Archive for the 'Conspiracy' Category
A tentative hearing date of June 5, 2012 has been set in the Pro-Sys and Sun-Rype indirect purchaser price-fixing class action cases before the Supreme Court of Canada (see: Supreme Court of Canada – scheduled hearings, Pro-Sys Consultants Ltd. – docket, Sun-Rype Products Ltd. – docket).
The CBC and others have reported on the continued progress of Bill C-10, the “Safe Streets and Communities Act”, which is now undergoing 11 days of Senate committee hearings (the Senate’s legal and constitutional affairs committee) that will hear from about 100 witnesses.
Conservative Justice and Public Safety Ministers Rob Nicholson and Vic Toews are asking Senators to “expeditiously” approve the Bill.
Bill C-10, which completed second reading in the Senate in December, would, among other things, 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).
The Competition Bureau announced last Friday in a news release that another seven individuals have pleaded guilty to criminal conspiracy charges in relation to the Bureau’s ongoing gasoline price-fixing investigation in Quebec.
A claim against two major real estate boards and their executives for breaching terms of an earlier settlement agreement, common law and Competition Act conspiracy and certain economic torts survived a motion to dismiss last week. The reasons for judgment provide insight into the sufficiency of pleadings in cases involving allegations of anti-competitive conspiracies against businesses and their executives.
Last Friday, Mr. Justice Kenneth L. Campbell of the Ontario Superior Court of Justice dismissed a motion by the defendants in Dale v. The Toronto Real Estate Board to dismiss Realtysellers (Ontario) Limited’s (“Realtysellers”) action against The Canadian Real Estate Board (“CREA”), The Toronto Real Estate Board (“TREB”) and 47 other defendants (for a copy of the decision see: Dale v. The Toronto Real Estate Board).
FEBRUARY 1-3, 2012 – Vancouver
The Antitrust Law Section of the American Bar Association and the International Bar Association (IBA) will be holding their bi-annual International Cartel Workshop in Vancouver from February 1-3, 2012 at the Fairmont Hotel Vancouver.
From the American Bar Association:
“The International Cartel Workshop, recognized globally as the premier international cartel program offered anywhere, is presented only once every two years. The next Workshop, which will have many new features, will be held in Vancouver, Canada during February 1-3, 2012. The 2012 program will continue the Workshop’s tradition of instruction by demonstration, with experienced faculty from around the globe taking you inside a hypothetical international cartel matter — from detection by government enforcers to the disposition of government prosecutions and private damage claims. The Workshop will also highlight new developments in the law and leniency practices around the world, with leading enforcers and experienced private practitioners demonstrating how critical decisions are made on both sides of the table and providing examples of important interactions between counsel and enforcers. The 2012 Workshop’s international faculty includes many of the most accomplished cartel attorneys in the world, as well as the most senior cartel enforcement officials from a variety of jurisdictions.”
For more information about the joint ABA/IBA Cartel Workshop see:
American Bar Association – Antitrust International Cartel Workshop
Gibson Dunn has published a very fine and detailed summary of U.S. and global criminal antitrust developments in 2011 (2011 Year-End Criminal Antitrust Update).
From Gibson Dunn:
“The Department of Justice obtained more than $1 billion in FY 2011 from criminal antitrust offenders, the second-highest amount in its history. The total payments consist of an estimated $523 million in criminal fines and more than $500 million in restitution, penalties, and disgorgement paid to state and federal agencies. This staggering amount represents an increase of more than 78% from FY 2010 and sends a clear message to the corporate world that DOJ’s zealous pursuit of large fines for collusive conduct continues unabated.
Another important measure of success for the Department of Justice, Antitrust Division also significantly advanced in FY 2011; the number of criminal cases filed increased 50% to 90 cases, which included 27 corporations and 82 individuals–each category significantly higher than in FY 2010.
Despite these achievements for the Antitrust Division, other metrics revealed significant year-over-year declines in FY 2011. Most notably, several statistics relating to incarceration of antitrust defendants reached multi-year lows: the number of individuals sentenced to prison decreased 28% to just 21 defendants, the length of the average prison sentence fell 44% to 17 months, and the total prison time imposed on defendants dropped 60% to 10,544 days. …
Given the Antitrust Division’s numerous ongoing investigations–a number of which involve large, complex, international cartel matters that have not yet been announced publicly–we expect 2012 to be another banner year in criminal antitrust enforcement. …”
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For the complete publication see:
We are pleased to provide this global competition update, with a focus on Asia Pacific, from our friends at Rajah Tann in Singapore.
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Happy New Year! Welcome to our refreshed Competition Review 2012, which presents an overview of developments in competition laws from around the world in the past few months, with a focus on ASEAN and Asia. This issue covers developments, which have occurred in the second half of 2011 that may interest you.
Each of the decisions and studies discussed below is intended to give you a flavor of the issues in the competition and anti-trust scene so that, when you review your business activities, structure new deals or make acquisitions, you have these issues at the back of your mind and provide for them. For ease of convenience we have organized our Competition Review into three sections – anti-competitive agreements, abuse of dominance and mergers.
We set out below some of the key principles that emerge from the cases discussed below:
(a) co-operating with competition authorities for a speedy resolution may help reduce penalties (see EU: European Commission (‘Commission’) Fines Producers Of CRT Glass €128 Million In Cartel Settlement);
(b) a competition authority may recommend shareholders to replace their directors or officers if they do not fully cooperate with investigations (see Indonesia: Indonesian Competition Authority KPPU Recommends President Director Be Replaced);
(c) even though a competition authority may not have powers to review mergers, it may investigate the transaction for other anti-competitive aspects (see Malaysia: Malaysia Competition Commission (‘MYCC’) To Investigate Air Asia-Malaysian Airlines (‘MAS’), Share Swap And Collaborative Agreement);
(d) exchanging information between competitors through a third party, such as software service providers, may lead to a violation of competition laws if the exchange is of sensitive information (see UK: Motor Insurers Agree To Limit Data Exchange And Provide Commitments to the Office Of Fair Trading (‘OFT’)); and
(e) not all jurisdictions, where merging parties have presence, will require merger notification. Undertakings with large presence in one jurisdiction may not have sufficiently significant presence in other jurisdictions that crosses notification triggers (see Indonesia: Microsoft’s Acquisition Of Skype Does Not Need Notification).
On January 6, 2012, the Competition Bureau announced that two companies pleaded guilty of fixing the price of polyurethane foam and were fined a total of $12.5 million (see: Competition Bureau Sends Signal to Price-Fixers with $12.5 Million Fine).
