Alkaloids of Australia and its former export manager sentenced

The Federal Court has sentenced a family-owned Australian pharmaceutical company and its former export manager for engaging in criminal cartel conduct, following a criminal prosecution by the Commonwealth Director of Public Prosecutions, that arose from an investigation by the ACCC.

Alkaloids of Australia, which produces scopolamine N-butylbromide (SNBB), the active pharmaceutical ingredient used in common anti-spasmodic medications, was convicted and fined $1,987,500.

Its former export manager, Christopher Kenneth Joyce, was also convicted and was sentenced to two years and eight months’ imprisonment to be served as an intensive corrections order, including 400 hours of community service.

Mr Joyce was also disqualified from managing corporations for five years and fined $50,000.

In late-2021, Mr Joyce and Alkaloids of Australia pleaded guilty to three criminal charges, and admitted to a further seven offences, in respect of making, attempting to make, and giving effect to several cartel arrangements with overseas pharmaceutical ingredient suppliers that involved price fixing, bid rigging, output restriction and market allocation.

The Court took into account Mr Joyce and Alkaloids of Australia’s early guilty pleas in sentencing.

“We welcome these outcomes, which should serve as a strong reminder that criminal cartel conduct is a serious offence attracting serious consequences, including significant fines, banning orders, and imprisonment for individuals,” ACCC Commissioner Liza Carver said.

“The sentence imposed on Mr Joyce is the longest sentence of imprisonment imposed on an individual under the criminal cartel laws so far.”

The charges relate to five years of cartel conduct in the period from July 2009, when criminal cartel laws came into force in Australia.

“This was a particularly concerning and serious case of cartel conduct by Alkaloids of Australia over a sustained period which included price fixing that had worldwide impact,” Ms Carver said.

The Court heard Mr Joyce (on behalf of Alkaloids of Australia) regularly met at industry conventions and communicated via email and phone with competing manufacturers of SNBB around the world and agreed to fix the minimum price for SNBB, to allocate customers between each other and to arrange what price would be quoted to customers to ensure a particular manufacturer won the sale.

In addition, Mr Joyce (on behalf of Alkaloids of Australia) attempted to induce competing SNBB manufacturers to limit the production of SNBB and/or its precursor plant, Duboisia, which is grown in Australia.

“Alkaloids of Australia produces and supplies an active ingredient derived from a plant predominantly grown and processed in the Kingaroy region in Queensland and exported for use in medications globally, so the cartel conduct potentially increased prices for consumers and businesses around the world,” Ms Carver said.

“Investigating serious cartels remains an important priority for us, because of the harm such anti-competitive conduct has on consumers, other businesses, and the economy as a whole.”