Japanese company pleads guilty; $25 million fine slapped for cartel conduct by Federal Court of Australia

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Canberra: Japan based shipping company, Nippon Yusen Kabushiki Kaisha Ltd (NYK), has been convicted and fined $25 million on Thursday (3 August)  in the Federal Court of Australia.

It was the first modern criminal prosecution of cartel conduct in Australia. The cartel involved collusion in fixing the freight rates and market shares for the international shipping of motor vehicles to Australia.

NYK is the parent company of a global logistics and bulk shipping group based in Japan with over 33,000 employees. The Car Carrier Group within NYK’s bulk shipping division provides ocean transport services to supply new passenger cars, trucks, buses and commercial vehicles from overseas manufacturers to Australia.

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From at least February 1997, NYK had an arrangement with other global vehicle shipping companies, to the effect that they would not seek to alter their existing market shares of cargo from manufacturers or otherwise try to win existing business from each other (a cartel referred to as the Respect Agreement). Between 24 July 2009, when legislation criminalising cartel conduct commenced in Australia, and 6 September 2012, when Japanese and United States authorities raided the offices of NYK and a number of other shipping companies, NYK gave effect to the cartel with other global shipping companies and their subsidiaries.

Three separate cartel provisions relating to fixing freight rates, bid rigging and customer allocation were undertaken. It involved six different shipping routes for vehicles to Australia, from India; Thailand; Japan; Indonesia; North America, and Europe; and shipping services supplied to 10 vehicle manufacturers.

The offending occurred over a three year period during which 69,348 new vehicles were imported into Australia through contracts entered into as a result of bids affected by the conduct.

NYK co-operated with Australian authorities and pleaded guilty to one rolled-up count of giving effect to cartel provisions, contrary to s 44ZZRG(1) of the Competition and Consumer Act 2010 (Cth). The maximum penalty was $100 million.

In handing down sentence on 3 August 2017, Justice Wigney stated:

‘Cartel conduct of the sort engaged in by NYK warrants denunciation and condign punishment. It is inimical to and destructive of the competition that underpins Australia’s free market economy. It is ultimately detrimental to, or at least likely to be detrimental to, Australian businesses and consumers. The penalty imposed on NYK should send a powerful message to multinational corporations that conduct business in Australia that anti-competitive conduct will not be tolerated and will be dealt with harshly.’

The Judge stated that but for NYK’s early guilty plea and co-operation, the fine would have been $50 million.

Shane Kirne, Deputy Director, CDPP, described the case as a milestone in the prosecution of cartels in Australia:

‘This was the first prosecution of a cartel since legislation criminalising such conduct commenced in 2009. The case demonstrates that no company, big or small, is above the law. The conviction and penalty imposed on NYK will act as a significant deterrent for others contemplating illegal conduct’, Kirne said.

The Australian Competition and Consumer Commission referred the matter to the CDPP and played an active role in support of the proceedings.

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The investigation and prosecution of other alleged cartel participants is continuing.

Click here for court’s case summary relating to this matter

Lok Sabha takes note of herbal and AYUSH related misleading advertisements

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New Delhi: Misleading Ministry of AYUSH received 79 complaints in the year 2014 about advertisements and misleading claims allegedly of herbal and AYUSH products. Thereafter, 515 AYUSH-related complaints of misleading advertisements in the print and electronic media have been escalated by Advertising Standards Council of India (ASCI) out of the cases registered in the “Grievances Against Misleading Advertisements (GAMA)” portal of the Department of Consumer Affairs since March 2015 till date.

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The Union Minister of State (independent charge) for Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy Shripad Yesso Naik gave this information in response to a starred question by Janak Ram and Dushyant Chautala on herbal medicines and products in Lok Sabha today.

The Government was asked about the number of complaints received against misleading advertisements and claims regarding herbal medicines/products made in the electronic/print media during the last three years;  whether the Government had also received complaints regarding sale of these herbal medicines and products in the market without any certified clinical tests and incidents of death of people after using these medicines and products; and if so, the details along with the steps taken by the Government to check these misleading advertisements and claims and the success achieved in this regard.

In his reply the Minister told the House that the category of herbal medicines/products is not defined in the Drugs & Cosmetics Act, 1940 and the related Rules. However, proof of safety and effectiveness, as required for issuing license to manufacture Ayurvedic, Siddha or Unani medicines, is prescribed in the guidelines under Rule 158-B of the Drugs & Cosmetics Rules, 1945, which can either be based on textual rationale from the authoritative books listed in the First Schedule to the Drugs & Cosmetics Act or published literature; and if no such evidence of effectiveness of the drug is available, it needs to be generated by conducting the pilot study.

In order to check the veracity of misleading advertisements of AYUSH products, the Central Government has taken following steps-

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  • Issued directives to the State Governments for appointing Gazetted officers for monitoring of advertisements of drugs.
  • Complaints of misleading advertisements of Ayurvedic, Siddha, Unani and Homoeopathic medicines are forwarded to the concerned State Licensing Authorities for action in accordance with the provisions of Drugs & Cosmetics Act, 1940 and Rules thereunder and Drugs & Magic Remedies (Objectionable Advertisements) Act, 1954 and Rules thereunder. States have reported action taken against the defaulters.
  • Ministry of AYUSH has signed MoU with Advertising Standards Council of India (ASCI) on 20th January, 2017 to undertake monitoring of the misleading AYUSH –related advertisements appearing in print and TV media and bring the instances of improper advertisements to the notice of the State Regulatory Authorities for taking necessary action.
  • Press Council of India has laid down norms for advising the newspapers to reject advertisements that offend the provisions of Drugs & Magic Remedies (Objectionable Advertisements) Act, 1954.
  • Ministry of Information & Broadcasting has issued an advisory to all media channels to ensure strict compliance of the provisions of Drugs & Cosmetics Act, 1940 and Drugs & Magic Remedies (Objectionable Advertisements) Act, 1954 in respect of AYUSH health products/drugs. TV channels have been advised to advertise only those AYUSH products, which have valid manufacturing license.

