McGill Law Journal ~ Revue de droit de McGill
MAKING SENSE OF THE SHIFT IN PARADIGM ON
CARTEL ENFORCEMENT: THE CASE FOR APPLYING A
DESERT PERSPECTIVE
Jennifer A. Quaid*
Soon after the coming into force of changes to
the criminal provisions in the Competition Act, the
commissioner of competition signalled that cartel
enforcement would start to reflect a new mindset,
one that treats cartels as truly criminal. But while
the impetus for this shift in paradigm is well-
intentionedto give effect to a stronger criminal
law mandate following the amendmentsit is
poorly explained, because its defenders continue to
refer to the predominant deterrence rationale used
in competition law, even though applying a harm-
based view of crime and punishment to cartels fails
to explain why criminal enforcement is needed.
I believe that applying a desert perspective of-
fers a compelling alternative explanation for this
shift toward treating cartels as truly criminal.
Drawing on the work of Arthur Ripstein, I offer an
account of cartel enforcement that focuses on the
inherently wrongful disregard for competition that
characterizes cartels. I argue that seeing cartels as
a particularly serious misuse of the competitive
system, one that is so fundamentally at odds with
the notion of a competitive marketplace that it
cannot be tolerated, is what justifies recourse to
the consistent and uniquely public response of the
criminal law. Seen in this light, bringing a more
criminal law-oriented mindset to bear on cartel en-
forcement makes sense in way that this shift in
paradigm does not when justified in deterrence
terms.
Peu de temps aprs l’entre en vigueur des mo-
difications apportes aux dispositions pnales de la
Loi sur la concurrence, le commissaire de la concur-
rence a signal que la lutte contre les cartels commen-
cerait reflter un nouvel tat d’esprit considrant les
cartels comme tant vritablement criminels. Mais,
bien que le but de ce changement de paradigme
donner effet un mandat plus fort suite ces amen-
dements est bien intentionn, il demeure mal ex-
pliqu. En effet, il continue d’tre justifi en fonction
de l’argument de la dissuasion utilis dans le droit de
la concurrence, mme si l’application d’une vue fonde
sur le prjudice de la criminalit et la punition des
cartels ne parvient pas expliquer pourquoi l’applica-
tion des peines est ncessaire.
Nous croyons que l’application d’une perspective
base sur le mrite offre une explication alternative
convaincante cette volution vers le traitement des
cartels comme tant vritablement criminel. En nous
appuyant sur les travaux d’Arthur Ripstein, nous
proposons un rcit de la lutte contre les cartels qui se
concentre sur le mpris envers la concurrence qui est
inhrent aux cartels. Je soutiens que concevoir les
cartels comme constituant un abus particulirement
grave du systme concurrentiel, un abus fondamenta-
lement en contradiction avec la notion d’un march
concurrentiel un point tel qui ne peut tre tolr,
justifie le recours la rponse cohrente et singuli-
rement publique du droit pnal. Vu sous cet angle,
apprhender lapplication des peines relatives aux
cartels dans un tat desprit plus orient vers le droit
criminel est plus logique que lorsque justifi en
termes de dissuasion.
* Assistant Dean (Graduate Studies), Faculty of Law, University of Ottawa. I am deeply
indebted to Paul Miller and Malcolm Thorburn for providing their invaluable insights
on prior drafts of this article. I also wish to thank the Journals anonymous reviewers
for their helpful comments. Some of the research and writing for this article was done
while I was a Teaching Fellow in Business Law at the Faculty of Law, Queens Univer-
sity, and I gratefully acknowledge this financial support, as well as that of the Social
Sciences and Humanities Research Council of Canada.
Citation: (2012) 58:1 McGill LJ 149 ~ Rfrence : (2012) 58 : 1 RD McGill 149
Jennifer A. Quaid 2012
150 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
Introduction
I.
Well-Intentioned but Badly Explained: Why the Shift
Needs a Different Justification
A. Well-Intentioned: How and Why the Shift Fits into
Criminal Competition Enforcement
1. The Competition Act and the Overall Purpose
of Enforcement
2. Fostering Compliance with the Act
3. Criminal Enforcement of the Act
B. Poorly Explained: Why the Explanations for the
Shift Do Not Add Up
1. What Did Change: The Effect of the 2009
Amendments on the Ambit of the Criminal
Prohibitions
2. What Did Not Change: The Rationale for Cartel
Enforcement
C. Why We Need to Address the Disconnect
II.
Considering Another Explanation: The Case for Applying
a Desert Perspective to Cartel Enforcement
A. Building a Desert Perspective
1. Putting Desert in Context
2. A Desert-Based Understanding of the Link Between
the Scope of the Criminal Law and Justifications for
Punishment
3. What Sets Criminal Conduct Apart: Unilateral Disregard
of Public Standards
4. Why Does Crime Demand Punishment? The Important
Role of Public Enforcement in Upholding the Law
5. Getting to the Essence of the New Perspective: Upholding
the Law
B. Applying the Approach to Competition
1. Competition as the Fair Terms of Interaction
2. What Makes Cartels Criminally Wrongful?
3. Why Do Cartels Require Punishment?
4. The Role of the Shift as the Public Expression of an
Omnilateral Perspective
Conclusions
151
156
156
156
163
164
168
169
172
179
180
180
180
182
185
189
191
192
192
193
195
196
197
Introduction
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 151
New conspiracy provisions came into force in March of this
year, and we are seizing this opportunity to begin the ad-
mittedly long process of shifting the paradigm of our crimi-
nal programme.
In a nutshell, relieved of the prior economic effects re-
quirement, which was not suited to a standard of proof be-
yond a reasonable doubt, we are working to move from a
jurisdiction often disproportionately focused on pleas
especially with respect to international cartelsto one that
is appropriately aggressive in using our new tools to ensure
that consumers and those who carry on business in Canada
can be confident that the criminality of this activity is rec-
ognized, and the law will be enforced with vigour.1
These words, spoken by then Commissioner of Competition Melanie
Aitken2 in the autumn of 2010, mark the beginning of a concerted com-
munications effort on the part of the commissioner to signal a change in
the Competition Bureaus (Bureaus) approach to the enforcement3 of
criminal provisions in the Competition Act (the Act).4 This shift follows the
1 Melanie L Aitken, Address (delivered at the CBA Fall Competition Law Conference,
Gatineau, 30 September 2010), online: Competition Bureau
September 2010].
2 Between the writing and final publication of this article, Commissioner Aitken an-
nounced that she would leave her post on 21 September 2012, more than eighteen
months before the end of her five-year mandate. At the time of publication, though no
successor had been named, there was nothing to suggest that the shift in paradigm re-
garding cartel enforcement initiated during Commissioner Aitkens tenure would not
continue after her departure.
3 Over the course of the 2009-2012 period since the enactment of the 2009 amendments,
the former commissioner of competition, Melanie L. Aitken, gave fifteen speeches in
several different venues, most recently at the Canadian Bar Association 2012 Competi-
tion Law Spring Forum in Toronto on 2 May 2012 (Melanie L Aitken, Best Practices in
a Time of Active Enforcement (delivered at the Canadian Bar Association Competition
Law Section 2012 Competition Law Spring Forum, Toronto, 2 May 2012), online: Com-
petition Bureau
made at least a passing reference to the new approach to criminal enforcement that she
believes flows naturally from them. In this article, I will refer to specific speeches by
date, which is how they are listed online (under the heading Speeches): Competition
Bureau
I am fully cognizant of the fact that enforcement is not done by the Bureau per se,
in that prosecutions of competition offences and the exercise of prosecutorial discretion
over them are the jurisdiction of federal prosecutors from the Public Prosecution Service
of Canada (PPSC). See Part I.A.3, below.
4 By criminal provisions, I mean the offences set out in part VI of the Competition Act
that target naked restraints of trade, referred to by the Bureau as cartel behaviour
(price-fixing, market allocation, supply restrictions, and bid rigging): see Competition
152 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
coming into force on 12 March 2010 of reforms to competition law that
were passed in 2009.5 In particular, Commissioner Aitken indicated that
she believes these amendments provide the commissioner and the Bureau
with a stronger mandate for criminal enforcement against cartels, one
that supports the adoption of a tougher enforcement attitude toward crim-
inal cartel behaviour.6
Act, RSC 1985, c C-34, ss 45-47 [Act]. All references to the Act are to its current provi-
sions, unless otherwise indicated.
5 See Budget Implementation Act, 2009, SC 2009, c 2 [2009 Budget Act]. A one-year delay
applied to the coming into force of the transformation of the conspiracy offence in sec-
tion 45, as it existed, into two new provisions: section 45 (Act, supra note 4), which
would apply only to the limited subset of conduct that could be said to be per se anti-
competitive (2009 Budget Act, supra note 5, s 410), and a new civil provision, section
90.1 (Act, supra note 4), which would apply to all other collaborations and would allow
for the consideration of procompetitive effects of collaboration, specifically efficiency
gains (2009 Budget Act, supra note 5, s 429).
The 2009 amendments generally track the recommendations made by the Competi-
tion Policy Review Panel in its June 2008 report: Canada, Competition Policy Review
Panel, Compete to Win: Final Report, June 2008 (Ottawa: Publishing and Depository
Services, 2008), online: Competition Policy Review Panel
fine tuning of a reasonably effective competition regime. Other than the change to the
conspiracy provision, the amendments modified the merger review process, repealed
the criminal pricing provisions (predatory pricing, price discrimination, geographic
price discrimination, and promotional allowances), increased the potential penalties
applicable to the offences in part VI of the Act, added administrative monetary penal-
ties for certain noncriminal anticompetitive practices, added certain remedies and
rights of action in connection with civil reviewable matters, and increased penalties for
the obstruction and non-compliance provisions of the Act. These modifications are
summarized in a Competition Bureau document: Competition Bureau Canada, A Guide
to Amendments to the Competition Act (22 April 2009), online: Competition Bureau
to
Amendments]. For a more detailed description of the amendments, see Mistrale
Goudreau & Jennifer Quaid, De quelques dveloppements rcents en droit de la con-
currence (2010) 22:2 CPI 317 (especially at 318-30).
[Guide
6 See e.g. Competition Bureau Canada, Annual Report of the Commissioner of Competi-
tion for the Year Ending March 31, 2010 (Gatineau: Competition Bureau, 2012) at 12,
online: Competition Bureau
Melanie L Aitken, Address (delivered at the CBA Spring Conference, Toronto, 3 May
2011), online: Competition Bureau
on an enhanced and reinvigorated mandate); Melanie L Aitken, Address (Keynote
Speech delivered at the Canadian Bar Association 2011 Fall Conference, Hilton Lac-
Leamy, Que, 6 October 2011) [Aitken, Speech of 6 October 2011] (describing how the
Bureau is now operating under a coherent framework with more powerful criminal
provisions because of the amendments); Melanie L Aitken, Address (delivered at the
2011 Competition Law and Policy Forum, Northwinds Professional Institute, Cam-
bridge, Ont, 24 February 2011), online: Competition Bureau
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 153
Commissioner Aitken provided little explanation either for her appar-
ent confidence in this new mandate or for why it required a paradigm
shift. All she said, without a lot of specifics, is that the combination of the
two (i.e., the paradigm shift and new mandate) will make enforcement
more effective. What justifies this shift, and how is it supposed to make
enforcement more effective?
From the limited way it has been described, the shift in paradigm
points to a shift in the mindset that the Bureau will bring to the scrutiny
of cartel cases: one that sees cartels as unambiguously criminal and thus
appropriately subject to criminal law.7 However, though the post-
amendment legislative division between civil and criminal collaborations
among competitors is the ostensible reason for the shift, the current char-
acterization of what makes cartels criminal is essentially unchanged, re-
maining focused on the potential harm they can cause.8 Not surprisingly,
the pre-amendment view that the purpose of criminal enforcement is to
reduce that harm through deterrence is also unchanged. Given how it was
framed, the suggestion that this paradigm shift will make enforcement
more effective should be taken to mean that the Bureau intends to do
something to further a deterrence objective.
February 2011] (importance of enforcement in order to deliver on the enhanced man-
date flowing from the amendments); Aitken, Speech of 30 September 2010, supra note
1 ([w]e have laid a strong foundation for the effective enforcement of our new provi-
sions); Melanie L Aitken, Speaking Notes (delivered at Canadian Bar Association,
Competition Law Section, 2009 Spring Forum, Toronto, 12 May 2009), online: Competi-
tion Bureau
([w]e believe these amendments create a more effective criminal enforcement regime).
The commissioners submissions to the Senate Banking Committee following the en-
actment of the amendments also convey this view: Proceedings of the Standing Senate
Committee on Banking, Trade and Commerce, 40th Parl, 2nd Sess, No 7 (13-14 May
2009) at 12-16 [Aitken Submissions to Senate Banking Committee].
7 See e.g. ibid at 12-13; Aitken, Speech of 6 October 2011, supra note 6 ([c]artels and
bid-rigging continue to be our focus, given the seriousness of this conduct, and its un-
ambiguously harmful nature; pernicious cartels); Aitken, Speech of 24 February
2011, supra note 6 (referring to cartels as the most serious forms of anticompetitive ac-
tivity and to the need to be appropriately aggressive toward the criminal nature of the
conduct at issue so that Canad[ians] can be confident that the criminality of [cartels] is
recognized); Melanie L Aitken, Address (Keynote Dinner Address delivered at the 2010
Competition Law and Policy Conference, Cambridge, Ont, 3 February 2010), online:
Competition Bureau
trade as egregious). Earlier speeches and annual reports also use similar language.
8 The cartel does not have to be successful at achieving its goals. The crime lies in agree-
ing to engage in one of the per se anticompetitive acts enumerated in the section: see
Competition Bureau Canada, Competitor Collaboration Guidelines (Gatineau: Competi-
tion Bureau, 2009) at 6, online: Competition Bureau
154 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
However laudable the objective of harm prevention may be, justifying
the shift in the enforcement mindset against cartels in these terms is
problematic. First, criminal and civil collaborations are not easily distin-
guished on the basis of harm. How can the shift justify labelling cartels as
more firmly criminal without a solid basis on which to set them apart as
a special kind of anticompetitive behaviour? Second, emphasizing deter-
rence does not convincingly explain why we should respond to cartels with
criminal enforcement. Finally, a deterrence narrative sets up unrealistic
expectations as to the kind of impact that the shift may actually have.
There is at best only a weak indication that because of the shift there will
be any meaningful change to those outcomes thought to matter most to
deterrence (i.e., more cartels being discovered, more convictions, or higher
penalties).
