Archive for the 'Competition Bureau' Category
November 24, 2012
Competition/antitrust law penalties in Canada, of course, do not compare to the magnitude of those in the EU or U.S. (where fines can reach hundreds of millions of dollars or Euros).
Having said that, given that 2012 is drawing to a close, I was curious what the fines in Canada have been over the past year. In this regard, though not exhaustive, the following is a brief tiptoe through the cartel, bid-rigging and misleading advertising fine landscape in the last year in Canada:
$12.5 million – Two companies sentenced in relation to a price-fixing cartel for polyurethane foam (January, 2012) (see: here).
$9 million – Five companies and three individuals held to have violated the misleading advertising provisions of the Competition Act (March 2, 2012) (see: here).
$5.5 million – An airline sentenced in relation to an international air cargo price-fixing cartel (July 19, 2012) (see: here).
$2 million – Three companies sentenced in relation to a gas price-fixing conspiracy in Kingston and Brockville, Ontario (March, 2012) (see: here).
$1.5 million – A company sentenced in relation to a price-fixing conspiracy in the aftermarket automotive lights market; part of the ongoing global auto parts cartel investigation (May, 2012) (see: here).
$500,000 – A company sentenced in relation to a gas price-fixing conspiracy in Belleville, Ontario (April 13, 2012) (see: here).
$125,000 – A company sentenced in relation to a bid-rigging cartel for federal government contracts (July 30, 2012) (see: here).
November 20, 2012
Earlier today, the Canadian Department of Justice announced that the final provisions of its omnibus crime bill, the Federal Safe Streets and Communities Act, eliminating conditional sentences for some serious crimes have come into force. In making the announcement, Canada’s Federal Attorney General said:
“’Our Government has a strong record of putting victims first, getting tough on serious and violent offenders, and keeping our streets and communities safe’ … ‘House arrest should not be available for offenders of serious crimes like sexual assault, kidnapping, and human trafficking. Those who commit these violent crimes must serve their time behind bars, not in the comfort of their homes and that is exactly the issue this legislation corrects.’”
On March 13, 2012, amendments to section 742.1 of the Criminal Code (the “Code”), which were part of the Federal Government’s omnibus crime bill (Bill C-10), received Royal Assent. The changes also restrict the availability of conditional sentences for some Competition Act offences.
In particular, where a person is convicted of an offence and a court imposes a sentence of less than two years, the court may impose a conditional sentence (i.e., served in the community), except in certain circumstances. These now include where an offence is an indictable offence with a maximum term of imprisonment of 14 years or life, which includes sections 45 and 47 of the Competition Act (conspiracy agreements and bid-rigging), as well as manslaughter, aggravated assault, arson and fraud over $5,000.
Other offences for which conditional sentences will not be available also include the following offences when prosecuted by indictment: prison breach, criminal harassment, sexual assault, kidnapping, human trafficking, theft over $5,000 and motor vehicle theft.
November 18, 2012
On Friday, the Ottawa Citizen reported that Public Works has toughened its integrity rules, with the result that CRG Consulting (which pleaded guilty to criminal bid-rigging in July) has been banned from bidding on future Public Works contracts. According to Public Works it “… will not enter into a contract or real property transaction, or accept bids from companies convicted of listed offences (such as bid-rigging) unless they have received a pardon.”
This recent public procurement development means that the risk of non-compliance for firms bidding for public sector contracts has now been raised further, in addition to other recent criminal competition law developments that include the elimination of conditional sentences (i.e., sentences served in the community) for some Competition Act offences, a recent Federal Court decision in the Maxzone case (see: here) indicating that the Federal Court will take a tougher stance on joint sentencing submissions in cartel cases, bid-rigging being an ongoing enforcement priority for the Competition Bureau and the continuing corruption/competition probe in the construction industry in Quebec. As such, the potential risk of engaging in bid-rigging or other criminal conduct under the Competition Act is now not only fines and/or imprisonment but also the possible loss of public sector clients.
