Competition Bureau Imposes Record-Setting Bid-Rigging Fines, But Jurisdictional Questions Remain

In cases heard barely two weeks apart, Canada's Competition Bureau obtained record-setting fines against two Japanese auto parts suppliers that pleaded guilty to bid-rigging charges. Although these significant penalties (obtained under the Bureau's leniency program) are a strong milestone for the Bureau's enforcement program, issues remain as to whether Canada can establish subject-matter jurisdiction over bid-rigging arrangements concluded entirely in offshore jurisdictions.

In the first case, on April 4, 2013, Furukawa Electric Co., Ltd. pleaded guilty in Superior Court on a single-count indictment charging bid-rigging in relation to the supply of electrical boxes to be used in 2001 and 2006 model years Honda Civics manufactured in Canada. As is typical in these cases, the plea took place under a plea agreement that included a public statement of admissions filed with the Court. The notable features of the admissions are that Furukawa has no facilities in Canada, but voluntarily agreed to attorn to Canadian jurisdiction for purposes of the plea. All meetings and communications in relation to the bid-rigging took place outside Canada, a fact reaffirmed by the wording of the indictment, stating that all acts occurred "in Japan and elsewhere outside of Canada." The admissions also asserted that knowledge, participation in and/or acquiescence with the agreements and arrangements "reached North American regional sales management levels" as well as sales management levels at Furukawa. The company agreed with the Director of Public Prosecutions (DPP) to a C$5-million fine and was the first leniency applicant for this product under the Bureau's leniency program. The fine represented approximately 12% of Furukawa's commerce in the products, totalling some C$40.9 million.

In the second case, on April 18, 2013, Yazaki Corporation agreed to a record-setting fine of C$30 million in a guilty pleain Superior Court to a three-count indictment charging bid-rigging offences in relation to events that occurred in 2002/2003 "in Japan and elsewhere outside of Canada" regarding rigged bids for electrical wire harnesses and related products for the 2006 model year Honda Civic, the 2005.5 model year Honda Ridgeline and the 2006 model year Corolla/Matrix, all manufactured in Canada. The admissions filed in the Yazaki case were very similar to those in the Furukawa case, and stipulated that all meetings and other forms of communications took place outside Canada...