So is the shift ill-advised and doomed to fail? If, as I believe, the crux
of the matter is not the absence of a rationale for the shift but rather the
inability of the current rationale for criminal enforcement to convincingly
explain why there are now stronger reasons for subjecting cartels to the
criminal law, there is a powerful theoretical foundation available to sup-
port the shift. But it comes from a relatively unexplored source in crimi-
nal competition law: desert theory.
Desert offers compelling explanations for a new emphasis on cartels as
truly criminal because of the way it links the special attributes that set
cartels apart from other anticompetitive conduct with a general rationale
for criminal enforcement. I believe that these explanations allow us to see
the shift in attitude toward cartels as embodying a different perspective
on criminal enforcement, one that is informed primarily by the goal of up-
holding competition rather than that of reducing the incidence of econom-
ic harm.
This article is divided into two parts. Part I explores the disconnect
between the impetus for the shift and the current deterrence-based ra-
tionale for criminal enforcement. As an overview of the current enforce-
ment context shows, the shift makes most sense when seen as a change in
attitude built on institutional confidence that there is a stronger basis on
which to treat cartels as criminal than there was before the amendments.
However, the existence of this stronger basis does not follow from the rea-
sons currently offered. This disconnect opens the door to considering
whether a different general justification for criminal enforcement might
offer another way of thinking about cartels that does support the view
that there is a stronger criminal law mandate providing the impetus for
the shift.
In Part II, I use the particularly rich theoretical framework of Arthur
Ripstein, built around a central concept of fair terms of interaction, to
develop this alternate rationale. Adapting Ripsteins concepts, I show that
what distinguishes cartels from other collaborations is not the harm that
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 155
they cause (as would be required by a deterrence-based rationale) but ra-
ther the fact that they are a deliberate attempt to avoid the burdens of a
competitive system while still reaping its benefits. It is the wrongfulness
of this deliberate choice that places cartels outside the bounds of accepta-
ble behaviour for market participants.
Thinking of cartels in this way explains why punishment, a special
form of state response, is justified. By signalling that the deliberate disre-
gard for the competitive system will not be tolerated, punishment conveys
a public commitment to consistently uphold the rules of competition for
the benefit of all. This in turn maintains confidence in the robustness of
the competitive system.
Against this backdrop, the shift in paradigm can influence enforce-
ment for the better if it presents its new criminal law mindset as a princi-
pled perspective from which to undertake efforts to uphold competition
against the particular threat posed by cartels.
Before going any further, I should stress that this article does not ad-
vocate the elimination of deterrence as an objective of punishment, either
in general criminal law or in competition law. It merely places it in a sec-
ondary position, at least as regards the question of a general justification
for punishment of cartels. Though it is beyond the scope of this article,
there is little doubt that deterrence still has a role to play, notably in the
selection of the type and quantum of punishment, and in how it is distrib-
uted.9 In addition, though deterrence-based justifications for criminal
competition enforcement have tended to draw on economic analysis for
support, I do not believe that my analysis is inconsistent with the idea
that competition law is directed at economic activity and economic actors.
Rather, I argue that, in the context of justifying the adoption of an atti-
tude that cartels are truly criminal, focusing on the reduction of the eco-
nomic harm that might result is not as convincing a rationale for punish-
ment as is promoting and protecting the fairness of the competitive sys-
tem from those who would misuse it in a criminally wrongful way. I leave
to others the consideration of whether and how the idea that punishment
9 One example of a distribution-related issue is whether it is better, from a crime-
prevention point of view, to punish individual or corporate persons for crimes. Though
beyond the scope of this article, this point has received considerable attention in the
United States, especially among law and economics scholars such as Jennifer Arlen and
Reinier Kraakman (Controlling Corporate Misconduct: An Analysis of Corporate Lia-
bility Regimes (1997) 72:4 NYUL Rev 687). There is still considerable debate about the
usefulness of corporate liability and punishment in general, not just in competition law.
My own view is that it is useful both in competition law and in other areas: see Jennifer
A Quaid, The Assessment of Corporate Criminal Liability on the Basis of Corporate
Identity: An Analysis (1998) 43:1 McGill LJ 67.
156 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
can serve to uphold the competitive system might enhance existing eco-
nomic models of criminal cartel behaviour.
I. Well-Intentioned but Badly Explained: Why the Shift Needs a Differ-
ent Justification
In this section, I explain why a deterrence-based narrative does not
convincingly support the Bureaus claim that the shift in enforcement at-
titude gives effect to a stronger criminal law mandate, flowing from the
amendments.
To put this shift in context and to show that it is worthy of attention, I
begin with a brief description of the Act and how its criminal provisions
are enforced. I then examine the claim that the way in which the amend-
ments changed the scope of the criminal provisions strengthens the crim-
inal enforcement mandate, creating the impetus for the shift. I find, how-
ever, that the post-amendment focus on cartels tells us only that a clearer
line between criminal and other collaborations has been drawn. It does
not tell us what it is about cartels that makes them criminal, nor does it
explain why criminal enforcement is the appropriate response to them. To
answer these questions, we need to consider the general justification of-
fered to explain recourse to the criminal law as a means to combat cartels,
which at present is a deterrence-based rationale. When looked at closely,
this rationale neither convincingly distinguishes cartels from other anti-
competitive collaborations, nor does it provide a compelling reason for us-
ing criminal punishment against them. Moreover, even if it did, it is hard
to see how a shift in mindset might contribute to those aspects of en-
forcement associated with prevention of harm through deterrence. I con-
clude by suggesting that the failure of the deterrence rationale is not fatal
to the success of the shift so long as the latter can be reimagined in terms
of a different general justification for recourse to the criminal law.
A. Well-Intentioned: How and Why the Shift Fits into Criminal Competition
Enforcement
The shift in paradigm has been described as a change in enforcement
mindset. In this section, I look more closely at what that means when
considered against the backdrop of the larger context of criminal competi-
tion enforcement. Where the shift fits in this picture gives us a sense of
what it can really contribute to the pursuit of criminal enforcement objec-
tives.
1. The Competition Act and the Overall Purpose of Enforcement
Any discussion of criminal competition enforcement must begin with
the Competition Act. As the primary source of competition legislation, the
Act applies to a wide range of potentially anticompetitive behaviour,
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 157
from price-fixing agreements and bid rigging, to marketing and pricing
practices, selling arrangements, abuse of a dominant position, and mer-
gers. It also contains provisions that give the Competition Bureau investi-
gative powers and that direct compliance with orders made under the
Act.10
All of these provisions are knitted together by the primary goal of
maintaining and encouraging competition, as set out in the purpose
clause of the Act:
1.1 The purpose of this Act is to maintain and encourage competi-
tion in Canada in order to promote the efficiency and adaptability of
the Canadian economy, in order to expand opportunities for Canadi-
an participation in world markets while at the same time recogniz-
ing the role of foreign competition in Canada, in order to ensure that
small and medium-sized enterprises have an equitable opportunity
to participate in the Canadian economy and in order to provide con-
sumers with competitive prices and product choices.11
The structure of the provision reflects the view that sanctioning anti-
competitive behaviour is ultimately directed at the protection of the com-
petitive character of the economic system, a system presumed to be the
best means of achieving a variety of possible good ends.12 The four policy
10 See part II, Administration (Act, supra note 4, ss 7-29.2), and part VII, Other Offenc-
es (ibid, ss 64-74), of the Act. The Act also sets out the process and conditions under
which certain transactions must be brought to the attention of the commission of com-
petition: see part IX, Notifiable Transactions (ibid, ss 108-24).
11 Ibid, s 1.1 [emphasis added].
12 Compete to Win (supra note 5 at 58) refers to the importance of the competitive process,
especially in connection with the criminal provisions of the Act. The Bureau refers to
the basic assumption that competition is a means to good ends in the description of its
mission in enforcing the Act: Competition Bureau Canada, Our Organization: What Is
the Competition Bureau?, online: Competition Bureau
Doern, in his insightful but sadly unpublished 1993 study of Canadian competition pol-
icy, also finds that Canada falls into the competition as means category, like the Unit-
ed States: Canadian Competition Policy Institutions and Decision Processes in Com-
parative Perspective, Study Prepared for the Bureau of Competition Policy, (Septem-
ber 1993) at 15 [unpublished, on file with the author]. Some academic commentators be-
lieve that economic efficiency should be given greater weight, though they acknowledge
that this is not necessarily how the Act has been applied: see e.g. Thomas W Ross, In-
troduction: The Evolution of Competition Law in Canada (1998) 13:1-2 Review of In-
dustrial Organization 1 at 9; Patrick Hughes & Margaret Sanderson, Conspiracy Law
and Jurisprudence in Canada: Towards an Economic Approach (1998) 13:1-2 Review of
Industrial Organization 153 at 160-63 (the pre-amendment PANS analysis of section 45
(for a discussion of the PANS judgment, see infra notes 15-19 and accompanying text)
could accommodate some consideration of efficiencies in terms of the objective intent in
forming the conspiracy, though the reasons in PANS do not support the application of a
total welfare approach). By contrast, Tim Hazledine (Rationalism Rebuffed? Lessons
from Modern Canadian and New Zealand Competition Policy (1998) 13:1-2 Review of
158 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
objectives enumerated in the latter part of the purpose clause identify the
kind of public benefits that competition might be expected to produce,
though it is accepted that they cannot be pursued to the same extent in all
circumstances and may in some cases conflict.13
The primordial role of maintaining and upholding competition is par-
ticularly evident in the context of the criminal provisions. As the Competi-
tion Policy Review Panel observed in its 2008 review of competition policy:
These forms of illegal collaboration between competitors are particu-
larly damaging to the competitive process because they reduce the
normal economic incentives created by competitive markets to re-
duce costs and innovate, key factors that influence productivity.14
Court decisions have expressed a similar view.15 They refer to the funda-
mental importance of protecting competition and the seriousness with
Industrial Organization 243 at 243-45) argues that, despite what neoclassical econo-
mists might have wished, the efficiencies view of competition law has not prevailed in
Canada.
13 For an excellent and succinct summary of the inherent contradictions in the policy ob-
jectives set out in section 1.1 and the challenges of developing a competition policy that
balances them appropriately, see Competition Bureau Canada, Anticompetitive Pricing
Practices and the Competition Act: Theory, Law and Practice by J Anthony VanDuzer &
Gilles Paquet (22 October 1999), Part I, online: Competition Bureau
The majority decision in Canada (Commissioner of Competition) v. Superior Propane
Inc. (C.A.) (2001 FCA 104 at paras 90, 98-109, [2001] 3 FC 185 [Superior Propane]) also
highlights the contradictions in the objectives set out in section 1.1. Ross (supra note 12
at 9) suggests that conflict is possible, though he is less definitive.
14 Compete to Win, supra note 5 at 58 [emphasis added].
15 See e.g. R v Nova Scotia Pharmaceutical Society, [1992] 2 SCR 606 at 649-50, 93 DLR
(4th) 36 [PANS]; R v Wholesale Travel Group Inc, [1991] 3 SCR 154, 84 DLR (4th)
161[Wholesale Travel, cited to SCR] (both Chief Justice Lamer, in his dissent (at 190-
91), and Justice Cory, in his majority reasons (at 222-23), refer to the primary purpose
of the Act as the protection of competition); Aetna Insurance v R (1977), [1978] 1 SCR
731 at 737-39, 75 DLR (3d) 332, Laskin CJ, dissenting, but not on this point [Aetna];
Howard Smith Paper Mills Limited v R, [1957] SCR 403 at 409-11, 8 DLR (2d) 449
[Howard Smith Mills]; Stinson-Reeb Builders Supply v R, [1929] SCR 276 at 280, [1929]
3 DLR 331. A slight nuance appears in the recent decision of the Ontario Court of Ap-
peal in R v. Stucky (2009 ONCA 151, 303 DLR (4th) 1 [Stucky]). While confirming that
the overall objective of the Act is to promote vigorous and fair competition, the court
suggests (drawing on a remark made by Chief Justice Lamer in Wholesale Travel (su-
pra note 15 at 190-91) regarding the purpose of a reverse onus in the misleading adver-
tising provisions) that, in the context of misleading advertising, there is a narrower,
two-pronged objective of protecting consumers and preventing businesses that use mis-
leading representations from reaping the benefits of those representations (Stucky, su-
pra note 15 at para 56). In Superior Propane (supra note 13 at paras 113-29), the major-
ity considered the purpose clause but was focused on whether, in the specific context of
merger review, section 96 of the Act gives precedence to economic efficiency over the
other effects of competition set out section 1.1, rather than focussing on the general
purpose of the Act. Recent lower court decisions have made reference to the purpose
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 159
which significant attacks on it ought to be treated.16 They also stress the
inherently public benefit of competition itself. Justice Gonthier, writing
for the majority in PANS, described the underlying policy interests that
justify the cornerstone offence of conspiracy,17 quoting and adding to re-
marks made in Howard Smith Mills:
The statute proceeds upon the footing that the prevention or lessen-
ing of competition is in itself an injury to the public. It is not con-
cerned with public injury or public benefit from any other stand-
point.18
Considerations such as private gains by the parties to the agreement
or counterbalancing efficiency gains … lie therefore outside of the in-
quiry under s. 32(1)(c) [now 45(1)(c)]. Competition is presumed by the
Act to be in the public benefit. The only issue is whether the agree-
ment impairs competition to the extent that it will attract liability.19
If the primary concern of competition legislation is to protect competi-
tion itself, and not to obtain specific effects that might flow from competi-
tion, competition can be compared to the idea of a level playing fieldone
where all participants strive to succeed, but within an agreed-upon sphere
bounded by certain rules. Individual success or failure (or indeed the ex-
clause when stressing the importance of protecting competition, especially against car-
tel activity: see R c Lapointe-Cabana, 2011 QCCS 2798 at para 9 (available on CanLII)
[Lapointe-Cabana]; R c Dubreuil, 2009 QCCS 5816 at para 13 (available on CanLII)
[Dubreuil]; R c Leblond, 2008 QCCS 6751 at para 26 (available on CanLII) [Leblond].
