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Competition Law

New Conspiracy Provisions Claim First Victims

Published: 01/16/2012

By Imran Ahmad, Chris Hersh

The first convictions under Canada’s strengthened conspiracy laws were announced on January 6, 2012. Two companies, Domfoam and Valle Foam, pleaded guilty to fixing prices for polyurethane foam and were fined a total of $12.5 million. Canada’s new per se conspiracy laws came into force in March 2010 (the previous provisions required that the conduct negatively impact competition “unduly”).

As the conduct occurred during the period covered by both the old and new conspiracy provisions of the Competition Act, the companies were charged under both. The companies were collectively fined $10 million for the period between January 1999 and March 2010 and a further $2.5 million for the five months the conduct continued after the new conspiracy provisions came into force.

In terms of the timing, it is worth noting that the Competition Bureau’s investigation was initiated by an immunity applicant one month before the new conspiracy provisions came into effect. This suggests that at least one of the companies involved believed that, while the conduct at issue might have been defensible under the old provisions, it would not be under the strengthened per se provisions. This is a useful reminder that companies should continually reassess their conduct to ensure it does not raise compliance issues under the current conspiracy provisions.

This case underscores the fact that the new conspiracy provisions are a much stronger enforcement tool in that they (i) eliminate the need to prove that the conduct had any anticompetitive effect and (ii) allow courts to impose significantly higher fines ($25 million versus $10 million under the previous provisions). This may explain why the fine for conduct that occurred for the five months after the new provisions came into effect is proportionately much higher than the fine imposed for the conduct that occurred for some 11 years under the old regime.

A copy of the Bureau’s press release announcing the conviction can be accessed here.

Please feel free to contact either Chris Hersh or Imran Ahmad should you wish to discuss this case or any other matters relating to the Competition Act.