In making the announcement, 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.”
On January 4, 2012, the U.S. Federal Trade Commission (“FTC”) announced that it filed complaints against three of the largest U.S. suppliers of ductile iron pipe fittings for an alleged price-fixing cartel.
The FTC is also alleging that parties used a trade association (the Ductile Iron Fittings Research Association) to exchange information and monitor adherence to the cartel agreement.
See: FTC Action Protects Competition in Market for Iron Pipe Fittings Used in Municipal Water Systems
The past year has been a busy one for Canadian competition law.
Developments in 2011 include new cases, enforcement and legislation in most key areas including abuse of dominance (the Competition Bureau’s ongoing challenge of The Toronto Real Estate Board and CREA settlement in late 2010), criminal conspiracy (developments in price-fixing class action litigation and some Bureau enforcement), refusal to deal (several important private access section 75 cases, including a decision of the Federal Court of Appeal), contested mergers (in the waste and airline markets), price maintenance (the merchant fees case involving Visa and MasterCard) and misleading advertising (involving Bell Canada, Rogers and others).
The Competition Bureau is testing the new rules under Canada’s Competition Act, which came into force in 2009 and 2010, and private plaintiffs are creating new law in a number of ongoing competition/antitrust class actions in Canada (principally indirect purchaser price-fixing cases relating to the sale and supply of dynamic random access, or “DRAMs”, high fructose corn syrup and computer operating systems).
At the same time, several new pieces of legislation have been introduced including a federal omnibus crime bill, which will eliminate conditional sentences for some competition law offences, and sweeping new anti-spam legislation (Bill C-28 or “FISA“) that once in force will be among the strictest anti-spam regimes in the world.
The Commissioner of Competition, and other federal enforcement officials including the RCMP, have also expressed intentions to adopt tougher enforcement stances in relation to competition law and other white collar crime.
In general, these developments mean that it remains important for Canadian companies, organizations and their executives to maintain a practical awareness of Canadian competition law.
Some of the key competition law and related developments of 2011 include:
On December 7, 2011, the International Competition Network (ICN) published its updated ICN Work Product Catalogue, with interactive links to ICN reports and documents from 2008 to 2011 in the advocacy, cartel (conspiracy), mergers and unilateral conduct (monopoly / abuse of dominance) areas.
On December 5, 2011, a federal omnibus crime bill (Bill C-10) was passed that will, among other things, have the effect of eliminating conditional sentences of two years or less 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 (section 47).
To quote the Legislative Summary issued with Bill C-10, “conditional sentencing … allows for sentences of imprisonment to be served in the community, rather than in a correctional facility. It is a midway point between incarceration and sanctions such as probation or fines.”
Currently, a number of criteria must be met for a sentencing judge to impose a conditional sentence under the Criminal Code as follows: (i) the offence is not a “serious personal injury offence” (as defined in the Code), (ii) the offence is not a terrorism offence, (iii) the offence is not a criminal organization offence prosecuted by way of indictment for which the maximum term of imprisonment is 10 years or more, (iv) the offence is not punishable by a minimum term of imprisonment and (v) the sentencing judge has determined that the offence should be subject to a term of imprisonment of less than two years, is satisfied that serving the sentence in the community would not endanger the safety of the community and the conditional sentence would be consistent with the fundamental purpose and principles set out in the sentencing guidelines of the Code.
Bill C-10 amends section 742.1 of the Criminal Code to remove the current reference to serious personal injury offences and to provide that a conditional sentence of two years or less may be ordered unless, among other things, the offence is an indictable offence with a maximum term of imprisonment of 14 years or life.
The European Commission announced earlier today that it was opening formal proceedings to investigate sales of e-books. In particular, the Commission has opened a cartel investigation to determine whether several international publishers, including Hachette Livre, Harper Collins, Simon & Schuster and Penguin have engaged in anti-competitive practices with respect to the sale of e-books.
In making the announcement, the Commission said in its news release:
“The European Commission has opened formal antitrust proceedings to investigate whether international publishers Hachette Livre (Lagardère Publishing, France), Harper Collins (News Corp., USA), Simon & Schuster (CBS Corp., USA), Penguin (Pearson Group, United Kingdom) and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan, Germany) have, possibly with the help of Apple, engaged in anti-competitive practices affecting the sale of e-books in the European Economic Area (EEA), in breach of EU antitrust rules. The opening of proceedings means that the Commission will treat the case as a matter of priority. It does not prejudge the outcome of the investigation.
The Commission will in particular investigate whether these publishing groups and Apple have engaged in illegal agreements or practices that would have the object or the effect of restricting competition in the EU or in the EEA. The Commission is also examining the character and terms of the agency agreements entered into by the above named five publishers and retailers for the sale of e-books. The Commission has concerns, that these practices may breach EU antitrust rules that prohibit cartels and restrictive business practices (Article 101 of the Treaty on the Functioning of the European Union – TFEU).”
The Commissioner of Competition, Melanie Aitken, addressed current enforcement priorities in two engaging and wide-ranging talks in Vancouver this evening: a keynote speech at a reception hosted by the University of British Columbia, National Centre for Business Law at the Four Seasons and a Vancouver Competition Policy Roundtable meeting organized by Professor Tom Ross of the Sauder School of Business.
Earlier this month, the Quebec Court of Appeal unanimously overturned the earlier 2008 Quebec Superior Court decision in Option Consommateurs v. Infineon Technologies AG, which had denied a motion to commence class action proceedings.
The decision in this case, which follows U.S. proceedings and guilty pleas in relation to a price-fixing conspiracy for the supply of dynamic random access memory (“DRAM”), is significant in expressly allowing indirect class action plaintiffs to proceed despite two earlier British Columbia Court of Appeal decisions that created a de facto passing-on defence (see: British Columbia Court of Appeal Allows Microsoft Appeal in Pro-Sys v. Microsoft – Creates de facto Passing-on Defence). (for the earlier BC judgments in Pro-Sys and Sun-Rype see: Pro-Sys Consultants Ltd. v. Microsoft Corporation and Sun-Rype Products v. Archer Daniels Midland Company).
In these two earlier British Columbia decisions, the Court of Appeal set aside the plaintiffs’ earlier certification decisions largely based on the risk that allowing indirect purchaser plaintiffs to proceed may lead to double recovery. In this regard, Mr. Justice Lowry held:
“… in the absence of the passing-on defence, a defendant would be liable for both the whole of the charge passed on (liability to the direct purchasers) and for all or any portion of the charge passed on (liability to the indirect purchasers) … [that] would result in double recovery … which our law does not permit.”
