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Federal Court Reasons in Sentencing Decision Create Uncertainty for Canadian Competition Bureau's Leniency Program

Download this publication October 18, 2012

Reasons delivered by Chief Justice Paul Crampton of the Federal Court of Canada in relation to sentencing an accused corporation in R. v. Maxzone Auto Parts (Canada) Corp. create uncertainty for entities considering use of the Competition Bureau's Leniency Program in relation to cartel offences under the Competition Act.

Although Crampton C.J. accepted the joint sentencing submission of the prosecutor and the accused in this case, he made additional comments not necessary for his ruling (and therefore not having the full force of precedent), but which were expressly intended to alter future expectations about the Court's approach to joint sentencing submissions. The reasons suggest that, before accepting a joint sentence proposal pursuant to a plea agreement, the Court may require the record to include significantly enhanced public disclosure of facts and factors beyond the scope of what has traditionally been included in prior sentencing proceedings pursuant to the Leniency Program. For example, the Chief Justice calls for future sentencing submissions to include estimates of both actual and intended effects of the illegal conduct (including not only agreed or contemplated price increases, but potentially also the "deadweight loss" resulting from purchasers substituting to less desirable products), as well as information concerning a range of aggravating factors (such as the accused's degree of planning and covertness, whether the accused was a "ringleader" of the cartel, and whether victims were particularly vulnerable). The reasons also suggest that higher fines may be appropriate where a corporate plea is not accompanied by a plea and term of imprisonment for one or more individual company representatives in Canada. Further uncertainty regarding the operation of the Leniency Program also arises from the suggestion that a Court may not consider restitution to have been addressed by pending private actions and that accused entities ought to settle private actions before proceeding with a guilty plea.

Whether the reasons in this case will influence the approach to prosecuting cartel offences in Canada remains to be seen. If the Bureau were to adopt the principles suggested by these reasons, the Bureau would be facing a significantly increased investigatory burden before it is in a position to proceed with a plea agreement and joint sentencing submission. In order to satisfy the expectations of both the Court and the leniency applicant, the Bureau may also have to consider whether it is willing to delay Court proceedings to approve joint sentencing proposals made pursuant to the Leniency Program until after related private actions have been resolved.

It also remains to be seen whether other judges or Courts will consider it appropriate to pursue the approach suggested by Crampton C.J., or how this approach might be applied in practice. (Indictments and pleas for Competition Act offences can be, and often are, heard in Provincial Courts as well as the Federal Court.) If the Chief Justice's views are adopted by the Courts, the result may be less use of the Leniency Program and more contested proceedings in respect of Competition Act cartel offences.

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