Canada: Taking punishment to the Max?: Individual liability for competition offences post-Maxzone


We have long been told that money cannot buy happiness. Now, it seems, money also cannot buy freedom – at least not freedom from jail for cartelists in Canada. Traditionally, criminal convictions or plea agreements for Canadian competition offences have involved monetary fines and, for individuals, house arrest or conditional sentences instead of actual jail time. However, both enforcement efforts and penalties sought for competition offences against individuals may be on the rise in Canada as a result of a deliberate strategy on the part of the Competition Bureau (the "Bureau") to eradicate these harmful practices. Canada's Federal Court also recently touted the benefits of jail time as a deterrent for competition offences and compared price fixing agreements and other "hard core" cartel agreements to fraud and theft. These "tough on (competition) crime" attitudes mirror those expressed by enforcers south of the border: individuals in the United States are also facing more jail time for cartel offences.

This article explores the principles of individual liability for competition offences in Canada in Section 1. Section 2 discusses the recent focus on enforcement against individuals, including the push for jail time. Section 3 explains the impact of the Safe Streets and Communities Act (SSCA), and Section 4 discusses the Bureau's Immunity and Leniency Programs.

General Principles of Individual Liability

Individual liability exists for many offences under Canada's Competition Act (the 'Act'). The most widely publicized and enforced of these are cartel offences under section 45, and bid-rigging offences under section 47.

Cartel Offences

Section 45 of the Act makes it an offence to conspire, agree or arrange with a competitor to fix, maintain, increase or control the price for the supply of a product; to allocate sales territories, customers, or markets for the production or supply of a product; or to fix, maintain, control, prevent, lessen or eliminate the production or supply of a product. The maximum penalty for these crimes is among the highest in the world: imprisonment for up to fourteen years and/or a fine of up to CA$25 million.

The Commissioner of Competition, John Pecman, stated in 2015 that the Bureau will vigorously enforce these provisions, including against individuals, and will prioritize cracking down on cartels. He has also quoted the US Supreme Court in stating that cartels are the "the supreme evil of antitrust".

Bid Rigging Offences

Section 47 of the Act prohibits bidders, in response to a call for bids or tenders, from agreeing to not submit a bid or to submit a bid that is the product of an agreement, when such an agreement is not disclosed to the person calling for the bids. It is an indictable offence for which the sentence is a fine, in an amount at the court's discretion and/or imprisonment for up to 14 years. Collusion in the bidding process, the decision to not submit bids, bid rotation, and bid sharing among bidders rank among the most widespread forms of bid-rigging.

Other Competition Act Offences/Reviewable Conduct

Individuals also face liability under other sections of the Act, as well as under the Criminal Code. For instance, engaging in deceptive marketing practices under Part VII.1 subjects individuals to administrative penalties of up to CA$750,000 (or CA$1 million for any subsequent contraventions). Making a false or misleading representation, when done knowingly or recklessly, is also an offence pursuant to section 52 of the Act punishable by up to 14 years imprisonment or a fine in an amount determined by the court.

The Act also extends liability for certain offences committed by corporations onto directors and officers where they are in a position to direct or influence the policies of the corporation. For instance, subsection 52.1(8) of the Act establishes the liability of officers and directors of corporations who have committed telemarketing offences and subsection 53(5) creates liability for officers and directors for the offence of deceptive prize notification.

Increased Focus on Individuals and Imprisonment

Traditionally in Canada, criminal convictions or plea agreements for competition offences have involved corporate defendants being subject to fines and, where individuals have been convicted, they have been subject to fines but only house arrest or conditional sentences instead of imprisonment. However, changes to the Act in 2009 and 2010 strengthened the Bureau's enforcement capacity by making hard core cartel agreements subject to a per se standard and increasing maximum fines and prison terms for cartel and bid rigging offences. These changes have given the Bureau a renewed mandate to pursue these offences and enforcers are now increasingly focused on individuals.

