On March 1, 2013, the Supreme Court of Canada released an important ruling on the scope of criminal conspiracy in Canada and significantly restricted the "party liability" rules for conspiracy offences. This decision could have significant implications for criminal antitrust prosecutions in Canada involving potential liability by third parties including individuals, affiliated companies and trade or industry associations.
The Court's analysis of the party liability rules in R. v. J.F. 2013 SCC 12 (released on March 1, 2013) arose out of a gruesome case of conspiracy to murder involving a young offender. The defendant had learned that a female friend and her sister were planning to murder the girls' mother by having her drink excess alcohol and then drowning her (the sisters were convicted of first degree murder). In the course of their investigation, authorities found that the defendant had MSN communications with one of the sisters in which he provided information about death by drowning and made certain suggestions about the manner in which the plan should be carried out. He also offered means to mislead a future police investigation. At trial, he was convicted of conspiracy to commit murder and the issue on appeal was whether the trial judge properly directed the jury on the prosecution's alternate theory of the defendant's participation in the conspiracy through "party liability".
The "party liability" rules in the Criminal Code for conspiracy cases aim at expanding liability beyond persons or entities that actually participate as members of a conspiracy, by stipulating that liability can arise through "aiding and abetting" the conspiracy. Prior to the Supreme Court's decision, a doctrinal dispute among Canadian provincial appellate courts existed as to whether guilt by "aiding and abetting" could be proven by evidence of conduct intended to generally further the objects of the conspiracy after the agreement had been formed, or by the more narrow analysis that would restrict liability to actions relating only to the initial formation of the agreement. In a principled analysis, the Supreme Court decided firmly that guilt for "aiding and abetting" a conspiracy could be found only where there was evidence of acts directed at the formation of the agreement. In the case of the defendant, the error committed by the trial judge was inconsequential since the Court noted that there was ample evidence from which the jury could have found that the defendant was a member of the conspiracy and thus his conviction was affirmed.
In the course of its analysis of the scope of criminal liability under Canada's conspiracy laws, the Court reiterated and affirmed earlier principles of law establishing that the crime of conspiracy is complete when two or more persons agree to attain an unlawful object. To establish guilt by "aiding and abetting" the prosecution must prove that a defendant knew the object of the conspiracy entered into by the conspirators and that his or her assistance was intended to assist the conspirators. The Court rejected an argument by the defendant that a theory of party liability was too remote and did not constitute an offence in Canada. The Court also noted that proof of actual membership in a conspiracy is most often made through indirect circumstantial evidence (a statutory component of Canada's antitrust conspiracy crime).
The Supreme Court's decision has implications for Canada's antitrust conspiracy offence under the Competition Act. In cases where Canada's Competition Bureau has been unable to point to direct evidence of membership in a particular conspiracy, investigators have sometimes sought to attach liability on the basis of conduct that assisted or facilitated the conspiracy in attaining its object. On this theory, a trade or industry association (itself not a competitor and therefore not capable of being a party to an antitrust conspiracy to fix prices) could be seen to facilitate or "aid and abet" such a conspiracy among its members by, for example, convening meetings at which prices are discussed or distributing material during the workings of the conspiracy. Similarly, under this theory, a former or current employee or an affiliated corporation could be seen to facilitate a conspiracy by engaging in acts that occurred after the formation of the original agreement.
Under the revised liability theory of the Supreme Court, such an approach would no longer be correct under Canadian law. Thus, in order to bring forward a case against a third party such as a trade or industry association, the prosecution will have to produce evidence that the acts committed by the association facilitated the actual formation of a price-fixing agreement. The same analysis would apply to conduct of individuals, affiliated corporations or other third parties in the circumstances.
The Court pointed out, however, that often actions undertaken by third parties during the course of a conspiracy would constitute strong evidence of actual membership in the conspiracy so as to remove the need for an "aiding and abetting" approach.
Trade or industry associations should never encourage or facilitate members entering into agreements that would constitute criminal offences under section 45 of the Competition Act. The decision of the Supreme Court of Canada does not represent a licence for impermissible conduct on the part of associations. However, the decision provides a potentially useful line of defence in criminal cases and private enforcement proceedings circumstances where the prosecution's or the class plaintiff's case may lack the key element of proof of conduct relating to and aimed at the formation of the actual antitrust conspiracy.
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