Law Times

Law Times • May 27, 2013 Page 9 FOCUS Criminal competition law changes Landscape altered for price-fixing, bid-rigging cases BY MARG. BRUINEMAN For Law Times R ecent changes to criminal competition laws completely alter the landscape for those facing charges of price fixing or bid rigging. "I don't recall anyone in Canada ever having served time in a jail cell for price fixing or bid rigging," says Eric Lefebvre, a partner with Norton Rose Canada LLP and a member of the firm's antitrust group. "But there have been, nonetheless, many conditional sentences rendered in recent years." All of that may soon change as a result of the latest legislative punch, although the ultimate impact of the changes, first to the Competition Act and then the Criminal Code, has yet to fully take hold. The Competition Act contains criminal as well as civil provisions governing most business conduct in Canada. Its goal is to prevent anticompetitive practices in the marketplace. The government amended the act three years ago to allow the Competition Bureau "to enforce Canada's anti-cartel law more effectively against serious offenders: those that agree to fix prices, allocate markets or restrict output." "To that end, these guidelines will assist firms in assessing the likelihood that a collaboration between or among competitors would raise concerns under the criminal or civil provisions of the Competition Act and, if so, whether the commissioner would commence an inquiry in respect of the collaboration," stated an announcement by the Competition Bureau at the time. The amendments saw an increase in the maximum allowable jail time to 14 years from five years. And there's now a mandatory twoyear sentence for fraud convictions involving more than $1 million. Last November, Criminal Code amendments under Bill C-10 removed the option of a conditional sentence as a form of punishment, which means a greater likelihood of a jail term. Suspended sentences or probation are still options but they're reformatory measures, not punishment. That reflects Federal Court Chief Justice Paul Crampton's reasons in Canada v. Maxzone Auto Parts (Canada) Corp. that suggested the need to treat price fixing and other cartel agreements as severely as fraud and theft. Toronto criminal lawyer Ricardo Federico foresees the changes introducing a series of trends. Foremost are the challenges. "Any time there is a minimum sentence . . . you will attract Charter scrutiny," he says. "And I think the role of the expert will become greater. It's going to create a whole new area, in my view, for criminal lawyers who do white-collar crime. The corporate world will look at the criminal bar . . . and work hand in hand with corporate lawyers." Federico believes guilty pleas will no longer be so easy to negotiate, which will lead to more trials. And that's where he sees more work for the forensic accountant and the forensic computer expert as science plays a larger role in dealing with electronic evidence when cases go to trial. There's no doubt the government's intention with the Safe Streets and Communities Act was to be tough on crime and the focus here is on white-collar offences. The change is breeding more specializations in fraud on both the prosecution and defence sides. But it's what may happen in the courtroom and an already overburdened criminal justice system that's of a concern to observers. "The great majority of cartel and bid-rigging cases under the Competition Act never make it to trial," says Lefebvre, pointing to a series of guilty pleas in Quebec involving retail gas price fixing. "In many cases, entering a guilty plea may have appeared as the lesser evil to individuals facing the prospect of lengthy litigation. Prior to the recent amendments, it boiled down to: Does the individual want to invest the resources needed to fight the accusations and take his chances as to the outcome of a full trial or does he rather put this matter behind him right away and deal with the consequences of having pleaded guilty?" A guilty plea, either through the leniency program or negotiation, would often result in a fine and perhaps a conditional sentence. "Now there is uncertainty as to what sentence an individual will face should he plead guilty. And that makes it more difficult for practitioners to advise clients," says Lefebvre. "Sentencing judges have lost the discretion to impose conditional sentences in cases of price fixing and bid rigging under the Competition Act. Until the courts provide guidance as to what we can expect in the way of sentencing under the new legislation, the uncertainty will remain. As a result, I expect there will be less plea agreements and more litigation on the horizon." With the prospect of imprisonment, those facing charges are much more likely to challenge them at a full trial rather than quickly settling the issue. In a letter to the standing committee on legal and constitutional affairs prior to the Criminal Code changes last year, The Advocates' Society objected to the expanded use