On November 22, 2011, the Competition Bureau announced that criminal charges had been laid against six companies and five individuals accused of rigging bids for provincial and municipal contracts for sewer services in the Montreal area (see: Competition Bureau Exposes Sewer Services Cartel in Quebec and Backgrounder – Competition Bureau Exposes Sewer Services Cartel in Quebec).
In making the announcement, the Bureau said:
“The evidence gathered by the Bureau reveals that the companies secretly agreed to coordinate their bids to pre-determine the winners of municipal and provincial contracts for the cleaning and maintenance of sewers.
‘This bid-rigging scheme misled officials into believing that tendering processes were competitive,’ said Melanie Aitken, Commissioner of Competition. ‘In reality, those charged had submitted token bids designed to ensure that a pre-determined company would win the contracts. The scheme deliberately evaded requirements created to protect taxpayer dollars in the government procurement process.’”
On October 25, 2011, the Competition Bureau published the Commissioner of Competition’s speech given at the 2011 Canadian Bar Association’s Annual Competition Law Conference in Ottawa.
It is fair to say that the Commissioner’s recent speech presented a singular tone across the civil and criminal competition law areas: enhanced enforcement.
Of the Commissioner’s remarks, some of the more interesting points include the Bureau’s increased focus on reviewing non-notifiable mergers (i.e., transactions that do not trigger the notification thresholds under the Competition Act), the statement that the Bureau has begun to revoke markers in some immunity cases where in its view immunity applicants are not complying with its Immunity Program and a subtle suggestion that the Bureau was preparing to bring, but not quite yet in a position to commence, the first conspiracy cases under the amended section 45 (Canada’s new hard core criminal conspiracy offences). The following are some highlights from the Commissioner’s recent speech.
On July 19th, the Competition Bureau announced that a Montreal company, Les Entreprises Promécanic Ltée, has pleaded guilty to three charges of bid-rigging and was fined $425,000 for its alleged role in rigging bids in relation to residential highrise building ventilation contracts in Montreal.
According to the Bureau, the Montreal company admitted that it was involved in coordinating with competitors to pre-determine the outcome of bids. Interestingly, this case also included an internal compensation arrangement between the parties to ensure that contracts were awarded to the pre-arranged company.
In making the announcement, the Commissioner Melanie Aitken said:
“Bid-rigging deprives Canadians of the benefits of a competitive market, including lower prices and product choice. … The Competition Bureau will continue to vigorously seek prosecution against those who thwart the forces of competition.”
The Bureau also reiterated that criminal cartels and bid-rigging remain enforcement priorities, stating that “attacking cartels, including bid-rigging offences, is one of the Bureau’s top priorities.”
In Canada, bid-rigging is a criminal offence under section 47 of the federal Competition Act, under which it is an offence to enter into an agreement, in response to a call or request for bids or tenders, to not submit a bid or tender, withdraw a bid or tender already made or submit bids or tenders that are arrived at by agreement.
Like criminal conspiracy agreements under section 45 of the Act, bid-rigging is a per se criminal offence, in that it is not necessary to establish any adverse market effects (though all elements of the offence must be proven on the criminal burden of proof – i.e., beyond a reasonable doubt).
Parties violating the bid-rigging provisions of the Act are liable to unlimited fines (i.e., a fine in the discretion of the court), imprisonment for up to 14 years, or both. It is also common for the Bureau to seek prohibition orders in bid-rigging cases, as the Bureau also did in this case, to prohibit the continuation of an offence.
Private parties that have suffered loss or damage as a result of a breach of the criminal provisions of the Act, including the bid-rigging offences under section 47, may also commence private civil actions.
For the complete Bureau news release see:
Guilty Plea and $425,000 Fine for Bid-rigging in Montreal
For more information about Canadian bid-rigging law, see: Bid-Rigging and Bid-Rigging News
For recent Canadian bid-rigging cases see: Competition Bureau Charges Eight Companies and Five Individuals in Alleged Bid-Rigging Scheme and Competition Bureau Launches Criminal Investigation into Quebec Construction Industry
On June 27th, the Competition Bureau announced that would seek to block a proposed joint venture between Air Canada and United Continental which, according to the Bureau, would “monopolize ten important Canada/United States routes, and substantially reduce competition on nine additional routes.”
In making the announcement, the Bureau said:
“The proposed joint venture is effectively a merger between Air Canada and United Continental on all of their Canadian and US operations. It would allow the parties to jointly set prices, capacity and schedules. If allowed to proceed, it will result in:
a monopoly on ten transborder routes;
substantially reduced competition on an additional nine transborder routes; and
significantly higher prices.
In addition to challenging the joint venture, the Commissioner is challenging three existing “coordination agreements” between Air Canada and United Continental. These agreements allow Air Canada and United Continental to coordinate key aspects of competition including, but not limited to, joint pricing and scheduling, as well as revenue sharing. Through these existing agreements, the companies currently have the power to charge passengers inflated fares. Moreover, if these anti-competitive provisions are further implemented, with or without the joint venture, Canadians will pay even more for less choice and higher fares.”
The Bureau has now filed its application in this case (see: Competition Tribunal).
The Bureau’s application, which is only the second contested merger since 2005, has a number of interesting aspects. These include:
Parties’ press releases. The Bureau became aware of the proposed Air Canada/United JV from press releases issued by the parties. In the past, it was thought rather uncommon for the Bureau to become aware of mergers through the media (i.e., as opposed to parties notifying transactions to the Bureau under the pre-merger notification provisions of the Act). This may signal an increasing effort by the Bureau to challenge mergers discovered through media sweeps, either on the basis that they were notifiable or non-notifiable transactions that nevertheless potentially raise substantive competition issues (the Bureau has jurisdiction under the Act to challenge any “merger” as broadly defined in the Act, whether or not it is notifiable, i.e., exceeds the Act’s pre-notification thresholds).
Joint venture challenged as a merger. This case is also interesting as a challenge of a JV as a merger. While joint ventures can in theory be reviewed under four provisions of the Act (as a criminal conspiracy, under the civil agreements provision, as a merger or under the abuse of dominance provisions), challenges of JVs in Canada on merger grounds are relatively rare. Having said that, the definition of “merger” under the Act is very broad, encompassing not only conventional asset and share acquisitions, but also the acquisition of a “significant interest” in a business. While the Bureau has taken the position in its Merger Enforcement Guidelines (MEGs) that acquiring a “significant interest” could include where an acquirer obtained an “ability to materially influence the economic behavior of the business” (such as through control of pricing, purchasing, distribution and marketing decisions), what JVs might in reality be considered a merger has generally been more the subject of speculation than certainty for merging parties and their counsel. In this regard, the Bureau takes the position in its recently filed Application that the proposed merger will, if allowed to proceed, lead to the parties “acquiring or establishing … a significant interest” in each other’s operations, and in particular the ability to make decisions on “all aspects of competitive behavior” that would be “indistinguishable … from common ownership.” As such, if this application proceeds, it may shed needed light on what types of de facto acquisitions may trigger the merger provisions of the Act.
First challenge under section 90.1 (civil agreements provision). The case is also the first challenge by the Bureau under the civil agreements provision (section 90.1) of the Act, which came into force in March, 2010 as part of Canada’s new two-track conspiracy regime. Under section 90.1, the Bureau may make applications to the Competition Tribunal for Tribunal orders where an agreement between actual or potential competitors prevents or lessens competition substantially in one or more markets (or is likely to do so). While it is generally thought that this new civil provision has many parallels to the existing merger provisions of the Act, including the required competitive effects test, evaluative factors for market impacts and an efficiencies defence, this will be the first case to potentially test the meaning and boundaries of this new section. If the case proceeds before the Tribunal, it may clarify key elements of section 90.1 including the meaning of “agreement” and “competitors”, the evaluation of the required competitive effects test and how, if at all, a review under section 90.1 differs in substance from merger review under the merger provisions of the Act.
Attempt to block the transaction. Finally, the case is somewhat noteworthy in that the Bureau is seeking to block the Air Canada/United JV altogether. In Canada, unlike some other jurisdictions, it is relatively unusual for regulators to seek to block a transaction altogether, rather than to negotiate a remedy.
For the Bureau’s news release see:
Competition Bureau Seeks to Block Joint Venture between Air Canada and United Continental
For the Bureau’s Backgrounder see:
For the Bureau’s Tribunal Application see:
For more about merger control in Canada see:
For more about Canada’s new two-track conspiracy regime see:
The Competition Bureau announced that would seek to block a proposed joint venture between Air Canada and United Continental which, according to the Bureau, would “monopolize ten important Canada/United States routes, and substantially reduce competition on nine additional routes.”
In making the announcement, the Bureau said:
“The proposed joint venture is effectively a merger between Air Canada and United Continental on all of their Canadian and US operations. It would allow the parties to jointly set prices, capacity and schedules. If allowed to proceed, it will result in:
a monopoly on ten transborder routes;
substantially reduced competition on an additional nine transborder routes; and
significantly higher prices.
In addition to challenging the joint venture, the Commissioner is challenging three existing “coordination agreements” between Air Canada and United Continental. These agreements allow Air Canada and United Continental to coordinate key aspects of competition including, but not limited to, joint pricing and scheduling, as well as revenue sharing. Through these existing agreements, the companies currently have the power to charge passengers inflated fares. Moreover, if these anti-competitive provisions are further implemented, with or without the joint venture, Canadians will pay even more for less choice and higher fares.”
According to the Bureau, it became aware of the proposed Air Canada/United joint venture after the parties issued a press release.
Joint ventures can be reviewed under at least four provisions of the Competition Act: as a criminal conspiracy, under the civil agreements provision, as a merger or under the abuse of dominance provisions, which also contemplates joint dominance.
In this case, the Bureau is challenging the proposed JV under the merger provisions of the Act, which allow the federal Competition Tribunal to issue orders including blocking proposed mergers or ordering the dissolution of assets or shares in the case of a completed merger.
The Bureau is also challenging three existing “coordination agreements” between the parties under the newly enacted civil agreements provision – section 90.1 – which is the Bureau’s first challenge to an allegedly anti-competitive agreement under this provision, which came into force in 2010 as part of sweeping amendments to the Competition Act.
Under the merger provisions of the Act, the Tribunal can issue orders, including blocking proposed mergers (or ordering the dissolution of assets or shares in the case of a completed merger) where a merger is found to prevent or lessen competition substantially. Under the new civil agreements provisions – section 90.1 – the Tribunal has the power to make “remedial orders” (i.e., for conduct to stop) where an agreement between actual or potential competitors prevents or lessens competition substantially.
It is, however, relatively unusual for a proposed agreement to be independently challenged by the Bureau outside of the context of parties seeking merger clearance or an advisory opinion for proposed business conduct. Possibly the parties concluded that the proposed JV was not notifiable under the merger provisions of the Act or there was a failure to adequately review whether the proposed JV may have required merger notification.
Another interesting aspect of this case is that the Bureau alleges that the proposed joint venture was intended to circumvent foreign ownership restrictions governing Canadian airlines, by allowing the parties to in essence merge though the joint venture.
With respect to market share and concentration issues, the Bureau’s concerns appear to primarily be based on increased “post-merger” market shares on specific city pair routes of between 34% and 100% (market shares typically being calculated in airline markets based on city pair routes).
Also interesting is the fact that while the Commissioner has the power to apply to the Tribunal for remedial orders, contested merger proceedings are relatively rare in Canada with the majority of issues typically resolved by way of negotiated settlement (i.e., consent agreements for the divestiture of assets and to a lesser extent the adoption of behavioural remedies).
For example, the Bureau’s recent challenge of CCS Corporation’s proposed acquisition of Complete Environmental, owner of the proposed Babkirk Landfill in Northern British Columbia, was the Bureau’s first merger challenge since 2005.
For the complete news release see:
Competition Bureau Seeks to Block Joint Venture between Air Canada and United Continental
For the Bureau’s Backgrounder see:
For the Bureau’s Competition Tribunal Application see:
For more about merger control in Canada see:
For more about Canada’s new two-track conspiracy regime see:
According to the United States Department of Justice (Antitrust Division), a former executive of an Illinois refuse disposal container company has been sentenced to 16 months in prison in relation to a city of Chicago bid-rigging case (see: Former Executive of Illinois Refuse Container Repair Company Sentenced to Serve 16 Months in Prison for Conspiring to Defraud the City of Chicago).
In making the announcement, the DoJ said:
“According to the indictment, Fenzl, Ritter and their co-conspirator conspired to deceive city of Chicago officials about the number of legitimate, competitive bids submitted for the contract. Specifically, Fenzl and his co-conspirators fraudulently induced other companies to submit bids for the contract at prices determined by Fenzl and his co-conspirators and greater than the price for which Fenzl’s company had submitted a bid. The department said that included in these bids were fraudulent documents indicating that, if awarded the contract, the bidder would enter into subcontracts to purchase goods or services for a specified percentage of the contract from a minority-owned business and a women-owned business, as required by the city of Chicago. According to the indictment, Fenzl and his co-conspirators also fraudulently certified to the city on Fenzl’s company’s bid that it had not entered an agreement with any other bidder relating to the price named in any other bid submitted to the city for the contract.”
This case is interesting as an example of “cover” or “courtesy” bidding, in which some bidders submit bids that are too high to be accepted (or with terms that are unacceptable to the party calling for tenders to protect an agreed upon low bidder).
Other common forms of bid-rigging that have been prosecuted in the past, both in the U.S. and Canada, include:
Bid suppression – one or more bidders that would otherwise bid agree to refrain from bidding or agree to withdraw a previously made bid.
Bid rotation – all bidders submit bids but take turns being the low bidder according to a systematic or rotating formula.
Market division – suppliers agree not to compete in designated geographic areas or for specified customers.
Subcontracting – some bidders that agree not to submit a bid or submit a losing bid are awarded subcontracts or supply agreements from the successful low bidder.
In Canada, bid-rigging is a criminal offence under section 47 of the federal Competition Act, under which it is an offence to enter into an agreement, in response to a call or request for bids or tenders, to: (i) not submit a bid or tender, (ii) withdraw a bid or tender already made or (iii) submit bids or tenders that are arrived at by agreement.
Like criminal conspiracy agreements under section 45 of the Act, bid rigging is a per se criminal offence, in that it is not necessary to establish any adverse market effects (though all elements of the offence must be proven on the criminal burden of proof – i.e., beyond a reasonable doubt).
Parties contravening the bid-rigging provisions of the Act are liable to unlimited fines (i.e., a fine in the discretion of the court), imprisonment for up to 14 years, or both. It is also common for the Bureau to seek prohibition orders in bid-rigging cases to prohibit the continuation of an offence. Private parties that have suffered loss or damage as a result of a breach of the criminal provisions of the Act, including the bid-rigging offences under section 47 of the Act, may also commence private actions.
For more information about Canadian bid-rigging law, see: Bid-Rigging and Bid-Rigging News. For recent Canadian bid-rigging cases see: Competition Bureau Charges Eight Companies and Five Individuals in Alleged Bid-Rigging Scheme and Competition Bureau Launches Criminal Investigation into Quebec Construction Industry.
On June 9, 2011 the European Commission announced that it had commenced an investigation into an alleged cartel in the seatbelts, airbags and steering wheels manufacturing sector with dawn raids (unannounced inspections) of manufacturers’ premises.
In making the announcement, the Commission stated:
“The European Commission can confirm that, starting on 7 June 2011, Commission officials carried out unannounced inspections at the premises of companies that supply car seatbelts, airbags and steering wheels, known in the industry as automotive occupant safety systems. The Commission has reason to believe that the companies concerned may have violated EU antitrust rules that prohibit cartels and restrictive business practices (Article 101 of the Treaty on the Functioning of the European Union).
Automotive occupant safety systems cover safety products such as seatbelts, airbags and steering wheels that are supplied to car manufacturers.
The Commission officials were accompanied by their counterparts from the relevant national competition authority.
Unannounced inspections are a preliminary step into suspected anticompetitive practices. The fact that the Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behaviour nor does it prejudge the outcome of the investigation itself. The Commission respects the rights of defence, in particular the right of companies to be heard in the Commission’s proceedings against them.”
The Commission has not yet identified the targets of its investigation. For the complete European Commission news release see:
Like the European Commission, the Competition Bureau has a wide range of enforcement powers available to it to investigate potential violations of competition law under the Competition Act, including the power to obtain search warrants, document production orders, orders compelling testimony under oath and wiretaps. The Bureau is increasingly resorting to these powers, particularly in relation to its enforcement priorities that include the detection and investigation of criminal cartels and deceptive and fraudulent marketing.
The Competition Act also contains obstruction provisions, which make it a criminal offence to impede or prevent (or attempt to impede or prevent) inquiries or examinations under the Act (see for example: Morgan Companies Fined $1 Million for Obstruction and Price-fixing).
As such, it is prudent for companies and organizations that may realistically face the prospect of a competition law investigation or search at some point – for example, companies engaged in higher risk industries and activities including construction, oil and gas and trade associations – are well advised to adopt basic search and seizure guidelines to reduce the likelihood of breaching Canadian competition law in the event of a search.
These commonly include guidelines dealing with how to deal with Bureau officials during a search, advising company/organization personnel, the control of information and PR, inspecting the search warrant and reducing the risk of breaching the obstruction provisions of the Act which can lead to significant additional liability (such as by breaching sealed boxes or rooms or impeding Bureau officers during a search).
For more information about the Competition Bureau’s enforcement powers see: Competition Bureau Enforcement.
On June 10, 2011, the Competition Bureau announced that two more individuals have pleaded guilty in the ongoing Quebec gasoline price-fixing case to fix the price of gasoline at the pump in Thetford Mines, Quebec.
In making the announcement, the Bureau said:
“The two individuals, Claude Bédard and Stéphane Grant, former Irving employees, were sentenced to personally pay fines of $15,000 and $10,000, respectively. Messrs. Bédard and Grant were both area sales managers for ‘Les Pétroles Irving Inc.’ responsible for the Thetford Mines market.”
In this case, which was one of the largest criminal cases in the Bureau’s history, charges were laid against 38 individuals and 14 companies accused of fixing the price of gasoline at the pumps at several locations in Quebec. According to the Bureau, to date 6 companies and 13 individuals have pleaded guilty in the case.
The case is also somewhat noteworthy in that six individuals have been sentenced to total imprisonment of 54 months (served in the community). While the penalties for contravening the criminal conspiracy provisions of the Competition Act include imprisonment for up to fourteen years, prison sentences for individuals have been, at least to date, relatively rare in Canada with liability in many cases being negotiated down to corporate liability and fines.
For the Bureau’s news release see:
Two Individuals Plead Guilty in Quebec Gasoline Price-Fixing Cartel
For more on the gasoline sector see:
Further Guilty Plea in Quebec Gasoline Price-fixing Cartel
Gouging, Gasoline and a New Parliamentary Committee to Grill Producers
Criminal Charges Against 25 Individuals and 3 Companies in Quebec Gas Price-fixing Case
Criminal Charges Laid by Competition Bureau in Gas Price-fixing Case
On June 9, 2011, the European Commission released updated statistics on cartels for 2007-2011, including statistics on fines imposed, highest fines imposed per case and firm and data regarding cartel enforcement in Europe. Some of the highlights of the Commission’s report include:
- € 315 million imposed in fines in 2011 (a significant decrease from € 2.86 billion imposed in fines in 2010).
- € 10.39 billion imposed in fines between 2007 and 2011.
- € 17.2 billion imposed in fines between 1990 and 2011.
- Top ten per case fines including € 1.38 billion imposed in the car glass cartel in 2008 (the highest fines imposed per case since 1969). Other record fines in the past ten years include: € 1.1 billion (gas, 2009), € 992 million (elevators and escalators, 2007), € 799 million (air freight, 2010), € 790 million (vitamins, 2001) and € 744 million (gas insulated switchgear, 2007).
- Top ten per firm fines including € 896 million imposed against Saint Gobain (car glass, 2008), € 553 million imposed against E.ON (gas, 2009), € 553 million imposed against GDF Suez (gas, 2009), € 479 million imposed against ThyssenKrupp (elevators and escalators, 2007) and € 462 million imposed against F. Hoffmann-La Roche AG (vitamins, 2001).
- 194 cartel decisions in 29 cartel cases between 2007 and 2011.
- About 35% of firms fined between 5% and 10% of their global turnover.
For the complete report see: European Union Cartel Statistics.
New Publications
The Competition Law Guide for Trade Associations in Canada
We are pleased to announce the forthcoming publication by Carswell this fall of The Competition Law Guide for Trade Associations in Canada jointly authored by Steve Szentesi and Mark Katz.
The Guide, the first book of its kind in Canada, will be a practical and concise summary of Canadian competition law as it applies to trade, professional and other associations. It will include an overview of the major areas of Canadian competition law that apply to associations, including the conspiracy (criminal and civil), bid-rigging, abuse of dominance and misleading advertising provisions of the federal Competition Act. The Guide will also include discussions of some of the specific types of association activities that can raise competition law concerns including membership criteria and discipline, codes of conduct and standard setting, meetings and information exchanges and joint association activities (e.g., joint negotiation and marketing, joint purchasing activities and lobbying and advocacy). A compendium of “best practices” (i.e., do’s and don’ts) will also be provided together with sample guidelines for the conduct of association meetings, document creation and responding to government investigations (principally search and seizures). Basic sample association compliance presentations for associations will also be included.
The Guide is intended to provide a practical resource for trade and professional association executives, their personnel and counsel to better understand Canadian competition law as it applies to association activities and to assist them in anticipating and reducing potential competition law liability.
For more information about this forthcoming book see Carswell’s product catalogue:
The Competition Law Guide for Trade Associations in Canada
A Carswell webinar in conjunction with West is also available online discussing key highlights from the new book. For more information see:
West LegalEdcenter – A Guide to Canadian Competition Law for Trade and other Associations
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Other Publications
The following are other publications and media appearances by Steve Szentesi:
Interviewed – dealReporter – Maple/TMX merger (2011)
PowerPoint, Carswell/West online webinar, A Guide to Canadian Competition Law for Trade and other Associations (November, 2011)
Academic peer review for a competition law paper, McGill Law Journal
Contribution, British Columbia Real Estate Association, Legal Update, “Canada’s Proposed Federal Anti-Spam Legislation” (2011)
Chapter, British Columbia Real Estate Association, Legal Update 2012, “Canadian Competition Law – The New Competition Act – The First Two Years in Force” (forthcoming, Spring, 2012)
Business News Network (BNN) – Maple/TMX merger: BNN Interview (2011)
Quoted – Globe and Mail Report on Business: Competition Watchdog presents high hurdles for Maple (2011)
Quoted – Globe and Mail Report on Business: “Aitken an ‘aggressive no nonsense Commissioner’” (2011)
Quoted – Globe and Mail Report on Business: High hurdles face Maple bid from Competition watchdog (2011)
Quoted – CTV News – “Competition watchdog presents high hurdles for Maple” (2011)
“Competition Bureau Steps Up Criminal Price-Fixing Investigations in Canada”, with Christine Duhaime, Business in Vancouver (BIV) (2011)
“Canada’s New Competition Law: The First Year in Force – How Does It Impact Canadian Professionals?”, with Christine Duhaime (2011)
Competition Law and REALTORS: What You Say and Do Matters, competition law compliance book for the Alliance for Canadian Real Estate Education (ACRE) and The Canadian Real Estate Association (2010)
“The CREA Abuse of Dominance Case: Competition Bureau Challenges Organized Real Estate in Canada”, Competition Policy International, Antitrust Chronicle (2010): The CREA Abuse of Dominance Case
“New Competition Rules for Trade Associations”, The Lawyers Weekly (2010)
Competition Law and Trade Associations, available to trade association clients (2010)
“Canada’s New Competition Law”, REM Magazine (2010)
“Trade associations face tough new competition rules”, The Lawyers Weekly (2010)
“Canada’s New Cartel Law in Force”, CUTS International ReguLetter (2010)
Contributor, Competition and Foreign Investment Law in Canada, British Columbia Continuing Legal Education Society course materials (2010)
“Canada’s New Criminal Conspiracy Law: U.S.-style Two-Track Regime, Hard Core Offences & Fines up to $25 Million”, CLE BC Continuing Legal Education Society of BC Seminar (2010)
Quoted – Fox Business (2010)
Quoted – MSN (2010)
Quoted – Reuters (2010) – China Tells State Companies to Explore Potash Bid
Quoted – Reuters (2010) – Analysis: China Posturing on Potash Sector Deals
Quoted – BusinessDay (2010) – China Anxious to Block Potash Deal
Quoted – “CREA Seeks Settlement Over MLS Policies”, REM Magazine (2009)
“Why India Needs Merger Control Now”, contribution to submission to the Indian government (Derek Ireland author) (2009)
“Competition Law & Trade Associations”, Boardwalk newsletter, Associations Plus (2009)
“Convergence and Canada’s New Merger Control”, presented at joint WCCG & International Academy of Law, International Conference on Competition Law, Delhi, India (2009)
“Canada’s New Competition Law”, presentation, CBA Business Law Subsection, luncheon, Vancouver, Sutton Place Hotel (2009)
Quoted – Globe and Mail Report on Business: Telus sues Rogers over ad claims (November 18, 2009)
“China’s Anti-monopoly Law From a Canadian Perspective”, Lexology, with James Musgrove (2007)
“Self-regulated professions under Competition Bureau spotlight”, with Sandra Knowler, Association of Corporate Counsel (ACC) (2007)
“Is That Really on Sale? – Traps for Unwary Advertisers”, Retail Connections (2007)
“Competition Bureau Issues Final Merger Remedies Bulletin”, with Francois Tougas, CCH, Commercial Times Newsletter (2007)
“Competition Bureau Appeals Tribunal Decision Allowing Labatt/Lakeport Beer Merger”, with Karl Gustafson, Business in Vancouver (BIV) (2007)
“Bureau Appeals Tribunal Decision Allowing Labatt/Lakeport Merger”, Business in Vancouver (2007)
“A Canadian View of China’s Anti-monopoly Law”, ABA, International Antitrust Bulletin (2007)
“’M’ is for Merger: A Year in Review for Merger Clearance Developments in Canada”, Commercial Times Newsletter (2007)
“Hong Kong Poised to Introduce Cross Sector Competition Law”, with James Musgrove (2007)
“Hong Kong Poised to Introduce Cross-Sector Competition Law”, ABA International Antitrust Bulletin (2007)
“No Deal for B-Filer”, with James Musgrove, Lang Michener Competition & Antitrust Brief (2007)
“Reviewing Merger Clearance Developments in Canada”, Lang Michener, In Brief (2007)
“Competition Bureau Puts Self-Regulated Professions Under the Gun”, Lawyers Weekly (2007)
“Canadian Competition Law & IP”, presentation for Chinese aviation trade delegation (2007)
“Canadian Merger Clearance Developments: Considerations in Cross-Border Deals”, Association for Corporate Growth (ACG), Mergers & Acquisitions: The Dealmaker’s Journal (2007)
“‘M’ is for merger: a year in review for merger clearance”, with Francois Tougas, Association of Corporate Counsel (ACC) (2007)
“Competition Bureau Issues Outline Consent Agreement”, Lang Michener publication (2007)
“Competition Bureau Continues to Investigate Self-regulated Professions”, Federated Press (2007)
“Self-Regulated Professions Under Bureau Spotlight”, Lang Michener publication (2007)
The Competition Act and You, Real Estate Board of Greater Vancouver publication (2007)
“Loyalty Programs: the Latest From Canada”, with James Musgrove, American Bar Association (ABA) Tele-seminar (2007)
“Competition Bureau Targets Self-Regulated Professions”, Lang Michener publication (2006)
“Loyalty Programs and Abuse of Dominance: Canada Pipe”, with James Musgrove, Continuing Legal Education Society of British Columbia, CLE Seminar (2006)
“U.S. Supreme Court Antitrust Cases Impact Canadian Business”, Lang Michener publication (2006)
“Developments in the Law of Price Maintenance, Refusal to Deal, and Predatory Pricing”, with James Musgrove and Janine MacNeil, for the Continuing Legal Education Society of British Columbia, CLE (2006)
“Competition Bureau / Korean FTC Cooperation Agreement”, Lang Michener publication (2006)
“Merger Remedies in Canada: Recent Developments”, Lang Michener publication (2006)
“Good Marketing or Misleading Advertising?: Competition Bureau Steps-up Enforcement”, Lang Michener (2006)
“Grafton Fraser Agrees to Pay $1.2 Million Penalty to Settle Misleading Advertising Case”, Lang Michener publication (2006)
Canadian Competition Law and Policy, Casebook, UBC Faculty of Law (2006, 2007)
“$1.8 Million Settlement in U.S. Gun-Jumping Case: Reviewing Pre-Merger Coordination”, Lang Michener publication (2006)
“Is That Really on Sale?: Traps for Unwary Advertisers”, Business in Vancouver (BIV) (2006)
“The ‘C’ Files – Top 10 Competition Questions of 2004”, Presentation for CREA Leadership Day (2005)
CREA Misleading Advertising Guide, The Canadian Real Estate Association (2005)
Competition Law Overview for Leadership, Canadian Real Estate Association publication (2005)
Competition Law Compliance Workbook, The Canadian Real Estate Association publication (2005)
“Co-operation and Competition: Being Ready for the Competition Bureau from an Association Perspective”, Canadian Bar Association, Annual Fall Conference on Competition Law (2004)
Contributor, Competition Law of Canada, Goldberg & Bodrug, eds. (2004)
“Reform of the Tribunal’s Procedure: Implications for Due Process”, Canadian Corporate Counsel Association, National Spring Conference, Competition Law: Face the Challenges for 2003, with George Addy and James Doris (2003)
“Proposed Public Interest Review for Transportation Mergers”, with John Bodrug
“Enforcing the Unenforceable: Constitutional Challenges to Canada’s Foreign Extraterritorial Measures Act”, with Milos Barutciski (2002)
“Litigating Abuse of Dominance Cases After Bill C-23”, with Kent Thomson, Competition Issues in Difficult Times, Anti-Competitive Behaviour and Enforcement in Soft Market, November, 2002, Sheraton Centre, Toronto (2002)
“ICPAC and the Road Not Taken”, with Brian Facey, Canadian Bar Association, Annual Fall Conference (2001)
The Competition Bureau has announced that a further individual has pleaded guilty and has been fined in the Quebec gas price-fixing cartel. In making the announcement, the Bureau said that Micheline Lapointe-Cabana, owner of a service station in Magog, Quebec operated under the Petro-Canada banner, was sentenced to personally pay a fine of $20,000.
In this case, which was one of the largest criminal cases in the Bureau’s history, charges were laid against thirty-eight individuals and fourteen companies accused of fixing the price of gasoline at the pumps at several locations in Quebec. According to the Bureau, to date six companies and eleven individuals have pleaded guilty in the case.
The case is also somewhat noteworthy in that six individuals have been sentenced to total imprisonment of 54 months (served in the community). While the penalties for contravening the criminal conspiracy provisions of the Competition Act include imprisonment for up to fourteen years, prison sentences have been, at least to date, relatively rare in Canada with liability in many cases being negotiated down to corporate liability and fines.
For the Bureau’s news release see:
Individual Fined in Quebec Gasoline Price-Fixing Cartel
For more on the gasoline sector see:
Gouging, Gasoline and a New Parliamentary Committee to Grill Producers
Criminal Charges Against 25 Individuals and 3 Companies in Quebec Gas Price-fixing Case
Criminal Charges Laid by Competition Bureau in Gas Price-fixing Case
On May 24th, the European Commission announced that it had fined Suez Environment and Lyonnaise des Eaux €8 million for breaching a seal during a regulatory inspection.
