The Long Arm of Canadian Price-Fixing Law? Canadian Jurisdiction Over Foreign Price-Fixing Conspiracies

• Author: W. Michael G. Osborne
• Profession: MStJ FCIArb, practises competition law and commercial litigation at Cozen O'Connor in Toronto
• Pages: 346-371

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e Long Arm of Canadian Price-Fixing

Law? Canadian Jurisdiction Over Foreign

Price-Fixing Conspiracies

W. MICHAEL G. OSBORNE*

A. INTRODUCTION

Global price-xing conspiracies have been a focus of antitrust enforcement

for the last twenty-ve years or so, with the United States Department

of Justice leading the charge. Global cartels typically involve meetings

between representatives of the major players in the aected industry, often

under cover of a sham (or even real) trade association. In some cases, such

as the lysine conspiracy, the conspirators xed prices on a state-by-state

basis; in others, such as the auto-parts conspiracies, they rigged bids for

particular automakers.

* Michael Osborne, MStJ FCIArb, practises competition law and commercial litiga-

tion at Cozen O’Connor in Toronto.

 An international conspiracy to x prices for lysine, an animal feed additive. e

conspiracy was prosecuted in both Canada and the United States. In Canada, it

netted . million in nes. It was also the subject of the Hollywood movie e

Informant.

 Scott D. Hammond, “Caught in the Act: Inside an International Cartel” Pres-

entation to the OECD Competition Committee, Working Party No. , Public

Prosecutors Program ( October ), online: www.justice.gov/atr/speech/caught-

act-inside-international-cartel.

 e auto-parts conspiracies were a series of international conspiracies to x prices

for various auto parts. ey were prosecuted in both Canada and the United States,

resulting in nes of more than  million in Canada alone.

The Long Arm of Canadian Price-Fixing Law?

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ese conspiracies have the potential to raise prices around the world,

not just for the products whose price is xed, but for downstream products

as well. e overcharge exacted by the conspirators may (or may not) be

passed on by each participant in the value and distribution chains, and

so ripple through the entire economy, potentially aecting nearly every

business and every consumer.

e problem is that these conspiracies often take place between

foreign executives of foreign corporations meeting in foreign jurisdic-

tions. Leaving aside practical diculties of investigating conduct abroad,

these foreign conspiracies raise the question of whether the competition

authorities and courts in any given state have jurisdiction.

e United States famously takes “long arm” jurisdiction over “foreign

conduct that was meant to produce and did in fact produce some substan-

tial eect in the United States.” e European Union follows a similar

policy. It applies its competition laws to cartels that are implemented in the

EU — even if that implementation consists merely of a sale within the EU.

In Canada, the Competition Bureau and the Public Prosecution Ser-

vice of Canada (PPSC) have long taken the position that cartels that

occur entirely outside Canada can be prosecuted in Canada if the cartel

has an eect in Canada. e eect need not be direct; it seems that even

an indirect eect on the price of downstream products will do. is policy

has largely been successful: beginning with the lysine conspiracy in ,

they have obtained guilty pleas and nearly  million in nes relating to

international conspiracies, more than ve times the total nes for domestic

conspiracies during the same period ( million). Canada’s plainti class

action bar has pursued foreign conspiracies even more aggressively, col-

lecting massive settlements even where the Bureau declined to investigate.

Despite these massive nes and settlements, it remains an open ques-

tion whether the Competition Act’s conspiracy provisions even apply to

price-xing conspiracies formed outside Canada. is is because Can-

adian criminal law traditionally takes a territorial, and not an eects-based,

 Hartford Fire Ins Co v California,  US  at .

 Judgment of the Court of Justice of  September , Ahlström v Commission (“Wood

Pulp”), C-/, C-/, C-/, C-/, C-/, C-/, C-/,

C-/, C-/, and C-/, [] ECLI:EU:C:: at paras  & ;

Judgment of the General Court of  March , Gencor v Commission, T-/,

[] ECLI:EU:T::, para .

 RSC , c C- [Competition Act or Act].