Canadian COMPETITION LAW

– By Christine Duhaime (Duhaime Law)

Our colleague Christine Duhaime has written this rather good comparative competition and terrorist financing note.

A Tale of Two Crimes and Their Punishment

This is a tale of two crimes and two punishment: the first, a conviction for price-fixing under §45(1) of the Competition Act in Québec in which the guilty party was sentenced to a term of 12 months imprisonment; the second, a conviction for terrorist financing under §83.03(b) of the Criminal Code in British Columbia in which the guilty party was sentenced to a term of six months imprisonment. Both were sentenced pursuant to the sentencing principles set out in §718 of the Criminal Code.

Québec Gasoline Price-Fixing Case

In 2008, the Competition Bureau uncovered a gasoline price-fixing cartel operating in several towns in Québec. According to the evidence, competitors in Magog, Sherbrooke and Thetford Mines telephoned each other regularly and agreed to set the price of gasoline at their gas stations and agreed on the timing of gas price increases. Criminal charges were laid against individuals and gas retail companies, including Irving, Shell, Olco and Esso, pursuant to §45(1)(c) of the Competition Act.

§45(1)(c) of the former Competition Act made it a criminal offence for, among other things, two persons to fix the price of a product if competition was prevented or lessened “unduly”.  On conviction, the former conspiracy offence carried a maximum term of imprisonment of up to 5 years imprisonment and a fine of up to $10 million (subsequently increased to 14 years and $25 million).  Stopping such cartel-type behaviour remains an enforcement priority for the Competition Bureau.

Several of the gas companies involved and individuals pleaded guilty to the charges; others are contesting the charges and their cases are before the courts in Québec. The Québec Superior Court, hearing most of the cases, noted recently in the price-fixing cases, that the courts “must severely punish those violating the Competition Act and in so doing, send a clear and dissuasive message to those tempted to impede competition…[the punishment cannot be] just a rap on the knuckles” (see: R. c. Darby, 2012 QCCS 26). Pierre Bourassa, a sales representative with Les Pétroles Global Inc. that operated under the Olco banner, pleaded guilty to price-fixing of gas prices in Sherbooke and Magog. He had no prior criminal record and was considered not to be a danger to society. He was sentenced to 12 months in prison by the Québec Superior Court.

British Columbia Terrorist Financing Case

In Canada, suppressing terrorism is an “uphill battle” (see: Commission of Inquiry Into the Investigation of the Bombing of Air India Flight 182), and a battle which Canada stands poised to lose unless more is done to detect, deter and prosecute terrorist financing.

Terrorist acts cost very little. The direct costs of the bombing of Air India Flight 182 that claimed the lives of 280 Canadians has been estimated at $3,000; the cost of the 2004 Madrid train bombings that claimed 191 lives was estimated at €15,000. The Paris bombs, a few hundred dollars. Thus, funds raised, even in relatively insignificant amounts, by the activities of those engaged in terrorist financing, can wreck incredible havoc on Canada with economic costs that range in the billions of dollars. In essence, what we know about terrorist financing is that is does not take a lot of money to accomplish a lot of damage. We also know that charities and non-profits play an increasingly important role in terrorist financing (see: Commission of Inquiry Into the Investigation of the Bombing of Air India Flight 182).

The purpose of detecting, preventing, acting lawfully against and prosecuting terrorist acts is to keep Canada and Canadians safe from those who would imperil our democratic freedom, core values and tolerant way of life, by harming Canadians through acts of violence. Terrorism is not simply a crime. It is also an existential threat to our society, and Government has a legitimate interest in preventing terrorism, above and beyond that of punishing terrorists as criminals (see: Security, Freedom and the Complex Terrorism Threat: Positive Steps Ahead, Special Senate Committee on Anti-Terrorism, 2010).

Terrorist acts impose both direct and indirect costs on Canadians. Direct costs  include loss of human life and health and the loss of physical capital due to destruction of buildings and infrastructure. Indirect costs include the increased level of fear in the population, increased insurance and business costs. There are also public costs, i.e., the expensive counterterrorist efforts by governments (such as airport security and border controls measures, monitoring the financial system and military operations), which drain resources from economically productive activities; and private costs bourn by the private sector (such as to comply with counterterrorism laws and policies, reduced economic activity caused by greater costs to individuals and businesses through taxes, and non-monetary costs of the loss of civil liberties and other freedoms).

