REGULATORS on both sides of the Pacific are gradually catching up with the perpetrators of a widespread, five-year conspiracy to cheat car-makers out of millions of dollars in car freight fees for roll-on, roll-off (RO-RO) services – including cars shipped to Australia.

Fresh from sending senior car shipping company executives to jail in the United States, regulators have now secured their first scalp in Australia.

Using criminal charges for the first time, which can involve jail time, the Australian Competition and Consumer Commission (ACCC) has, on the first day of hearing in the Federal Court, won a guilty plea for criminal cartel conduct from Nippon Yusen Kabushiki Kaisha (NYK), a global shipping company based in Japan.

The early capitulation by NYK follows investigations and trials, especially in the United States, where the US department of justice (DOJ) has secured many scalps by sending four shipping company executives to jail. Four more have been sentenced but are currently described as “fugitives from justice”.

Penalties in the US and Japan levied on the members of the cartel so far come to more than $A420 million.

Chairman Rod Sims said the ACCC alleged “cartel conduct in connection with the transportation of vehicles, including cars, trucks, and buses, to Australia between July 2009 and September 2012”.

NYK is claimed to be the dominant player in world RO-RO car shipping and is one of the world’s largest shipping companies, with offices in Europe, Africa, East Asia, South Asia, China, Oceania (including Australia), and North and South America. It has over 33,000 employees and its headquarters is in Tokyo.

It also operates an Australian subsidiary, NYK Line (Australia) Pty Ltd.

Other shippers are likely to be named next. The ACCC said that its investigation into other alleged cartel participants in the RO-RO shipping industry in Australia was continuing.

The decision by Commonwealth director of public prosecutions to call on criminal rather than civil charges for the first time since they were granted in 2009 means that offending Australian company executives can face a prison term of up to 10 years. The criminal provisions were brought in following the watchdog’s exposure of collusion between packaging giants Visy and Amcor.

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For corporations, the maximum fine for each criminal cartel offence will be the greater of:

• $10 million
• Three times the total benefits that have been obtained and are reasonably attributable to the commission of the offence
• Or, if the total value of the benefits cannot be determined,10 per cent of the corporation’s annual turnover connected with Australia

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The NYK matter in Australia is next scheduled for a directions hearing in the Federal Court on September 12, 2016.

Meanwhile, the cartel behaviour, which was practiced worldwide, has been dealt with both in the US and in Japan after investigators moved on the shipping companies in 2012.

In the US, the department of justice found that RO-RO shipping companies had conspired to rig shipping prices to prevent underbidding from cutting into their profit margins and that shippers allocated customers amongst themselves by rigging the bidding for RO-RO shipping contracts – including shipping to Australia.

In September 2014, K Line, the 16th largest shipping company in the world, pleaded guilty to cartel behavior on its car carrying operations and was fined $US68 million followed by a guilty plea by NYK in January 2015 which earned the company a fine of $US60 million.

In February 2015, CSAV, a Chilean shipping company, entered a guilty plea. It is one of the largest conglomerates in Chile and the leading shipping company in Latin America. It was fined $US9 million.

And, just this week (July 2016), the Norwegian carrier Wallenius Wilhelmsen Logistics (WWL), one of the largest operators of ocean-faring car carriers worldwide, entered a guilty plea with the US DOJ and has been issued with a $US100 million penalty.

This brings the total penalties in the US to $US237 million ($A315 million).

The Japan Fair Trade Commission (JFTC) has also dealt out penalties over the same collusive practices, with NYK paying $A60 million, K Line $A26 million, WWL $A16 million and Nissan Motor Car Carrier Co $A1.6 million. The Japanese shipping company Mitsui O.S.K Lines was mentioned but not penalised.

The penalties in Japan totaled $A104 million, bringing the US and Japanese penalties to about $A420 million.

By John Mellor