When a well-resourced law-enforcement agency sets its crosshairs on a particular type of crime, smart lawbreakers move on to other endeavours where the risk-benefit ratio is more in their favour.
And price-fixing and price-maintenance cases are at the top of the priority list for the federal Competition Bureau.
"Conspiring to fix prices and price maintenance are criminal offences with serious consequences," federal senior commissioner of competition Denyse MacKenzie said in a news release.
"Criminal cartels cause damage to our economy and can drive up prices for Canadian consumers."
Investigators with the bureau uncovered a case recently involving six autobody shop proprietors in northern Alberta's oilsands frontier. The companies included Shamrock Maintenance & Hotshot Services Ltd., Pete's Custom Coachwork, Birchwood Auto Body, Alberta Motor Products Ltd., Noral Motors and Lane's Auto Shop.
The case involved their customers and insurance companies.
The Fort McMurray companies reached a settlement with the Competition Bureau. Under a binding court order, they are required to change their conduct regarding the setting of labour rates; they are prohibited from communicating with each other on the pricing of products or services or entering into any agreements on the pricing of products or services. They must also publish a corrective notice in the local newspaper, outlining key terms of the order.
Canada's trust-buster - the Ottawa-based Competition Bureau - has made cartels its No. 1 law-enforcement priority. The bureau, which has opened new offices and beefed up staffing levels at its offices in centres across Canada, promotes and maintains fair competition so all Canadians can benefit from competitive prices and product choice.
In a speech at the Canadian Bar Association's September 2006 Fall Conference on Competition Law, complaints commissioner Sheridan Scott reminded the lawyers that fighting cartels remains the bureau's top priority.
To this end, the bureau increased its criminal branch's budget by 50 per cent over the previous three years, Scott said.
She cited the following recent cases to show that the agency will not tolerate anti-competitive behaviour:
* A Toronto judge hit Cascades Fine Papers Group Inc., Domtar Inc. and Unisource Canada Inc. with record fines of $12.5 million each in 2006 after they pled guilty to two counts of conspiring to lessen competition.
Investigators discovered that the three companies conspired to avoid competing with each other in the carbonless sheet markets in Ontario from October 1999 to September 2000 and during 2000 in Quebec.
The companies acknowledged that they had agreed to respect each other's market share to stabilize prices, co-ordinate a response to a new market entrant, implement a common discount program, maintain price discipline to avoid a price war, and share sales and pricing data.
* The bureau has persuaded the federal attorney general to lay criminal charges against a ventilation company employee.
Joel Perreault, an appraiser with Les Entreprises Promecanic Ltee., faces a charge under the Competition Act of obstructing an investigation and destroying documents during a raid in connection with a cartel investigation.
The attorney general laid the charge in September 2006 after Competition Bureau investigators allegedly discovered that Perreault removed and destroyed pages from his agenda. The case remains before Quebec's courts.
* A Quebec high court issued search warrants in the summer of 2006 to investigate alleged price-fixing among competitors in the retail gasoline industry in local markets. Later, the bureau confirmed publicly that it also had drawn a bead on certain Canadian tour operator businesses.
Cartels - mostly international groups - have been fined a total of more than $200 million across Canada over the past 10 years. "Clearly, we have some interesting files in the works," said Scott, referring to the gasoline and tour operator probes.
If potential penalties of up to five years in the slammer or paying multi-millions of dollars in fines aren't sufficient to discourage conspiracies to organize cartels, the Competition Bureau is now looking at injecting personal accountability into the equation.
Scott said the bureau is seeking ways to hold executives or employees responsible for cartel-related wrongdoing.
For example, in the carbonless paper prosecution, the judge ordered the companies to remove key employees from their positions or strip them of any pricing responsibilities and demote them, Scott noted.
The identities of these individuals, their roles in the conspiracies and the consequences of their actions were described in a note distributed to current employees, directors and officers.
"It may not have been American justice, but it is innovative, given the Canadian system," Scott told the September 2006 Fordham Corporate Law Institute annual conference in New York.
In addition, the Competition Bureau is also exploring the option of taking fuller advantage of the Canadian Police Information Centre (CPIC) by registering individuals convicted of cartel offences alongside other riff-raff such as murderers, rapists and drug dealers.
"This can have serious consequences on an individual's ability to cross international borders, (a) particularly important consideration for Canadians given the integrated nature of the U.S. and Canadian economies," Scott said.
Finally, the bureau is continuing a review of its immunity program - which plays a critical role in exposing cartels - to identify ways to improve it further.
The program is diabolically simple and effective.
Turn yourself in on your own initiative and you're immune from prosecution, as long as you're the first in your cartel to do so.
You'll maintain your immunity, provided that you assist investigators to the best of your ability.
The diabolical part is nobody knows if one of their own is ratting them out.
All they know, if they're reasonably familiar with Competition Bureau procedures, is that anyone in their group could do this at any time simply by picking up the phone.
"Our immunity program encourages cartel participants to blow the whistle as early as possible in return for immunity from prosecution," Chris Martin, the Competition Bureau's assistant deputy commissioner, told Business Edge.
"This often results in a race to the door since it's only the first party that co-operates with us that is eligible. The program has been quite successful in providing incentives to cartelists to come forward, uncovering evidence that has led to fines against their co-conspirators in the millions of dollars."