That takes us to the second case.

In 2008, Prapaharan Thambaithurai, a Sri Lankan Tamil foreign national, solicited funds in Vancouver for the World Tamil Movement (“WTM”), funds which he knew were destined for the Liberation Tigers of Tamil Eelam (“LTTE”). Both the WTM and LTTE are listed entities (identified as terrorist organizations) in Canada. These two groups (LTTE and WTM) in Canada have been exposed for their alleged extortion – both target the Tamil community and are suspected of using extortion and threats to elicit funds for the cause. The LTTE has been suspected for years of being one of the main actors in terrorist financing in Canada (see: Commission of Inquiry Into the Investigation of the Bombing of Air India Flight 182).

The LTTE engages in armed conflict against the Sri Lankan government and uses a guerrilla strategy that often includes acts of terrorism. Over the past 17 years, the LTTE has conducted approximately 200 suicide bombings, resulting in the deaths of hundreds of people, and carried out numerous political assassinations. The LTTE was designated by Canada as a terrorist organization and therefore may not legally raise money or procure equipment or materials in Canada.

Upon his arrest, Mr. Thambaithurai said he had raised about $3,000 and he knew that the money would be used by the LTTE. He also admitted knowing that it was illegal to raise funds for the LTTE.

Mr. Thambaithurai was charged under §83.03 of the Criminal Code. That provision makes it an offence for a person to collect or make available property intending that it be used, or knowing that it will be used, in whole or in part, for the purpose of facilitating or carrying out any terrorist activity, or to benefit a terrorist group and carries a term of imprisonment of up to ten years.

Mr. Thambaithurai pleaded guilty to terrorist financing. The Supreme Court of British Columbia held that his terrorist financing activities were “at the low end of the scale” because the amount of money he collected for terrorism was “minimal.” As a result, he was sentenced to six month in prison (see: R. v. Thambaithurai, 2010 BCSC 1949).

The Crown appealed, inter alia, on the basis that a six month sentence was inappropriate for terrorist financing; it did not resile with Canada’s international obligations to deter and punish terrorist financing; and the focus on the amount raised was immaterial to sentencing in the context of terrorist financing. The Court of Appeal upheld the six month sentence, on the grounds, inter alia, that concerns with respect to LTTE and terrorist financing had abated worldwide (see: R. v.  Thambaithurai, 2011 BCCA  137).

The Court of Appeal’s findings with respect to the LTTE and that its terrorist financing activities had “abated worldwide” is of concern. It is not clear whether these facts were ever in evidence before the Court of Appeal, and if they were, whose evidence was relied upon for that information, considering that such evidence is inconsistent with what is known about the LTTE (see: Commission of Inquiry Into the Investigation of the Bombing of Air India Flight 182). The LTTE is still a listed entity in most countries, including Canada. Whether an entity is a threat to the security of Canada is a matter for the federal government to decide. Lists are created pursuant to §83.05 of the Criminal Code and an entity is placed on the list if the Governor in Council has reasonable grounds to believe that the entity has knowingly carried out, attempted to carry out, or participated in or facilitated a terrorist activity. An entity can be delisted under §83.06 of the Criminal Code in one of several ways, including judicial review on application by the listed entity. The Court’s finding in this case can be viewed as a de facto delisting of the LTTE in a manner that disregards the Criminal Code delisting process.

Reconciling the Cases

How do we reconcile these two sentences? Both accused had no previous criminal record and otherwise unblemished histories. The gas price-fixing case addresses economic crimes against several hundred thousand people in Québec; the terrorist financing case addresses crimes against all Canadians that are more fundamental since they threaten our democracy. And yet, the more serious crime that constitutes a threat against all Canadians garnered a 50% lighter sentence.

The Financial Action Task Force, the international body that sets anti-money laundering (“AML”) and counter terrorist financing (“CTF”) standards worldwide, noted in its Mutual Evaluation of Canada, that Canada’s judiciary needed to understand and be trained on, the law on AML and CTF to prevent the type of decision that flowed from the Thambaithurai case. There is merit, in our view, for an increased awareness of AML and CTF.

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