Canadian COMPETITION LAW

We have been seeing an increase lately in penalties imposed in competition cases against individuals in Canada.  A number of commentators have also recently noted this shift in enforcement by the Competition Bureau and some Canadian courts.

As a result of this trend, I thought I’d post a short note highlighting some of the recent statements by the Bureau, legislative developments and penalties imposed in one particularly noteworthy case – the ongoing Quebec gasoline price-fixing cartel case (the largest criminal investigation in the Bureau’s history).

For example, the Commissioner of Competition recently indicated that the Bureau had a stronger appetite to pursue penalties against individuals:

“In both cartel and bid–rigging cases, we will be appropriately aggressive when dealing with individuals. To date, 38 individuals have been charged in the Quebec Octane case, and last December, five individuals were accused of rigging bids for private sector contracts in residential highrise buildings in the Montreal area” (see: Keynote Speech at the Canadian Bar Association 2011 Fall Conference).

Penalties against individuals was also one of the topics of a recent paper presented by the Bureau at a global competition conference in Paris:

“International cooperation and coordination is fairly advanced during the covert stage of investigations that begin with immunity applications. Agencies involved in multi-jurisdictional investigations of this nature do an excellent job at coordinating the execution of formal powers, such as searches, dawn raids, and production orders. Commentators have noted that better coordination between agencies could be undertaken once investigations go overt; for example, in regards to immunity and leniency marker management, fine calculation methodologies, ability to pay issues, charging individuals and comity considerations. Timing issues, as well as different settlement procedures in various jurisdictions may limit the ability to improve this type of coordination.”  (See: Improving International Cooperation in Cartel Investigations – Global Forum on Competition – Contribution from Canada).

In addition to these enforcement policy statements, the omnibus crime bill (Bill C-10) presently undergoing Senate Committee hearings may also have significant impacts on the sentencing of individuals in criminal cartel (i.e., conspiracy) and bid-rigging cases.  In particular, this Bill will, if passed in its current form, eliminate conditional sentences of two years or less (i.e., sentences served in the community rather than a correctional facility) from being ordered by courts for violation of two of the core criminal offences under the Competition Act: criminal conspiracy agreements (section 45) and bid-rigging agreements (section 47).  (See: Cartel Update: Omnibus Crime Bill (Bill C-10) Continues to Move Ahead – Senate Hearings Underway.)

However, probably the most interesting and starkest illustrations of the stepped-up enforcement against individuals is the recent (and ongoing) gasoline price-fixing cartel in Quebec.

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, under the former 45(1)(c) of the Competition Act (which made it a criminal offence for persons to, among other things, fix the price of products or services where the result that competition is prevented or lessened “unduly”).  On conviction, the former conspiracy offence carried a maximum term of imprisonment of up to 5 years and a fine of up to $10 million (subsequently increased to 14 years and $25 million).

Several of the companies involved and individuals pleaded guilty to the charges; others are contesting the charges and their cases are before the courts in Québec.  Some of the specific penalties imposed to date in this case against individuals include:

Jacques Ouellet (Ultramar): $50,000; Daniel Leblond (Olco): $10,000; Carol Lehoux: 10 months imprisonment (served in the community); Andre Bilodeau (Shell): 10 months imprisonment; Jean-Yves Plourde (Olco): $10,000 and 150 hours of community service; Claude Bedard (Irving): $15,000; Stephane Grant (Irving): $10,000; Pierre Bourassa (Olco): 12 months imprisonment (served in the community); Christian Payette (Olco): 12 months imprisonment (served in the community); Gisele Durand (Esso): 4 months imprisonment (served in the community) and a $20,000 donation; and Michel Dubreuil (Esso): 6 months imprisonment (served in the community) and a $25,000 fine.  (See: List of Charges and Sentences in the Quebec Gasoline Price-fixing Cartel.)

The Québec Superior Court, hearing most of the cases, has also had harsh things to say about the parties in this case and the importance of individual penalties.  For example, it noted recently 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” and that fines imposed must “hurt financially” (see e.g.: R. c. Darby, 2012 QCCS 26).

These are yet early days for Canada’s new Competition Act and the tougher Bureau.  Whether this enforcement trend against individuals will continue remains to be seen.

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