Defeat greets first ACCC criminal cartel case

The competition regulator has suffered a comprehensive defeat in its first ever criminal cartel case.

Chair of the Australian Competition and Consumer Commission Rod Sims. Picture by Sean Davey.

The competition regulator has suffered a comprehensive defeat in its first ever criminal cartel case against Mildura-based Country Care, putting an end to a long-running battle between a family-owned business and one of the nation’s most powerful regulators.

The decision handed down on Wednesday in the Federal Court by judge Robert Bronwich came after a jury met for a short time to dismiss all charges against the company that distributes disability and healthcare equipment.

The loss came five years after Country Care boss Robert Hogan was raided and three years after court proceedings began.

Mr Hogan said in a statement: “It is a disgrace, but for us it’s finally time to move on.”

He noted: “During the trial the ACCC and CDPP’s (Commonwealth Department of Public Prosecutions) key immunity witness (Andy Cuddihy) was exposed as a disgruntled individual who held a grudge against me and Country Care. He admitted under cross-examination that he had misled and withheld important information from the ACCC and lied to the jury.

“Questions should be asked as to how it can be that the ACCC did not identify the obvious issues with this witness, particularly given the defence was able to uncover significant untruths in this witnesses statement from documents which had been in the ACCC’s possession for years.”

Describing the case as a victory for small businesses, he said: “The ACCC and the CDPP need to be held to account for the significant failures in their investigation and approach to these criminal proceedings”.

ACCC chairman Rod Sims said in a statement: “Following a lengthy trial, the jury has now spoken and we respect the process and the verdicts which have been delivered.

“We were concerned this alleged conduct had the potential to increase prices paid by consumers for rehabilitative and assistive technology products which are essential for the health, wellbeing and dignity of people with disabilities or who are undergoing rehabilitation or are in aged care. It also had the potential to increase prices paid by governments for these essential products.”

This case is the first contested criminal prosecution under the criminal cartel provisions of the Competition and Consumer Act, and the first to proceed to trial by jury.

“Cartel conduct cheats consumers and other businesses, and restricts healthy economic growth,” Mr Sims said. “The ACCC will continue to give high priority to deterring, detecting and dismantling cartels that have the potential to harm Australian consumers and take enforcement action in appropriate cases.”

The ACCC has had a string of competition wins and is now facing a battle against the big banks in the ANZ cartel case. It has scored victories in recent months against TasPorts over Tasmanian port services competition and a series of big consumer cases.

The central character in the Country Care case, known in the trade as the “Zimmer frame” case was Mr Hogan, a Mildura-based businessman.

He adapted to Department of Veterans Affairs administrative changes that had effectively locked small business out of bidding for its hospital equipment contracts.

The case, first lodged in 2018, is the first criminal case launched by the ACCC against an Australian company and individual. Previously the department had dealt with local suppliers of the equipment, but it changed and sought out statewide or national suppliers like Allianz or Aidacare.

Mr Hogan’s move was to group small players together and bid jointly so the consortium could take on the big guys.

The ACCC immunity witness, Mr Cuddihy, had taped a conversation with Mr Hogan that was taken to the ACCC and used in the trial.