Conventional wisdom is that the Competition Bureau will pursue most misleading advertising cases civilly, under section 74.01 of the Competition Act, not criminally (the Act also contains a criminal misleading advertising provision, section 52, as well as a number of other criminal deceptive marketing offences).
For example, in the Bureau’s 1999 Bulletin on the choice of the criminal or civil track for misleading advertising, which remains its leading statement on the question, the Bureau states that the civil track will be pursued in most instances (though it may proceed criminally where there is both clear evidence of intent – for example, continuing conduct after complaints are made – and a criminal prosecution is in the public interest).
Despite this expressed restraint to proceed criminally, there have been a steady stream of deceptive advertising and marketing cases over the past few years where the Bureau has commenced criminal enforcement proceedings. Some recent cases have involved deceptive telemarketing (see: here, here and here), employment opportunity schemes (see: here and here), a GST refund fraud scheme (see: here) and the sale of counterfeit cancer drugs on the Internet (see: here). In terms of criminal misleading advertising cases, the Bureau has appeared to be most concerned with deceptive telemarketing and fraudulent business directory schemes (although its efforts have not been restricted to those two categories of cases).
While imprisonment is rather rare in Canada for competition law offences, several individuals in these cases were also sentenced to imprisonment, ranging from conditional sentences in the community to 3 years, in addition to paying monetary penalties.
In an interesting statement made yesterday, the Federal Government announced that it was extending the list of offences that will render companies and individuals ineligible from bidding on Government contracts to include money laundering, participating in criminal organization activities, tax evasion (income and excise tax), bribing foreign public officials and drug trafficking. These new additions have been added to an existing list, which includes certain Criminal Code fraud offences against the Government and a number of Competition Act offences (including conspiracy and bid-rigging).
In making the announcement, the Government said:
“Our Government continues to stand up for accountability by ensuring we do business with companies that respect the law and act with integrity,” said Minister Ambrose. “We are taking action to protect taxpayers from fraudulent companies who seek to do business with the Government of Canada.”
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The Toronto Sun has reported that the federal Competition Bureau has commenced an investigation into alleged price-fixing activities among concrete companies in the Greater Toronto Area home-building industry.
According to the Bureau, it is investigating businesses in the residential concrete forming industry in the Greater Toronto Area (companies that create basement foundations for residential homes). In addition to contractors, the allegations appear to include a trade association, the Residential Low Rise Forming Contractors Association of Metropolitan Toronto and Vicinity (the LRFA). Also according to Bureau officials, criminal searches have been conducted in the Toronto area.
Under section 45 of the Competition Act, three types of agreements between competitors are “per se” illegal (i.e., with no adverse competitive impacts required to be proven): (i) price-fixing agreements (agreements to fix, maintain, increase or control the price for the supply of a product or service), (ii) market allocation/division agreements (agreements to allocate sales, territories, customers or markets for the production or supply of a product) and (iii) output/supply restriction agreements (agreements to fix, maintain, control, prevent, lessen or eliminate the production or supply of a product). Other types of agreements between competitors are potentially subject to review under a second and separate non-criminal reviewable matters agreement provision (section 90.1).
The construction industry has long been a target of competition/antitrust regulators. For example, some of the construction related cases in Canada, many of which have also involved trade associations and have gone back about a century, have included building contractors, corrugated metal pipe manufacturers, electrical contractors, gypsum dealers and manufacturers, plumbing contractors, road surfacing contractors, chain link fence contractors, among others.
On April 13, 2012, the Competition Bureau announced that Suncor Energy Products Inc. (Sunoco) pleaded guilty to fixing gasoline prices from May to November, 2007 in Belleville, Ontario and that the Ontario Superior Court sentenced it to pay a $500,000 fine (see: Suncor (Sunoco) Energy Pleads Guilty to Price-Fixing in Belleville, Ontario).
In making the announcement, the Commissioner of Competition said:
“We are committed to pursuing those who engage in anti-competitive behaviour that harms Canadian businesses and consumers … Illegal agreements between competitors to fix prices deny consumers the benefits of competitive prices and choice.”
