Gasoline companies plead guilty to price-fixing in Kingston and Brockville, Ontario


March 20, 2012

The investigation

The Bureau became aware of criminal activity by way of its Immunity Program and benefitted from the cooperation of a number of companies under the Bureau's Leniency program.

Conspiracies are difficult to detect and prove, as the key element of a conspiracy is an anti‑competitive agreement between competitors and these agreements are often covert. Under the authority of the Competition Act and the Criminal Code, the Bureau has the ability to use formal investigative tools during a criminal investigation. These tools include: the power to request and execute search warrants, the subpoena of records and witnesses, and the ability to wiretap.

In this case, the Bureau searched five corporate locations, nine individual residences and two residential offices, seized thousands of paper and electronic records, conducted wiretaps and interviewed witnesses as part of the investigation.

The evidence gathered by the Bureau indicates that the price-fixing occurred between May and November 2007 in the Kingston and Brockville areas. The investigation revealed that the accused gasoline retailers communicated by telephone to coordinate their response to price changes initiated by major-branded competitor in their markets. More specifically, the accused gasoline retailers agreed among themselves to only follow price changes, by matching major-branded competitors who had either increased or decreased prices.

Immunity and leniency programs

If individuals or corporations are involved in conduct which they believe may violate the Act and wish to disclose their conduct, but fear prosecution, the Bureau's Immunity and Leniency Programs may provide immunity from prosecution or favourable treatment, in return for your cooperation with the Bureau's investigation.

Under the Immunity Program, the first party to disclose to the Bureau an offence not yet detected, or to provide evidence leading to the filing of charges, may receive immunity from the Director of Public Prosecutions, provided the party fully cooperates with the Bureau. Parties that approach the Bureau early in an investigation of criminal activities may also be able to benefit from leniency, such as reduced penalties, in return for their cooperation. The Act contains whistleblowing provisions that protect identities and guard against possible retaliation by an employer. Information provided to the Bureau can be kept strictly confidential.

Obtaining the cooperation of implicated parties through the Bureau's Immunity and Leniency Programs is one of the Bureau's best weapons to combat these secret criminal anti‑competitive agreements.

Gas prices and the Bureau

High prices or higher prices than elsewhere in Canada are not in and of themselves evidence of an anti‑competitive agreement. Gasoline prices can vary from place to place because of a number of factors that may affect prices in local markets. These factors include:

  • Differences in local supply and demand conditions, including the number, size, and type of competitors in each market;
  • Differences in taxes;
  • Differences in marketing, distribution and transportation costs; and/or
  • The presence of one or more aggressive price competitors in a local market.

Price-fixing and the Competition Act

The Government of Canada is sensitive to the need to protect consumers. The Government has already made substantial amendments to the Competition Act, which strengthened the powers of the Commissioner of Competition to take action against anti‑competitive behaviour.

Under the Act, it is a criminal offence when two or more competitors or potential competitors conspire, agree or arrange to fix prices, allocate customers or markets, or restrict output of a product.

In March 2010, the amended provisions of the Act relating to cartels and collaborations between competitors came into effect. The new provision increased the penalties upon conviction: jail terms of up to 14 years, fines of up to $25 million, or a combination of both. The amendments also removed the requirement to prove that the alleged conspiracy would result in a significant economic effect on the market (known as an undue lessening of competition).

Given that the conduct in question occurred prior to the amendments, the companies pleading guilty today faced the penalties under the previous price-fixing provision of the Act: a fine of up to $10 million, or imprisonment for a term of up to five years, or both.

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