In making the announcement, the Commission stated:
“Joaquín Almunia, Vice President of the Commission in charge of competition policy, said: ‘Inspections are a key tool in the fight against cartels as companies rarely voluntarily hand over evidence of anti-competitive practices. Even when a company does give evidence in return for immunity, the Commission must still prove the participation of others, the practices themselves and their duration. It is therefore important that companies do not break seals, which may be necessary when there is more than one office to inspect or a day is not enough.’
From 13 to 16 April 2010 the Commission conducted an inspection at the premises of water management companies in France, including LDE, over suspicions of anti-competitive behaviour (see MEMO/10/134). Coming back the morning of the second day, the Commission officials found that a seal had been broken at LDE’s headquarters. The Commission immediately started an investigation (see IP/10/691). LDE and Suez Environnement admitted that an LDE employee breached the seal, arguing an unintentional act
Breaches of seals are a serious infringement of competition law. The Commission however took into account the immediate and constructive cooperation of Suez Environnement and LDE, which provided more information than was its obligation, when setting the fine.
The investigation into suspected anticompetitive practices in the water and waste water markets is still on-going (see MEMO/10/134).”
Like the European Commission, the Competition Bureau has a wide range of enforcement powers available to it to investigate potential violations of competition law under the Competition Act. These include the power to obtain search warrants, document production orders, orders compelling testimony under oath and wiretaps. The Bureau is increasingly resorting to these powers, particularly in relation to its enforcement priorities that include the detection and investigation of criminal cartels and deceptive and fraudulent marketing.
The Competition Act also contains obstruction provisions, which make it a criminal offence to impede or prevent (or attempt to impede or prevent) inquiries or examinations under the Act[1] (see for example: Morgan Companies Fined $1 Million for Obstruction and Price-fixing).
As such, companies and organizations that may realistically face the prospect of a competition law investigation or search at some point – for example, companies in higher risk industries including construction, oil and gas, trade associations, etc – are well advised to adopt basic search and seizure guidelines to reduce the likelihood of breaching Canadian competition law in the event of a search.
These commonly include guidelines dealing with how to deal with Bureau officials during a search, advising company/organization personnel, the control of information and PR, inspecting the search warrant and reducing the risk of breaching the obstruction provisions of the Act which can lead to additional liability (such as by breaching sealed boxes or rooms or impeding Bureau officers during a search).
For the full news release see: Commission Fines Suez Environnement and Lyonnaise des Eaux €8 Million for the Breach of a Seal During an Inspection.
For more information about the Competition Bureau’s enforcement powers see: Competition Bureau Enforcement.
[1] Obstruction of an inquiry or examination is a criminal offence under the Act, with potential penalties, on summary conviction, of a fine up to $100,000, imprisonment for up to 2 years, or both and, on indictment, an unlimited fine (i.e., in the discretion of the court), imprisonment for up to 10 years, or both (Act, subsections 64(1), (2)). Failure to comply with sections 11 (section 11 orders) or 15 (search warrants) are also criminal offences, with potential penalties, on summary conviction, of a fine up to 100,000, imprisonment for up to 2 years, or both and, on indictment, an unlimited fine (i.e., in the discretion of the court), imprisonment for up to 2 years, or both (Act, subsections 65(1), (2)). In addition, destruction or alteration of records that are sought by the Bureau under section 11 (section 11 orders) or 15 (search warrants) is punishable, on summary conviction, by fines up to 100,000, imprisonment for up to 2 years, or both and, on indictment, by unlimited fines (i.e., in the discretion of the court), imprisonment up to 10 years, or both (Act, subsection 65(3)). The Act also provides that corporate officers, directors or agents may be liable independently of whether a company is prosecuted for a failure to comply (Act, subsection 64(4)).
The U.S. Department of Justice announced that an Iowa ready-mix concrete company has plead guilty to participating in price-fixing and bid-rigging conspiracies in relation to the sale of ready-mix concrete (see: Iowa Ready-mix Concrete Company Pleads Guilty to Participating in Price-fixing and Bid-rigging Conspiracies).
In making the announcement, the U.S. DoJ stated:
“According to a three-count felony charge filed on May 18, 2011, in U.S. District Court in Sioux City, Iowa, GCC Alliance Concrete Inc., a producer of ready-mix concrete headquartered in Orange City, Iowa, participated in separate conspiracies with three different companies involving agreements to fix prices and/or to rig bids for ready-mix concrete sold to various companies in the northern district of Iowa and elsewhere. The department said that the conspiracies took place during various time periods starting as early as January 2006 to as late as August 2009. Under the terms of the plea agreement, GCC Alliance Concrete has agreed to pay a criminal fine, as determined by the court.
Ready-mix concrete is a product comprised of cement, aggregate (sand and gravel), water and other additives. The concrete generally is produced in a concrete plant and is transported by concrete-mixer trucks to work sites, where it is used in various types of construction projects, including buildings and roads.
According to court documents, GCC Alliance Concrete participated in conspiracies through its former sales manager, Steven VandeBrake, in which he engaged in discussions concerning project bids for sales of ready-mix concrete, submitted rigged bids at collusive and noncompetitive prices to customers in Iowa and elsewhere and accepted payment for sales of ready-mix concrete at predetermined prices. VandeBrake also engaged in discussions and reached agreements regarding the prices on the conspirators’ annual price lists for ready-mix concrete sold in Iowa on behalf of GCC Alliance Concrete, the department said.”
Like the United States, in Canada conspiracies (agreements between actual or potential competitors to fix prices, divide markets or restrict output) and bid-rigging (including agreements not to bid or submit bids based on agreement) are criminal offences subject to potential significant penalties including imprisonment for up to 14 years, fines up to $25 million, or both (per count).
Also like other major jurisdictions, many criminal conspiracies have been formed in Canada historically in industries in which it is difficult to compete other than on price – for example, cement, steel and other homogenous products (e.g., chemical inputs).
Unlike the U.S., however, of which this case is a sober reminder, it is relatively rare for Canadian accused to be sentenced to imprisonment, although this has been gradually been changing, particularly in relation to contraventions of the deceptive marketing provisions of the Competition Act (i.e., in relation to fraudulent marketing activities).
For more information about Canada’s conspiracy and bid-rigging laws see: Conspiracy (Cartels), Conspiracy FAQs, Bid-rigging and Bid-rigging News.
OUR BOOKS
The Competition Law Guide for Trade Associations in Canada is a practical and concise summary of Canadian competition law as it applies to trade, professional and other associations.
OUR COURSES
Competition Law and REALTORS®: What You Say and Do Matters was designed by ACRE with the assistance of CREA to help Canadian REALTORS® understand and comply with Canadian competition law.
This course is available
to members of Canadian
real estate boards.
For more information see ACRE