I ENFORCEMENT POLICIES AND GUIDANCE
All aspects of competition law in Canada are governed by a single federal statute – the Competition Act (the Act).2 Canadian provinces and territories do not have their own competition legislation. The Act is administered by the Commissioner of Competition,3 an independent public official who heads the Competition Bureau (the Bureau), a federal investigative and enforcement agency consisting of various operating branches. The Bureau, and specifically the Cartels Directorate of the Cartels and Deceptive Marketing Practices Branch, investigates criminal matters, including cartels but refers cases it considers worthy of prosecution to the Attorney General, who makes the final determination whether to prosecute.4
Canada has a dual-track approach (criminal and civil) to agreements between competitors. Agreements or arrangements that are akin to hardcore cartels (conspiracy, bid rigging) are per se illegal.5 Other forms of competitor collaboration (joint ventures, strategic alliances) are subject to a civil review that incorporates a competitive effects test.6
In 2009, the Bureau published Competitor Collaboration Guidelines (the Guidelines),7 which reflect its stated position regarding the enforcement of the horizontal conspiracy provisions and are intended to assist in assessing the likelihood of interactions with competitors raising concerns under the criminal or civil provisions of the Act. The Guidelines discuss, among other things, who is considered a competitor, the types of agreements that fall within the criminal as opposed to civil provisions, and the defences available.8 Parties may seek an advisory opinion from the Commissioner to determine whether a particular agreement or arrangement violates the Act.
The main anti-cartel prohibitions are found in Sections 45 and 47.
i Section 45 – Conspiracy
ii Section 47 – Bid rigging
Section 47 prohibits agreements or arrangements between one or more unaffiliated entities13 either not to submit a bid or tender, to withdraw an already made bid or tender, or to submit a separate but coordinated bid or tender, where the agreement or arrangement is not disclosed to the person calling for the bid or tender at or before the time of submitting or withdrawing the bid or tender.14
iii Other cartel-related offences
The Act also contains a number of other anti-cartel prohibitions, the most important of which is the prohibition against foreign-directed conspiracies found in Section 46.15 Section 46 makes it an offence for a corporation carrying on business in Canada to implement a directive or other communications from a person outside Canada for the purpose of giving effect to a foreign conspiracy that would have contravened Section 45. The offence can occur even if directors or officers in Canada were unaware of the foreign conspiracy.16
II COOPERATION WITH OTHER JURISDICTIONS
The Bureau cooperates closely with enforcement agencies in other jurisdictions through both formal and informal arrangements.
At the state level, Canada has entered into a number of mutual legal assistance treaties, which enable signatory countries to request that the other authority take measures under its existing laws to provide assistance, including exchanging information, providing documents and records, locating or identifying persons, serving documents, taking evidence under oath and executing searches and seizures. Assistance can be provided regardless of whether the conduct under investigation constitutes an offence in the jurisdiction in which the request is made.
Informally, the Bureau will routinely coordinate its investigative efforts with other agencies in cross-border cartel cases, with the most recent example being its cooperation with the Antitrust Division of the United States Department of Justice in the Nishikawa Rubber Co Ltd investigation.17 The Bureau also routinely requests and expects immunity and leniency applicants to provide confidentiality waivers to enable it to communicate informally with other agencies in cartel investigations.
State level cooperation may also result in extradition, both to and from Canada. The Extradition Act18 provides Canada with the legal basis on which to extradite persons located in Canada who are sought for extradition by one of Canada's 'extradition partners'.19 Extradition is possible only in cases of 'dual criminality'; that is where conduct for which extradition is sought is considered criminal in both the requesting country and Canada.20 To date, no one has been extradited (nor has the Bureau requested the extradition of any individual) in an international cartel case, although some individuals have been extradited to the United States in respect of other criminal offences under the Act.21
III JURISDICTIONAL LIMITATIONS, AFFIRMATIVE DEFENCES AND EXEMPTIONS
Canada has traditionally held a strong presumption against the extraterritorial application of criminal laws. In common law and under the Criminal Code, criminal jurisdiction is based on territoriality – a court has authority to try an offence only if it is committed in Canada.22 To prosecute in Canada a cartel offence committed outside Canada, a Canadian court must have jurisdiction over both the offence because of its extraterritorial aspects (subject-matter jurisdiction) and over a defendant who is outside Canada's territorial jurisdiction (personal jurisdiction).