This new enforcement focus was reflected in the 2012 case Canada v. Maxzone Auto Parts (Canada) Corp. ('Maxzone'). Maxzone Autoparts Canada Corp. ('Maxzone Corp.') was charged under section 46 of the Act for its involvement in an aftermarket auto parts cartel. Section 46 makes it an offence for a corporation that carries on business in Canada to implement in Canada any kind of directive intended to give effect to a conspiracy, combination, agreement or arrangement outside of Canada that would have contravened section 45 of the Act had it occurred on Canadian soil.

Maxzone Corp. pleaded guilty and the Bureau sought a fine but no jail time against any individuals. Chief Justice Crampton ultimately accepted the parties' very brief (two paragraphs) joint sentencing submission and imposed a fine of CA$1.5 million, which was calculated pursuant to the Bureau's guidance regarding leniency applicants such as Maxzone Corp. However, he did so reluctantly and criticized the Bureau for not pressing harder for imprisonment.

In his reasons, Chief Justice Crampton called into question whether courts will continue to enforce joint recommendations as to sentencing and demanded more information from the Bureau about the harm that competition crimes cause in order to support sentencing. Going forward, where no term of imprisonment is provided for in a joint sentencing submission, a court may require the parties to submit more detailed evidentiary records and submissions to satisfy the court that the proposed sentence is appropriate.

In his sentencing reasons, the judge also compared price fixing agreements and other "hard core" cartel agreements to fraud and theft1 and indicated that the threat of serving time in prison is a necessary deterrent. He stated:

In the absence of a serious and very realistic threat of at least some imprisonment in a penal institution, directors, officers and employees who may otherwise contemplate participating in an agreement proscribed by section 45 of the Act, or who may have been directed to implement such an agreement in Canada in contravention of section 46 of the Act, are unlikely to be sufficiently deterred from entering into or implementing such agreements by mere fines. In brief, achieving effective general and specific deterrence requires that individuals face a very real prospect of serving time in prison if they are convicted for having engaged in such conduct...2

Chief Justice Crampton's critique was based in part on the weak history of imprisoning people in Canada for competition offences.3 From 2008 to the present, no individuals have been jailed in Canada for cartel or bid rigging offences. Indeed, it appears that the 1996 case R v Perreault, the first ever jury trial for a Competition Act offence in Canadian history, in which an individual was sentenced to one year in prison for conspiring to fix driving school prices, attempting to oust competitors from the market by offering unreasonably low prices, and plotting to raise prices by making threats to competitors, is one of the few modern examples of individuals being imprisoned for cartel or bid-rigging offences.4 By contrast, those convicted of telemarketing offences have served jail time.5

The tide does seem to be turning. With the enhanced penalties added in 2010, as well as the move to a per se standard for hard core cartel offences, the Commissioner has signalled he is optimistic that convictions will be forthcoming. Indeed, Commissioner Pecman is so keen to see individuals jailed that he reportedly made a bet in 2014 with Gary Spratling, former Deputy Assistant Attorney General of the U.S. Department of Justice Antitrust Division, regarding whether Canada would put any cartelists behind bars by the time of the next International Cartel Conference in 2016. Commissioner Pecman lost that bet.

Impact of the Safe Streets and Communities Act

Another key driver behind the greater likelihood that cartel offenders will be jailed is the passage of the SSCA in 2012.6 The law included relatively well-publicized amendments in Canada to a number of criminal statutes, including the Youth Criminal Justice Act and the Criminal Code. However, the law will also have an important effect on Canadians (and non-Canadians) convicted of violating the conspiracy and bid-rigging provisions of the Act.

Removes sentencing flexibility

On the issue of imprisonment, the SSCA removes the ability to sentence an individual to community service, also known as a conditional sentence. As sections 45 and 47 are indictable offences for which the maximum term of imprisonment is 14 years, courts can no longer order a sentence of less than two years to be served in the community. This means any prison sentence as a result of a section 45 or 47 conviction would result in the sentence having to be served in prison. As noted, previously many competition-related sentences were carried out in the community. For instance, six individuals were sentenced to terms of imprisonment of a combined 54 months in relation to price fixing in the retail gasoline markets in Victoriaville, Thetford Mines, Sherbrooke, and Magog, Québec. However, all six individuals served their terms in the community.