of mandatory minimum sentences. firm's chairwoman of the com"It is our view that the manpetition law and foreign investdatory minimum sentences ment group, says enforcement is imposed by the bill will poteneasier as a result of the changes tially lead to disproportionate because there's no need to prove sentences, increase the numany anticompetitive effect. But ber of trials, create the potenthere are a number of other factial for transferring discretion tors that play a role. from judges to prosecutors, She points to increased multiand increase the likelihood of national co-operation with anticompromised guilty pleas, all trust regulators, the proliferation of which may create injustice," of the immunity and leniency wrote Mark Lerner, then presiprograms with their incentives dent of the organization. for people to confess, and more The recent legislative amendsevere penalties. ments have brought competition "The consequences of engaglaw compliance to the forefront. Companies are more frequently 'Now there is uncertainty as to what sen- ing in this conduct are dramatioffering compliance training to tence an individual will face should he cally higher," she says. But civil litigation, where damages can far their employees, something law- plead guilty,' says Eric Lefebvre. exceed the monetary fines imyers say is key. During those discussions, the company representatives come to un- posed in a criminal court, is also a significant facderstand the importance of being the first to apply tor. The Competition Act allows for civil suits after for protection under the Competition Bureau's im- an allegation of a violation. "You've got increased munity program. The first person to co-operate with enforcement by the Competition Bureau. Now the Competition Bureau and help build its case will you've got a significant factor of private enforcenever be accused. A co-conspirator who follows and ment," she says. "The bureau often takes years . . . but the plainco-operates through the leniency program might get a lesser sentence but can still face a criminal con- tiffs don't wait for the bureau. They file as soon as there's some disclosure." viction and all of the restrictions that brings. As a result, Lally says there's a significant surge of But Michelle Lally says it's all part and parcel of how the enforcement landscape has changed. Lally, private enforcement through strategic use of class LT a partner at Osler Hoskin & Harcourt LLP and the action proceedings in Canada. new edition CONsOlidATed ONTAriO emPlOymeNT ANd lAbOUr sTATUTes ANd regUlATiONs 2013 COnSULTInG EDITOR: ROBERT S. GREEnFIELD, B.A., j.D. Get easy access to all Ontario employment and labour legislation with the full text of all key statutes and regulations in labour and employment law. Annual editions ensure you are always working with the latest legislation and a section-by-section table of contents plus a comprehensive index provide instant access to the information. Updated in the 2013 edition NeW • Under the Accessibility for Ontarians with Disabilities Act, O. Reg. 191/11: Integrated Accessibility Standards • Under the Occupational Health and Safety Act, O. Reg. 33/12: Offices of the Worker and Employer Advisers UPdATed • • • • • • • • • • • • • • • • • • • • Apprenticeship and Certification Act, 1998, S.O. 1998, c. 22 Human Rights Code, R.S.O. 1990, c. H.19 Occupational Health and Safety Act, R.S.O. 1990, c. O.1 Ontario College of Trades and Apprenticeship Act, 2009, S.O. 2009, c. 22 Ontario Labour Mobility Act, 2009, S.O. 2009, c. 24 Pay Equity Act, R.S.O. 1990, c. P.7 Trades Qualification and Apprenticeship Act, R.S.O. 1990, c. T.17 Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Sched. A Under the Accessibility for Ontarians with Disabilities Act, 2005, Accessibility Standards for Customer Service, O. Reg. 429/07 Under the Apprenticeship and Certification Act, 1998, Restricted Skill Sets, O. Reg. 565/99 Under the Apprenticeship and Certification Act, 1998, Exemptions, O. Reg. 566/99 Under the Employment Standards Act, 2000, Termination and Severance of Employment, O. Reg. 288/01 Under the Labour Relations Act, 1995, Arbitration - Residential Sector of the Construction Industry, O. Reg. 522/05 Under the Pay Equity Act, Limitations on Maintaining Pay Equity, O. Reg. 491/93 Under the Public Service of Ontario Act, 2006, Public Bodies and Commission Public Bodies – Definitions, O. Reg. 146/10 Under the Trades Qualification and Apprenticeship Act, Fees, O. Reg. 31/02 Under the Trades Qualification and Apprenticeship Act, General Regulation (made under the Trades Qualification and Apprenticeship Act), R.R.O. 1990, Reg. 1055 Under the Workplace Safety and Insurance Act, 1997, Benefit for Loss of Retirement Income, O. Reg. 562/99 Under the Workplace Safety and Insurance Act, 1997, Construction Sector - Exemptions (Partners and Executive Officers), O. Reg. 47/09 Under the Workplace Safety and Insurance Act, 1997, Prescribed Temporary Indexing Factor, O. 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