In 2009, Parliament passed major amendments to the Competition Act (the “Act”) that are far reaching and represent the most significant changes to the Act since it was introduced in 1986. The most notable amendments to the Act include:
- decriminalizing many of the pricing provisions, including price maintenance, price discrimination and predatory pricing;
- introducing administrative monetary penalties for cases of abuse of dominance of up to $10 million for a first offence and $15 million for subsequent offences;
- increasing penalties for conspiracies, bid rigging and deceptive marketing practices, including misleading advertising; and
- introducing a two track regime for addressing agreements between competitors which will include a per se criminal conspiracy offence with respect to agreements between “competitors” to fix prices, allocate markets or control supply.
B. CONSPIRACY OFFENSE CAME INTO FORCE MARCH 2010
While Parliament has decriminalized some conduct, it has toughened the Act’s criminal provisions in other areas. The most profound amendment in this regard is the creation of the per se criminal conspiracy offence, which came into force in March 2010.
Previously, conspiracies under the Act only gave rise to criminal liability if they “unduly” prevented or lessened competition. This was a very onerous burden for the prosecution to bear. Under the new per se conspiracy provision, the question of “undueness” is not relevant. A per se offence is an offence where the conduct in question is illegal irrespective of its impact or consequences. As such, under the new per se criminal conspiracy offence, the prosecution must simply show intent to enter into one of the three prohibited types of agreements and knowledge of its terms – the agreement’s effect is irrelevant.
An “ancillary restraint defence” to a conspiracy prosecution is available. This defence applies if the accused can establish, on a balance of probabilities, that the alleged conspiracy is ancillary to a broader agreement between the same parties that does not contravene the Act’s conspiracy provisions, and is directly related, and gives effect to, the objective of the broader legal agreement.
C. ASSOCIATIONS TAKE NOTE
While the new conspiracy provision is focused on agreements between competitors, it is nonetheless important for associations to recognize that any person or entity who aids or abets an agreement that falls within the ambit of the new conspiracy provision may be liable under the Criminal Code for aiding or abetting a criminal offence and/or counseling another to commit a criminal offence. As such, associations may face criminal liability if they participate in, facilitate or support an illegal conspiracy amongst its members.
Trade and industry associations, by their very nature, bring together competitors in order to share common interests and to seek common solutions to common problems. Accordingly, associations are already potential hotbeds for illegal collusive behaviour. Associations must therefore be careful that their activities and meetings do not become forums for their members to fix prices, allocate markets or set supply or production.