Last month, Pioneer Energy LP, Canadian Tire Corporation and Mr. Gas also pleaded guilty to price-fixing during the same period (in Kingston and Brockville) and were fined $2 million (see: Competition Bureau Announces $2 Million in Ontario Gas Price-fixing Case).
Under section 45 of the Competition Act, three types of agreements between competitors are “per se” illegal (i.e., with no adverse competitive impacts required to be proven): (i) price-fixing agreements (agreements to fix, maintain, increase or control the price for the supply of a product or service), (ii) market allocation/division agreements (agreements to allocate sales, territories, customers or markets for the production or supply of a product), (iii) output/supply restriction agreements (agreements to fix, maintain, control, prevent, lessen or eliminate the production or supply of a product).
Other types of agreements between competitors are potentially subject to review under a second and separate non-criminal reviewable matters agreement provision (section 90.1).
According to the Bureau, it became aware of the price-fixing activities in this case using its Immunity and Leniency Programs (see: Backgrounder – Gasoline Companies Plead Guilty to Price-Fixing in Kingston and Brockville, Ontario). Under the Competition Bureau’s Immunity and Leniency Programs, applicants may receive full immunity from prosecution or reductions in penalties for cooperating with a Bureau investigation.
Under the Bureau’s Immunity Program, a party or company implicated in criminal conduct under the Act may offer to cooperate with the Bureau in its investigation and request immunity (i.e., full immunity from prosecution for criminal offences under the Act). Under the Bureau’s Leniency Program, parties that have contravened criminal provisions of the Act that are not entitled to full immunity (e.g., are not “first in”) may nevertheless be eligible for leniency in sentencing. Importantly, the Bureau’s Immunity Program is a “race” in that only the first eligible applicant is entitled to full immunity. As such, evaluating whether the Bureau’s Immunity and Leniency Programs are available is an important and time-sensitive step for parties to potentially reduce liability.
According to the Bureau, it also used wiretaps and search warrants in its investigation in this case, searching five corporate locations, nine residences and two residential offices, seizing thousands of paper and electronic records and interviewing witnesses (for more about the Bureau’s enforcement powers see: Bureau Enforcement).
Yesterday was a banner day for the European Commission, which imposed a total of €255 million against parties in the freight forwarders and window mountings cartels.
In the freight forwarders cartel, the Commission fined 14 international groups of companies a total of €169 million for participating in four cartels between 2002 and 2007 to fix the prices and other trading conditions for international freight forwarding services.
Interestingly, the parties in this case took rather elaborate and colourful steps to conceal the cartel, organizing their contacts in a so-called “Gardening Club” and using code-names based on vegetables (e.g., asparagus and baby courgettes) when the parties talked about fixing prices. The parties also set up a specific Yahoo e-mail account to facilitate the cartel and information exchanges between them.
February 7, 2011
The United States Department of Justice (Antitrust Division) has announced that a California Real Estate Executive has plead guilty to bid-rigging at public foreclosure auctions, which in the U.S. is a violation of the Sherman Act (see: California Real Estate Executive Pleads Guilty to Bid Rigging at Public Foreclosure Auctions).
January 16, 2011
The U.S. Department of Justice has announced that another executive has been indicted for his role in the global LCD price-fixing conspiracy. According to the U.S. DoJ, a federal grand jury in San Francisco returned an indictment against the current president of HannStar Display Corporation for participating in a global conspiracy to fix the prices of thin-film transistor liquid crystal display (TFT-LCD) panels.
December 21, 2010
The Competition Bureau announced earlier today that it has laid criminal charges against eight companies and five individuals in Quebec that are accused of rigging bids for private sector ventilation contracts for residential highrise buildings in the Montreal area (see: Charges Laid in Residential Construction Bid-Rigging Scheme in Montreal and Competition Bureau, Backgrounder, Charges Laid in Residential Construction Bid-Rigging Scheme in Montreal).
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
