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Australia: Pharmaceutical company Alkaloids of Australia fined $2m in Federal Court for 'deliberate, covert' behaviour

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An Australian-owned company has been fined almost $2 million for criminal cartel conduct over the supply of a major pharmaceutical drug.  

Alkaloids of Australia Pty Ltd was sentenced in the Federal Court today after pleading guilty in November 2021 to three charges including price fixing, bid rigging, and cartel arrangements over the production and supply of the drug hyoscine, also known as scopolamine.

The drug is highly sought after for its use in over-the-counter motion sickness and stomach pain medications and is found in Duboisia shrubs, grown around Kingaroy in Queensland's South Burnett.

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Hyoscine is related to morphine, cocaine, and nicotine, and very high doses can cause respiratory failure and death.

The company, which is run by the Kingaroy-based Crumpton family, was charged after an Australian Competition and Consumer Commission (ACCC) investigation over a ten-year period. 

Alkaloids of Australia's former export manager Christopher Joyce pleaded guilty to similar charges in 2021 and was today sentenced to 32 months' prison to be served by way of intensive correction in the community.  he was also fined $50,000, ordered to perform 400 hours of community service, and disqualified from managing corporations until November 2027. 

Covert conduct

Established in 1986, the company employs just over 30 people, and is the only producer of hyoscine in Australia, which is sourced from about 100 hectares of plantations in and around Kingaroy.  

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In her judgement, Federal Court Judge Wendy Abraham said the company's offending occurred over a significant period.

"[It] can only be characterised as deliberate, systematic, coordinated and covert," Judge Abraham said. 

"Alkaloids of Australia engaged in the conduct for financial gain."

The court heard between 2009 and 2017, the company put into effect an agreement with international companies in Peru, India, Germany, Switzerland, and Singapore to sell the drug scopolamine at a minimum price of between $2,240 ($1,500 USD) per kilogram and about $7,464 AU ($5,000 USD) per kilogram.

The court was told Alkaloids of Australia also worked with its competitors to eliminate another Australian duboisia grower, David Thamm, from the market.

Anti-competitive conduct

The company admitted its conduct may have led to a loss of competition in overseas markets, but had argued the agreements had no effect on Australian customers.

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But Judge Abraham said Alkaloids of Australia failed to acknowledge the broader destructive impact of anti-competitive conduct. 

She found the company's former export manager Christopher Joyce was actively involved in monitoring the agreements with other companies.

"Mr Joyce committed these offences, which began in 2009, knowing that the conduct was improper.... unethical and probably unlawful," Judge Abraham said.

In a letter to the court, Alkaloids of Australia's general manager Sonie Crumpton apologised and expressed remorse on behalf of his family and the company.

The court heard the company had relied on Mr Joyce's expertise and judgement to market and sell the drug hyoscine, but the letter said it was no excuse for its conduct in facilitating serious criminal conduct. 

Judge Abraham said she had applied a 25 per cent discount on the sentence considering the company's guilty pleas and other factors such as contrition. 

The Australian Competition and Consumer Commission (ACCC) has welcomed the outcome.

"It 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."

Alkaloids of Australia has been contacted for comment.

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