What are the legislative amendments to the criminal
Effective March 12, 2010, Canada's existing conspiracy
provisions will be replaced by a per se criminal offence
for agreements between competitors to fix prices, affect production
or supply levels of a product, or allocate sales, customers or
territories. Unlike the current conspiracy offence, the new offence
does not require proof that the conspiracy, if implemented, would
prevent or lessen competition unduly. The new offence will,
however, still require proof (beyond a reasonable doubt) of an
agreement between competitors that falls into one of the categories
Maximum penalties under the new conspiracy offence are 14 years
imprisonment and a C$25 million fine, a significant increase from
the previous maximum of five years and C$10 million.
Are there any defences or exemptions?
Under the new cartel offence, liability can be avoided if the
agreement is "ancillary" to a broader agreement that does
not contravene the new conspiracy offence and is reasonably
necessary for giving effect to the objective of that broader
agreement. However, until the courts consider this point, the scope
of activities that will fall under the ancillary restraints defence
will remain uncertain.
Some of the defences previously available, including for
agreements or arrangements relating to the exchange of statistics
or credit information, cooperation in research and development and
the defining of product standards, have been removed from the new
cartel offence. Other exemptions, including those for
specialization agreements, agreements between affiliates and
agreements relating only to the export of products from Canada,
What is the practical impact of the new cartel offence?
The introduction of a per se offence for agreements
between competitors represents a fundamental shift in one of the
cornerstones of Canadian competition law, eliminating as it does
the requirement to prove that the agreement, if implemented, would
have a significant negative impact on competition in the relevant
Under the new offence, even legitimate collaboration between
competitors that involves an agreement to fix prices, affect
production or supply levels of a product, or allocate markets may
raise issues under a literal reading of the provisions. Although
the Bureau has taken the position in its recently issued Competitor
Collaboration Guidelines that it will seek to prosecute only
"hard core" cartels under the new offence, these
guidelines are not binding on the courts, private parties or even
the Bureau itself. Accordingly, any arrangements between
competitors that meet the above criteria could be the subject of
civil litigation or be used by parties as justification to avoid
Furthermore, agreements between competitors that do not fall
into any of the per se categories but are likely to
substantially lessen competition may be reviewable under a new
civil provision that also becomes effective as of March 12,
Parties doing business in Canada would be well advised to review
any existing arrangements with competitors (e.g., joint ventures,
product swaps, patent settlements) to determine whether such
arrangements raise any issues under the new cartel offence. The
potential consequences for violations are even more serious than
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.
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