The investigation and prosecution of domestic and international
cartels continues to be a top priority for antitrust authorities
worldwide, including in Canada. The past month has seen a number of
significant developments in this area, including guilty pleas in
Canada and the United States and the imposition of record
administrative fines (over €1 billion) in the European
Union. A brief overview of these developments is provided
The Canadian Competition Bureau's pursuit of alleged price fixing affecting retail gasoline markets in Quebec continues. Charges were laid in June 2008 against 13 individuals and 11 companies accused of fixing gasoline prices in Victoriaville, Thetford Mines, Magog and Sherbrooke, Quebec. While many defendants have indicated their intent to vigorously contest the charges, certain individuals and companies have pleaded guilty and agreed to pay fines exceeding $2 million in total. Most recently, one of the individual defendants pleaded guilty on October 31, 2008 and agreed to be sentenced to 12 months' imprisonment to be served in the community.
The Bureau relied on a number of different investigative tools in connection with its investigation, including search warrants and wiretaps. Surprise search and seizures (or "dawn raids", as they are commonly referred to in Europe) are used frequently by the Bureau when investigating cartels, and being prepared to deal with such an event should be an important part of any company's competition compliance program. For guidance on how to respond to search and seizures in Canada, please see our firm's publication, "Are You Prepared for a Search?".
While the Quebec gasoline proceedings involve allegations of a purely domestic cartel, other recent developments may impact the Bureau's approach to the prosecution of international cartels. For instance, in July of this year, the Bureau announced that two individuals had been extradited to the United States for their role in a deceptive telemarketing scheme involving American consumers and had been found guilty and sentenced to a combined 42 years in prison by the U.S. Federal Court in the Southern District of Illinois. This is the first time that a Competition Bureau investigation has resulted in an extradition from Canada to a foreign jurisdiction. Given that the United States has sought the extradition of foreign nationals in international conspiracy cases, it is quite possible that the authorities in Canada could be asked to extend this precedent to extradite Canadian nationals who are allegedly involved in international cartels that impact U.S. commerce.
Lastly, on November 21, 2008, the Competition Bureau announced that Akzo Nobel Chemicals International BV pleaded guilty to criminal charges for its role in an international cartel between October 1, 1998 and June 30, 2001 to fix the price of hydrogen peroxide sold in Canada. Akzo agreed to pay a fine of CDN$3.15 million (or approximately 15% of the affected volume of commerce). This case is yet another example of an international cartel investigation where the Bureau benefited from the co-operation of an immunity applicant. The Bureau's investigation of this international conspiracy continues and more fines or charges may be forthcoming. In 2006, the European Commission fined seven firms (including Akzo Nobel) a total of €388 million for their involvement in price-fixing related to sales of hydrogen peroxide between 1994 and 2000 in the European Economic Area. The European Commission's 2006 investigation also benefited from the co-operation of an immunity applicant.
On November 12, 2008, the European Commission announced that it had imposed administrative fines of over €1.3 billion on the participants in a conspiracy to allocate markets/customers, and exchange confidential information relating to the sales of car glass in the European Economic Area. These fines were the highest ever imposed by the Commission, both for an individual company (€896 million for Saint Gobain) as well as for a cartel as a whole. According to the European Commissioner for Competition, the record fine was warranted because of the large size of the market (the annual turnover in the relevant market was €2 billion in the last year of the conspiracy), the seriousness of the case and the repeat nature of the offence (Saint Gobain was a repeat offender). The four companies can now appeal their fines at the European Court of First Instance.
In another development this month, the European Commission confirmed that it had carried out unannounced inspections or "dawn raids" at the premises of several cement companies operating in the European Union. According to the Commission, the companies are suspected of having violated Articles 81 and 82 of the EC Treaty (provisions dealing with cartels and abuse of dominant position). European press sources report that the companies searched include Lafarge, Holcim, Cemex, Heidelberg Cement and Dyckerhoff.
Also on November 12, 2008, three leading electronics manufacturers – LG Display Co. Ltd, Sharp Corp. and Chunghwa Picture Tubes Ltd. - agreed to plead guilty and pay a total of US$585 million in criminal fines in the United States for their roles in fixing prices in the sale of liquid crystal display (LCD) panels. LG alone was ordered to pay US$400 million, which is the second highest criminal fine ever obtained by the U.S. Department of Justice's Antitrust Division. Also noteworthy is the fact that Chungwa is the first Taiwanese company to plead guilty to a price fixing offence in the United States.
The LCD investigation, which remains ongoing, has involved co-ordination between enforcement officials in the U.S., Canada, the E.U. and Asia. This is by now a regular feature of international cartel investigations. The Competition Bureau, for example, holds bi-monthly bilateral meetings with its U.S., E.U. and Japanese counterparts to co-ordinate investigative steps and timing.
Antitrust authorities continue to vigorously investigate and prosecute cartel activity, a trend which shows no signs of abating. The developments described above speak to the seriousness with which antitrust authorities regard cartels and the risks companies and individuals face in engaging in such conduct.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.