On October 6, 2005, the Canadian Government announced a package of measures to address higher energy costs caused by recent increases in gasoline prices.

As part of this package, the Government has proposed increasing the fines for persons convicted of price fixing and other conduct violating the Competition Act's criminal conspiracy provisions.  The maximum potential fine would be $25 million (Cdn.) per count rather than the current $10 million (Cdn.).

The Government is also proposing to amend the Competition Act by giving the Competition Bureau the power to initiate general "market studies" into the state of competition in any sector of the economy.  Currently, the Bureau may commence an inquiry only if it has reason to believe that a provision of the Competition Act has been or is likely to be contravened.

According to Minister of Industry David Emerson, the proposed amendments to the Competition Act will "increase deterrence and improve compliance with the law".  The amendments will be incorporated into an already existing draft Bill containing other proposed amendments to the Competition Act (Bill C-19), and are expected to be reviewed by the House of Commons Industry Committee in the current Parliamentary session.

The Canadian Government's proposals come in the wake of growing concerns about rising gasoline prices, particularly following Hurricane Katrina.  The Competition Bureau initially responded to these concerns by publishing a special "Consumer Fact Sheet on Gasoline Prices".  The Commissioner of Competition, Ms Sheridan Scott, also appeared before the House of Commons Industry Committee on September 22, 2005 to discuss the issue.  In both cases, the message was the same: the Competition Bureau continues to monitor the situation closely but has no evidence that recent price increases are the result of anti-competitive conduct.  In fact, in five major investigations into the gasoline industry since 1990, the Bureau has never uncovered sufficient evidence to conclude that there has been a conspiracy or joint abuse of dominance involving gasoline suppliers.

Based on the October 6 announcement, it appears that the conclusion was reached that further steps were required under the Competition Act to address the gas price issue.  That said, neither of the proposed amendments is limited to conduct affecting the gasoline industry; they are both general provisions and thus of much wider scope in their potential application.

For additional information on the proposed Government measures, please see http://news.gc.ca/cfmx/view/en/index.jsp?articleid=173269&.    

If you have any questions regarding the foregoing, please contact George Addy, John Bodrug,  Mark Katz or Elisa Kearney in the Toronto office (416-863-0900) and Hillel Rosen in the Montréal office (514-841-6400). 

Davies Ward Phillips & Vineberg LLP, with over 225 lawyers, practises nationally and internationally from offices in Toronto, Montréal, New York and Paris and is consistently at the heart of the largest and most complex commercial and financial matters on behalf of its North American and overseas clients.

The information and comments contained herein are for the general information of the reader and are not intended as advice or opinions to be relied upon in relation to any particular circumstances.  For particular applications of the law to specific situations, the reader should seek professional advice.