The ACCC says billion-dollar Australian companies must be fined more for breaching the law.

An OECD report has found that Australian penalties are significantly lower than those imposed in other comparable OECD jurisdictions.

The report, Pecuniary Penalties for Competition Law Infringements in Australia, compared the penalties for companies which breach competition laws in Australia with the EU, the UK, Germany, Japan, Korea and the USA.

It found that in Australia, both the maximum and average penalties imposed by the courts for competition law breaches are significantly lower than in the OECD jurisdictions considered, especially for large firms or for long-standing anti-competitive behaviour.

The average Australian penalty is 12.6 times lower than the level of the average penalty in the OECD countries.

In one example, ANZ bank was charged $9 million for 10 incidents of collusion, in the same year that the company made $8 billion profit.

In comparison, the EU last year imposed a record €2.4 billion penalty against Alphabet, Google’s parent company, while the United States recently fined Citicorp $925 million.

ACCC chair Rod Sims said the regulator would begin pursuing penalties closer to 10 per cent of a company’s turnover. 

“When you have a company with a turnover of $10 billion, that would be a maximum penalty of up to $1 billion, so we’d be looking at penalties of hundreds of millions,” he said.

Additionally, in most OECD countries financial penalties are set according to a methodology that includes sales of the infringing company’s product.

Australia the penalties are determined by the Federal Court following an “instinctive synthesis” of various factors.

“This difference does not prevent Australia from imposing substantial and deterrent sanctions for competition law violations,” OECD economist Dr Sean Ennis said.

“Clearer guidance on the size of penalties could be useful in Australia to ensure penalties deter and that companies are aware of the likely size of fines.”

Mr Sims agreed that fines should be higher.

“The ACCC has been concerned that penalties in competition cases historically have not been sufficiently high to deter breaches, especially in cases involving large businesses,” Mr Sims said.

“Whilst the OECD’s report focusses on penalties in competition cases, the ACCC is similarly concerned to ensure that penalties imposed in consumer cases are also high enough to achieve deterrence.

“In particular, we acknowledge the OECD’s comment that in the past we may not have given the size of the contravening corporation sufficient weight in our penalty submissions to the Court.

“We do not want breaches of our competition law to be seen as an acceptable cost of doing business. We need penalties that will be large enough to be noticed by senior management and company boards, and also shareholders,” Mr Sims said.