Archive for the 'Conspiracy' Category
March 16, 2013
In a very interesting case reported by the New York Times, Wall Street Journal, Bloomberg and others, a U.S. District Court late last week ordered Chinese vitamin C manufacturers (including Hebei Welcome Pharmaceutical Co. and North China Pharmaceutical Group Corp.) to pay more than $162 million, after a New York jury found the companies liable in this civil price-fixing case. Other companies, including China Pharmaceutical Group Ltd., reached settlements before trial.
March 15, 2013
In February, GCR published a new edition of The Asia-Pacific Antitrust Review (2013), which includes: Australia (Cartels, mergers and telecom), Canada (mergers and the Investment Canada Act), China, India (overview and mergers), Japan (cartels and mergers) and Malaysia (which recently introduced competition law).
Overview:
“Global Competition Review is delighted to publish the ninth annual edition of The Asia-Pacific Antitrust Review, one of a series of special reports that deliver specialist intelligence and research designed to help subscribers successfully navigate the world’s increasingly complex competition regimes. Read in conjunction with The European Antitrust Review and The Antitrust Review of the Americas, it gives general counsel, government agencies and private practice lawyers unparalleled annual insights into the development of the world’s competition regimes.”
For more information see: The Asia-Pacific Antitrust Review 2013.
March 10, 2013
Readers of this blog will know that two of my main interests are competition/antitrust compliance and cartels. Despite the continually escalating fines and persuasive reasons cartels should be aggressively punished, they seem to chug on in the corporate world unabated. Perhaps it’s the game theory of cartels that I find fascinating. At any rate, in this vein this new paper on cartels and compliance caught my eye by D. Daniel Sokol: “Policing the Firm” (see: here). Abstract:
“Criminal price fixing cartels are a serious problem for consumers. Cartels are hard to both find and punish. Research into other kinds of corporate wrongdoing suggests that enforcers should pay increased attention to incentives within the firm to deter wrongdoing. Thus far, antitrust scholarship and policy have ignored this insight. This article suggests how to improve antitrust enforcement by focusing its efforts on changing the incentives of internal firm compliance.”
March 9, 2013
In a very interesting case released on March 1st (R. v. J.F., 2013 SCC 12), the Supreme Court of Canada settled a debate between previously rival authorities for establishing party liability in criminal conspiracy cases.
While this case involved rather grisly criminal conspiracy-related facts, involving allegations of a conspiracy to commit murder (an agreement between youths to ply their mother with alcohol and drugs, drown her in the bathtub and make it appear an accident), it has potential implications for other types of conspiracy agreements including conspiracy and bid-rigging agreements under the federal Competition Act (sections 45 and 47).
The issues in this case were: (i) whether a person can be found liable as a party to an offence of conspiracy under section 21 of the Criminal Code (which includes liability to an offence for aiding or abetting the offence, in addition to actually committing it); and (ii) if so, under what circumstances, with the Court referring to the latter, quite rightly given the uncertainty of the law to date, as “the more perplexing issue” and “centerpiece of the appeal”.
The aiding and abetting provisions of the Criminal Code also apply to competition law offences in Canada – for example, in a 1966 Supreme Court case – R. v. Campbell – it was held that while the former Combines Investigation Act did not refer to aiding or abetting, it did not exclude the application of section 21 of the Criminal Code.
A number of recent Canadian cartel cases have also involved allegations or admissions of liability based on aiding and abetting conduct. These include a case involving Mitsubishi Corporation in 2005 (in which Mitsubishi was fined for aiding and abetting the implementation of a foreign-directed conspiracy in Canada); a case in 2005 involving Nippon Carbon Ltd. (which pleaded guilty and was fined $100,000 for aiding and abetting an international conspiracy to fix the price of graphite electrodes used in steel production); and a case involving Ibiden Co. Ltd. (which was fined for aiding and abetting a conspiracy to fix the price of isostatic graphite’s, a fine grain carbon product).
In answering the questions set out above, and in a concurring decision, the Court reviewed two conflicting lines of authorities that had been adopted by courts in different provinces with divergent approaches to party liability for conspiracy cases.
One broad approach, referred to the “McNamara model”, after the decision in R. v. McNamara (No. 1) (1981), 56 C.C.C. (2d) 193 (Ont. C.A.), extended party liability in conspiracy cases where an accused aided or abetted the furtherance of a criminal conspiracy’s unlawful object (a broad basis, which would potentially lead to liability in more instances).
Another and narrower approach referred to as the “Trieu model”, after the decision in R. v. Trieu, 2008 ABCA 143, limited party liability in conspiracy cases to situations where an accused aided or abetted the formation of a conspiracy agreement (thus a narrower basis of liability, and one more clearly linked to the elements of the offence of conspiracy – i.e., an agreement).
