Amcor and Visy to settle cartel class action with SMEs

Australia’s highest-profile cartel scandal may finally be about to end, with packaging cartel operators Visy and Amcor agreeing to settle a class action brought against them by a group of customers, many of whom are SMEs.

The final details of the settlement are being negotiated now, with the Federal Court expected to receive the final deal tomorrow.

While the original claim from the class action was for $500 million in damages and interest, the final settlement is likely to be much lower. Press reports this morning have put the figure at about $150 million, although the details are likely to be confidential.

The settlement should allow Amcor and Visy – and more particularly, the family of company founder, the late Richard Pratt – to put the scandal behind them for good.

Richard Pratt, who admitted to his company’s involvement in the cartel in 2007, when Visy and Pratt were fined $36 million after a long-running case bought by the ACCC.

The consumer watchdog later brought criminal charges against Pratt, alleging he provided misleading evidence during the cartel probe. These charges were dropped for health reasons on the eve of Pratt’s death in early 2009.

Visy and Amcor settled legal action brought by food and beverage giant Cadbury in 2009. With this new settlement, the companies should not face further legal claims over the cartel.

While the settlement is likely to be welcomed by those involved in the class action, competition experts and the legal fraternity are slightly disappointed the case didn’t go to trial and even beyond.

Frank Zumbo, competition and consumer law expert from the University of New South Wales, says the case would have provided valuable precedents in the rarely-tested area of cartel law.

“It’s s always good that litigation is settled before it gets to court, simply because they are so complex and expensive for all involved,” Zumbo says.

“But to have it thrashed out in court, and then to have a judgement, and then possibly an appeal, that would be very helpful for setting precedents in this area.”

“This is certainly an area crying out for legal precedence from the courts.”