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March 22, 2013

Earlier today, the Competition Bureau announced that three individuals have been found guilty for their roles in the ongoing Quebec gas price-fixing case (see: Quebec Gas Price-fixers Found Guilty).

To say that this is the Canadian domestic cartel that keeps on giving would be an understatement.  This case has stretched now for some five years (see: here and here), led to date to 39 individuals and 15 companies being charged with criminal price-fixing under the Competition Act, with fines so far of over $3 million and is one of the largest and most exhaustive investigations in the Bureau’s history (see: here).

In making the announcement, Canada’s Interim Commissioner of Competition John Pecman reiterated the Bureau’s continued (and in recent years escalated) focus on detecting and prosecuting price-fixing cartels and other criminal competition law conduct:

“Today’s guilty verdict sends a clear message that price-fixing activities will not be tolerated in Canada. … Canadians are ultimately on the losing end of secret agreements that cheat them out of their money.”

According to some media reports, the prosecution’s case included some 600 intercepted phone conversations between the competing retailers that were recorded by the Bureau using wiretaps, with information that included price increases in the morning in Sherbrooke followed by increases at competing stations later in the day (or next morning) in other municipalities.

Interestingly, the convictions announced today are the result of a long trial (the individuals in this case were first charged in 2010 – see: here), which is rather uncommon in Canada for price-fixing as the majority of convictions are the result of pleas.  For other recent statements by the Interim Commissioner on this case, as well as the Bureau’s criminal enforcement priorities more generally, see: here, here, here and here.

Canada’s Competition Act Cartel Rules

In Canada, three types of cartel agreements between actual or potential competitors are per se illegal (i.e., without the requirement to establish any anti-competitive effects on a market, significant market presence, etc.):

1.  Price-fixing agreements.  Agreements between competitors to fix, maintain, increase or control the price for the supply of a product.

2.  Market allocation/division agreements.  Agreements between competitors to allocate sales, territories, customers or markets for the production or supply of a product.

3.  Output/supply restriction agreements.  Agreements between competitors to fix, maintain, control, prevent, lessen or eliminate the production or supply of a product.

Other types of agreements between competitors are also potentially subject to review under a second and separate non-criminal reviewable matters agreement provision (section 90.1).

Compliance & Bureau Immunity and Leniency Programs

The risks of potential competition law liability can be significantly mitigated by the adoption of a credible and effective compliance program.

In addition, the Bureau also has Immunity and Leniency Programs, which can also significantly reduce criminal liability in some cases.

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