On the more orthodox point (being a party to an offence of conspiracy), the Court held that being a party to a conspiracy is an offence known to law.
On the less clear and more challenging and interesting question, namely the required linkage of an accused to a conspiracy agreement (framed by the Court as: “how and under what circumstances a person [can] be found liable as a party to the offence of conspiracy”), the Court held that the correct approach was based on the narrower Trieu model. In other words, party liability in conspiracy cases is to be limited to cases where an accused aids or abets the initial formation of an agreement or, alternatively, aids or abets a new member to join a pre-existing agreement.
The Court’s primary rationale for adopting this narrower approach related to the nature of conspiracy offences – i.e., the central actus reus (i.e., act element) of a conspiracy is the conspirators’ act of agreeing. In this regard, the Court held:
“The Trieu model is a legitimate basis for party liability to a conspiracy. A person becomes party to an offence if he aids or abets a principal in the commission of the offence. It follows that party liability to a conspiracy is made out where the accused aids or abets the actus reus of conspiracy, namely the conspirators’ act of agreeing.”
The Court also confirmed more than a century of Canadian jurisprudence that the “essence of the crime of conspiracy” (whether under the Criminal Code or Competition Act offences) is an agreement and, therefore, that liability should be founded on either committing the offence or aiding or abetting the offence (i.e., an illegal agreement).
The Court reasoned that, since acts that further the unlawful object of a conspiracy are not elements of the offence of conspiracy, aiding or abetting such acts should not expose a criminal accused to liability.
Having said that, the Court did also hold that where a person, with knowledge of a conspiracy, does or omits to do something for the purpose of furthering the mere (or perhaps more accurately, more mere) unlawful object, with the knowledge and consent of one or more of the existing conspirators, this may “provide powerful circumstantial evidence from which membership in the conspiracy can be inferred.”
In other words, where there is evidence of an accused supporting a conspiracy’s object, but not the agreement itself, this may be, depending on the facts, a sufficient ground on which to base criminal liability. This is a logical conclusion and extension of the Court’s holding and consistent as well with Canadian conspiracy authorities generally that an agreement may be established based on mere circumstantial evidence (although still with the necessity to be proven on the criminal burden of proof – i.e., beyond a reasonable doubt).
On the particular facts of this case, while the Court found that party liability should not have been put to the jury (given that there was no evidence that the accused aided or abetted the initial formation of the agreement or aided or encouraged a new member to join the conspiracy), the Court nevertheless found that the trial judge’s error could not have affected the verdict given that the evidence implicating the accused as a member of the conspiracy was “overwhelming”.
This interesting decision is important for several reasons, including for clarifying (and potentially narrowing) the circumstances in which criminal accused under the Competition Act may face liability for agreement related offences (including conspiracy, foreign directed conspiracies and bid-rigging).
The decision also gives persons that are being challenged by the Competition Bureau a clearer indication of when, and under what circumstances, allegations of aiding or abetting a criminal offence may be established, given that it is not uncommon for the Bureau to rely on aiding or abetting theories of liability in criminal cartel cases in Canada in addition to theories that an accused actually committed the offence.
For example, in the Bureau’s Competitor Collaboration Guidelines, the Bureau states that it may seek criminal conspiracy (cartel) liability under section 45 of the Competition Act based on aiding or abetting theories, including for trade association conduct:
“Where an agreement involves competing and non-competing parties, the fact that some parties are not competitors does not insulate the non-competing parties from prosecution under section 45. [criminal conspiracy agreements] Parties that are not competitors may also be prosecuted under section 45 through the aiding and abetting provisions in section 21 or the counseling provisions in section 22 of the Criminal Code … Agreements between members of a trade or other industry association may also constitute agreements between competitors for the purpose of section 45. … In the event that such an agreement contravenes section 45, the trade association may be considered as a principal party to the offence or may be subject to prosecution through the aiding and abetting provisions in section 21 of the Code.”
For a copy of the decision see: R. v. J.F., 2013 SCC 12.
February 28, 2013
As part of the kick-off of Fraud Prevention Month it seems, the Competition Bureau has issued an updated pamphlet for businesses on bid-rigging. The Bureau’s new Bid-rigging pamphlet discusses the criminal bid-rigging offences under the Competition Act (section 47), provides some tips to detect and prevent common types of bid-rigging offences (e.g., cover bidding, bid suppression, bid rotation and market division), gives a brief overview of the Bureau’s Immunity and Leniency Programs and bid-rigging penalties. The Bureau’s new pamphlet also includes other bid-rigging related resources, including its multi-media presentation: Bid-Rigging: Awareness and Prevention.