Although no Canadian court, in a contested criminal cartel case, has yet held that subject-matter jurisdiction may be established based on the effects of the criminal conduct in Canada, based on civil cases that have considered the scope of extraterritorial jurisdiction, subject-matter jurisdiction is most likely to be found if there is a 'real and substantial link' to Canada.23
However, the existence of subject-matter jurisdiction does not automatically translate into personal jurisdiction, and the general principle governing personal jurisdiction is that it must be specifically created by the language used in the offence-creating statute. Given that the language of neither Section 45 nor Section 47 appears to specifically warrant application to persons outside Canada, significant doubts exist as to whether a Canadian court could assert personal jurisdiction over a foreign defendant with no presence in Canada. In practice, the issue remains untested since, in all the guilty pleas entered to date, the defendants voluntarily attorned to the jurisdiction of Canadian courts as part of a negotiated settlement.
The Act establishes a number of defences to the charge of conspiracy. However, these defences are very limited and parties should use caution when considering relying on them.
i Ancillary restraint defence
Parties to an agreement that contravenes Section 45 will not be convicted of an offence if the agreement is 'ancillary' to an otherwise lawful broader or separate agreement, provided it is 'directly related to' and 'reasonably necessary' for implementing that lawful agreement.24 The most common example of an ancillary restraint defence (ARD) is a non-competition agreement between parties to a merger or a joint venture. The Bureau has provided some guidance on the scope of ARD25 but, given the relative lack of Canadian jurisprudence on the issue, it should be approached with caution.
ii Other defences and exemptions
The Act recognises the common law defence of 'regulated conduct'.26 Actions that are authorised or carried out pursuant to federal or provincial legislation are exempt from prosecution under the conspiracy provisions.
Agreements or arrangements that relate only to the export of products from Canada are exempt from prosecution under the conspiracy provisions, provided they meet certain conditions.27 Other exemptions include certain types of agreements or arrangements between federal financial institutions28 and agreements or arrangements between affiliates.29
IV LENIENCY PROGRAMMES
i Immunity and leniency programmes
The Bureau administers robust immunity and leniency programmes, both of which were recently updated, which allow corporate and individual applicants party to a criminal offence to seek either immunity from prosecution or leniency in return for their cooperation.30 Immunity and leniency are available for all cartel offences, as well as for aiding, abetting or counselling an offence.
To obtain full immunity, an applicant must be either first to disclose an offence of which the Bureau is unaware or first to come forward before there is sufficient evidence to warrant a referral to the Attorney General.31 The applicant must have ended its involvement in the illegal conduct and not have coerced others to participate in the conduct. In addition, to qualify for and maintain immunity, the applicant must cooperate fully and in a timely manner with the Bureau's investigation and subsequent Public Prosecution Service of Canada (PPSC) prosecution, which essentially means full disclosure of all relevant non-privileged information and records. Failure to abide by all the requirements may vitiate immunity.
Under the previous immunity programme, when a company qualified for immunity, all current directors, officers and employees also automatically received immunity, provided they admitted their involvement in the cartel as part of the corporate admission, and cooperated with the Bureau and the PPSC. Under the revised programme, this automatic coverage will no longer be provided and those individuals seeking immunity will be required to proactively admit their involvement as a party to the offence and demonstrate a willingness to cooperate with the Bureau's investigation. The approach remains the same with respect to immunity for agents and former directors, officers and employees in that it is granted on a case-by-case basis. Generally speaking, provided these individuals fully cooperate with the investigation and are not employed by another member of the cartel that is being investigated, they are likely to be granted immunity.
The new immunity programme also now includes an 'interim' immunity stage. A grant of interim immunity will be provided where documentary and testimonial evidence is submitted by an applicant. Final immunity will not be provided until the Director of Public Prosecutions accepts a recommendation from the Bureau that the applicant has satisfied its obligations and the applicant's assistance is no longer required. The new immunity programme has also introduced a new mandatory protocol for claims of privilege, including identifying, reviewing and adjudicating privilege claims by immunity applicants.
Even if a party does not qualify for immunity, it may still qualify for some form of leniency resulting in significant discounts to the otherwise applicable fine. Previously, the amount of leniency available to applicants was largely contingent on the order in which they made their application. The first applicant was eligible for a fine reduction of 50 per cent, the second, 30 per cent and, for all subsequent applicants, a reduction of 30 per cent or lower. The updated programme extends eligibility of a 50 per cent reduction to all applicants, though this is now discretionary and subject to the value of the applicant's cooperation. This value is measured by several factors, including:
- the timeliness of the leniency application;
- the timing of the applicant's cooperation;
- the availability, credibility and reliability of witnesses;
- the relevance and materiality of the applicant's records; and
- any other factor relevant to the development of the Bureau's investigation.
The Bureau has also indicated that having an effective compliance programme would be viewed as one of the mitigating factors in granting leniency. Leniency applicants must meet the requirements of the leniency programme, which are similar to those of the immunity programme.
Canada also has an Immunity Plus Program, similar to the Amnesty Plus Program in the United States, whereby reporting any other unrelated cartels during the leniency negotiations may result in immunity for that offence and additional discounts in the fines for the initial offence, typically between 5 and 10 per cent. The previously published information bulletins on the immunity and leniency programmes, as well as a comprehensive set of frequently asked questions that outlined the Bureau's approach, have been replaced by the newly published bulletin.32
ii Immunity and leniency process
The first step in obtaining immunity or leniency is to request an immunity or leniency marker by contacting the Senior Deputy Commissioner, Cartels and Deceptive Marketing Practices Branch. Marker requests are generally made through an applicant's counsel and may be done on the basis of minimal hypothetical disclosure that would allow the Bureau to identify the offence committed and the relevant product. The Bureau will often inform the applicant immediately of its eligibility for a marker, although the process may take up to a few days.
Once a marker is granted, typically applicants will have 30 calendar days to provide sufficient detail about the nature of any records in their possession, testimony their witnesses are able to give and how probative the evidence is likely to be, to allow the Bureau to determine whether the applicant may in fact qualify for immunity or leniency. This stage, called a 'proffer', may also be completed in hypothetical terms (although the Bureau may request that the applicant's identity be disclosed) and is also completed by counsel. The Bureau may, at its discretion, grant an extension to the 30-day period, but the reasons for seeking an extension must be compelling. Generally speaking, delays that are solely caused by an applicant negotiating immunity or leniency in other jurisdictions will not be enough to obtain an extension. If the applicant has not perfected the marker or obtained an extension within the 30-day period, the marker will automatically lapse without further notice from the Bureau.
Information at both the marker and proffer stages is usually provided orally, although in some cases the Bureau may request production of documents during the proffer stage and, under the new immunity programme, witness interviews may be conducted using audio or video recordings and may be taken under oath. Once the Bureau feels it has received all the relevant information, it will consider whether to recommend interim immunity or leniency to the PPSC. It is important to note that immunity from criminal prosecution does not insulate a party from civil liability, and parties who obtain immunity may still be subject to civil damages claims.
The Bureau keeps the identity of the immunity or leniency applicants, and any information obtained from them, confidential, subject to very limited statutory exceptions where disclosure is:
- required by law;
- necessary to obtain or maintain the validity of a judicial authorisation for the exercise of investigative powers or to secure the assistance of a Canadian law enforcement agency in the exercise of investigative powers;
- consented to by the applicant;
- already public;
- necessary to prevent the commission of a serious criminal offence; or
- necessary for the administration or enforcement of the Act.33
The identity of applicants will be publicly disclosed once charges are laid against other cartel participants and the Bureau may be required to disclose information received from an applicant to other cartel participants if the information is necessary for their defence. Private plaintiffs seeking to bring damages claims may also seek access to information disclosed to the Bureau during the immunity or leniency application process. The Bureau's policy is not to provide information to private litigants other than in response to a court order.
As individual employees may also be charged with an offence, counsel may face a conflict of interests if it represents both the company and the employees targeted by the investigation. There may also be situations in which a corporation does not qualify for immunity (for example, because it was deemed to be a ringleader), but employees who came forward with the corporation nonetheless may. In cases where the interests of corporate and individual defendants may not be aligned, counsel should caution individual defendants that he or she represents the corporation only and invite them to consider whether separate representation is appropriate.
