June 6, 2013
Earlier today, the Competition Bureau announced that criminal charges have been laid against three companies (Nestlé Canada Inc., Mars Canada Inc. and ITWAL Limited, a national network of independent wholesale distributors) and three individuals (two former Nestlé presidents and the President and CEO of ITWAL), who are being accused of participating in a chocolate price-fixing cartel (a case that has been running now for some six years).
In making the announcement, Canada’s Interim Commissioner of Competition John Pecman said:
“We are fully committed to pursuing those who engage in egregious anti-competitive behaviour that harms Canadian consumers … Price-fixing is a serious criminal offence and today’s charges demonstrate the Competition Bureau’s resolve to stop cartel activity in Canada.”
According to the Bureau, it became aware of the conduct through its leading cartel detection tool – its Immunity Program (under which full immunity from prosecution is possible, where all the conditions of the Program are satisfied) – and Hershey Canada Inc. cooperated with the Bureau through its Leniency Program (under which 50% and 30% reductions in fines are available provided, among other things, that an accused plead guilty).
Nestlé, Hershey Canada, Mars Canada and ITWAL were first raided by the Bureau back in 2007 (see: here), which subsequently led to investigations and class-actions in Canada, the U.S. and Europe. Allegations in this case, which have not been proven, have included that Nestle executives colluded with competitors in Canada to inflate the prices for chocolate products and that executives met in restaurants, coffee shops and conventions to operate the alleged cartel (see e.g.: here).
The Bureau’s announcement is another example of its continued seriousness in detecting and prosecuting price-fixing and other competition law cartels, particularly domestic (i.e., Canadian) conspiracies.
Canada’s current criminal conspiracy offences are subject to criminal fines of up to $25 million, imprisonment for up to 14 years, or both.
The announcement also follows a number of recent cartel law and policy related developments in Canada, which have included a new cartel whistleblowing initiative announced by the Bureau last week, record bid-rigging fines secured by the Bureau in April, indications that the Bureau was looking for regulated conduct doctrine cases to expand the existing case law relating to this potential defence to competition law violations (including cartel offences), more convictions in the Quebec gas price-fixing case, the elimination of conditional sentences for some Competition Act offences, a tougher stance by the Federal Court in relation to cartel sentencing and the introduction of per se criminal cartel offences back in 2009.
For more about Canada’s cartel and bid-rigging offences (and the Bureau’s Immunity and Leniency Programs) see: here, here and here.
For an overview of some of the basics of competition law compliance see: here.
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