February 11, 2013
Thank you very much to Concurrences for short-listing one of my articles on Canadian bid-rigging for their upcoming 2013 Antitrust Writing Awards: Competition Bureau Jointly Lays 77 Charges Against 11 Individuals and 9 Companies in Quebec Bid-rigging Case – Tough Stance on Criminal Enforcement Continues. Concurrences short-lists articles in Academic and Business categories with voting and awards in April. From Concurrences:
“The Antitrust Writing Awards’ goal is to promote antitrust scholarship and competition advocacy by recognizing and awarding the best articles published in the antitrust law and law & economics fields in the last 12 months. The Awards feature two different categories of articles: Academic and Business. The Academic Articles category comprises articles published in academic journals, whereas the Business Articles category features articles published in professional magazines or newsletters. The articles are selected by a jury and by readers. The jury consists of a Board, an Academic and a Business Steering Committees composed of the leading academics and counsels. Readers contribute to the selection process by voting for articles. Click here to see the Jury. To ensure transparency, but also impartiality and expertise in the processing of the Awards, publications are assessed following an international peer-reviewed evaluation process. Members of the Board and of the Steering Committees are chosen from world-renowned antitrust enforcers, counsels and academics who are committed to judging the Awards fairly. The Institute of Competition Law – the publisher of the Journal Concurrences and the e-Competitions Bulletin – and George Washington University Law School Competition Law Center, are organizing these first of their kind Antitrust Writing Awards with the support of partners.”
For more information, copies of the articles, selection process or vote see: here and here.
February 4, 2013
Tristan Jones over in the U.K. at Blackstone Chambers (Competition Bulletin) has written a very interesting note on recent U.K. competition/antitrust class action developments with comparisons to Canada and the U.S. Given that we are waiting for the Supreme Court of Canada’s indirect purchaser decision in Canada (heard last fall with a decision expected this spring) which, if decided adversely against the plaintiffs’ bar in Canada, may have significant adverse impacts on the competition class action bar in Canada, I thought this note rather timely and interesting. Tristan has kindly allowed me to reprint his note (and paper) here.
Collective Actions: Loss in Complex Cases
Tristan Jones (Blackstone Chambers)
The big news from last week’s UK announcement on reforming private competition enforcement is that the government plans to introduce opt-out class actions for competition claims.
The proposals incorporate various “safeguards” designed to ensure that the perceived excesses of US class actions do not become a problem here. Some of the safeguards are really no more than statements of the obvious – no-one can be surprised that we will not have US-style triple damages, or that law firms won’t be able to bring a claim without even having a claimant. On the other hand, some safeguards – such as the prohibition on contingency fees – will surely serve to limit the usefulness of UK class actions.
Financing aside, the big unanswered question is how attractive claimants will find such class actions (or “collective actions”, as the government prefers to call them, emphasising the differences with the US). The ideal competition class action would be a cartel between retailers, all imposing the same overcharge on their customers, all of whom are end consumers. Such a cartel would be a claimant lawyer’s dream – all of the consumers could be treated as a class, and the total overcharge could be calculated and distributed between those consumers.
Unfortunately life is often more complex. A good example of the problems of loss in complex cases is the US hydrogen peroxide litigation. The Court of Appeals for the Third Circuit quashed a class certification order because of the difficulty of showing injury on a class-wide basis. The defendants had argued (among other things) that the industry had changed significantly over the period of the cartel, that there was no empirical evidence suggesting that prices charged to individual customers moved in tandem, and that a number of contracts were individually negotiated.
The problems of individualised loss become even more pronounced if the calculation has to take account of indirect purchasers (“IPs”) as well as direct purchasers (“DPs”). In any case brought on behalf of IPs, the court will need to work out how much of the overcharge was passed on from the DP to the IP, and potentially from that IP further down the chain of increasingly remote IPs.
January 30, 2013
Earlier today, Canada’s Interim Commissioner of Competition John Pecman delivered remarks in Montreal on the Competition Bureau’s current activities and priorities. In this, Mr. Pecman’s third speech since taking over from the former Commissioner (see previous speeches here and here), he discussed the Bureau’s use of section 11 orders, consent agreements, misleading advertising, cartels and its work with Quebec’s anti-corruption unit.
Some of the aspects of the Interim Commissioner’s remarks that I found interesting included confirming work to develop price maintenance guidelines and updated FAQs for the Bureau’s Leniency Program and announcing that the first course of action to obtain information from targets in formal inquiries in non-merger cases (except in exceptional cases) will be through section 11 court orders.
With respect to the Bureau’s sterner and increased use of section 11 orders, the Interim Commissioner indicated that the Bureau’s new approach had stemmed from an increased frustration with obtaining complete and timely information through voluntary information requests. Where the Bureau has commenced a formal inquiry, it may request information voluntarily or compel production through section 11 orders or through the use of search warrants. Also, as with the Bureau’s increased enforcement stance in other areas, notably cartels, the Interim Commissioner emphasized a desire in his section 11 related remarks today for the Bureau to use all of the tools Parliament had provided in the Competition Act.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