Violations of the anti-cartel provisions of the Act are prosecuted as indictable criminal offences and can attract significant penalties. Violations of Section 45 may result in a fine of up to C$25 million per count, and for individuals, a fine or imprisonment for up to 14 years, or both. Since parties can be charged with multiple counts under Section 45, the resulting fines may significantly exceed the statutory maximum.34 Individuals convicted of bid rigging may also face up to 14 years in prison and there is no maximum statutory fine for either individuals or corporations.35 In addition to statutory penalties, parties that are convicted of, or plead guilty to, cartel offences, may be subject to sanctions under other regulatory regimes.36
There are no cartel-specific sentencing guidelines; sentencing for cartel violations is guided by the general sentencing principles set out in the Criminal Code (which apply to all criminal offences, not just offences under the Act), as well as a number of principles developed in competition law jurisprudence.37
When recommending a fine, the main factor the Bureau considers is the overall economic harm caused by the conduct at issue. Since the degree of harm is generally difficult to quantify, the Bureau generally starts with a proxy of the volume of commerce in Canada affected by the cartel multiplied by an overcharge factor, which is generally 20 per cent (10 per cent representing the notional overcharge and 10 per cent for deterrence). However, the Bureau may use a different approach (or multiplier) where, in its judgement, the 20 per cent multiplier calculation does not reflect the economic harm caused by the cartel.38
The Bureau also takes into account aggravating and mitigating factors in recommending a fine. Examples of aggravating factors include recidivism, coercion or instigation, obstruction and involvement of senior officers in the conduct. Cooperation with the authorities, acceptance of responsibility, early termination of conduct, restitution to victims and inability to pay are examples of mitigating factors.
Although the maximum prison sentence available under Sections 45 and 47 is 14 years, to date no custodial jail sentence has been imposed in Canada for a cartel offence, although the Bureau has shown greater willingness to recommend tougher sanctions against individuals involved in domestic cartels.39
VI 'DAY ONE' RESPONSE
The Bureau has a number of powerful investigative tools at its disposal, the main one being search and seizure, whereby the Bureau can obtain and execute judicially authorised search warrants to enter premises and seize documentary and electronic records.40 Warrantless searches are also possible in 'exigent circumstances' where the delay to obtain a warrant would result in loss or destruction of evidence. Subject to legal privilege, the Bureau can require production of any relevant document or information, including information held on a computer,41 and can interview individual employees. Documents must be relevant to the matters being investigated but, in exigent circumstances, officers can seize documents immediately without the search warrant and without explaining in advance how the search will unfold.
Other investigative tools include documentary production orders (including against foreign affiliates of Canadian companies),42 orders to compel testimony under oath43 and orders to intercept electronic communications (wiretaps).44
Where a search warrant has been issued, it is an offence to refuse to allow the Bureau officers named in the warrant to enter and search the premises. As the Bureau may conduct a search and seizure at any time it thinks expedient, and usually in the early morning (hence the term 'dawn raid'), a company's ability to respond quickly and efficiently is crucial to its defence, particularly given that officers have no formal obligation to wait for legal counsel to arrive before entering the premises or commencing the investigation.45 Companies should be mindful of the following key practical points.
- Companies must ensure the investigative actions are within the scope of the warrant. It is advisable to carefully check the warrant and note the alleged offence, the affected individuals, if any, the description of the premises subject to search and what may be seized. A search warrant should be photocopied and immediately sent to the company's legal counsel.
- Companies should devise an internal communication plan to both senior executives and all employees addressing conduct during the investigation, including communicating and cooperating with the Bureau, disclosing information and signing documents, and should put in place IT protocols to maintain the integrity of electronic devices. It should be made clear that employees may not obstruct the investigation by, for example, deleting emails or destroying or removing records from the premises.
- Bureau officers cannot examine privileged documents. Where there is a concern about legal privilege, officers cannot examine or seize documents or items until a procedure for dealing with them has been agreed upon or until a judge has ruled on the matter. In the event of a dispute over legal privilege, the documents in question must be placed in a package, sealed, identified and placed in the custody of a permitted third person for subsequent discussion with the lead officer or for resolution after the raid. For electronic records, owing to their volume and the technical requirements for accessing and maintaining the integrity of the records, the review of privilege may take place following the seizure, further to a mutually agreed process.
- To the extent possible, detailed records of all requested documents and copies of all seized documents or data should be made and memoranda setting out everything taking place during the Bureau investigation should be prepared.