November 16, 2012
The following are some of the more interesting competition, advertising and regulatory law developments that caught my eye over the past several days, at least to the extent they have a bearing on Canada or companies doing business in Canada:
BCE and Astral plan to work towards reworking their deal to obtain regulatory clearance (see: here and here), following a rejection of the deal by the federal CRTC.
The Malaysian state-owned oil company Petronas was reported to be revising undertakings to obtain Investment Canada Act clearance for its acquisition of Progress Energy (see: here).
The CRTC launched new web pages for their planned mandatory wireless code consultations that include the “top 100 liked” comments for a new wireless code (see: here).
Earlier today, Canada’s Finance Minister gave some further indications that the Federal Government may soon reveal new Investment Canada Act rules for FDI in Canada and that the new rules may include “limits” (see: here). Any such rules would replace and/or supplement existing Investment Canada Act provisions and guidelines under the ICA (e.g., those specifically relating to national security or state-owned-enterprises).
More testimony unfolded in the ongoing Quebec corruption and competition law probe relating to allegations of municipal bribes and bid-rigging in the construction sector in Quebec (Monique Muise at the Gazette in Montreal has the best feed going on this, plus she has a sense of humour and, if I may say, classic Quebecois ability to take things in stride – see: here).
November 16, 2012
I did a bit of a quick sweep earlier today for new Canadian competition, advertising and regulatory law texts and this one, recently published by Oxford University Press, caught my eye on class action regimes around the world including Canada. Given the accelerating rate of class action activity in Canada, including in the competition and advertising law areas, I thought this was a worthy hole to fill (and to keep filling).
Abstract:
“World Class Actions: A Guide to Group and Representative Actions around the Globe is a guide for attorneys and their clients on the procedures available for class, group, and representative actions throughout the world. It helps lawyers navigate and develop strategies for litigation and risk management in the course of doing business abroad, or even in doing business locally in a way that impacts interests abroad.
Part I of the book provides a jurisdiction-by-jurisdiction survey of the class action, group, collective, derivative, and other representative action procedures available across the globe. Each chapter is written from a local perspective, by an attorney familiar with the laws, best practices, legal climate, and culture of the jurisdiction.
Part II provides guidance from the perspective of international attorneys practicing in foreign jurisdictions and the art of counseling and representing clients in international litigation. It also covers a variety of topics related to transnational, multi-jurisdictional, and class or collective actions that involve international issues and interests.
Each chapter offers practice tips and cultural insights helpful to an attorney or litigant facing a dispute in a particular part of the world. Many of the chapters introduce key books, treatises, articles, or other reference materials to foster further research. Its focus on international class and group litigation law from a practitioner’s perspective makes World Class Actions an essential guide for the lawyer or client.”
Jurisdictions included in this new global class action text include Canada, as well as the U.S., Australia, a number of major European jurisdictions, China, India and the Asia-Pacific region.
For more information see: World Class Actions: A Guide to Group and Representative Actions Around the Globe.
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November 14, 2012
CANADIAN CONTEST RULES/PRECEDENTS
Do you need contest rules and forms for a Canadian contest/sweepstakes? I offer a selection of Canadian contest rules and forms for random draw, skill and other common types of Canadian contests (i.e., contest precedents and forms). For more information see Canadian Contest Forms/Precedents.
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In what I think was the most tragic legal story I saw today – in terms of human nature and near financial gain (but not quite) though not perhaps true human tragedy – the Montreal Gazette reported that a Quebec court has denied a lottery player’s claim to a $27 million jackpot – for a seven second delay in buying his ticket.
November 13, 2012
Given the ongoing testimony at the Charbonneau Commission in Montreal, which has included allegations of bid-rigging among Quebec construction firms, I thought I would post a short overview of bid-rigging under the Competition Act – a sort of “bid-rigging 101” list of FAQs. While much of this will likely be intuitive to most, Canadian bid-rigging law has a number of interesting aspects (and, like criminal cartels, can be very difficult for tendering authorities to detect).
What is bid rigging?
Unlike some jurisdictions, notably the U.S., Canada has a standalone bid-rigging offence, or to be more accurate related offences. Under section 47 of the federal Competition Act it is a criminal offence to:
1. Agree to not submit a bid or tender;
2. Agree to withdraw a bid or tender already made (an offence recently added to the Competition Act as a result of amendments in 2009); or
3. Submit a bid or tender arrived at by agreement.
In essence, the Competition Act prohibits most types of agreements or arrangements between competing bidders or tenderers (though there is one key exception).
