A recent sentencing decision,1 coupled with amendments just enacted to the sentencing provisions of the Criminal Code,2 means that tougher times may lie ahead for directors, officers and employees implicated in price-fixing and bid-rigging offences. Individuals who plead guilty to or are otherwise convicted of those offences are now more likely to be subject to imprisonment. This possibility may affect the willingness of individuals to participate in the Competition Bureau’s leniency program and to cooperate with an investigation. Each of these developments is discussed below.
The Maxzone decision
In Maxzone, a decision of the Federal Court released in September, the accused company pleaded guilty to a conspiracy-related offence. The sentencing judge, Chief Justice Paul Crampton, approved the $1.5 million fine that was jointly proposed by the Crown and the accused company. In doing so, however, he also wrote extensive reasons that he indicated were intended to "alter the future expectations" of leniency applicants and prosecutors alike.
Justice Crampton described price-fixing and other "hard core" cartel offences as analogous to fraud and theft, representing "nothing less than an assault on our open market economy." In discussing the need for more prosecutions of executives who commit these offences, Justice Crampton contrasted the insufficient deterrent effect of fines with the “powerful deterring effect” of prison sentences. He suggested that, other than in exceptional circumstances, a jointly recommended sentence for price-fixing violations should include a term of imprisonment for one or more directors, officers or employees of the accused corporation. When the recommended sentence does not include jail time, the prosecutor and settling defendant should explain to the court why a fine alone would be adequate.
Elimination of Conditional Sentences
Individuals convicted of price-fixing and other competition-related offences in Canada have typically received either fines or conditional sentences that allow time to be served in the community rather than in prison. On November 20, 2012, amendments to the sentencing provisions of the Criminal Code came into force; these eliminate the possibility of conditional sentences for individuals convicted of price-fixing or bid-rigging offences under the Competition Act. Non-custodial sentences are no longer available if a jail sentence is imposed.
Companies currently engaged in, or considering entering into, the leniency process should carefully consider the combined effect of the two developments discussed here. Prosecutors now may have less flexibility in negotiating resolutions. Some potential applicants (particularly individuals) may prefer to contest charges rather than submit voluntarily to the leniency process and settle cooperatively, with the increased risk that they will be subject to jail time.
1 R. v. Maxzone Auto Parts (Canada) Corp., 2012 FC 1117 [Maxzone].
2 Safe Streets and Communities Act, S.C. 2012, c. 1.
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