VII PRIVATE ENFORCEMENT
Section 36 of the Act allows private parties to bring a civil claim in respect of damages resulting from the breaches of criminal provisions of the Act. Most commonly, claims under Section 36 are brought by way of class actions, by both direct and indirect purchasers.
The plaintiffs in a civil action must prove the same elements required to be proven under the relevant criminal provisions, as well as having to prove that the conduct has caused their loss or damage. In other words, it is not enough for the plaintiffs to prove that alleged prohibited conduct has occurred; they must prove that they have sustained quantifiable harm as a result of the conduct. Successful plaintiffs may recover an amount equal to the loss or damage proven to have been suffered (treble damages are not available in Canada), as well as any additional amount the court may allow to cover the costs of any investigations in connection with the matter, up to the full cost of the investigation. Section 36 does not allow plaintiffs to recover punitive or exemplary damages.
A finding of guilt in the criminal case is not required for a plaintiff to commence a civil action. However, typically, claims under Section 36 are brought following criminal convictions or guilty pleas, and the Act facilitates the proof by plaintiffs where there has been a prior conviction. The record of proceedings in the criminal case (including a criminal conviction, as well as an agreed statement of facts in a guilty plea) creates a rebuttable presumption that the defendant engaged in the prohibited conduct.
In addition to the statutory cause of action under Section 36, common law economic torts (e.g., unlawful interference with economic interests, civil conspiracy and inducing breach of contract) are available and are often asserted in conjunction with Section 36 proceedings. Equitable or restitutionary claims are also becoming increasingly common in Canada.
The limitation period for commencing an action under Section 36 is two years after the offending conduct or the final disposition of any criminal proceedings, whichever is the later. The ambiguous wording of the provision creates a possibility that the two-year limitation period may be extended if criminal proceedings are brought more than two years after the date of the offending conduct.
VIII CURRENT DEVELOPMENTS
Significant changes to the immunity and leniency programmes, intended to improve Canada's detection, investigation and prosecution of criminal violations of the Act,46 came into effect on 27 September 2018, following two rounds of public consultations. During the consultation process, the proposed changes, particularly to the immunity programme, were met with significant criticism from both the Canadian and international competition law bars, and although some concerns were addressed, the changes have created significant uncertainties for immunity applicants.
For example, the fact that the revised programme now includes an additional stage, the interim grant of immunity (IGI), or effectively a conditional grant of immunity designed to facilitate early disclosure of records and interviewing of witnesses, with full immunity contingent on an applicant's cooperation, means that full immunity will only be granted once the prosecution is satisfied that no further assistance from the applicant is required. Given that cartel prosecutions may take years (e.g., the Canadian prosecution of an alleged chocolate cartel stemmed from a 2007 tip-off from one of the participants and did not end until 2015) and an immunity applicant's assistance may conceivably be required throughout, this creates considerable uncertainty as to when (or even if) an applicant may eventually receive full immunity. Also, as the revised immunity programme no longer contemplates granting automatic blanket immunity to individual directors, officers and employees as part of the corporate immunity application, this may lead to conflicts, as interests may not be aligned. Applicants will also now be required to justify their claims of privilege and, within 30 days of the IGI being issued, would have to advise the Bureau of the specific legal privilege being claimed and the nature of the record to which privilege is attached. In cases of a dispute regarding a privilege claim, the PPSC and the applicant may agree to appoint an independent counsel to resolve the privilege claim. Otherwise, the PPSC may ask the court for a privilege ruling.
The revised leniency programme does now allow all leniency applicants to benefit from a fine reduction of up to 50 per cent, but this will be based on the timing of the application and the value of cooperation, and it will no longer be possible to predict with certainty the financial value of seeking leniency.
These changes are still recent, and it remains to be seen how they affect the way in which immunity and leniency are sought and granted and with it the incentives created for cartel participants.
In terms of developments other than the immunity and leniency programme, Bill C-49, an Act to amend the Canada Transportation Act and other acts respecting transportation and to make related and consequential amendments to other acts, received Royal Assent on 23 May 2018. With respect to the Act, the Bill created, among other things, an exemption to Section 45 of the Act for certain arrangements among public airlines that have been authorised by the Minister of Transport.
In November 2017, the Bureau issued a bulletin on its approach to requests for disclosure of confidential information in its possession from private litigants,47 likely in response to increasing requests for access from class action plaintiffs.48 The Bureau confirmed its previously stated position that it will not voluntarily disclose confidential information to persons contemplating, or who are parties to, a proceeding under Section 36 of the Act, and provides guidance on how it will approach disclosure in the circumstances where it is ordered to do so by a court.
