October 28, 2010
The Competition Bureau announced today that Cargolux Airlines International S.A. had plead guilty in Federal Court and was fined $2.5 million for its participation in an air-cargo price-fixing cartel impacting Canada.
In making its announcement, the third cartel enforcement announcement in as many days (see also: Competition Bureau Launches Investigation into Quebec Construction Industry and Embraco North America Inc. Pleads Guilty to Price-fixing Conspiracy), the Bureau said:
“Cargolux admitted that it engaged in a conspiracy to fix air cargo fuel surcharges for international air cargo transportation services from Canada between April 2002 and February 2006.
“Price-fixing is a serious crime that denies the benefits of competition and artificially increases the prices we pay for goods and services,” said Melanie Aitken, Commissioner of Competition. “The Bureau will not hesitate to take action against conspirators when it uncovers evidence that the law has been broken.”
Cargolux’s penalty brings the total fines in the Bureau’s air cargo investigation to more than $17 million. In 2009, Air France, KLM, Martinair, Qantas, and British Airways each pleaded guilty to fixing air cargo surcharges for shipments on certain routes from Canada. The Bureau’s investigation into the alleged conduct of other air cargo carriers continues.
The Bureau’s investigation has benefited from the cooperation of certain air cargo carriers through the Bureau’s Leniency Program. This program creates incentives for parties to address their criminal liability by co-operating with the Bureau in its ongoing investigation of other alleged cartel participants.”
As a result of sweeping amendments to the Competition Act in March 2009 and March 2010, Canada’s conspiracy laws have been significantly amended making it both easier to prosecute criminal conspiracies (i.e., price-fixing, market allocation and supply restriction agreements between competitors) and more than doubling the previous penalties. Maximum penalties for contravention of the criminal conspiracy provisions of the Competition Act are now fines of up to $25 million, imprisonment for up to 14 years, or both.
It will remain to be seen, however, how Canadian courts interpret the new U.S.-style conspiracy rules in Canada, given that the former conspiracy offences were shaped by over a hundred years of case law and the fact that, unlike in the U.S., contested competition law cases are far more uncommon in Canada.
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