Criminal And Related Antitrust Developments In 2012: Canada And The World

OVERVIEW

This article outlines the major global criminal and related antitrust developments in 2012, with a focus on Canada. Three salient realities underpin this article (1) global and domestic businesses and their directors, officers and employees are subject to increasing scrutiny by Canada's Competition Bureau and global antitrust regulators; (2) antitrust investigations, prosecutions, convictions and sanctions are growing; and (3) criminal and related antitrust investigations are increasingly global, with multiple regulators investigating and prosecuting the same conduct, either working together or in parallel.

As described below, 2012 saw large-scale global investigations, domestic price fixing and bid-rigging investigations, escalating fines and imprisonment in some cases. Our review begins with an examination of major developments in Canada, followed by major developments in other major jurisdictions.

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CANADA

2012 was a definitive year in criminal and related antitrust enforcement in Canada. 2012 saw a significant increase in charges laid and convictions, both in domestic and international activity. 2012 was not only busy but signaled that rigorous enforcement and harsher penalties are here to stay.

Of all the major developments, three are particularly salient:

First, in August, the Superior Court of Québec overturned the Director of Public Prosecutions' decision to renege on a plea agreement in R. v. Couche-Tard Inc. [2012] J.Q. No. 9567. Alimentation Couche-Tard Inc. was charged with fixing retail gas prices in Québec. Pursuant to the plea agreement, the accused disclosed its defence strategy to the Competition Bureau, which the Court believed had irreparably prejudiced the fairness of the trial. Fourteen months earlier, the repudiation of a plea agreement was at issue in a non-antitrust case before the Supreme Court of Canada, R. v. Nixon 2011 SCC 34, [2011] 2 SCR 566. The Court in Nixon confirmed that the Crown's decision to resile from a plea or immunity agreement cannot be overturned failing a successful abuse of process challenge. However, the Court in Couche-Tard did not apply the stringent Nixon test. It concluded that the Crown's repudiation of the plea agreement was not an abuse of process but nevertheless overturned the Crown's repudiation of the plea agreement due to procedural fairness concerns. Couche-Tard is currently under appeal. To our knowledge, Couche-Tard is the first case in Canada where the repudiation of an anti-trust plea agreement was at issue. Full text of the decision in French can be found here.

Second, in September 2012, Chief Justice Crampton of the Federal Court of Canada in Canada v. Maxzone Auto Parts (Canada) Corp., 2012 FC 1117, reluctantly accepted a plea agreement between the Competition Bureau and the accused, Maxzone Auto Parts (Canada) Corp. The fine was $1.5 million, 10% of the volume of affected commerce. The Competition Bureau recommended a fine representing 10% of the volume of affected commerce due to Maxzone's participation in the Bureau's leniency program. The Federal Court accepted the recommendation, but signaled that future plea deals may be rejected unless there is evidence that the various objectives of sentencing have been duly considered. Justice Crampton made a number of critical comments in obiter regarding the practice of resolving cartel cases though joint penalty submissions. Justice Crampton concluded that the parties had not filed a sufficient evidentiary record from which the Court could conclude that the objective and principles set out in sections 718 to 718.21 of Canada's Criminal Code were satisfied. Justice Crampton was also concerned that there was no evidence upon which the Court could be satisfied that the fine would likely disgorge, in an approximate way, the gains arising from the illegal conduct. Justice Crampton also made comments regarding the deterrent effect of prison sentences for cartel offences, noting that Courts will expect sentencing submissions to explain why fines alone are sufficient to the exclusion of prison sentences having regard to the harm caused by cartel behaviour. Full text of the Court's sentencing reasons can be found here.

Third, in November 2012, legislative amendments that were enacted under Bill C-10 (the Safe Streets and Communities Act) came into force. Among the changes were the elimination of conditional sentences (i.e., community service or house arrest) for conspiracy to fix prices, bid-rigging and misleading advertising. In addition, the wait period for a pardon following a criminal conviction was extended from 5 to 10 years. Full text of the Bill can be found here.

Further major development in the form of charges laid and convictions are described below, and are subdivided under price-fixing, bid-rigging and deceptive marketing.

Price Fixing

In January, Domfoam International Inc. and its affiliate Valle Foam Industries (1995)...