In the past, where immunity was no longer available, corporations and individuals often plead guilty to conspiracy offences after reaching an agreement with the Bureau and the Director of Public Prosecutions (DPP) as to a recommended sentence pursuant to the Bureau's Leniency Program (see below). By constraining the ability of the Bureau to agree to recommend sentences involving terms of imprisonment to be served in the community, the SSCA may result in accused individuals contesting more cases.7

Delays ability to travel abroad

Under the SSCA, individuals convicted under sections 45 or 47 of the Act must also wait 10 years, instead of the previous five years, to apply for a pardon after their sentences have expired (to be called a "record suspension"). This will in turn affect these individuals' ability to resume business activities after they have served their sentences. Of particular note is that a record of conviction affects the ability to travel to certain countries, particularly the United States, which bars entry to persons convicted of a criminal offence who have not received a pardon.

Treatment of Individuals Under the Bureau's Immunity and Leniency Programs

As recognized in Maxzone, the potential for imprisonment is meant to act as a powerful incentive for offenders to come forward under the Bureau's Immunity and Leniency Programs. The Bureau views its Immunity Program as one of the most effective tools in its detection and enforcement arsenal. Under this Program, the first party to disclose an offence to the Bureau or to provide evidence that leads to the filing of charges is eligible to receive immunity from prosecution, assuming the party meets the other Program requirements, such as full cooperation with the Bureau's investigations. Under the Leniency Program, other parties who are not the first to come forward and therefore are not eligible for immunity may nonetheless be eligible for lenient sentencing treatment if they cooperate with the Bureau and agree to plead guilty.

The Immunity and Leniency Programs apply to individuals as well as corporations. According to the Immunity Program Guidelines, where a company comes forward and qualifies for immunity, "all current directors, officers and employees who admit their involvement in the illegal anti-competitive activity as part of the corporate admission, and who provide complete, timely and ongoing co-operation, also qualify for the same recommendation for immunity". In addition, former directors, officers and employees may qualify for immunity if they offer to co-operate with the Bureau's investigation. Under the Leniency Program Guidelines, the directors, officers or employees of the first company to apply for leniency are not typically charged separately. However, directors, officers and employees of subsequent leniency applicants may be charged depending on the situation.

Leniency applicants should, however, be aware of the effects of Chief Justice Crampton's decision in Maxzone, which, as noted above, called into question whether courts will continue to accept lenient joint sentencing submissions that do not include jail time, particularly in the absence of adequate information to assess the seriousness of the crime.


Canadian businesses should prepare or enhance corporate compliance plans and training for executives and employees to limit corporate and personal exposure under the Act, particularly for breaches of sections 45 and 47. Companies that are first to report suspected violations and meet the criteria of the Bureau's Immunity and Leniency Programs can obtain some legal protection for individual employees. However, greater vigilance is warranted as a result of the decision in Maxzone and the impact of the SSCA, as well as statements from Commissioner Pecman that the Bureau will "vigorously enforce" the criminal cartel provisions, including against individuals,8 and indications that the Commissioner is frustrated about the lack of jail time imposed for cartel offences in Canada.9

This combination of an enhanced enforcement climate and a tough on competition crime mentality at the Bureau and in the courts means images of executives in handcuffs could be coming to Canada very soon. After all, Mr. Pecman would not want to lose another bet.


1 Canada v Maxzone Auto Parts (Canada) Corp., 2012 FC 1117, at para 54.

2 Ibid at para 80.

3 See Government of Canada, Competition Bureau, Penalties Imposed – International Cartels.

4 R v Perreault, [1996] RJQ 2565 (WL Can) (QC Sup Ct). See also Jennifer A Quaid, "Making Sense of the Shift in Paradigm on Cartel Enforcement: The Case for Applying a Desert Perspective" (2012) 58:1 McGill LJ 149.

5 See Government of Canada, Competition Bureau, Court Decisions.

6 SC 2012, c 1.

7 The Commissioner rebuffed such concerns in a 2015 speech, suggesting that there are a variety of reasons, beyond sentencing, that would lead an accused to settle rather than litigate; John Pecman, " Cutting Through the Noise" (delivered December 8, 2015).

8 Pecman, June 2015 remarks, supra note 2.

9 Guniganti, supra note 9.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions