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CCCA_V6No1_DawnRaid-FIN_CCCA_V6No1_DawnRaid 2/13/12 10:10 PM Page 27 Cover price-fixing, bid rigging, and other “hard-core” cartel agree- ments between competitors are now flat-out illegal. Global co-ordination “With Canada’s law becoming a per se offence it is more aligned with other jurisdictions, and as a result we are more able to co- Christopher Putney ordinate with our foreign counterparts,” says Pecman, who is also Senior legal counsel, the co-chair of a cartel enforcement techniques working group for Insurance Corporation of cartel the International Competition Network (ICN), the only interna- British Columbia (ICBC) investigations is tional body devoted exclusively to competition law enforcement. Vancouver the search warrant,” “From time to time we were not able to meet the burdens to says John Pecman, the senior obtain a search warrant while other jurisdictions were able to go to deputy commissioner of criminal the dawn raid stage prior to us being able to act in a formal way.” matters at the Competition Bureau. The trend towards large, multi-jurisdiction cartel cases among The exercise, which can last more than a week, is designed to regulators has become par for the course, with dawn raids, partic- seize evidence before it can be “sanitized,” misplaced or destroyed. ularly in Europe, used as the major investigatory tool. In the sec- “It is very disruptive, says Amita Kent, regional lead counsel, ond half of 2011, the European Commission raided natural gas Europe and Canada at Merck Canada Inc. in Montreal. “It starts off companies located in 10 different countries, raided banks offering being very intimidating and uncomfortable for those who are financial derivatives linked to the Euro Interbank Offered Rate involved, and it is unusual and s something that not a lot of people ("EURIBOR"), carried out surprise inspections at the premises of have experience with.” “At the best of times it’s an unpleasant thing Brussels Airlines and TAP Portugal in Belgium and Portugal, and to go through.” conducted joint dawn raids with other national competition And indeed, few companies are really prepared for the unexpect- authorities on companies involved with ball bearings used for ed visits from regulatory authorities. “Many corporations presume automotive and industrial purposes. it’s never going to happen to them, and when it happens I have South of the border, the U.S. Antitrust Division zealously pur- never had a client who hasn’t been surprised,” remarked John sued collusive conduct, filing 90 criminal cases, a 50 per cent Clifford, a partner and antitrust and competition expert with increase over 2010. It also amassed US$523-million in criminal McMillan in Toronto. fines and more than US$500-million in restitution, penalties, and With Melanie Aitken, who has earned a reputation as a tough and disgorgement paid to state and federal agencies. Global investiga- hard-hitting Competition Commissioner at the helm of the tions have become key for the U.S. Antitrust Division. Bureau, Canadian business executives — guided by their in-house Understandably so: A staggering 96 per cent of the US$6.1-billion legal advisers — would do well to take its recent actions seriously. in criminal fines obtained between 1997 and 2010 stemmed from The Bureau has been cracking down more vigorously on prosecutions of international cartels. On top of that, 48 foreign Canadian business that violate competition laws, setting its sights defendants from have served, or have been sentenced to serve, particularly on cartels and bid-rigging in spite of calls by some to prison sentences in the U.S. “There has certainly been increasing ease antitrust scrutiny at a time when the global economy is sag- co-ordination among international authorities over the last five ging. It is now in the midst of conducting up to 20 active investi- years and the practice of engaging in dawn raids or searches is gations. What’s more, the Bureau is now armed with sweeping becoming more common among international regulators,” noted new competition powers. Far-reaching amendments to the Graham Reynolds, a partner with Osler, Hoskin & Harcourt. Competition Act were enacted in March 2009 — with criminal car- “The gospel is being spread through the use of ICN,” added the tel provisions in force as of March 2010 — that are more in line former senior general counsel for the Competition Bureau. with tough competition laws in the United States. time when many, if not the majority, are under intense pressure to That gospel is proving to be a migraine for in-house counsel at a ROBERT KARPA, VENTURI + KARPA risk up to 14 years’ imprisonment. Convictions can also lead to spe- shave costs, run a lean team and deliver more with less. Making mat- Fines can run as high as $25-million per count, and individuals ters even thornier, the regulatory authorities talk to each other, cific prohibition orders. The amendments have also made it easier for the government to obtain convictions after doing away with the more so than ever, and frequently seek waivers of confidentiality. provision that required proof that price-fixing cartels caused an Ensuring that representations are consistent across jurisdictions therefore is vital, adds Kent. So too is keeping in mind privilege “undue” lessening of competition. Under the new section 45, PRINTEMPS 2012 CCCA Canadian Corporate Counsel Association 27