16 In PANS (supra note 15 at 649), Justice Gonthier stated, The prohibition of conspira-
cies in restraint of trade is the epitome of competition law. … [It] is not just another
regulatory provision. It definitely rests on a substratum of values. In Aetna (supra note
15 at 736), Chief Justice Laskin also stressed that the public interest in prosecuting
conspiracies lay in protecting competition, which he described as the ultimate good in a
market economy. More recently, a similar tone was used in Canada (Director of Inves-
tigation and Research) v. Southam Inc. ([1997] 1 SCR 748, 144 DLR (4th) 1 [Southam
cited to SCR]). Though it was a decision regarding mergers (a civil matter), Justice
Iacobucci referred to the evil at which competition law is directed: The evil to which the
drafters of the Competition Act addressed themselves is substantial lessening of compe-
tition (ibid at 789 [underlining added, italics in original]). The term substantial is a
qualifier in section 92 of the Act (which deals with mergers). Prior to the 2009 amend-
ments, section 45 had a similar limitationit prohibited only those agreements that, if
implemented, would lessen competition unduly. Now, the amended section 45 prohib-
its anticompetitive agreements outright, though the agreements falling within its ambit
are much more narrowly circumscribed.
17 The offence, set out in section 45 of the Act, was characterized as one of the pillars of
the Act in PANS (supra, note 15 at 648). See also ibid at 657.
18 Howard Smith Mills, supra note 15 at 411, cited in PANS, supra note 15 at 649 [em-
phasis added].
19 PANS, supra note 15 at 649-50 [emphasis added]. See also Aetna, supra note 15 at 736-
39 (where Chief Justice Laskin reviews a number of judicial precedents, including
Howard Smith Mills, on the irrelevance of public benefit to assessing conspiracy).
160 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
tent to which the market is efficient)20 does not matter so long as the basic
parameters of the competitive system are respected. The provisions of the
Act set out the legal rules that establish those basic parameters, which
one might call the bounds of acceptable behaviour by participants in a
competitive economy. So long as those boundaries are respected, partici-
pants have the freedom to conduct their affairs in the way that they judge
is best. It is assumed that allowing participants a broad freedom to opti-
mize their interests is the best way to make everyone better off.21
The way in which the Act provides for competition to be maintained
differs, however, depending on whether the anticompetitive behaviour is
an offence in relation to competition (part VI of the Act) or a reviewable
matter (parts VII.1 and VIII). The latter are enforced through noncrimi-
nal procedures and are subject to a number of remedies.22 The proceedings
are usually public, but only in the sense that the dominant mode of en-
forcement is via proceedings brought by the Bureau before the Competi-
tion Tribunal.23 Reviewable matters are not outright prohibitions on the
commercial practices within their scope, but rather, they set out when
these practices may be challenged as actually or potentially anticompeti-
tive. The provisions fall into one of two forms: either the behaviour or
practice is subject to approval, which in addition to any formal require-
20 In other words, so long as the conditions conducive to efficiency exist, it is not the role of
competition law to actively manage the achievement of these efficiencies. Commissioner
Aitken said as much when discussing the amendments before the Senate Banking
Committee (ensuring that markets are competitive and honest so that efficiency and
innovation are fostered): see Aitken Submissions to Senate Banking Committee, supra
note 6 at 12.
21 See ibid at 13-14.
22 These remedies are not restricted to damages. They can include orders to do certain
things or to abstain from certain activities: see e.g. Act, supra note 4, ss 74.1(1)(a),
74.1(1)(b), 75, 76(2), 77(2), 77(3), 79(1), 81(1), 90.1(1). Following the 2009 amendments,
the Competition Tribunal may also impose an administrative monetary penalty in
certain cases: see e.g. ibid, ss 74.1(1)(c), 79(3.1). The Act specifies that the purpose of
this kind of penalty is not, however, to punish: see e.g. ibid, ss 74.1(4), 79(3.3). Part
VII.1 of the Act (Deceptive Marketing Practices) provides for a range of administra-
tive remedies (see ibid, ss 74.1-74.111), including permanent or temporary orders and
administrative monetary penalties.
23 Applications under most provisions in parts VII.1 and VIII can be brought only by the
commissioner. Section 103.1 sets the conditions under which a person may apply to the
tribunal for permission to make an application under section 75, 76, or 77. Section 9
provides the conditions under which six adult Canadian residents may apply to the
commissioner to commence an inquiry into alleged non-compliance with an order (para-
graph 9(1)(a)), civil reviewable behaviour (paragraph 9(1)(b)), or criminal behaviour
(paragraph 9(1)(c)). Section 36 of the Act provides that a private party may bring an ac-
tion to recover loss or damage caused by anticompetitive behaviour contrary to any of
the rules on criminal offences in part VI or resulting from the failure of a person to
comply with an order of the Competition Tribunal or a court. This kind of action is still
infrequently brought in Canada.
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 161
ments, means that it cannot lessen competition unduly (e.g., mergers24
and specialization agreements25), or the practice is permitted unless it has
an unpermitted effect on competition26 (most other matters).27 Depending
on the nature of the reviewable matter, otherwise anticompetitive con-
duct will not be subject to an order by the tribunal under certain circum-
stances.28 The basic rationale behind these provisions is that, for some
business practices, it may be relevant to consider whether there are posi-
tive effects (usually efficiency gains) that mitigate any negative effects on
competition itself.29
The provisions that subject anticompetitive behaviour to criminal
sanction are closer to outright prohibitionsthey do not require proof of
anticompetitive effect, nor do they permit a defence on the basis that the
harm caused may be outweighed or offset by benefits such as efficiency
24 See Act, supra note 4, s 92.
25 See ibid, s 86.
26 This effect is not described in the same way for all provisions, which makes sense in
light of the diversity of conduct covered. Sections 75 and 76 (refusal to deal, price
maintenance) refer to an adverse effect on competition (ibid, ss 75(1)(e), 76(1)(b)); sec-
tion 77 (exclusive dealing, tied selling, market restriction) refers to certain effects of the
practice where competition is or is likely to be lessened substantially (ibid s 77(2). See
also ibid, s 77(3)); sections 78 and 79 (abuse of a dominant position) require the conjunc-
tion of market power, the practice of anticompetitive acts, and a substantial lessening
or prevention of competition (ibid, s 79(1)); sections 80 and 81 (delivered pricing) refer to
the deni[al of] an advantage [to a customer or potential customer] that would otherwise
be available to him in the market (ibid, s 81(1)).
27 The deceptive marketing practices in part VII.1 are different. They cue off whether the
practice is false or misleading in a material way: see ibid, ss 74.02-74.19.
28 See e.g. ibid, s 96 (which prevents an order from being made against a merger that is
otherwise anticompetitive [under the terms of section 92] where the parties can show
that the merger will generate efficiency gains that outweigh and offset those anticom-
petitive effects). Other examples can be found in parts VII.1 and VIII: see ibid, ss
74.04(3), 74.05(2), 74.07(1) (due diligence and corrective measures can prevent orders
being made against marketing practices that would otherwise be considered deceptive);
ibid, ss 76(9), 77(4), 81(2), 81(3) (circumstances where the prohibited pricing behaviour
can be permitted).
29 This is especially true in merger review: see Competition Bureau Canada, Merger En-
forcement Guidelines (Gatineau: Competition Bureau, 2011), online: Competition Bu-
reau
The particular importance of the goal of economic efficiency in the context of merger re-
view was confirmed in the majority reasons of the Federal Court of Appeal in Superior
Propane (supra note 13 at paras 113-29) and its subsequent decision in Canada (Com-
missioner of Competition) v. Superior Propane Inc. (C.A.) (2003 FCA 53 at para 16,
[2003] 3 FC 529 (confirming the manner in which the Competition Tribunal applied the
legal test under section 96 set out in the 2001 Superior Propane case)), though the court
made clear that this was not the same as endorsing a total surplus approach to the as-
sessment of efficiency gains.
162 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
gains.30 Since the amendments, the offences in this part are essentially di-
rected at different forms of cartel behaviour: conspiracy to engage in cer-
tain naked restraints of trade,31 bid rigging,32 and two specialized types of
conspiracy.33 The sharper focus on cartels can be attributed to two major
substantive changes to part VI: the transformation of section 45 into a per
se offence directed at agreements for price-fixing, market allocation, and
output restriction,34 and the elimination of the pricing offences.35 Though
intentional or recklessly deceptive marketing practices remain in part
VI,36 they are enforced entirely separately from other criminal matters in
that part,37 so much so that they are not considered part of the criminal
provisions.38 It follows that, when Commissioner Aitken referred to a
30 Though a general defence on the basis of efficiency gains is not permitted, there are
some defences available that could be seen as special cases where a public policy choice
has been made to allow beneficial effects, akin to efficiency gains, to be taken into ac-
count, such as the export defence (section 45(5), permitting collaborations to increase
the value of exports, subject to certain conditions) and the regulated conduct defence
(section 45(7), which applies where the agreement is part of a regulated scheme created
presumptively in the public interest). A further defence is the ancillary agreement de-
fence (section 45(4), where the agreement is ancillary to a broader agreement that does
not violate section 45).
31 See Act, supra note 4, ss 45(1)(a)-45(1)(c).
32 See ibid, s 47.
33 Conspiracy relating to professional sport (section 48 of the Act) and agreements or ar-
rangements of federal financial institutions (section 49 of the Act).
34 Per se offence refers to the structure of the offencewhich is built on the presumption
that the prohibited agreements will, if successful, have anticompetitive effects. The pre-
amendment section 45 required that the prosecution prove that the agreement, if suc-
cessful, would unduly lessen competition.
35 Sections 50 and 51 (price discrimination), and section 61 (price maintenance) were re-
pealed. These practices have become matters for civil review.
36 These are misleading advertising (section 52 of the Act), deceptive telemarketing (sec-
tion 52.1 of the Act), and other practices (section 53 [deceptive notice of winning a prize],
section 54 [double ticketing], section 55 [multilevel marketing plans], section 55.1 [pyr-
amid selling schemes]).
37 Despite their inclusion in part VI of the Act, the deceptive marketing practices offences
are considered part of the mandate of the Fair Business Practices Branch, which is to
promote truth in advertising, even if actual prosecutions are handled by PPSC law-
yers. The Fair Business Practices Branch handles the full range of advertising and
marketing practices, both civil and criminal, and has an overarching mandate of con-
sumer protection: see generally Competition Bureau Canada, Ensuring Truth in Adver-
tising, online: Competition Bureau
38 References in Bureau publications to the criminal provisions of the Act (including sta-
tistics) refer to those matters that fall within the mandate of the Criminal Matters
Branch and thus exclude the misleading advertising offences: see e.g. Annual Report
2009-2010, supra note 6 at 4-5, 20-22, 48. Previous annual reports have followed the
same convention.
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 163
shift in paradigm in our criminal programme, she meant the offences
that, following the amendments, are directed at prohibiting cartels.
2. Fostering Compliance with the Act
The structure of the Act paints only part of the enforcement picture
however. How the criminal provisions fit into a broader competition en-
forcement policy is influenced by the general approach that the Bureau
takes toward fostering compliance with the Act, referred to as the con-
formity continuum.39 As the name connotes, the continuum refers to the
spectrum of means available to the Bureau for the purpose of achieving
compliance. The underlying assumption is that most people will comply
with rules if they know what they are.40 Thus, at one end of the scale are
education and information activities designed to keep business and con-
sumers informed about how, and to what extent, competition is regulat-
ed.41 In the middle are informal and negotiated efforts to reach mutually
satisfactory resolutions to potential situations of non-compliance.42 At the
end of the scale are informal and formal responses to actual instances of
non-compliance with the Act.43
On the continuum, formal criminal enforcement, especially full prose-
cution, occupies the outer edge of the strongest responses to non-
compliance.44 Though the continuum is not intended to set a hierarchy in
the methods of achieving conformity with the Act,45 historically, very few
cases have been fully prosecuted.46 Though it is not a promise to increase
39 See Competition Bureau, Conformity Continuum: Information Bulletin (Hull: Competi-
tion Bureau, 2000), online: Competition Bureau
40 See ibid at 1. This is a dominant theme tied to an emphasis on predictability in the Bu-
reaus approach to enforcement, which aims to allow business to arrange its affairs in
such a way as to be in compliance with the law (Competition Bureau Canada, Operat-
ing Principles, online: Competition Bureau
1, 5, 8, 40-43. See also Aitken Submissions to Senate Banking Committee, supra note 6
at 14-15.
41 See Conformity Continuum, supra note 39 at 5-6.
42 See ibid at 6-9.
43 See ibid at 9-12.
44 See ibid at 10.
45 See ibid at 3-4.
46 Most cartels are discovered when cartel offenders to come forward to denounce their co-
conspirators, something that is actively encouraged through the Bureaus immunity
and leniency programs. Contested proceedings tend, therefore, to be limited to dealing
with those conspirators who do not come forward early enough to claim immunity or le-
niency, or whose conduct precludes them from claiming immunity or leniency. The his-
tory of criminal enforcement under the Act and its predecessors has been chronicled by
164 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
actual prosecutions, the shift in paradigm seems to suggest that some-
thing has changed in the small space at the end of the spectrumthat ex-
plicitly labelling cartels as criminal is intended to dispel any hint of an in-
stitutional reticence or unease about the general legitimacy of making use
of criminal enforcement, regardless of its actual frequency.47
3. Criminal Enforcement of the Act
Each arm of government plays a role in the enforcement of competi-
tion offences. The criminal prohibitions and outer limits on punishments
are set out in the Act, supplemented as necessary by legislation such as
the Criminal Code.48 Investigations of potential violations of these crimi-
nal prohibitions are undertaken by specialized units within the Competi-
tion Bureau.49 Once charges are laid, the formal aspects of the criminal
process are handled by the Public Prosecution Service of Canada (PPSC).
Though the decision to bring individual prosecutions is ultimately a mat-
ter of prosecutorial discretion guided by the Federal Prosecution Desk-
William Stanbury, who notes the small number of contested prosecutions: see WT
Stanbury, Legislation to Control Agreements in Restraint of Trade in Canada: Review
of the Historical Record and Proposals for Reform in RS Khemani & WT Stanbury,
eds, Canadian Competition Law and Policy at the Centenary (Halifax: Institute for Re-
search on Public Policy, 1991) 61 at 65-66 [Stanbury, Restraint of Trade]; WT Stan-
bury, A Review of Conspiracy Cases in Canada, 1965/66 to 1987/88 (1989) 10:1 Can
Compet Poly Rec 33 [Stanbury, Conspiracy Cases in Canada]. Stanbury has also doc-
umented the penalties imposed in those cases where there is a conviction and argues
that this is further evidence of under-enforcement of the Act: WT Stanbury, Penalties
and Remedies Under the Combines Investigation Act, 1889-1976 (1976) 14:3 Osgoode
Hall LJ 571 at 571-72, 594-96, 627 (table 5). Compete to Win (supra note 5 at 115, n 63)
notes that the prevalence of guilty pleas (and of their corresponding fines) has tended to
mask the fact that only a small number of contested prosecutions have led to convic-
tions.
47 Some might consider Commissioner Aitkens references to a more aggressive use of in-
vestigation and enforcement tools and to bringing responsible cases (see e.g., the Ait-
ken Submissions to Senate Banking Committee (supra note 6 (I will not hesitate to act
when we uncover evidence of a breach of the law at 16)) and numerous speeches such
as the 4 May 2010 speech (Melanie L Aitken, Address (delivered at the Economic Club
of Canada, Toronto, 4 May 2010), online: Competition Bureau
2010] (I wont be afraid to bring responsible cases that are prepared and conducted in
a principled and measured way)) as leading to more fully contested proceedings. Given
the Bureaus limited control over criminal enforcement, and its emphasis on immunity
and leniency, I do not think this is a correct inference.
48 See e.g. Act, supra note 4, ss 16(6), 33(8), 34(5), 34(8), 67, 68. The general sentencing
principles of the Criminal Code (RSC 1985, c C-46, ss 718-718.3) also apply to criminal
competition matters.
49 For the criminal offences, it is the Criminal Matters Branch; for the deceptive market-
ing offences, it is the Fair Business Practices Branch.
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 165
book,50 there is also a memorandum of understanding between the PPSC
and the Bureau to ensure that they coordinate their respective roles and
that they consult one another, particularly with regard to decisions on
immunity and leniency.51 The final part of enforcement is the jurisdiction
of the courts, who formally endorse findings of liability and inflictions of
punishment.
Though it is only one of the players in actual enforcement, the Bureau
has greater prominence when it comes to conveying a general enforce-
ment policy. This is not surprising, if one considers that criminal proceed-
ings are just one of several ways that the Bureau fosters compliance with
the Act in the discharge of its broad mandate to maintain and encourage
competition in Canada.52 Highlighting these activities through public
communications53 is an important component of its compliance work.54
From the Bureaus perspective, not only does public communication high-
light specific enforcement activity, it also increases transparency and ac-
countability,55 and promotes awareness of the requirements of the Act.56
In the context of criminal enforcement, media releases are issued on the
50 Federal Prosecution Service, Department of Justice Canada, The Federal Prosecution
Service Deskbook, online: Public Prosecution Service of Canada
51 Memorandum of Understanding with Respect to the Conduct of Criminal Investigations
and Prosecutions of Offences Under the Competition Act, the Consumer Packaging and
Labelling Act, the Textile Labelling Act and the Precious Metals Marketing Act, Com-
missioner of Competition and Director of Public Prosecutions, 13 May 2010, ss 3.1-3.13,
online: Competition Bureau
sional grants of immunity in competition matters: supra note 50, ch 35.4.5.
52 See the Bureaus mission statement: What Is the Competition Bureau, supra note 12.
See also Conformity Continuum, supra note 39 at 1-2. The Competition Policy Review
Panel expressly endorsed the view that the core mandate of the Bureau is to enforce
and promote compliance with the Act: Compete to Win, supra note 5 at 60.
53 These include: media releases, publications aimed at the public, periodic public consul-
tations about competition policy and legislation, speeches (the texts of which are public-
ly available), and submissions to legislators. For a fuller description, see part 9 of the
Annual Report 2009-2010 (supra note 6 at 40-43).
54 See Conformity Continuum, supra note 39 at 5 (describing the importance of publica-
tions and communication in promoting conformity with the Act). See also Annual Re-
port 2009-2010, supra note 6 at 8, 40-43.
55 See e.g. Annual Report 2009-2010, supra note 6 at 5 (it is the first of five priorities of the
Bureau); Conformity Continuum, supra note 39 at 1 (also the first of five guiding prin-
ciples). It was also a recurring theme in Commissioner Aitkens speeches. Not everyone
agrees, however, that the type and manner of information made public by the Bureau
increases transparency and accountability: see Suzanne Day et al, Rightsizing Regula-
tion: The Competition Act, 1975-2005 (2009) 24:1 CJLS 47 at 51-52.
56 See Conformity Continuum, supra note 39 at 5. See also Annual Report 2009-2010, su-
pra note 6 at 8, 40-43.
166 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
progress of criminal matters,57 annual reports describe enforcement prior-
ities and activities,58 and enforcement guidelines set out the Bureaus
approach to the criminal provisions.59 Without overstating their im-
portancethey are not legally bindingthese communications are nu-
merous and easily accessed through the Bureaus website. In contrast,
though individual prosecutors may communicate with the media, the na-
ture of these statements is such that they provide little insight into the
enforcement policy applicable to a specialized area like competition.60
Moreover, the decisions of courts on criminal competition matters, though
legally important, are similarly limited in their impact because they are
relatively few in number61 (especially with respect to liability matters)
and they are jurisdictionally disparate.62 More importantly, unlike the
Bureaus communications, court decisions seldom provide a clear overall
message on enforcement.63
57 All media releases are available online through the Competition Bureaus Media Centre
tab, online: Competition Bureau
cessed via the Investigating Cartels tab, online: Competition Bureau
58 See e.g. Annual Report 2009-2010, supra note 6 at 5, 12-13.
59 The relevant guidelines for cartels are contained in parts 1 (an overview) and 2 (a de-
scription of how collaboration will be assessed under the Acts criminal conspiracy pro-
vision, section 45), as well as part 4 (some examples) of the Collaboration Guidelines
(supra note 8).
60 Chapter 10 of the FPS Deskbook (supra note 50) outlines the parameters of media
communications that are focused either on providing factual information on specific
cases or explaining the policies and procedures of the FPS Deskbook. Neither of these
areas speaks to enforcement policy writ large.
61 In recent years, of the judicial decisions on distinct criminal competition matters (as op-
posed to multiple proceedings concerning the same underlying facts), more deal with
misleading advertising than cartels: see e.g. Stucky, supra note 15; R v Mouyal, 2007
QCCQ 6141 (available on CanLII); R v Leefe, 2007 CarswellOnt 9385 (WL Can), [2007]
OJ no 3461 (QL) (Ont Sup Ct); R v Benlolo (2006), 81 OR (3d) 440, (sub nom R v Benlolo
(A) et al) 212 OAC 227 (CA).
62 Criminal competition cases are heard by superior courts of criminal jurisdiction: Act,
supra note 4, s 67(3). Most cases involve guilty pleas where the decision goes to the ap-
propriateness of a joint submission on sentence. For some recent conspiracy decisions as
to sentence, see e.g. R v Kason Industries, 2011 FC 281 (available on CanLII) [Kason];
Lapointe-Cabana, supra note 15; Dubreuil, supra note 15; Leblond, supra note 15; R v
Mitsubishi Corp (2005), 40 CPR (4th) 333 (available on CanLII) (Ont Sup Ct)
[Mitsubishi]. The middle three cases relate to the gasoline conspiracy in eastern Que-
bec.
63 I am not suggesting that it is the role of courts to do so. Especially in matters of pun-
ishment, decisions are very much a function of individual circumstances, guided by the
sentencing principles in the Criminal Code. However, individually appropriate deci-
sions, taken together, do not necessarily lend themselves to a single, unifying explana-
tion that makes for a strong primary justification for criminal enforcement. Moreover,
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 167
This brief overview of the way the Act is structured and enforced high-
lights the prominent role that the Competition Bureau has in setting ex-
pectations for how the criminal provisions will be enforced, even if it is
but one of many players in actual enforcement proceedings. In light of the
Bureaus particular role, I believe it makes sense to think of the shift as
conveying a change in the perspective from which it will view cartels, a be-
lief that is reinforced by how the Bureau itself has described the shift.64
The change in perspective, though not described in detail, suggests
that the Bureau is more confident about describing the general category
of cartel behaviour as inherently reprehensibleit is prepared to say that
there is something that makes cartels substantively different from other
collaborations among competitors. It is apparent that some of this confi-
dence comes from a belief that a much clearer legislative line has been
drawn between cartels and other collaborations.65 But something more
in many trial decisions, only very cursory reference is made to the general principles
underlying enforcement. And while appellate decisions, especially those of the Supreme
Court of Canada, do assist in articulating general principles to guide competition en-
forcement, they are infrequent and may have less relevance as the law changes, as was
the case following the 2009 amendments.
64 See e.g. Melanie L Aitken, Address (Keynote Address delivered at the United States
Council for International Business (UNCIB) / International Chamber of Commerce
(ICC), New York, 22 September 2010), online: Competition Bureau
September 2010] (emphasizing that shifting the game on cartel enforcement is ulti-
mately about instilling public confidence that the criminality of cartels is recognized and
that the threat of enforcement is credible); Aitken, Speech of 30 September 2010, su-
pra note 1 (referring to the shift in connection with increased recognition by courts and
prosecutors that cartels are deserving of true criminal sanctions); Aitken, Speech of
24 February 2011, supra note 6 (describing the importance of a shift in mindset in light
of the amendments to the criminal provisions and referring to the need for responsible
enforcement that instills confidence that prosecutions are an appropriate tool in the en-
forcement arsenalthat is, the decision to prosecute will be driven by the need to be
seen to respond to criminal conduct, even if no conviction is obtained in a given case);
Aitken, Speech of 3 May 2011, supra note 6 (referring to an increased willingness to
investigate cartels and the need to change the dynamic between the Bureau and the
bar in criminal cases); Aitken, Speech of 6 October 2011, supra note 6 (highlighting
the need to reorient the Bureaus processes and mindset toward a more appropriately
aggressive stance to respond, as we must, to our new more powerful criminal provi-
sions [emphasis added]).
65 See e.g. Annual Report 2009-2010, supra note 6 at 8, 12; Aitken, Speech of 4 May
2010, supra note 47 ([w]e are doing our best to put a fence around the conduct we
would consider investigating as criminal, and to paint that fence in bright, bold col-
ours); Aitken, Speech of 24 February 2011, supra note 6 (stressing the importance of
bringing responsible cases to clarify the law where necessary, as part of a general goal
of promoting transparency and predictability); Aitken, Speech of 3 May 2011, supra
note 6 (stressing the importance of making clear what is acceptable and unacceptable
conduct as the amendments are implemented); Aitken, Speech of 6 October 2011, su-
pra note 6 (consistency in enforcement against cartels is critical to predictability, espe-
cially in the application of leniency and immunity).
168 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
subtle is also at play. The clarity of the law is mentioned in tandem with
references to principled, fair, and consistent enforcement.66 In my view,
the Bureau is really indicating that there is something about cartels that
allows us to cast a judgment about the seriousness of the behaviour in
question, not unlike the way we distinguish conventional crimes from
torts. The clearer law serves to highlight the substantive difference be-
tween cartels and other anticompetitive behaviour in a way that was not
possible before the amendments, but the law does not explain what that
difference is. The Bureau must point elsewhere to justify its adoption of a
judgmental criminal law mindset, a justification that explains why, giv-
en the difference between cartels and other collaborations, criminal en-
forcement is appropriate against cartels. As I will explain in detail in the
second part of this article, I think that such a justification exists, although
it is not the one the Bureau claims to rely on. In the balance of this first
part, I explain why the reasons currently offered as the basis for the shift
do not add up to a convincing justification.
B. Poorly Explained: Why the Explanations for the Shift Do Not Add Up
There is little doubt that the Bureau considers the adoption of a shift
in perspective to be warranted and to be serving a purpose. But if we un-
tangle the loose combination of elements that the Bureau refers to when
explaining and justifying the shift, a disconnect emerges. The purported
impetus for the shift is the post-amendment legislative focus on cartels,
which is taken as a stronger basis for treating cartels as criminal. This
appears to mean that the Bureau is in a better position than before to in-
sist that criminal enforcement rests on something more than the exist-
ence of a legal prohibition. In other words, the legislative focus on cartels
supports the view that criminal enforcement is now directed at inherently
reprehensible conduct that ought to be sanctioned by the criminal law.
This explanation is deficient for two reasons. The first is that the nar-
row legislative focus on cartels does not, on its own, tell us why cartels are
criminally prohibited. The changes made to the specific offence definitions
in the Act only tell us that the legal prohibitions are criminal, not why
they are appropriately criminal. Second, though one might be tempted to
say that the legislative provisions were enacted to reflect an already es-
tablished view that cartels are inherently criminalindeed, the targeting
66 See e.g. ibid (consistent, principled enforcement); Aitken, Speech of 3 May 2011, su-
pra note 6 (being appropriately aggressive in enforcing the new, enhanced criminal
provisions); Aitken, Speech of 24 February 2011, supra note 6 (we will move forward
in a straightforward, principled, and predictable way); Aitken, Speech of 30 Septem-
ber 2010, supra note 1 (referring to encouraging criminal investigators to be appropri-
ately aggressive toward the criminal nature of the conduct at issue, and more generally,
to a more focused and robust enforcement).
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 169
of cartels is not new from the enforcement policy perspective of the Bu-
reauthis seems to undermine the idea that a new enforcement mindset
is needed. If cartels were treated differently from other anticompetitive
behaviour falling within the pre-amendment ambit of the criminal provi-
sions, then presumably a distinct enforcement perspective on cartels has
existed for some time already.
Is there some other way to understand the Bureaus view that there is
something about the amendments that produces a stronger criminal law
mandate requiring a new perspective on cartels? Since the narrower,
clearer scope of the new criminal provisions tracks the scope of the Bu-
reaus previous enforcement policy against cartels, a policy justified by de-
terrence, is it possible that the amendments are seen as a kind of legisla-
tive endorsement of deterrence as the primary rationale for criminal en-
forcement against cartels? Though I doubt the amendments can be read
in this way, I think the premise underlying such a suggestionthat de-
terrence makes a convincing primary justification for a criminal competi-
tion law focused on cartelsgets to the heart of why the shift is poorly
justified. As I will explain, the deterrence rationale as applied to cartels
cartels are criminal because they are economically harmful and criminal
enforcement serves to reduce that harm through deterrenceis uncon-
vincing in criminal law terms because it does not speak to what it is about
cartels that makes them inherently reprehensible, nor does it explain why
criminal enforcement is needed to respond to that reprehensible nature.
For these reasons, it is difficult to argue that the prevailing deterrence ra-
tionale supports the claim that criminal competition enforcement now
rests on a firmer, more principled basis.
Over and above the merits of the deterrence explanation, it is also
hard to see how giving effect to a stronger criminal law mandate through
a change in perspective on cartels can be taken to enhance deterrence. In
my view, looked at through the lens of deterrence, the shifts potential
impact on enforcement effectiveness dissolves into nothing more than
wishful thinking.
1. What Did Change: The Effect of the 2009 Amendments on the Ambit of
the Criminal Prohibitions
In keeping with the spirit of the 2008 recommendations of the Compe-
tition Policy Review Panel (which noted that long-standing calls for re-
form of the criminal provisions67 had yet to deliver amendments68), the
67 See Compete to Win, supra note 5 at 54, 58-59. The recommendation of the panel with
regard to the conspiracy provision drew on the consensus view, even among critics of
the pre-amendment section 45, that a criminal prohibition that focused on the most
egregious forms of anticompetitive agreement (horizontal price-fixing, market alloca-
170 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
2009 amendments made three changes to part VI. Section 45 (the con-
spiracy offence) was changed into a per se offence prohibiting price-fixing,
market allocation, and output restrictions.69 Also, the maximum penalties
applicable to some of the offences were increased. Finally, the pricing of-
fences were repealed and changed into civil reviewable matters. Leaving
aside the separately administered category of deceptive marketing offenc-
es, the core focus of the criminal provisions70 was narrowed to cartel be-
haviour.71
tion, and supply restrictions), widely considered to be without redeeming economic ben-
efits, was justified: see generally Tim Kennish & Thomas W Ross, Toward a New Ca-
nadian Approach to Agreements Between Competitors (1997) 28:1 Can Bus LJ 22 at
30; Presley L Warner & Michael J Trebilcock, Rethinking Price-Fixing Law (1993)
38:1 McGill LJ 679 at 681; Richard Janda & Daniel Martin Bellemare, Canadas Pro-
hibition Against Anti-competitive Collusion: The New Rapprochement with U.S. Law
(1993) 38:3 McGill LJ 620 at 621-22; Stanbury, Restraint of Trade, supra note 46 at
61-62; Hughes & Sanderson, supra note 12 at 154-55.
68 The last unsuccessful attempt to amend the Act was Bill C-19 (An Act to amend the
Competition Act and to make consequential amendments to other Acts, 1st Sess, 38th
Parl, 2004 (first reading 2 November 2004)), but the bill died on the Order Paper when
a federal election was called in 2005. Bill C-19 incorporated a number of amendments
flowing from the conclusions in the VanDuzer-Paquet Report (supra note 13).
69 Even though section 45 is a new provision, yet to be interpreted judicially, it is fair to
say that the essence of the prohibition is directed at agreements to engage in any of
three kinds of per se anticompetitive behaviour: price-fixing, market allocation, and
output restriction: see Compete to Win, supra note 5 at 58-59. Though not legally bind-
ing, the Collaboration Guidelines also reinforce this view: supra note 8 at 6.
70 These are conspiracy (Act, supra note 4, ss 45, 48-49) and bid rigging (ibid, s 47). Except
for bid rigging (which is always a separate offence), cartel behaviour falls within the
ambit of the conspiracy offence. For an excellent historical overview of the different ver-
sions of the conspiracy provision, which shows that the scope of the basic prohibition
had changed little in substance from 1889 to 1999 (and indeed until the 2009 amend-
ments), see Paul Franois Famula, Section 45 of the Competition Act: Partial Rule of
Reason or Partially Reasonable Rule? (1999) 62:1 Sask L Rev 121 at 125-28. See also
Ross, supra note 12.
71 Though Canadian competition law has always prohibited cartel-type behaviour, the
term is not used in the Act. Rather, cartel has emerged over the last ten to fifteen
years as a term of art in international competition circles, notably by the competition
committee of the Organisation for Economic Co-operation and Development (OECD).
For the OECD, the expression hard-core cartel means an anticompetitive agreement,
anticompetitive concerted practice, or anticompetitive arrangement by competitors to
fix prices, make rigged bids (collusive tenders), establish output restrictions or quotas,
or share or divide markets by allocating customers, suppliers, territories, or lines of
commerce (OECD, Committee on Competition Law and Policy, Recommendation of the
Council Concerning Effective Action Against Hard Core Cartels, Doc No C(98)35/FINAL
(1998), I.A.2(a), online: OECD
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 171
By reserving the criminal law for the subset of anticompetitive agree-
ments that are cartels,72 the 2009 amendments addressed the problematic
ambit of the previous criminal provisions in part VI of the Act. This prob-
lem was mainly attributable to the uncertain breadth of section 4573 and
the continued presence of the pricing offences, which depending on the
context, could be considered procompetitive.74 There is little doubt that
the amendments made important and much-needed changes, especially
from the standpoint of addressing the problems with how section 45 was
drafted and structured. However, in terms of the amendments constitut-
ing clear recognition of the need to target cartels, this change is less sig-
nificant when one considers that a de facto criminal enforcement focus on
cartels had been in place since the late 1990s.75 The existence of this ear-
72 Other potentially anticompetitive agreements among competitors (i.e., noncartel
agreements) are now treated as civil reviewable matters governed by the new section
90.1 of the Act.
73 Prior to the amendments, section 45 had an ambiguous scope flowing from the fact that
it was characterized as somewhere between a per se offence (illegal regardless of
whether it lessened competition unduly) and a rule of reason offence (illegal only if the
agreement would, if implemented, unduly lessen competition). Justice Gonthier ex-
pressed this view in PANS (supra note 15 at 650), stating that the conspiracy provision
fell somewhere between per se and the rule of reason. Although the provision covered
the kind of behaviour that might be considered per se illegal because of the way the
provision was drafted, a problem arose in terms of enforcement, because the prosecu-
tion was always required to prove that, if implemented, an agreement would lessen
competition unduly and that the participants knew or ought to know that the agree-
ment would lessen competition unduly. Very few successful cases were ever prosecuted
under the pre-amendment section 45, although this did not prevent prosecutors from
negotiating plea bargains, especially once the Bureau established an immunity policy in
the 1990s. The Competition Policy Review Panel noted these issues: Compete to Win,
supra note 5 at 58 (in its recommendation to change section 45 into a per se provision
targeting cartels).
74 The Competition Bureau had, for some time, recognized the need to decriminalize these
practices. In 1998, the Bureau commissioned an independent study by two academics,
J. Anthony VanDuzer and Gilles Paquet. Their final report, Anticompetitive Pricing
Practices and the Competition Act: Theory, Law and Practice, was publicly released in
October 1999, online: VanDuzer-Paquet Report, supra note 13. They found that it was
very difficult to distinguish between pro- and anticompetitive pricing practices, and rec-
ommended that the existing criminal pricing practices become civil reviewable matters.
The Competition Policy Review Panel made recommendations along the same lines
(Compete to Win, supra note 5).
75 This increased focus on hard-core cartels is evident in the annual reports of the com-
missioner of competition from about 2000 onwards, increasing under the tenure of
Sheridan Scott (2004-2009) and Melanie Aitken (2009-2012), as well as in the many
press releases and speeches that draw attention to cartel enforcement. All cartel-related
publications and press releases are available either from the Investigating Cartels
webpage (supra note 57) or the Publications webpage (online: Competition Bureau
national trend that emerged after the breakthrough criminal investigation by US anti-
172 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
lier enforcement policy dilutes the claim that the new narrow focus on
cartels in the Act is a substantive change that provides the impetus for a
shift in enforcement perspective. If anything, it undermines this claim,
since as a practical matter, the Bureau adopted a different enforcement
perspective on cartels when it decided to pursue an enforcement strategy
that was narrower than the ambit of the criminal prohibitions before the
amendments.
In my view, in terms of a stronger criminal law mandate, the crux of
the matter is that the legislative focus on cartels is only part of the an-
swer; the provisions do not, on their own, tell us why cartels are criminal-
ly prohibited.76 For that, we need to look at the current explanations of-
fered by the Bureau, which draw on those developed in the pre-
amendment period.
2. What Did Not Change: The Rationale for Cartel Enforcement
Though not all criminal law is justified by reference to only one gen-
eral justification, in competition law the dominant general justification for
criminal enforcement is deterrence.77 This rationale was very much part
trust authorities of the global conspiracy to fix the price of lysine: OECD, Hard Core
Cartels (Paris: OECD, 2000) at 15-16, online: OECD
because some US defendants pleaded not guilty to the charges against them. The ensu-
ing prosecutions by the US Department of Justice made public much of the evidence
collected in the investigation, which provided a window into the workings of interna-
tional cartels. This helped to foster the international co-operation needed to bring down
several significant global price-fixing conspiracies from the late 1990s onward.
76 Some may say that the increased penalties applicable to conspiracy could be taken as
evidence of the inherent seriousness of cartels. While I agree that penalties are an indi-
cation of the relative seriousness of an offence, the pre-amendment penalties for con-
spiracy were already significant in criminal law terms. I am not sure that the increased
maxima on their own are enough to say that the basis for treating cartels as inherently
criminal has been enhanced.
77 This view emerges clearly from Bureau communications, where criminal enforcement is
always tied to the need to deter cartels: see e.g. Conformity Continuum, supra note 39
([o]ne of the objectives is to obtain penalties adequate to promote the policy goal of
general and specific deterrence at 10); Annual Report 2009-2010, supra note 6 at 4, 13;
Guide to Amendments, supra note 5 at 1; Aikten Submissions to Senate Banking
Committee, supra note 6 at 14, 24. See also Melanie L Aitken, Address (delivered at the
ABA / US Chamber Event, Washington, DC, 1 February 2010), online: Competition
Bureau
Aitken, Speech of 3 February 2010, supra note 7; Aitken, Speech of 4 May 2010,
supra note 47; Melanie L Aitken, Address (delivered at the CBA Spring Competition
Law Conference, Toronto, 17 May 2010), online: Competition Bureau
September 2010, supra note 64; Aitken, Speech of 30 September 2010, supra note 1;
Aitken, Speech of 6 Oct 2011, supra note 6. Academic commentators also tend to
assume that the proper role of criminal enforcement under the Act is deterrence: see
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 173
of how the Bureau justified its move to an enforcement policy focused on
cartels, stressing that cartels were distinct from other anticompetitive col-
laborations because of their potential to cause serious economic harm
without the prospect of sufficient positive, counterbalancing effects on
competition. Criminal enforcement was needed to deter them and prevent
that harm from occurring.78
The Bureaus view echoed the international trend of the late 1990s,
which gained traction when the Organisation for Economic Co-Operation
and Development (OECD) adopted its 1998 Recommendation Against
Cartels.79 In the 1998 recommendation and in subsequent publications,
cartels are described as the most egregious violations of competition law,80
with such significant negative consequences (e.g., raising prices, restrict-
ing supply, and even distorting world trade) that there can be no possibil-
ity of mitigation by secondary effects such as efficiency gains or good in-
tentions.81
The Bureau has used the term cartel in a similar way. An informal
definition that combines the general scope of the post-amendment prohi-
bitions in section 45 (as amended) and section 47 of the Act is posted on its
website:
A cartel is a formal or informal group of otherwise independent
businesses whose concerted goal is to lessen or prevent competition
among its participants. Typically, cartel members enter into an
agreement or arrangement to engage in one or more anti-
e.g. Warner & Trebilcock, supra note 67 at 682, 717; Hughes & Sanderson, supra note
12 at 153-54; Kennish & Ross, supra note 67 at 32. To the extent that court decisions
refer to general principles when approving jointly submitted sentences, they tend to
emphasize deterrence, though other objectives of sentencing are mentioned in passing:
see e.g. Kason, supra note 62 at para 5; Leblond, supra note 15 at paras 28, 37;
Mitsubishi, supra note 62 at 338; Lapointe-Cabana, supra note 15 at paras 12-13.
Dubreuil (supra note 13 at paras 16-17) appears to refer equally to denunciation and
deterrence without much detail.
78 Commissioner Aitken summed it up this way: [C]ombating cartels, given how harmful
their effects are to the economy, was our number one priority and remains so (Aitken
Submissions to Senate Banking Committee, supra note 6 at 12).
79 OECD 1998 Recommendation, supra note 71.
80 The OECD uses the term cartel without characterizing it as criminal behaviour. Few
countries outside Canada and the United States criminalize cartel behaviour, though
some have taken limited steps toward criminalizing cartels since the adoption of the
OECD 1998 Recommendation. Criminal enforcement tends to be limited to internation-
al co-operation with respect to global cartels, with the United States taking the lead.
See generally OECD, Hard Core Cartels: Recent Progress and Challenges Ahead (Paris:
OECD, 2003),
online: OECD
81 OECD 1998 Recommendation, supra note 71, Overview, Preamble, paras 7-8. See also
OECD 2003 Report on Cartels, supra note 80 at 7.
174 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
competitive activities, such as to fix prices, allocate markets or cus-
tomers, limit production or supply, or rig bids.82
It is noteworthy that neither the definition above nor the prohibitions
in sections 4583 and 4784 specifically mention economic harm. Rather, the
focus is on whether there has been an agreement to engage in certain
specified activities (price-fixing, market allocation, output restriction, or
bid rigging) that are deemed anticompetitive. The definitions do not in-
dicate whether the term anticompetitive refers to a disregard for compe-
tition itself or to the potential economic effects expected to flow from the
implementation of an illegal agreement.
In practice, however, the Bureau has tended to emphasize the latter
when explaining why cartels are criminal and why criminal sanctions are
needed.85 This emphasis on the harm caused by cartels draws on the rela-
82 Investigating Cartels, supra note 57. The definition refers collectively to behaviour pro-
hibited by section 45 (conspiracy) and section 47 (bid rigging). Though the definition
predates the amendments, it is much better aligned with the amended scope of section
45. Even if naked restraints on trade were generally considered to fall within the scope
of the pre-amendment section 45, the scope of the pre-amendment section 45 was not,
as drafted, limited to naked restraints in trade and required proof, even for naked re-
straints, that the restraint unduly lessened competition.
83 Section 45(1) reads:
Every person commits an offence who, with a competitor of that per-
(a) to fix, maintain, increase or control the price for the supply of a
son with respect to a product, agrees or arranges
product;
tion or supply of the product; or
tion or supply of the product.
(b) to allocate sales, territories, customers or markets for the produc-
(c) to fix, maintain, control, prevent, lessen or eliminate the produc-
84 Section 47(1) reads:
In this section, bid-rigging means
(a) an agreement or arrangement between or among two or more
persons whereby one or more of those persons agrees or undertakes not to
submit a bid or tender in response to a call or request for bids or tenders, or
agrees or undertakes to withdraw a bid or tender submitted in response to
such a call or request, or
(b) the submission, in response to a call or reuqest for bids or tenders
that are arrived at by agreement or arrangement between or among two or
more bidders or tenderers,
where the agreement or arrangement is not made known to the person calling for
or requesting the bids or tenders at or before the time when any bid or tender is
submitted or withdrawn, as the case may be, by any person who is a party to the
agreement or arrangement.