Cocaine use and overdose deaths in the United States are on the rise

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William R brownfield

Washington, DC: After years of progress in combating coca cultivation and cocaine production, Colombia is once again the world’s largest producer of cocaine and is the origin of approximately 90 percent of the cocaine seized in the United States, according to the DEA Cocaine Signature Program.

This was underscored by William R. Brownfield, the US Assistant Secretary, Bureau of International Narcotics and Law Enforcement Affairs in his testimony before the Subcommittee on Western Hemisphere, Transnational Crime, Civilian Security, Democracy, Human Rights, and Global Women’s Issues here this past Wednesday (2 August 2017).

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The Assistant Secretary pointed out that between 2013 and 2016, coca cultivation in Colombia increased by more than 130 percent, from 80,500 hecatres (ha) in 2013 to 188,000 ha in 2016. Perhaps more troubling, pure potential cocaine production surged by more than 200 percent in the same time period, from 235 metric tons produced in 2013 to 710 metric tons in 2016.

Brownfield said: “At a time when the Colombian government is implementing a peace accord that promises to keep the Revolutionary Armed Forces of Colombia (FARC) off the battlefield and out of the illicit economy, we have a limited window of opportunity to roll back the recent troubling narcotics trends that threaten the safety and health of citizens here in the United States as well as in Colombia and throughout the rest of the Western Hemisphere.”

Brownfield said since 2000, the United States has invested more than $10 billion to improve citizen security, disrupt the drug trade, and combat criminal networks to advance peace and prosperity. Correspondingly since 2002, homicides in Colombia also have fallen by more than 50 percent and kidnappings have dropped by 90 percent; in 2016, Colombia had its lowest reported homicide rate in 40 years.

Brownfield also presented an alarming picture by stating that cocaine use and overdose deaths in the United States also are on the rise. Following a dramatic decline in cocaine overdose-related deaths in the United States since 2006, this figure has steadily increased since 2012, reaching 6,784 overdose-related deaths in 2015, the highest on record since 2006.

This surge is due to multiple factors, Brownfield said adding these include Colombia’s decision in 2015 to end the U.S.-supported aerial coca eradication program as well as counter-eradication techniques implemented by coca growers. The dramatic increase in coca cultivation and cocaine production in Colombia is deeply concerning, he observed.

The Colombian government has been a steadfast partner of the US in the fight against crime and narcotics since before the start of Plan Colombia in 1999. Achieving the shared goals will not be easy, nor quick, Brownfield said expressing confidence that that the US and Columboa will continue to effectively work together to tackle the considerable challenges.

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The US Assistant Secretary for International Narcotics and law enforcement testified on counter-narcotics efforts in Colombia after the peace agreement. Implementation of an effective counter-narcotics plan for Colombia is more important now than ever, he asserted.

Two directors of a company in UK which marketed tax avoidance schemes disqualified for a combined 9 years for moving assets out of the reach of creditors

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London: Timothy Richard Edmunds has been disqualified from acting as a director for five years and Annette Edmunds has been disqualified for four years.

On 17 July 2017, the British Secretary of State for Business Energy and Industrial Strategy accepted disqualification undertakings from Timothy Richard Edmunds and Annette Edmunds, with effect from 7 August 2017.

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Mr and Mrs Edmunds were directors of ESP Strategies Ltd, which went into liquidation on 25 November 2015.

The investigation found that ESP Strategies Ltd had entered in to a tax avoidance scheme involving the issue of shares totalling £240,000 to directors which were only partly paid for.

Mr and Mrs Edmunds agreed to a number of transactions ending with the surrender of the shares, which resulted in £230,400 of uncalled share capital becoming unavailable. The transactions took place at a time when the directors knew that the company had an outstanding debt to HMRC, the sole creditor in the liquidation, with a claim of £133,245.

Commenting on the disqualification, Sue MacLeod, Chief Investigator at the Insolvency Service, said:

If your business engages in transactions in the run up to liquidation which are detrimental to any of its creditors, the Insolvency Service may investigate you, leading to your removal from the business environment.”

ESP Strategies Limited (Company number 05497483), was incorporated on 3 July 2005. Its registered office and trading address was at 718 Gower Road, Upper Killay, Swansea SA2 7HQ.

Timothy Richard Edmunds (b. 20 May 1965) and Annette Edmunds (b. 13 January 1965), both directors are of Swansea.

A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:

  • act as a director of a company
  • take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
  • be a receiver of a company’s property

Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.

The Insolvency Service, an executive agency sponsored by the Department for Business, Energy and Industrial Strategy (BEIS), administers the insolvency regime, and aims to deliver and promote a range of investigation and enforcement activities both civil and criminal in nature, to support fair and open markets.

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BEIS’ mission is to build a dynamic and competitive UK economy that works for all, in particular by creating the conditions for business success and promoting an open global economy. The Criminal Investigations and Prosecutions team contributes to this aim by taking action to deter fraud and to regulate the market. They investigate and prosecute a range of offences, primarily relating to personal or company insolvencies.