Is it necessary to prove
anti-competitive effects on a market?
No. In Canada bid-rigging is referred to as a ”per se” offence, in that no anti-competitive effects need to be proven to make out an offence – in other words, the offence lies in the agreement to not submit a bid, withdraw a bid already made or submit bids arrived at by agreement.
Like the other criminal offences in the Competition Act, however, and criminal offences generally in Canada, it is necessary to prove all elements under section 47 on the criminal burden of proof (i.e., beyond a reasonable doubt).
What are some common types of bid-rigging
(i.e., ways parties attempt to avoid detection)?
Like criminal cartel (i.e., conspiracy) agreements, bid-rigging agreements are often structured in a handful of key ways to avoid detection. These include:
1. “Cover”, “courtesy” or “complementary” bidding: Some firms submit bids that are too high to be accepted (or with terms that are unacceptable to the tendering authority) to protect an agreed upon low bidder.
2. Bid suppression: One or more bidders that would otherwise bid or tender agree to refrain from bidding (or withdraw a previously made bid).
3. Bid rotation: All parties submit bids but take turns being the low bidder according to a systematic or rotating basis.
4. Market division: Suppliers agree not to compete in designated geographic areas or for specified customers.
5. Subcontracting: Parties that agree not to submit a bid (or submit a losing bid) are awarded subcontracts or supply agreements from the successful low bidder.
The above types of bid-rigging arrangements are typically intended to achieve several goals, including keeping the bid-rigging arrangement secret and dividing contracts/markets among the parties.
What must be proven to establish
an illegal bid-rigging agreement?
To establish an illegal bid-rigging agreement under section 47 of the Competition Act, all of the following elements must be established:
1. An agreement or arrangement between two or more persons (or bidders or tenderers as the case may be).
Like section 45 of the Competition Act (criminal conspiracy agreements), an agreement is an essential element to establish a bid-rigging offence under section 47. Also like the criminal conspiracy provisions, Canadian courts have held this element to require a “consensus of minds” or “mutual understanding” between the parties.
Mere consultations between parties bidding in relation to pricing, where there has been no agreement or arrangement between the parties and their respective bids are not communicated to the other before tenders are submitted, has been held not to contravene section 47.
November 11, 2012
In an interesting note earlier today, the National Post reported (from The Canadian Press) that the federal Competition Bureau was working with Quebec’s corruption unit in the ongoing Quebec corruption and competition investigation which has so far led to the resignations of the mayors of Montreal and Laval and involved testimony that working in this area for some years now I can only describe as astonishing.
The articles published earlier today confirmed that the Bureau is working with Quebec’s provincial anti-corruption authorities in relation to a number of cartel and bid-rigging cases under investigation in Quebec (which was also recently confirmed by the Acting Senior Deputy Commissioner of Competition, Criminal Matters Branch, Matthew Boswell in recent remarks, including the fact that Bureau officers have been included in recent dawn raids in Quebec – see: here).
According to the Post’s reporting, the Competition Bureau, in addition to cooperating in searches, is “keeping tabs” on the ongoing Charbonneau inquiry, where testifying witnesses have made criminal and competition law allegations in relation to a wide range of conduct that includes bribery of public officials, illegal political campaign contributions and competition law violations, including criminal bid-rigging and conspiracy under sections 47 and 45 of the Competition Act. The Post also cites correspondence with the Bureau stating that criminal bid-rigging remains an enforcement priority for the Bureau.
While the Bureau’s enforcement powers include the ability to obtain court orders for search warrants and wiretaps, and uses enforcement partnerships as part of its efforts to detect and investigate Competition Act offences, it may be some time yet until any charges or laid or formal Bureau announcements are made given the relatively slower pace of criminal matters under the Act. For example, developments (e.g., pleas) and announcements are still being made in the Quebec’s Quebec gas price fixing investigation, which first began about five years ago.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