85 See e.g. Aitken Submissions to Senate Banking Committee, supra note 6 at 12-13; Ait-
ken, Speech of 6 October 2011, supra note 6 (referring to the unambiguously harmful
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 175
tively uncontroversial economic view that cartels, as naked restraints on
trade, have no redeeming features because they lead to an inefficient allo-
cation of resources that reduces total welfare (i.e., they make the econo-
my, in the aggregate, worse off).86 Implicit in the notion of a cartel, there-
fore, is presumed aggregate inefficiency and negative overall economic ef-
fects. This is why economists do not necessarily object to a per se offence
structure for cartels so long as the types of behaviour prohibited fit the
presumption of inefficiency.87
This harm-based analysis is, however, problematic because it does not
provide a justification for addressing cartel behaviour through criminal
rather than civil sanctions. Regardless of how well the presumption of in-
efficiency captures the likely economic harm caused by cartels, it says
nothing about why the economic harm caused by cartels is any different
in nature than the harm that flows from a civil reviewable matter.88 At
the end of the day, conduct found to be anticompetitive on the basis of a
civil reviewable standard is also economically inefficient, even though the
finding is arrived at by a more circuitous route. The difference is only one
of degree: civil reviewable matters tend to require proof of a significant
economic effect on competition,89 whereas the presumption of anticompeti-
nature of cartels); Aitken, Speech of 3 February 2010, supra note 7 (referring to crack-
ing down on harmful criminal cartel activity). See also supra note 80.
86 Warner and Trebilcock (supra note 67 at 683-84), Kennish and Ross (supra note 67 at
25), and Hughes and Sanderson (supra note 12 at 160-63) all refer to this prevailing
economic view. This is consistent with the view applied in American antitrust law: see
e.g. Richard A Posner, Economic Analysis of Law, 8th ed (New York: Aspen, 2011) at
10.1; Phillip E Areeda, Louis Kaplow & Aaron Edlin, Antitrust Analysis: Problems,
Text, and Cases, 6th ed (New York: Aspen, 2004) at 114.
87 See ibid.
88 I concede that it is possible to think that the harm from illegal cartels is the harm to
competition itself. But the Canadian experience has been that harm boils down to the
potential or actual economic effects of the cartel (e.g., through price increases or output
restrictions): see e.g. PANS, supra note 15 at 650. This is why the requirement to prove
the extent to which competition was lessened unduly under the pre-amendment section
45 was so difficult: see, for example, the work of Stanbury (Restraint of Trade, supra
note 46 at 64; Conspiracy Cases in Canada, supra note 46 at 34-35). The harm to the
competitive process per se (at least as I present it in Part II) and the importance of the
competitive process in maintaining confidence in the integrity of the economic system
as a whole, being unmeasurable, could not on their own constitute evidence of an undue
lessening of competition. Under the new section 45, the removal of the need to prove ef-
fects has not changed the attitude that the harm cartels cause has concrete economic ef-
fects. The basis of the presumption is that economic effects are so likely to occur that it
is not necessary to prove them, not that anticompetitive behaviour is defined by some-
thing other than economic effects.
89 The actual wording varies: see supra note 26.
176 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
tive effects in the criminal provisions obviates the need to show the mag-
nitude of that effect.90
In my view, if the criminal nature of cartels is tied to the potential
for economic harm, it cannot provide a basis on which to say that the
criminal enforcement mandate is stronger. If anything, it would be the
opposite, since emphasizing that the distinction between criminal and civ-
il collaboration lies only in a reduced evidentiary burden seems to use the
criminal law only as a convenience, to avoid a heavier evidentiary bur-
deneven if it is to tackle agreements that cause economic inefficiency
that is otherwise hard to prove. If the issue is that cartels are hard to
prove, why not create a specific civil reviewable matter with the same
presumption of inefficiency that prevents evidence of efficiency or other
beneficial effects from being presented to counter the finding of an anti-
competitive impact?91 After all, the harm itself is not more reprehensible
than that of current civil reviewable mattersthey both target inefficient
activities that reduce aggregate economic welfare.
The inability to use economic harm to distinguish cartels from other
anticompetitive collaborations also weakens a second claimthat it is le-
gitimate to treat cartels as criminal because achieving the goal of harm
reduction specifically requires criminal enforcement.92 That harm reduc-
tion persists as a justification for criminal enforcement in competition law
is largely attributable to the influence of economic models that examine
crime and punishment in mathematical terms. If economic harm is the
essence of what makes a cartel criminal, then punishment ought to be
90 Even though the amount of the harm does not factor into whether the offence has oc-
curred, the Bureau has suggested that, where economic harm is negligible, it may be
more likely to explore alternate case resolution instead of criminal enforcement: see
Collaboration Guidelines, supra note 8 at 17. This tends to suggest that it is the signifi-
cance of their potential economic harm that makes cartels serious and worthy of crim-
inal enforcement.
91 Though they present it differently, Warner and Trebilcock (supra note 67 at 715-18) al-
so suggest that something more than anticompetitive harm is needed to distinguish na-
ked restraints on trade (which could be subject to a per se prohibition) from other col-
laborations. That element is covertness (akin to a form of fraud).
92 In economic terms, the effectiveness of a criminal sanction is tied to its ability to reduce
the social welfare costs of crime (which are understood as the sum of the harm caused
and the costs of detection and enforcement). Understood in this way, it is not typically
an optimal use of social resources to bring the incidence of crime to zero. Rather, the
aim should be to keep crime to the level where the net social cost is the lowest. The ef-
fectiveness of enforcement is thus the extent to which it brings the crime level (usually
down) toward this optimal level. See, for example, Gary S. Beckers seminal article,
Crime and Punishment: An Economic Approach ((1968) 76:2 J Pol Econ 169 at 204-
205), and Richard A. Posners more nuanced examination, An Economic Theory of the
Criminal Law ((1985) 85:6 Colum L Rev 1193 at 1205-14 [Posner, An Economic Theo-
ry]).
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 177
correlated to that harm. To the extent the harm is quantifiable in mone-
tary terms, there is a natural tendency to see optimal punishment in the
same way (i.e., as a monetary penalty), which has the intuitive appeal of
an apples-to-apples comparison.93 Harm reduction as a justification for
criminal enforcement has considerable appeal in competition law because
it offers the prospect of linking the punishment imposed (usually a fine) to
the economic effects of anticompetitive conduct.94 Whatever the merits of
using harm as a means of determining the quantum and distribution of
punishment, however, focusing on harm reduction does not provide a
strong primary justification for criminal enforcement against cartels. If
one looks at criminal enforcement against cartels as primarily a response
to the economic harm causeda harm that is indistinguishable from that
caused by other collaborationsthe utility of the criminal sanction is lim-
ited to how well it reduces that harm. If a civil sanction could reduce the
harm caused by cartels as well as95 a criminal sanction, a civil sanction
should be applied because it is cheaper to administer.96 In deterrence
terms, harm reduction would come at a lower cost, and thus social welfare
would be better served.97 Since cartel offences are still largely subject to
93 See generally Becker, supra note 92; George J Stigler, The Optimum Enforcement of
Laws (1970) 78:3 J Pol Econ 526. It is important to note that this does not mean that
the optimal fine equals the amount of the economic harm, only that the amount of the
economic harm is one of the components used to calculate the amount of the fine.
94 This assumes that potential offenders, as rational actors, will be motivated not to offend
because any illicit gains will be eliminated by the fine. But determining the level of fine
that will generate this presumed deterrent effect also depends on the ability to calculate
the actual economic harm caused, as well as the likelihood that the offender will be ap-
prehended and that the punishment will actually be inflicted. These assumptions are
integral to the analyses of, for example, Becker (supra note 92), Posner (An Economic
Theory, supra note 92), and Shavell (Steven Shavell, Criminal Law and the Optimal
Use of Nonmonetary Sanctions as a Deterrent (1985) 85:6 Colum L Rev 1232).
95 Criminal sanctions may deter morebut this is not enough, in economic terms, to justi-
fy the criminal sanction. In order for social welfare to be optimized, it is the combined
amount of harm plus enforcement cost that must be reduced: see e.g. Stigler, supra note
93; Becker, supra note 92.
96 This argument is not new and is common in law and economics analyses of punishment
for corporate and business crimes, which are firmly rooted in utilitarianism: see gener-
ally Arlen & Kraakman, supra note 9; Jennifer Arlen, The Potentially Perverse Effects
of Corporate Criminal Liability (1994) 23:2 J Legal Stud 833; VS Khanna, Corporate
Criminal Liability: What Purpose Does It Serve? (1996) 109:7 Harv L Rev 1477; Rich-
ard A Posner, Optimal Sentences for White-Collar Criminals (1980) 17:3 Am Crim L
Rev 409 [Posner, Optimal Sentences]; Posner, An Economic Theory, supra note 92.
But see Robert Cooter, Prices and Sanctions (1984) 84:6 Colum L Rev 1523 (who tries
to bridge the gap between the jurisprudential and economic schools of thought on this
point); Shavell, supra note 94 (despite higher social costs, the threat of nonmonetary
sanctions is useful as a deterrent in circumstances where monetary sanctions are likely
to be inadequate, though his analysis focuses on the traditional malum in se crimes).
97 This rationale has been used to argue that using the criminal sanction for corporate,
white collar, and economic crime is largely unnecessary: see e.g. Arlen, supra note 96;
178 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
monetary penalties in the form of fines, it is at least arguable that civil
fines in the same amount might achieve comparable effects in terms of
harm reduction. Seen from this perspective, it is hard to argue that crimi-
nal sanctions must be used.
Imprisonment is different, of course, because there is no analogous civ-
il sanction. In deterrence terms, one might argue that access to this spe-
cial penal sanction could be particularly effective against cartel offenders
because they are not typically exposed to the risk of imprisonment and
thus might take extra care to avoid it. To date, however, custodial sen-
tences for cartel offences have been exceptionally rare,98 and the circum-
stances under which they are imposed, unusual.99 Though this trend could
change (recent Bureau communications suggest that imprisonment will
be sought where appropriate), it is hard to argue that access to the spe-
cial punishment of imprisonment is, at present, the primary reason for
the criminal treatment of cartels.
I think there is a reason why, when examined closely, these deter-
rence-based explanations of the shift are weak. It is because they are be-
ing used to justify measures that do not make sense if they are directed at
deterrence and harm. In my view, the answer to why cartels are inherent-
ly reprehensible and require criminal punishment does not lie in the
harm they cause, however serious. Rather, it comes from the particular
way the harm is caused. In my view, desert principles offer a more con-
Khanna, supra note 96; Posner, Optimal Sentences, supra note 96; Posner, An Eco-
nomic Theory, supra note 92 at 1204-205.
98 While sections 45 and 47 provide for potentially significant imprisonment (up to four-
teen years for section 45 and at the discretion of the court for section 47), in practice, in-
fliction of imprisonment for competition offences is very rare in Canada. There is only
one notable case where a term of imprisonment was imposed (and not suspended) out-
side of the misleading advertising context (and even there, the number of cases where
imprisonment has been imposed is small). The exception came in 1996, following the
first ever jury trial for a Competition Act offence: R c Perreault, [1996] RJQ 2565 (avail-
able on WL Can) (Sup Ct). The infrequent use of imprisonment as a punishment can be
traced to a number of factors, notably that most cartel offenders plead guilty and have
no previous criminal record (both mitigating factors as to sentence). Moreover, where of-
fenders are corporations, there is little precedent in Canada for sanctioning corporate
crime with imprisonment of corporate officers.
99 In cartel cases, with the notable exception of the Perreault case (ibid), imprisonment
has been imposed following a guilty plea (usually with a joint submission on sentence).
Leaving aside the global cartel context (where US enforcement practice usually dictates
the kind of sentence imposed), the most recent examples of sentences of imprisonment
have been in the ongoing gasoline cartel in eastern Quebec. However, all the terms of
imprisonment (imposed against six of about twenty individual defendants) were sus-
pended (to be served in the community) and were of twelve months or less: see e.g. Du-
breuil, supra note 15 (imposing a six-month sentence). The Bureau communications on
these sentences gloss over this fact: see e.g. Annual Report 2009-2010, supra note 6 at
12-13.
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 179
vincing explanation both for the adoption of an approach that draws more
heavily on criminal law, and for why this approach might make enforce-
ment more effective.
Before concluding this part, I will make one further observation. In my
view, even if deterrence were a convincing justification for the criminal
treatment of cartels, it is hard to imagine how adopting a mindset that
cartels are truly criminal and properly subject to criminal law might, on
its own, have a concrete effect on how offenders weigh the risk of being
caught and punished against the potential illicit benefits of engaging in
cartel behaviour. Despite the tough talk of the Bureau, it is difficult to see
the shift as a credible commitment to an actual increase in enforcement
activity. Without such a credible threat, it is hard to see how those factors
generally considered to be relevant to a rational offenders decision to
commit a crime (i.e., the probability of detection and conviction, and the
nature and extent of punishment) will materially change. It seems un-
wise, therefore, for the Bureau to tie the shift in attitude to more effective
deterrence.
C. Why We Need to Address the Disconnect
As I indicated in the introduction, I believe that the shift in paradigm
on cartel enforcement is a change in attitude toward cartels, one that
aims to treat cartels as truly criminal in the sense that they are inherent-
ly reprehensible and deserve to be dealt with under the criminal law.
Though I believe that Commissioner Aitken was right to see such a mind-
set as consistent with a stronger criminal enforcement mandate and as
capable of facilitating enforcement, I find the reasons she relied on uncon-
vincing and even damaging. They attribute undue significance to legisla-
tive changes while at the same time relying on an unchanged deterrence
rationale that does not offer a compelling general justification for subject-
ing cartels to the criminal law.
It would be wrong, however, to conclude that, just because deterrence
does not convincingly support a stronger criminal law approach to cartels,
no such basis exists. Finding this justification, however, requires looking
at criminal enforcement from a different perspective. In the next section, I
will explain how Arthur Ripsteins desert-based framework provides a
helpful means of getting at what makes cartels criminally wrongful. Us-
ing his work on desert theory, I provide an analysis of cartel enforcement
that casts the new Bureau mindset as an integral part of a justification
for recourse to criminal law that can actually enhance enforcement effec-
tiveness.
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II. Considering Another Explanation: The Case for Applying a Desert
Perspective to Cartel Enforcement
A. Building a Desert Perspective
1. Putting Desert in Context
Punishment theories tend to fall into one of two principal, and gener-
ally opposing, schools of thought: the consequentialist school and the de-
sert-oriented school.100 While both are predicated on the idea that crime is
a bad thing and demands a publicly sanctioned response, each camp
thinks crime is bad for a different reason. They therefore also disagree on
what the response to crime should achieve. Consequentialists see crime as
harmful to victims and to society. They therefore view punishment as a
means of specific deterrence, or a way to prevent the offender from caus-
ing harm again by reoffending. More importantly, consequentialists would
use punishment as a means of general deterrence, which is intended to
dissuade others from offending in the first place. Given that punishment
inflicts unpleasant and burdensome consequences on offenders, it is justi-
fied only to the extent that it can, on balance, generate something good (in
most cases, deterrence).101
The consequentialist rationale raises two related objections. First, by
focusing on creating deterrent effects, the offender is simply a means to
an end. Taken to its logical extreme, punishment could be inflicted every
time it produces net crime-prevention benefits, without regard to other
factors such as the extent of culpability and the seriousness of the crime.
Second, it is unclear to what extent punishment actually causes the deter-
rent effects attributed to it.102
100 I have used these labels as a convenient way to refer to the big tent that each side in
the punishment theory debate represents, in order to provide context for my discussion
of specific theorists. I note that my labels do not directly capture the movement for re-
storative justice, which though intended to have broad application to all injustice, is
often directed at questions of punishment. There is a debate about whether restorative
justice ought to be associated with either side in the punishment theory debate or
whether it transcends this divide: see generally Andrew von Hirsch et al, eds, Restora-
tive Justice and Criminal Justice: Competing or Reconcilable Paradigms? (Oxford: Hart,
2003).
101 Without discounting their importance, I have excised rehabilitation and incapacitation
from the discussion. Like Herbert Packer, I believe deterrence is [t]he classic theory of
prevention: Herbert L Packer, The Limits of the Criminal Sanction (Stanford: Stanford
University Press, 1968) at 39.
102 Consequentialists respond to the criticisms, and most recognize the need for propor-
tionality constraints on punishment (sometimes called side constraints). A notable ex-
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 181
By contrast, desert theorists see crime as wrongful and see punish-
ment as the way to convey to the offender the censure and blame com-
mensurate with the gravity of the wrong. Desert-based approaches pre-
suppose the existence of individual autonomy and the ability of individu-
als to choose whether to engage in wrongful behaviour. Thus, someone
who chooses to do wrong deserves the resulting punishment being
wrought upon him or her. This position raises two questions. First, how
does one censure an offender who rejects or refuses to acknowledge that
his actions were wrongful? Second, on what basis can an account of pun-
ishment that rejects the instrumentalism of consequentialist approaches
justify hard treatment103does it simply convey further censure, or does it
serve some other purpose?104
My account of desert theory takes its shape from theorists who discuss
criminal law and punishment within the larger context of how law should
function in a modern liberal democracy.105 For them, the preference for a
desert-based approach flows from the belief that a legal and political sys-
ample is H.L.A. Harts mixed account of punishment: Punishment and Responsibility:
Essays in the Philosophy of Law, 2d ed (Oxford: Oxford University Press, 2008) (pun-
ishment should be limited to responding to a range of behaviour that has been found to
violate law following a fair and just process). Desert-based critics of Hart, including
John Gardner (who wrote the introduction to the second edition of Harts book), Antho-
ny Duff, Andrew von Hirsch and Andrew Ashworth, Michael Moore, and Arthur Rip-
stein, point out that these modifications do not change the fundamentally instrumental
view of punishment that consequentialists espouse.
103 Hard treatment is a common generic term used to describe the unpleasant conse-
quences imposed on an offender as punishment. While the concept of hard treatment
is most readily associated with consequentialist theories of punishment, most modern
desert theorists also see a place for hard treatment, provided that it is inflicted in a
manner that reinforces the central role of desert in punishment.
104 Desert theorists have offered a variety of responses to these criticisms. On the question
of punishing those who reject the wrongfulness of their actions, see e.g. RA Duff, Pun-
ishment, Communication, and Community (Oxford: Oxford University Press, 2001) at
68-71, 75-92; Arthur Ripstein, Equality, Responsibility, and the Law (Cambridge, UK:
Cambridge University Press, 1999) at 162-63 [Ripstein, Equality]; Arthur Ripstein,
Force and Freedom: Kants Legal and Political Philosophy (Cambridge, Mass: Harvard
University Press, 2009) at 308-14 [Ripstein, Force]. On hard treatment, see e.g. Duff,
supra note 104 at 82-88; Ripstein, Equality, supra note 104 at 157-60; Ripstein, Force,
supra note 104 at 314-18; Andrew von Hirsch & Andrew Ashworth, Proportionate Sen-
tencing: Exploring the Principles (Oxford: Oxford University Press, 2005) at 21-27.
105 See e.g. John Gardner, Offences and Defences: Selected Essays in the Philosophy of
Criminal Law (Oxford: Oxford University Press, 2007); Duff, supra note 104; Malcolm
Thorburn, Criminal Law as Public Law in RA Duff & Stuart P Green, eds, Philosoph-
ical Foundations of Criminal Law (Oxford: Oxford University Press, 2011). Arthur Rip-
stein also presents his theory of punishment through the lens of political theory, but in
his approach, he attempts to eschew the conventional consequentialist-desert divide:
Equality, supra note 104 (especially at 133-71). In his most recent work, Ripstein ar-
gues that deterrence and desert are both part of, and consistent with, his Kantian ap-
proach to punishment: Force, supra note 104 at 300-24.
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tem must treat its citizens as autonomous actors capable of making deci-
sions consistent with the demands of an individual conscience or shared
values, or both. Where a citizen chooses to violate the applicable social
norms enforced by the criminal law, respect for individual autonomy re-
quires that the citizen be called to account for the wrongful conduct and
face the societal condemnation that flows from it, including the infliction
of any appropriate punishment. As I will discuss, of these theorists, I have
found that the approach of Arthur Ripstein,106 with some nuances, pro-
vides particularly helpful analytical tools to create and justify a desert-
based account suitable for competition law.
2. A Desert-Based Understanding of the Link Between the Scope of the
Criminal Law and Justifications for Punishment
Before turning to a detailed examination of how desert can justify the
shift toward a more criminal law-oriented attitude to cartel enforcement
by the Bureau, I will first explain how a desert-based approach connects
the goals of the criminal law and punishment in a particularly compelling
way. The connection reveals how the strength of a general justification for
an approach to cartels that is more rooted in criminal law rests on the
conjunction of two related ideas: first, that cartel behaviour is criminal
and, second, that it demands the response of punishment.
The goals and purposes to be served by criminalizing conduct have an
important bearing on how we justify the use of punishment. An account of
what is criminal must explain what kind of undesirable conduct demands
that those who engage in it be held to account for it publicly, which is ob-
viously linked to the kind of reasons considered sufficient to justify impos-
ing the sanction of punishment on those same persons. Though the term
punishment can be used to describe the means of sanctioning a wide vari-
ety of unwanted behaviour, not all of it criminal in nature, discussions of
how to justify punishment are usually tied to a comprehensive analysis of
the role and purpose of the criminal law. Criminal law theorists tend,
therefore, to use a more restrictive notion of punishmentlimiting it to
sanctions inflicted on those who violate criminal laws.107
106 Ripstein has developed his ideas about punishment as part of broader discussions of
law, first in his 1999 work, Equality (supra note 104 (especially at 133-71)), and more
recently in his 2009 work on Kants philosophy, Force (supra note 104 (especially at
300-24)).
107 The quotation marks highlight that the scope of the criminal law is neither fixed nor
universally agreed upon. Most theorists do not attempt to define it, choosing instead to
focus on the subset of behaviour conventionally considered criminal: see e.g. von Hirsch
& Ashworth, supra note 104 (who argue that it is not necessary for a theory of criminal
law to defend all criminal prohibitions so long as the core conduct with which the
criminal law is concerned can legitimately be characterized as blameworthy at 18-19).
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 183
Theorists who discuss punishment and criminal law together never-
theless tend to make two important assumptions about the criminal law:
first, that its scope is determined in accordance with sound principles,
usually those consistent with liberal democratic values,108 and second, that
once that scope is determined, the specific norms that a particular criminal
prohibition is designed to uphold are basically legitimate.109 I will discuss
why my desert-based approach requires a detailed discussion of the first
assumption but not the second.
When I refer to how the scope of the criminal law is determined, I am
referring to the general basis on which we decide what kind of undesira-
ble conduct ought to be subject to the public sanction of punishment. This
determination matters in a desert-based account, which necessarily be-
gins with some understanding of the wrongfulness that constitutes a
crime. To make sense of the idea of an offender deserving punishment,
there must be some general principles that set out what kind of wrongful-
ness rises to the level of a crime. This is not, however, the same as the se-
cond assumption, which assumes that the behaviour targeted by a specific
See also Duff, supra note 104 at 59-64; Gardner, supra note 105 at 239-40; Ripstein,
Equality, supra note 104 at 140.
108 I have used this term loosely as there are variations in how it is described. Duff calls it
the law of liberal polity, where the central values of individual autonomy, freedom,
privacy, and pluralism should inform how the scope of the criminal law is set (supra
note 104 at 67). For Ripstein, the criminal law protects public standards of reasonable-
ness required to maintain the optimal balance between the fundamental values of
freedom and security (something that he calls the fair terms of interaction): Equality,
supra note 104 at 6-9, 156. Gardner argues that the need for what he calls determinacy
in the demarcation of wrongs is driven by the demands of the rule of law, though he of-
fers little content to his idea beyond fair notice and procedural protection (supra note
105 at 239).
109 Criminal law theorists assume that the criminal law is made up of criminal prohibi-
tions that uphold norms reflective of a shared understanding of what ought to be crimi-
nal, even if they acknowledge that, in practice, some criminal prohibitions may not fit
this assumption. See e.g. Duff, supra note 104 at 64-66; Gardner, supra note 105 at 239-
40; von Hirsch & Ashworth, supra note 104 at 18-19. Hart makes the point slightly dif-
ferently, because he eschews using morality as a way of determining what is criminal,
but he acknowledges that what is announced to be legally criminal in criminal legisla-
tion does not necessarily overlap with what might be understood to be morally wrong:
supra note 102 at 7. It is important to note that this inevitable lack of overlap does not
prevent theorists for holding another assumption: criminal prohibitions, as prohibitions
set out in law, must be obeyed. Ripsteins idea, which I will discuss in Part II.A.3, below,
is that a crime is an attempt to unilaterally exempt oneself from the demands of public
law (which includes criminal law) and thus demands a form of enforcement that reas-
serts the supremacy of law and the need to comply with it: see Ripstein, Force, supra
note 104 at 306-308; Ripstein, Equality, supra note 104 at 140-41, 156.
184 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
criminal prohibition conforms to the general standard of wrongfulness
and is thus properly subject to the criminal law.110
Distinguishing between the general principles that mark certain be-
haviour as criminal and the specific assessment of the legitimacy of a giv-
en criminal offence is important. The first assumption is part of a general
justification for punishment, because it helps us understand why punish-
ment is the required response to crimewe need to know what makes
crime a special category of wrongful behaviour in order to justify why we
need to use punishment, as opposed to other methods, to enforce the crim-
inal law. The second assumption is not part of a general justification of
punishment, because it is concerned only with whether a specific instance
of criminalization is appropriateit does not speak to the justifications of
punishment at all. Debating the merits of the form that an instance of
criminalization takes is not the same thing as debating whether the basic
conduct targeted by that criminalization is the kind of wrong that can be
considered a crime. Thus, while there may be general agreement that
murder is the kind of special wrong that requires enforcement by the
criminal law, there can be disagreement about the exact bounds of a given
legal prohibition against murder.111
As my focus is on developing a theoretical framework to explain what
it is about cartels that makes them criminal and why they are appropri-
ately subject to punishment, my analysis must be seen as a general justi-
fication of the use of the criminal law and punishment against cartels and
not a specific justification of a given form of legal prohibition against car-
tels. For my purposes, it is sufficient that the intention behind the 2009
amendments was to narrow the focus of the criminal provisions to cartel
behaviour. This is not altered by the possibility of noncartel conduct fall-
ing within the scope of the provisions at the margins.112
I will now explain how the desert-based approach of Arthur Ripstein
offers a very helpful way of tackling the key questions we need to answer
in order to justify the Bureaus move toward a stance that criminal en-
forcement be firmly grounded on the inherently criminal nature of cartels:
110 Gardner uses the expression theory of criminalization to capture the same idea: A
theory of criminalization does not (and should not aspire to) tell us whether murder is
wrong. It can only tell us whether, given that murder is wrong, it is also a candidate for
criminalization (supra note 105 at 205).
111 See Duff, supra note 104 at 64-66; Gardner, supra note 105 at 205, 239-40.
112 Von Hirsch and Ashworth expressly make this point and do not believe that some de-
bate about the legitimacy of offences at the margins of the criminal law affects the over-
all legitimacy of the criminal law: supra note 104 at 18-19. Ripstein makes a similar as-
sumption, although he expresses it in terms of the demands that the criminal law
makes on citizens: Equality, supra note 104 at 156.
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 185
why are cartels criminal, and why do they demand the response of pun-
ishment?
3. What Sets Criminal Conduct Apart: Unilateral Disregard of Public
Standards
The first question to be answered is what sets criminal conduct apart
from other conduct. Assuming that, in order for behaviour to be consid-
ered criminally wrongful, something more is required than the breach of a
legal provision enforced through punitive sanctions, what makes certain
kinds of wrongful behaviour so serious as to warrant the use of criminal
law and enforcement through punishment?
Ripsteins core idea is that a society depends on the existence of law
(including the criminal law) to maintain the fair terms of interaction be-
tween persons. He uses this phrase to describe the equilibrium that a le-
gal system, and a political philosophy, should strive to attain between in-
dividual freedom of action and protection from the interference of oth-
ers.113 By upholding the fair terms of interaction, the law enables an indi-
vidual person to exercise his or her freedom of action independently of the
choices of others. As the expression suggests, however, the fair terms of
interaction make no sense in the absence of others. The exercise of free-
dom by one depends on a mutual recognition of the fair limits of freedom
by all. Thus, embedded in this equilibrium is the expectation that reason-
able people understand the need for legally enforceable constraints on in-
dividual freedom and will abide by them, regardless of their individual
opinions as to the merits of any specific constraint. In this way, the fair
terms of interaction set the outer limits of acceptable behaviour and what
is reasonable. It follows then that behaviour that does not respect these
limits is wrong.
