Canadian COMPETITION LAW

On January 6, 2012 the Competition Bureau announced its first cartel case under Canada’s amended Competition Act (partially brought under the new section 45 of the Competition Act).

In this case, two companies pleaded guilty of fixing the price of polyurethane foam and were fined a total of C $12.5 million (see: Cartels Update: Bureau Announces $12.5 Million Fine in First Price-fixing Case Under Amended Competition Act and Competition Bureau Sends Signal to Price-Fixers with $12.5 Million Fine).

In making the announcement, believed to be one of a number of new cartel cases currently being investigated, the Bureau said:

“’Yesterday’s guilty plea is the first conviction under Canada’s amended conspiracy law,’ said Melanie Aitken, Commissioner of Competition. ‘This investigation highlights the Bureau’s reinvigorated mandate to stop consumer harm caused by price-fixing, and to secure significant fines for these serious criminal offences.’

The charges are the first to arise from the Bureau’s investigation into price-fixing cartel in the polyurethane foam industry. Anyone with information relating to this investigation is encouraged to contact the Competition Bureau.

The Bureau’s investigation benefitted from cooperation under the Bureau’s Immunity and Leniency Programs, which create incentives for parties to address their criminal liability by cooperating with the Bureau in its ongoing investigation and prosecution of other alleged cartel participants.

Under the Competition Act, an agreement between competitors to fix prices, allocate markets or restrict output in Canada is a criminal offence. In March 2010, amendments to the conspiracy provision of the Act came into force.”

The Bureau also recently confirmed that it is investigating potential effects in Canada from the alleged global LIBOR-TIBOR bank cartel (see: Cartel Update: Competition Bureau Investigates Alleged Interbank Lending Rate Coordination), that it continues to receive guilty pleas in the Quebec gasoline price-fixing case, which was the largest such investigation in the Bureau’s history (see: Cartels Update: Seven More Individuals Plead Guilty in Criminal Quebec Gasoline Price-fixing Cartel) and that it remains focused on both maintaining and increasing its cooperation with global enforcement agencies in the detection and enforcement of cartels.

For example, in recent remarks made last week at an OECD conference in Paris, the Bureau said:

“In today’s globalized economy, it is essential that competition enforcement transcend national boundaries to protect the benefits of competitive and honest markets. The borderless workplace for competition enforcers has prompted the Canadian Competition Bureau to engage in a broad array of activities to encourage increased collaboration within a global network of enforcement agencies. This is particularly the case with respect to those agencies committed to the detection, investigation, and prosecution of international cartel activity.”

(See: Canada’s Contribution to 11th OECD Global Forum on Competition – “Improving International Co-operation in Cartel Investigations”).

In other recent public remarks, the Bureau has similarly indicated that cartels remain a top enforcement priority.  For example, the Commissioner recently said:

“In our Criminal work, we continue to concentrate on the, admittedly, lengthy process of ‘changing the game’— reorienting our approach at the Bureau, our processes, and our mindset to a more appropriately aggressive stance to respond, as we must, to our new more powerful criminal provisions.

As we move forward with our new criminal regime, consistency, consistency, and consistency is our focus.

There will be no arbitrary relaxing of standards under the Bureau’s watch — a practice that can only impair predictability and fairness in enforcement. Further, we will use our investigative tools such as searches, wiretaps and section 11 orders.

Cartels and bid–rigging continue to be our focus, given the seriousness of this conduct, and its unambiguously harmful nature. We are committed to advancing cases that matter to Canadians, doing so in a timely manner, and following them through to the end.

For cartels, while it will necessarily take some time before we bring our first case under the new section 45, we do have a number of ‘hybrid’ cases underway that will give us experience with the new provisions.”

(See: Commissioner of Competition, Keynote Speech at the Canadian Bar Association 2011 Fall Conference).

In addition to these recent Bureau initiatives, there are a number of currently ongoing conspiracy-related private and class actions in Canada in a number of sectors (see e.g.: Canadian Supreme Court Grants Leave in Pro-Sys/Microsoft and Sun-Rype Indirect Purchaser Competition/Antitrust Class Actions and Private Action Update: Realtysellers Lawsuit Against CREA and TREB Survives Motion to Dismiss).

Based on these recent cartel enforcement developments, we will be posting overviews of Canadian conspiracy and bid-rigging laws, each concluding with practical steps for companies to take to reduce potential criminal liability (and overviews of the Bureau’s Immunity and Leniency Programs, which are increasingly proving to be key for both Bureau investigations and parties to reduce liability).

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