Legal Developments: Competition Act

Amendments to the Competition Act

 

Canada’s Competition Act has been significantly amended over the past few years. Some of the amendments include the following:

 

  • Repeal of Criminal Pricing Provisions: The Act no longer criminalizes price maintenance, predatory pricing and price discrimination.

 

  •  New Criminal Conspiracy Provisions for “Hard Core” Anti-Competition Agreements: The Act now includes criminal conspiracy provisions for three categories of anti-competitive agreements: output restriction agreements, market allocation/division agreements and bare price fixing agreements. These offences do not require proof of adverse market effects to impose criminal liability. Other agreements that do not fall into these categories will be addressed by the “civil track” for anti-competition agreements.

 

Caselaw

 

Commissioner of Competition v. Toshiba of Canada Limited [2011] ONSC 949

 

In Toshiba Canada, Justice Wilton-Siegel denied Toshiba’s application for leave to appeal to the Divisional Court on the grounds that the Court lacked jurisdiction to hear appeals in criminal matters.

 

The Commissioner of Competition had commenced an inquiry pursuant to section 10 of the Competition Act into an alleged cartel agreement to lessen competition with respect to cathode ray tubes. The commencement of an inquiry under section 10 allows the Competition Bureau to seek and obtain certain court orders, including oral examination/production orders pursuant to sections 11 to 14 and search warrants pursuant to sections 15-20 of the Competition Act.

 

The Commissioner had sought and obtained an order pursuant to section 11 that Toshiba produce certain documents. Toshiba brought an application to challenge that order and in furtherance of that challenge sought an interim order providing disclosure of the inquiry commencement memorandum and an interim order allowing it to cross-examine the affiant who swore an affidavit filed in support of the production order. Toshiba’s applications for these interim orders were dismissed and it brought an application for leave to appeal from the dismissal of those interim applications to the Divisional Court.

 

Justice Wilton-Siegel held that where an inquiry is commenced to further an essentially criminal investigation, such as an alleged cartel in this case, it is criminal, rather than civil, procedure that governs and there is thus no appeal available to the Divisional Court.

 

Record Fines Emphasize Deterrence in Bid-Rigging Prosecutions

In April 2013, two auto parts suppliers, Yazaki Corporation and Furukawa Electric Co. Ltd. were fined $30 million and $50 million, respectively, by the Ontario Superior Court of Justice for violating the Competition Act in a bid-rigging conspiracy against auto manufacturers Honda and Toyota. The fine against Yazaki is the largest ever imposed in Canada for a bid-rigging charge.

Importantly, these large fines were imposed even though both companies participated in the Competition Bureau's leniency program, which agrees to percentage reductions in fines sought in exchange for "full, frank, timely and truthful cooperation" with the investigation. Details of the program can be found on the Competition Bureau's website at: http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03288.html#s3_3

With the current anti-corruption climate being fueled by scandals in government and the private sector, the Competition Bureau is putting significant emphasis on large fines such as in these cases. If you or your company have potential exposure in this area, a proactive approach of coming clean prior to an investigation starting or at the early stages of an investigation can make all the difference. Early participation can result in avoiding prosecution entirely. Heller, Rubel has the experience and expertise necessary to engage in the high-level negotiations that go hand-in-hand with this proactive approach.