Making sense of the shift in paradigm on cartel enforcement: the case for applying a desert perspective.

• Author: Quaid, Jennifer A.
• Position: Introduction to II. Considering Another Explanation: The Case for Applying a Desert Perspective to Cartel Enforcement A. Building a Desert Perspective 2. A Desert-Based Understanding of the Link Between the Scope of the Criminal Law and Justifications for Punishment, p. 149-182

Soon after the coming into force of changes to the criminal provisions in the Competition Act, the commissioner of competition signalled that cartel enforcement would start to reflect a new mindset, one that treats cartels as truly criminal. But while the impetus for this shift in paradigm is well-intentioned--to give effect to a stronger criminal law mandate following the amendments--it is poorly explained, because its defenders continue to refer to the predominant deterrence rationale used in competition law, even though applying a harm-based view of crime and punishment to cartels fails to explain why criminal enforcement is needed.

I believe that applying a desert perspective offers a compelling alternative explanation for this shift toward treating cartels as truly criminal. Drawing on the work of Arthur Ripstein, I offer an account of cartel enforcement that focuses on the inherently wrongful disregard for competition that characterizes cartels. I argue that seeing cartels as a particularly serious misuse of the competitive system, one that is so fundamentally at odds with the notion of a competitive marketplace that it cannot be tolerated, is what justifies recourse to the consistent and uniquely public response of the criminal law. Seen in this light, bringing a more criminal law-oriented mindset to bear on cartel enforcement makes sense in way that this shift in paradigm does not when justified in deterrence terms.

Peu de temps apres l'entree en vigueur des modifications apportees aux dispositions penales de la Loi sur la concurrence, le commissaire de la concurrence a signale que la lutte contre les cartels commencerait a refleter un nouvel etat d'esprit considerant les cartels comme etant veritablement criminels. Mais, bien que le but de ce changement de paradigme--donner effet a un mandat plus fort suite a ces amendements --est bien intentionne, il demeure mal explique. En effet, il continue d'etre justifie en fonction de l'argument de la dissuasion utilise dans le droit de la concurrence, meme si l'application d'une vue fondee sur le prejudice de la criminalite et la punition des cartels ne parvient pas a expliquer pourquoi l'application des peines est necessaire.

Nous croyons que l'application d'une perspective basee sur le merite offre une explication alternative convaincante a cette evolution vers le traitement des cartels comme etant veritablement criminel. En nous appuyant sur les travaux d'Arthur Ripstein, nous proposons un recit de la lutte contre les cartels qui se concentre sur le mepris envers la concurrence qui est inherent aux cartels. Je soutiens que concevoir les cartels comme constituant un abus particulierement grave du systeme concurrentiel, un abus fondamentalement en contradiction avec la notion d'un marche concurrentiel a un point tel qui ne peut etre tolere, justifie le recours a la reponse coherente et singulierement publique du droit penal. Vu sous cet angle, apprehender l'application des peines relatives aux cartels dans un etat d'esprit plus oriente vers le droit criminel est plus logique que lorsque justifie en termes de dissuasion.

Introduction I. Well-Intentioned but Badly Explained: Why the Shift Needs a Different Justification A. Well-Intentioned: How and Why the Shift Fits into Criminal Competition Enforcement 1. The Competition Act and the Overall Purpose of Enforcement 2. Fostering Compliance with the Act 3. Criminal Enforcement of the Act B. Poorly Explained: Why the Explanations for the Shift Do Not Add Up 1. What Did Change: The Effect of the 2009 Amendments on the Ambit of the Criminal Prohibitions 2. What Did Not Change: The Rationale for Cartel Enforcement C. Why We Need to Address the Disconnect II. Considering Another Explanation. The Case for Applying a Desert Perspective to Cartel Enforcement A. Building a Desert Perspective 1. Putting Desert in Context 2. A Desert-Based Understanding of the Link Between the Scope of the Criminal Law and Justifications for Punishment 3. What Sets Criminal Conduct Apart: Unilateral Disregard of Public Standards 4. Why Does Crime Demand Punishment? The Important Role of Public Enforcement in Upholding the Law 5. Getting to the Essence of the New Perspective: Upholding the Law B. Applying the Approach to Competition 1. Competition as tire Fair Terms of Interaction 2. What Makes Cartels Criminally Wrongful? 3. Why Do Cartels Require Punishment? 4. The Role of the Shift as the Public Expression of an Omnilateral Perspective Conclusions Introduction

