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Archived — Embraco North America Inc. pleads guilty to price-fixing conspiracy

OTTAWA, October 27, 2010 — The Competition Bureau announced today that Embraco North America Inc. was fined $1.5 million by the Federal Court after pleading guilty to criminal charges that it fixed the price of hermetic refrigeration compressors sold to a household refrigerator and freezer manufacturer in Canada.

The Bureau's investigation revealed that, between January and December 2005, Embraco conspired with its competitors to fix the price of hermetic refrigeration compressors sold in Canada and elsewhere. The compressors were primarily sold to W.C. Wood Corporation, located in Guelph, Ontario, and used in the manufacture of various brand-name chest freezers. The hermetic refrigeration compressors that are the subject of the guilty plea are mainly purchased by manufacturers of household refrigerators and freezers.

"We are satisfied that this company recognized its criminal behaviour," said Melanie Aitken, Commissioner of Competition. "We continue to work diligently to uncover these unambiguously harmful conspiracies. Cracking down on illegal cartels is a top priority for the Bureau."

Embraco sold hermetic refrigeration compressors to W.C. Wood Corporation that were manufactured in Brazil. Prior to negotiating its annual supply contract, Embraco and another competitor exchanged information on their hermetic refrigeration compressor prices, production capacities and other market intelligence. Embraco and its competitor reached an agreement that they would increase prices for hermetic refrigeration compressors sold to W.C. Wood Corporation in Canada.

The Bureau's investigation into the alleged conduct of other hermetic refrigeration compressor manufacturers continues.

Under the Competition Act, an agreement between competitors to fix prices, allocate markets or restrict output in Canada is a criminal offence. Following amendments to the Act that came into force in March 2010, penalties for violations of the conspiracy provisions include fines of up to $25 million and prison terms of up to 14 years, or a combination of both. The price-fixing conduct in question occurred under the previous conspiracy provision, and penalties at that time were capped at fines of up to $10 million and prison terms of up to five years, or a combination of both.

The Bureau benefits from cooperation under its Immunity and Leniency Programs, which create incentives for parties to address their criminal liability by cooperating with the Bureau in its ongoing investigation and prosecution of other alleged cartel participants.

The Competition Bureau ensures that Canadians prosper from the benefits of a competitive marketplace, driving innovative products and services at competitive prices.

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