In an August 2013 decision of the Quebec Superior Court, R. c. Les Pétroles Global Inc., a company was found guilty of price fixing based on the criminal conduct of its general manager who pleaded guilty to the same offence in 2009. The case marks one of the first decisions that considers the scope of section 22.2 of the Criminal Code (the organization liability offence) in the context of a criminal trial on the merits. The decision is important for two reasons.
First, and as discussed at length in the court's reasons, the addition of section 22.2 in 2003 represented a departure from the old common law rule that required the Crown to tie the underlying criminal conduct to the "directing minds" of the corporation. The 2003 amendment was prompted by a number of incidents involving corporations, including the Westray mine disaster in 1992.
Second, and more importantly, enforcement officials from a number of agencies, including the Competition Bureau, will point to this decision to support their view that conduct need not have been formulated at the highest levels of an organization to give rise to corporate culpability, and that even conduct engaged in by mid-level managers is sufficient to convict a corporation.
For a discussion of the May 30, 2012 decision that followed the preliminary inquiry in this matter, please see our October 2012 Blakes Bulletin. The decision treated in detail the issue of who can trigger a corporation's liability under section 22.2.
Les Pétroles Global Inc. (Global) is a retail gasoline operator with stations located across Eastern Canada. In 2008, Global was accused of conspiring to fix gasoline prices in Sherbrooke and Magog between May 2005 and May 2006. Following a preliminary inquiry in May 2012, Global was committed to trial on the conspiracy charge. All of the facts necessary to convict for conspiracy were admitted in this case with the exception of whether the company's general manager satisfied the "senior officer" requirement under section 22.2.
The court began by considering the legislative history of section 22.2. It noted that the parliamentary debates surrounding the enactment of section 22.2 (through Bill C-45) revealed that Parliament intended to expand the scope of personnel whose conduct could result in corporate criminal liability to include mid-level managers, such as regional or general managers. The court also considered the language of section 22.2, as well as relevant academic literature, and determined that Parliament intended to move away from the restrictive interpretation of the common law "directing minds" concept, as set out by the Supreme Court of Canada in Rhône (The) v. Peter A.B. Widener (The) and in Canadian Dredge and Dock v. The Queen. In doing so, the court affirmed that the standard for imposing corporate criminal liability for the conduct of the organization's personnel is, indeed, lower than the common law "directing minds" standard and rejected the defence's arguments that Bill C-45 merely clarified the common law by further identifying the persons susceptible to being characterized as "directing minds."
In order to determine whether or not the key employees of Global were "senior officers", the court examined the roles and responsibilities of those employees and did not rely merely on their titles or positions within the organization. The court pointed to a number of factors to support its holding that the defendant's general manager was, indeed, a "senior officer": he held the title of general manager for Quebec and the Maritimes and was responsible for overseeing two-thirds of the company's stations; he was the third-highest-paid employee with the company; territory managers under his direct supervision were responsible for setting gasoline prices; and his superiors had no involvement in the day-to-day operations of the stations in his territory.
The decision raises a number of implications for Canadian companies.
First, the decision confirms that the conduct of individuals who do not sit within the highest levels of management still can result in criminal liability for a company in Canada.
Second, an employee with significant operational authority rather than traditional decision-making power can be considered a "senior officer" for the purpose of section 22.2.
Third, cases in which criminal liability can be attached to a corporation will be highly fact-specific. The line between being a "senior officer" and a "mere employee" remains undefined, particularly given the dearth of case law, meaning that criminal conduct of certain lower-level employees without managerial or supervisory functions may not be sufficient to result in criminal liability for their employer.