New conspiracy provisions came into force in Match of this year, and we are seizing this opportunity to begin the admittedly long process of shifting the paradigm of our criminal programme. In a nutshell, relieved of the prior economic effects requirement, which was not suited go a standard of proof beyond a reasonable doubt, we are working to move from a jurisdiction often disproportionately focused on pleas--especially with respect to international cartels--to one that is appropriately aggressive in using our new tools to ensure that consumers and those who carry on business in Canada tan be confident that the criminality of this activity is recognized, and the law will be enforced with vigour. (1) These words, spoken by then Commissioner of Competition Melanie Aitken (2) in the autumn of 2010, mark the beginning of a concerted communications effort on the part of the commissioner to signal a change in the Competition Bureau's (Bureau's) approach to the enforcement (3) of criminal provisions in the Competition Act (the Act). (4) This shift follows the coming into force on 12 March 2010 of reforms to competition law that were passed in 2009. (5) In particular, Commissioner Aitken indicated that she believes these amendments provide the commissioner and the Bureau with a stronger mandate for criminal enforcement against cartels, one that supports the adoption of a tougher enforcement attitude toward criminal cartel behaviour. (6)

Commissioner Aitken provided little explanation either for her apparent confidence in this new mandate or for why it required a paradigm shift. All she said, without a lot of specifics, is that the combination of the two (i.e., the paradigm shift and new mandate) will make enforcement more "effective". What justifies this shift, and how is it supposed to make enforcement more effective?

From the limited way it has been described, the shift in paradigm points to a shift in the mindset that the Bureau will bring to the scrutiny of cartel cases: one that sees cartels as unambiguously criminal and thus appropriately subject to criminal law. (7) However, though the post-amendment legislative division between civil and criminal collaborations among competitors is the ostensible reason for the shift, the current characterization of what makes cartels criminal is essentially unchanged, remaining focused on the potential harm they can cause. (8) Not surprisingly, the pre-amendment view that the purpose of criminal enforcement is to reduce that harm through deterrence is also unchanged. Given how it was framed, the suggestion that this paradigm shift will make enforcement more "effective" should be taken to mean that the Bureau intends to do something to further a deterrence objective.

However laudable the objective of harm prevention may be, justifying the shift in the enforcement mindset against cartels in these terms is problematic. First, criminal and civil collaborations are not easily distinguished on the basis of harm. How can the shift justify labelling cartels as more firmly "criminal" without a solid basis on which to set them apart as a special kind of anticompetitive behaviour? Second, emphasizing deterrence does not convincingly explain why we should respond to cartels with criminal enforcement. Finally, a deterrence narrative sets up unrealistic expectations as to the kind of impact that the shift may actually have. There is at best only a weak indication that because of the shift there will be any meaningful change to those outcomes thought to matter most to deterrence (i.e., more cartels being discovered, more convictions, or higher penalties).

So is the shift ill-advised and doomed to fail? If, as I believe, the crux of the matter is not the absence of a rationale for the shift but rather the inability of the current rationale for criminal enforcement to convincingly explain why there are now stronger reasons for subjecting cartels to the criminal law, there is a powerful theoretical foundation available to support the shift. But it comes from a relatively unexplored source in criminal competition law: desert theory.

Desert offers compelling explanations for a new emphasis on cartels as truly criminal because of the way it links the special attributes that set cartels apart from other anticompetitive conduct with a general rationale for criminal enforcement. I believe that these explanations allow us to see the shift in attitude toward cartels as embodying a different perspective on criminal enforcement, one that is informed primarily by the goal of upholding competition rather than that of reducing the incidence of economic harm.

This article is divided into two parts. Part I explores the disconnect between the impetus for the shift and the current deterrence-based rationale for criminal enforcement. As an overview of the current enforcement context shows, the shift makes most sense when seen as a change in attitude built on institutional confidence that there is a stronger basis on which to treat cartels as criminal than there was before the amendments. However, the existence of this stronger basis does not follow from the reasons currently offered. This disconnect opens the door to considering whether a different general justification for criminal enforcement might offer another way of thinking about cartels that does support the view that there is a stronger criminal law mandate providing the impetus for the shift.

In Part II, I...