The one-year delay before Canada's new, tougher, cartel law
comes into force expires this month. Starting March 12, 2010,
prohibited agreements between competitors will be criminally
illegal in Canada, regardless of their impact on competition. The
amendments result in the creation of a new category of "per
se" criminal offences (so-called because the outlawed
categories of agreement are "per se" illegal without
proof of economic effect). Penalties under the new offence will
also increase: from the former maximum five years imprisonment
and/or C$10 million fine, to a maximum of 14 years and/or C$25
million.
The prohibited categories of agreement include agreements with
existing or potential competitors to fix prices, allocate sales,
customers, or markets, and to limit or control production or supply
of a product. Such agreements are a criminal violation of Canadian
competition law, unless the defence can show that they are both
"ancillary and necessary" to a broader or different
agreement, the purpose of which is not also prohibited (e.g.,
customer allocation could be necessary, in some circumstances, to a
distribution agreement).
The amendments removed the requirement, which had existed in
Canadian law since 1890, for the Crown to prove that the impugned
agreement had led or was likely to lead to an "undue lessening
of competition" - thus facilitating the prosecution of
"hardcore" cartels.
As noted in the January 2010 edition
(http://www.stikeman.com/cps/rde/xchg/se-en/hs.xsl/13435.htm) of this newsletter, the Competition Bureau has issued
Competitor Collaboration Guidelines outlining its intended
approach to the enforcement both of the stricter section 45
prohibition against cartels, and of the accompanying civil
provision under the new section 90.1 of the Competition
Act, which enables the Competition Tribunal, on application by
the Commissioner of Competition (head of the Bureau), to prohibit
agreements which - although not criminally illegal - nonetheless
have led or are likely to lead to a substantial lessening or
prevention of competition.
While the Commissioner and the Guidelines have gone out of their
way to attempt to reassure the Canadian business community that the
new powers will be used responsibly, the fact remains that many
agreements which were previously regarded as legal under Canadian
law, due to their lack of economic impact, need to be reassessed
under the new law.
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.