In March 2019, the Bureau and the PPSC issued updated immunity and leniency programmes to provide increased clarity on the status of cooperating witnesses, specifically, to clarify that participants in the programmes are cooperating witnesses and not confidential informers. This clarification does not change how the programmes function and the identity of participants will continue to be kept confidential, except in the specific circumstances outlined in the programmes.
Finally, on 20 September 2019, the Supreme Court of Canada issued a highly anticipated decision in the Godfrey case,49 a class action alleging a price-fixing cartel in the market for optical disc drives, which, among other findings, has confirmed that umbrella purchasers50 have a cause of action.51 The extension of a potential cause of action to umbrella purchasers has significant implications for cartel defendants, as it considerably expands the scope of potential liability.
1 Arlan Gates and Yana Ermak are partners at Baker McKenzie LLP.
2 RSC 1985, c C-34, as amended.
3 The current Commissioner of Competition is Matthew Boswell, who was appointed in March 2019. Prior to that, he served as Interim Commissioner of Competition for approximately one year. The Commissioner is appointed for a five-year term.
4 Unlike some other enforcement agencies (e.g., the US Federal Trade Commission), the Bureau does not have carriage of criminal prosecutions. This is the responsibility of the Public Prosecution Service of Canada (PPSC), a federal organisation that fulfils the responsibilities of the Attorney General in prosecuting criminal offences under federal jurisdiction. Following the completion of its investigation, the Bureau will refer a criminal matter to the PPSC, with a recommendation as to whether it should prosecute. The PPSC alone has the authority to decide whether it is in the public interest to proceed, although as a practical matter, the PPSC is unlikely not to follow the Bureau's recommendation, and the Bureau remains closely involved in the prosecution.
5 This means that prosecution does not need to prove that the conduct in question had any effect on the market. Prior to March 2010, in a conspiracy case, prosecution had to prove that the conduct at issue resulted in an 'undue' lessening of competition, which meant that parties to an alleged agreement had to possess some degree of market power. Conduct carried out prior to March 2010 continues to be assessed pursuant to the former criminal provisions, using the 'undueness' standard. Conduct carried out after March 2010 will be assessed under the new per se standard.
6 The civil provision is found in Section 90.1 of the Act. It prohibits agreements between actual or potential competitors that have the effect of substantially preventing or lessening competition. It is meant to provide more flexibility to the Bureau to address other forms of competitor collaborations that have or are likely to have a negative effect on competition but do not amount to hardcore cartels warranting criminal prosecution. Section 90.1 does not carry any financial penalties. The only available remedy is a prohibition order from the Competition Tribunal, a quasi-judicial body in charge of adjudicating civil competition law claims. Section 90.1 is outside the scope of this chapter.
7 Canada, Competition Bureau (23 December 2009). Online at https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03177.html.
8 The Guidelines do not have the force of law; they simply reflect the Bureau's enforcement approach and are not binding on the Bureau.
9 Section 45(8) of the Act defines a competitor broadly to include 'a person who it is reasonable to believe would be likely to compete with respect to a product in the absence of a conspiracy, agreement or arrangement'.
10 Competition Act, Section 45(1)(a).
11 Competition Act, Section 45(1)(b).
12 Competition Act, Section 45(1)(c).
13 In May 2018, the definition of 'affiliate' under the Act was amended to replace prior references to 'corporation' and 'partnership' with the concept of 'entity', which broadens the scope of entities that could be considered affiliated.
14 Competition Act, Section 47(1). It should be noted that even if the coordinated conduct is not subject to Section 47(1) by virtue of having been made known to the person calling for bids or tenders, it may still constitute conspiracy under Section 45.
15 Other anti-cartel provisions prohibit conspiracies in professional sports (Section 48) and certain agreements or arrangements between federal financial institutions (Section 49).
16 The Bureau has relied on this section fairly infrequently and there have been no recent prosecutions.
17 This investigation was part of a larger, ongoing international investigation into a series of conspiracies and bid-rigging arrangements among various suppliers of motor vehicle components, which is being coordinated with competition agencies in the United States, Japan, the European Union and Australia. In July 2016, Nishikawa, a Japanese manufacturer of body sealing products, was charged in the United States and agreed to plead guilty and pay a fine of US$130 million for its participation in bid rigging affecting both the United States and Canada. After discussions, it was agreed that the Antitrust Division would take the lead on the prosecution, as the conduct primarily targeted US consumers. Competition Bureau, News Release, 'Unprecedented cooperation with US antitrust enforcement authority leads to major cartel crackdown' (20 July 2016) at https://www.canada.ca/en/competition-bureau/news/2016/07/unprecedented-cooperation-with-us-antitrust-enforcement-authority-leads-to-major-cartel-crackdown.html.
18 SC 1999, c 18.
19 Extradition partners are countries with which Canada has an extradition agreement (bilateral treaty or multilateral convention) or a case-specific agreement, or countries or international courts whose names appear in the schedule to the Extradition Act.
20 Extradition will only be granted for offences punishable by imprisonment of at least two years in both countries or as otherwise specified in the relevant extradition treaty.
21 For example, in 2007, three Canadians who ran a telemarketing 'boiler room' in Toronto that purported to offer credit cards to US consumers with poor credit histories for a fee but never delivered the cards, were extradited to the United States and eventually received lengthy prison terms. Competition Bureau, News Release, 'Canadian Scammers Extradited to the U.S. Receive Lengthy Prison Sentences' (30 July 2008), at https://www.canada.ca/en/news/archive/2008/07/canadian-scammers-extradited-receive-lengthy-prison-sentences.html.
22 Section 6(2) of the Criminal Code provides that 'no person shall be convicted . . . of an offence committed outside Canada'.
23 The 'real and substantial link' test, established by the Supreme Court of Canada in Libman v. The Queen,  2 SCR 178, provides that all that is necessary to make an offence subject to the jurisdiction of Canadian courts is that a significant portion of the activities constituting the offence took place in Canada and that there be a 'real and substantial link' between an offence and Canada. In the competition law context, this approach was confirmed in VitaPharm Canada Ltd v. F Hoffman-La Roche Ltd (2002) 20 CPC (5th) 351 (Ont SCJ), in which five foreign defendants brought a motion to challenge a Canadian class action in relation to the bulk vitamins conspiracy on the basis that the court lacked jurisdiction because the agreements in question were made outside Canada and the defendants did not operate in Canada (although some had Canadian subsidiaries). The court concluded that where defendants conducted business in Canada, made sales in Canada and conspired (elsewhere) to fix prices on products sold in Canada, a real and substantial connection existed between the alleged damage in Canada and each defendant's conduct elsewhere. The VitaPharm decision was affirmed by the Supreme Court of Canada in Sun-Rype Products Ltd v. Archer Daniels Midland Company  SCJ No. 58.
24 Competition Act, Section 45(4).
25 The Guidelines – see footnote 7 at 13 and 14.
26 Competition Act, Section 45(7).
27 Competition Act, Section 45(5).
28 Competition Act, Section 45(6)(a).
29 Competition Act, Section 45(6)(b). The Bureau's position is that the exemption does not apply to partnerships, trusts or other non-corporate entities or individuals, although the Bureau has indicated that it will consider the nature of any common control or relationship between the parties when determining whether criminal prosecution is appropriate. The Guidelines – see footnote 7 at 15.
30 Although requests for immunity or leniency are made to the Bureau, only PPSC can grant immunity or leniency, on the Bureau's recommendation. As a practical matter, although the decision is technically at the PPSC's discretion, the PPSC is unlikely to go against the Bureau's immunity or leniency recommendation.
31 An applicant must be the first to disclose in Canada. Being the 'first-in' in another jurisdiction does not automatically translate into immunity in Canada.
32 Competition Bureau, Bulletin, 'Immunity and Leniency Programs under the Competition Act' (27 September 2018) at https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04391.html.
33 Competition Bureau, Bulletin, 'Communication of Confidential Information Under the Competition Act' (30 September 2013) at https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/%20eng/03597.html.
34 In 1999, F Hoffmann-La Roche paid C$50.9 million for multiple conspiracies involving bulk vitamins.
35 Investigations into bid-rigging arrangements among various suppliers of motor vehicle components have resulted in the three largest fines ever ordered by a Canadian court for bid rigging. In 2013, Yazaki Corporation paid C$30 million for bid rigging in the supply of wire harnesses, the highest penalty ever imposed under Section 47 (see https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03560.html). In April 2017, Mitsubishi Electric paid C$13.4 million after pleading guilty to three counts of bid rigging in the supply of alternators (see https://www.canada.ca/en/competition-bureau/news/2017/04/mitsubishi_electrictopay134millionforriggingbidsforcarparts.html) and in April 2016, Showa Corporation paid C$13 million for its role in a bid-rigging arrangement involving the supply of electric power steering (see https://www.canada.ca/en/competition-bureau/news/2016/04/japanese-auto-parts-company-fined-13-million-for-participating-in-a-bid-rigging-conspiracy.html).
36 For example, under the federal Integrity Framework, parties may be debarred from federal procurement for up to 10 years. See https://www.tpsgc-pwgsc.gc.ca/ci-if/ci-if-eng.html. It should also be noted that the leniency programme does not contain an express debarment exemption for leniency applicants who may, therefore, face debarment from federal public procurement after pleading guilty as part of the leniency process.
37 These include deterrence, ensuring the sentence is sufficiently large so as not to amount to a mere licence fee, proportionality to the gravity of the offence and the degree of the defendant's responsibility, the duration of the offence, the defendant's market share and the potential harm to consumers.
38 For example, where the party agreed to refrain from doing business in Canada and thus had no Canadian volume of commerce or where a party deliberately lost out on a bid and thus earned no revenues.
39 Canadian courts have imposed conditional sentences involving home confinement, community service or both. As a result of the enactment of the Safe Streets and Communities Act in November 2012, Canadian judges technically no longer have the discretion to impose a conditional sentence on individuals convicted of an offence that carries a maximum penalty of 14 years' imprisonment or more. See Competition Bureau, News Release, 'Ontario individual sentenced after pleading guilty to bid rigging' (21 May 2015), https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03936.html. In December 2018, the Quebec Court of Appeal reversed a trial judge's decision to impose conditional sentences on three individuals accused of bid rigging, substituting them with prison sentences. The Court even increased one accused's sentence from two years less a day to be served in the community, to three years in prison.
40 Competition Act, Section 15.
41 Subject to legal privilege, access to computerised data, whether stored on computers or other devices, means that Bureau officers must be provided with necessary passwords, encryption codes, decryption codes, software, hardware or other means to allow access.
42 Competition Act, Sections 11(1)(b) and 11(2).
43 Competition Act, Section 11(1)(a).
44 Criminal Code, Section 183.
45 In practice, they will often allow for a brief period of time for counsel to be contacted.
46 See the Competition Bureau's press release at https://www.canada.ca/en/competition-bureau/news/2018/09/launch-of-revised-immunity-and-leniency-programs-will-enhance-effective-enforcement-and-prosecution.html.
47 Competition Bureau, Bulletin, 'Requests for information from private parties in proceedings under Section 36 of the Competition Act' (20 November 2017) at https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04314.html.
48 Courts in various jurisdictions in Canada have reached different conclusions regarding the production of information in the Bureau's possession. See, for example: Pro-Sys Consultants Ltd v. Microsoft Corporation, 2016 BCSC 97; Imperial Oil v. Jacques, 2014 SCC 66; and Canada (Attorney General) v. Thouin, 2015 QCCA 2159 affirming Thouin v. Ultramar Ltée, 2015 QCCS 1432.
49 Pioneer Corp v. Godfrey, 2019 SCC 42.
50 Umbrella purchasers are those who purchased the allegedly cartelised product from non-conspirator manufacturers. The main argument advanced in umbrella claims is that cartel members dominated the relevant market to such an extent that they were able to increase prices across the entire market, resulting in non-conspiring manufacturers being able to charge – and having charged – their customers higher prices than they would have in a non-cartelised market. Prior to the Godfrey decision, the law on umbrella purchasers was split between the courts in Ontario and British Columbia, with the Ontario lower court having rejected umbrella purchaser claims and the British Columbia courts, including the Court of Appeal in the Godfrey case, having allowed them.
51 The Supreme Court of Canada also settled a number of other important questions that had been subject to debate in the lower courts. These included: (1) the applicable limitation period for alleging breaches of the Act; (2) whether the Act excludes parallel or similar causes of action in tort, such as civil conspiracy and unjust enrichment; and (3) the methodology for determining loss at the certification stage.