Pharma company Alkaloids of Australia fined $2m for decade-old cartel behaviour

Pharma company Alkaloids of Australia fined $2m for decade-old cartel behaviour

The Duboisia plant. Photo credit: John Moss via Wikimedia Commons.

The Federal Court has handed a $2 million fine to Queensland pharmaceutical company Alkaloids of Australia as well as a lengthy prison sentence for a former employee, following convictions on criminal cartel charges that stem from events almost a decade ago.

Alkaloids of Australia, which produces a native plant extract used to relieve stomach pain and bowel cramps, and its former export manager were found guilty of criminal cartel conduct following an investigation by the competition watchdog, the ACCC.

The charges stem from five years of cartel conduct from July 2009, a critical time for the prosecution as it was around then that criminal cartel laws came into force in Australia.

Alkaloids of Australia’s key product is scopolamine N-butylbromide (SNBB), the active pharmaceutical ingredient used in anti-spasmodic medications. SNBB is produced at the company’s Kingaroy facility in Queensland where it sources the extracts from local plantations of Duboisia shrubs, the natural source of scopolamine.

Alkaloids of Australia and its former export manager, Christopher Kenneth Joyce, pleaded guilty to three criminal charges late last year. They also admitted to seven offences of making, attempting to make, and giving effect to several cartel arrangements with overseas pharmaceutical ingredient suppliers.

The court heard that Joyce represented the company at industry conventions and would phone and email competition manufacturers of SNBB around the world to fix the minimum price for SNBB.

His actions would lead the competitors to allocate customers between themselves and arrange what price would be quoted to customers to share sales among customers. The ACCC says the arrangements involved price fixing, bid rigging, output restriction and market allocation.

Alkaloids of Australia was fined $1.987 million and Joyce was hit with a $50,000 fine on top of a prison sentence of two years and eight months which is being served as an intensive corrections order, including 400 hours of community service.

Joyce was also disqualified from managing corporations for five years. The court took into account early guilty pleas in the 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,” says ACCC commissioner Liza Carver.

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

“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.”

The ACCC says Joyce and Alkaloids of Australia also had sought to induce competitors to limit SNBB production.

“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,” says Carver.

“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.”

The ACCC initially brought the charges against Joyce and Alkaloids of Australia in December 2020.

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