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Improvements to the Competition Act...Prohibition Orders

March 18, 1999

Competition law-breakers face "positive" court orders

Changes in the Competition Act give the courts more scope and flexibility in the use of prohibition orders issued against persons convicted or suspected of engaging in criminal misconduct under the Act. The Competition Bureau will be asking Crown prosecutors to seek orders that include "prescriptive" terms, requiring persons or companies not only to stop specified behaviour, but to take positive steps to promote compliance and prevent future offences. Companies could be ordered, for example, to institute an education program to make sure their employees understand when co-operation among companies crosses the line into conspiracy.

The prohibition orders are available to deal with criminal misconduct, including bid- rigging, conspiracy to fix prices or share markets, and misleading advertising with intent.

Key points

Prescriptive terms

Under the new provisions, not only will the court be able to issue orders which prohibit the continuation or repetition of an offence, but it will also be able to require the person to take such steps or acts as the court considers necessary to prevent the commission, continuation or repetition of the offence. The court may also include in the order any other steps agreed upon by the parties. Examples of prescriptive terms which may be imposed by a court include the establishment and implementation of a corporate compliance program or the implementation of seminars on competition law and policy for officers and employees of the company.

Section 34 prohibition orders deal with criminal offences

The Competition Act addresses both criminal law offences, which are subject to prosecution, and anti-competitive practices which are subject to review by the Competition Tribunal. The prohibition orders under section 34 apply only to criminal misconduct, including conspiracy to fix prices or restrain competition unduly, bid-rigging, and knowingly or recklessly making a false or misleading representation to the public for the purpose of promoting a business interest.

A prohibition order is an enforceable court order which forbids the continuation or repetition of an offence. The Competition Act provides for such order in two situations:

where a person has been convicted of a criminal offence, and
where there has been no conviction, but it appears to a court that the person has committed or is likely to commit an offence, or acts directed toward the commission of an offence.

Limitation on other proceedings

Where a prohibition order is sought against a person who has not been convicted of an offence, the Crown forfeits the right to institute criminal proceedings against that person in relation to the same or substantially the same facts.

Breach of an order is an offence

A person who contravenes a prohibition order is liable to a fine within the discretion of the court, or to a prison term up to two years.

Applications for prohibition orders to be made at the time of conviction

Where a person has been convicted of an offence, the Crown may apply for a prohibition order under subsection 34(1) at the time of conviction. The former provision allowing prohibition orders to be sought up to three years after conviction has been repealed.

Time limit of prohibition orders

The new provisions include a maximum statutory limit of ten years for orders issued after coming into force of the new legislation. Orders made prior to the coming into force of these amendments exist in perpetuity, unless the order provides otherwise, or until the order is rescinded.

Provision to vary or rescind the order

The new provisions state expressly that the court may terminate a prohibition order or change its terms. Under the former provisions, it was not clear that the court had this authority. The order can be varied or rescinded with the consent of both the Crown and the person who is subject to the order, or without consent, where one of the parties applies to the court and the court finds that the circumstances that led to the making of the order have changed.

Public consultations

In public consultations held prior to the drafting of the amendments, stakeholders generally favoured the proposal that the courts should be able to include prescriptive terms in prohibition orders, at least where the parties to the order consent.

Contraventions of the Competition Act can be reported to:
1-800-348-5358