Since it is inevitable that some individuals will fail to act within the
limits of acceptable behaviour, the law provides responses to instances of
wrongdoing. It does not, however, respond to all wrongs in the same way.
How, then, do we identify those wrongs that are properly dealt with by
the criminal law? When is the failure to act in a manner consistent with
the balance of freedom and protection criminally wrongful and deserving
of punishment? Ripstein sums up his answer as follows:
Any account of punishment needs to explain why punishment is
sometimes required in addition to compensation, as well as to say
why intentional acts are the appropriate occasions for that addition-
al response. I begin by suggesting that crimes are torts with some-
113 Ibid at 2; Ripstein, Force, supra note 104 at 31-50.
186 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
thing added. Once we see what is added, we see why punishment is
the appropriate response to that extra thing.114
To distill this extra element, Ripstein separates the wrongfulness of
crimes into two parts: wrongful injury and wrongful denial of rights.
Wrongful injury refers to losses suffered as a result of wrongful behaviour.
Both torts and crimes can cause wrongful injury and the law protects vic-
tims by giving them the right to seek damages from the wrongdoer for the
losses suffered. Wrongful denial of rights is of a different nature and is
what sets crime apart from tort. A wrongful denial of rights occurs when
the wrongdoer subjects the victims rights to his or her will. This occurs
because the wrongdoer deliberately ignores the fair terms of interaction
and acts in a way that denies the victims freedom to decide independently
of others how to exercise his or her rights.115
Analyzed in this way, what makes crime particularly objectionable is
not the ultimate ends of the conduct (though these can be very objectiona-
ble) but rather the means by which the wrongdoer sought to reach those
ends.116 Focusing on the wrongfulness of the means directs our attention
to the need for a certain deliberation in the behaviour of the offender. By
deliberation, I am not referring here to the specific intent requirements
that may be set out in a particular offence, but to the general idea that
crimes are usually committed advertently. In the context of understand-
ing what makes crimes different from torts, this advertence does not arise
from the fact that the effects of crime are intentionally sought (though
they often are) but rather from the offenders choice to pursue a particular
course of action despite being aware that it disregards the rights of others
(usually because the conduct will cause injury or expose others to an un-
reasonable risk of injury).117
Set in the larger context of Ripsteins fair terms of interaction, a crime
is essentially a deliberate misuse of the freedom that the fair terms of in-
teraction are intended to uphold. But what is it about misusing freedom
in this way that requires the special response of punishment? To under-
stand why punishment is required, we need to look again at the nature of
the fair terms of interaction.
As conceived by Ripstein, the fair terms of interaction are a legally
maintained balance of freedom of action and freedom from interference.118
114 Equality, supra note 104 at 147.
115 See ibid at 148-49.
116 See Ripstein, Force, supra note 104 at 309-12.
117 See Ripstein, Equality, supra note 104 at 134.
118 Ripsteins account of criminal law and punishment is firmly grounded in the broader
idea that law can balance individual responsibility and social equality: ibid at 1-2.
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 187
Leaving aside whether it is possible for the law to uphold the optimal bal-
ance between these two elements (however that may be defined by a given
society), the law does uphold a balance by identifying the extent and na-
ture of freedom that will be legally protected.119 In my view, this legally
protected freedom can be understood as having two separate but recipro-
cal components. First, this freedom includes the ability for individuals to
choose how to exercise certain fundamental rights conferred on them by
law.120 Second, this freedom excludes behaviour that is inconsistent with
respect for the freedom of others (by disregarding either the protected in-
dividual rights of others or the rules intended to protect the public in gen-
eral). The intersection of these two elements sets the legally enforced pa-
rameters of acceptable behaviour. They are the authoritative and public
source of expectations of behaviour, overriding competing private sources
of expectations such as personal belief or morality, however reasonable
these latter may be. Moreover, these public expectations allow responsible
citizens to guide their own behavior by reference to what the law has de-
clared is acceptable or not.
Ripstein calls these parameters public standards of reasonable-
ness.121 These standards are upheld and enforced by public law, which
encompasses the rules and institutions designed to protect the system of
equal freedom around which a society is unified. Public law demands
compliance because it is directed at maintaining the system on behalf of
all, something Ripstein has described as an omnilateral standpoint.122
Enforcement of public standards of reasonableness is thus critical to en-
suring that the reciprocal limits on freedom are consistently and fairly
upheld, reinforcing their primacy in governing conduct. In this way, all
holders of freedom are treated equallyeveryone must exercise his or her
freedom in a manner consistent with the way in which the law upholds
the fair terms of interaction.123
Legal enforceability of public standards on its own, however, tells us
nothing of the precise means of enforcement. What is it about crimes that
makes them a special kind of violation of public standards, one to be en-
forced through the specific mechanism of punishment? For Ripstein, the
defining feature of a crime is that the failure to respect the requirements
119 Ripstein assumes that the demands that the criminal law makes on citizens, even
where crimes are not violations of individual rights but are intended to protect the
public order, are largely just and that, as a result, it is fair to expect that people adjust
their behaviour to those demands: ibid at 156.
120 Ripstein refers generally to individual rights, though he indicates that these include
such fundamental rights as the right to life, physical security, and property: ibid at 157.
121 Ibid at 10.
122 Force, supra note 104 at 306.
123 See ibid at 306-308.
188 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
of the fair terms of interaction is triggered by the offenders decision to act
as though these terms did not apply to him or her. This is what makes
crime so seriousit is a unilateral decision to ignore, based on private
reasons, the obligation to abide by legally imposed constraints on freedom.
The unilateral nature of the decision is critical because it is fundamental-
ly inconsistent with the very reciprocity on which legally protected free-
dom relies. In essence, the offender has chosen to define his or her own
freedom, based on his or her own interests, in a way that conflicts with, or
even rejects, legally protected freedom. In a system built on the notion
that the exercise of freedom depends on constraints that apply equally to
all, it is inconsistent with the principles of fairness and equality to permit
individuals to decide to exempt themselves from those constraints.124
Applying Ripsteins analysis, the fundamental goal of the criminal law
is to uphold the primacy of legally protected freedom as against deliber-
ate, unilateral attempts to exercise a privately determined freedom incon-
sistent with the fair terms of interaction. The primary concern of criminal
enforcement must therefore be to ensure that the public standards that
underpin legally protected freedom prevail over the offenders decision to
ignore them. This cannot be accomplished through compensation, which
addresses only the wrongful injury that occurs subsequent to the decision
by the offender to substitute private reasons for public standards. Rather,
the response to crime must clearly repudiate the offenders wrongful exer-
cise of freedom, by vindicating the public standard that he or she has vio-
lated.125 This vindication must take the form of punishment, because only
punishment provides the consistent, omnilateral response (driven by pub-
lic rationality and standards as opposed to the individual needs or wishes
of any specific victim) that conveys the public refusal to give effect to the
offenders unilateral point of view.126 In other words, a wrong against the
system of reciprocal freedom, once committed, cannot be ignored by the
society in whose interest the system was created and is maintained. By
subjecting the offender to deliberate, state-inflicted coercion, punishment
reasserts the authority of public law over him or her, thereby underscor-
ing the primacy of legally protected freedom over private attempts to sub-
vert it.
124 This is the core thesis of Equality (Ripstein, supra note 104). Duff also discusses this
idea but is not prepared to ground his account of punishment on this rationale alone:
supra note 104 at 21-23.
125 See Ripstein, Equality, supra note 104 at 156-57.
126 See Ripstein, Force, supra note 104 at 306-308.
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 189
4. Why Does Crime Demand Punishment? The Important Role of Public
Enforcement In Upholding the Law
If crime is the wilful flouting of the essential rules around which a so-
ciety is organized, then punishment must cause the offender to be resub-
jected to those rules, regardless of whether he or she accepts them. In the
context of justifying the Bureaus shift in enforcement attitude, I will fo-
cus on the special role of public enforcement in justifying punishment in
terms of upholding the law.
Public enforcement is a reflection of the states unique interest in
sanctioning violations of the criminal law.127 It is a vindication of the pub-
lic standards that the criminal law defends against deliberate violations
motivated by private reasons. From a desert-based perspective, punish-
ment must respond to the deliberate disregard for the public standard
that the crime represents, both in terms of the impact on public order and
on any individual rights that might be affected.128 This is contrasted with
a deterrence-based account, where punishment is intended to reduce the
future incidence of the type of harm caused by the crime.
As discussed in Part I, focusing on harm makes distinguishing be-
tween the public enforcement of criminal law and the private enforcement
of civil law more difficult. Some have described the difference as a con-
trast between behaviour that is priced (where, provided there is a means
available to redress any harm caused, the law is indifferent to the behav-
iour itself) and that which is prohibited (where the law seeks to mini-
mize the occurrence of the behaviour itself, not just to compensate for any
actual harm caused).129 In my view, this model makes a distinction of de-
gree, not of substance. In reality, there is no basis upon which to distin-
127 Ripstein makes a distinction with regard to the states interest in punishing an offender
depending on whether or not there is an individual victim: [t]he person who unilateral-
ly sets the terms of interaction with others both wrongs his or her particular victim and
commits a wrong against the public order (Equality, supra note 104 at 156 [emphasis
added]). I believe that he makes this distinction principally to explain how the criminal
law can apply both to crimes that have a specific victim and to so-called victimless
crimes. The general principle is the same for boththe role of the criminal law is to up-
hold an important public standard set out in law. This is the material point for my pur-
poses.
128 See Ibid at 156-57.
129 Cooter provides an excellent explanation of this distinction and offers some cogent criti-
cisms of its use in economic analyses of criminal law: see supra note 96 at 1523-31,
1537-38. See also Kenneth G Dau-Schmidt, An Economic Analysis of the Criminal Law
as a Preference-Shaping Policy [1990] 1 Duke LJ 1 at 10-14 (outlining the traditional
economic approach, which treats punishment as a kind of tax or price to control behav-
iour). As Dau-Schmidt notes, the approaches of Becker and Stigler are built on this
foundation, though some of their assumptions differ. See Becker, supra note 92 at 170-
72, 176-185; Stigler, supra note 93 at 527-31.
190 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
guish between the response to harm caused by priced behaviour and that
caused by prohibited behaviour. The only difference is that prohibitions
tend to be justified ex ante, on the basis of the expected likelihood and ex-
tent of harm flowing from the behaviour.130 But this in and of itself offers
no independent reason to use public enforcement instead of private en-
forcement. From the perspective of deterrence, in each case, the behaviour
has a price. The price of prohibited behaviour is set at a level expected to
discourage people from engaging in it all together (and consequently caus-
ing the potential harm), while the price of priced behaviour is simply
aimed at encouraging people to take care to avoid causing harm while en-
gaging a behaviour.
Linking punishment to the effects of crime has tended to have strong
appeal when dealing with economic crimes, because this link fits neatly
with the economic assumption of rationalitythat profit-maximizing of-
fenders engage in a kind of cost-benefit calculation before committing a
crime. The weakness of this analysis is that it sees punishment solely in
terms of its expected effects at the individual levelfirst, on the offender
subject to punishment and, second, on any potential offenders considering
whether to commit the crime. If the purpose of punishment is defined only
by its potential to influence this cost-benefit analysis, how is this different
from civil enforcement? How do we explain why punishment is exclusively
inflicted by the state? In my view, reducing harm is not a distinct reason
that explains what it is about crime that requires punishment. This
makes the deterrence-based view vulnerable to the argument that crimi-
nal enforcement is simply a means of enforcing a legal prohibition di-
rected at achieving the goal of harm reduction. This undermines the idea
that criminal prohibitions ought to be reserved for a special class of be-
haviour that has characteristics that specifically call for the special re-
sponse of publicly-inflicted punishment.
By contrast, where the goal of the criminal law is framed in terms of
upholding the supremacy of legally protected freedom against deliberate
disregard by the offender, there is something distinct about the prohibited
behaviour that supports the use of the criminal law. In this context, pun-
ishment is directed at responding to that distinct criminal element (the
choice to ignore public constraints on freedom in pursuit of private bene-
fit), which nonpunitive remedies cannot address. The private benefit,131
130 This is certainly the assumption for the per se cartel offences: see e.g. Collaboration
Guidelines, supra note 8 ([cartels] are so likely to harm competition and to have no pro-
competitive benefits that they are deserving of prosecution without a detailed inquiry
into their actual competitive effects at 6). See also supra notes 12, 67, 88, and accom-
panying text.
131 By benefit, I am referring as much to a positive gain as to the infliction of loss or injury,
or both, on others that is caused by the pursuit of the offenders private interests.
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 191
which could be addressed by remedies other than punishment, is not the
main concern. As Ripstein has argued, this approach asserts the primacy
of public rationality over private rationality,132 which means that the of-
fenders private reasons for choosing to offend are irrelevant to his pun-
ishment. In other words, punishment that seeks to influence a private
weighing of costs and benefits misses the point, because what is wrong
about crime is the very fact that the offender has chosen to use a private
cost-benefit analysis while ignoring public standards. While committing a
crime can be privately rational in terms of its expected effects on the of-
fender (the benefits outweigh the costs),133 this does not alter the fact that
it is publicly irrational.134 This public irrationality will arise because the
offenders private rationality will ignore (or at least undervalue) the pub-
lic cost of not respecting the system of reciprocal freedom that the crimi-
nal law helps to maintain. So long as others exercise restraint and abide
by public standards, the offender can extract the benefits from the system
while exempting him- or herself from the cost of complying with its obli-
gations, a notion I will refer to as asymmetrical participation.
Thinking about a violation of criminal law in terms of asymmetrical
participation in a system predicated on reciprocity illustrates the need for
an omnilateral, systemic viewpoint when responding to crime. If crime is
a deliberate and reprehensible misuse of the fair terms of interaction up-
held by the minimum standards enshrined in law, then punishment must
respond to crime from the public perspective of protecting those fair
terms. Emphasizing the public rationality of an omnilateral perspective
thus sets the goal of punishment in terms very different from the individ-
ually-focused instrumentalism of deterrence.
5. Getting to the Essence of the New Perspective: Upholding the Law
I have outlined a desert-based approach that I believe offers helpful
tools for justifying a shift to a more criminal law-oriented mindset in com-
petition enforcement. By framing the overarching purpose of the criminal
law as upholding public standards essential to maintaining a system of
legally protected reciprocal freedom, the purpose of enforcement through
punishment is to publicly vindicate these standards (and by extension the
freedom they protect) when they are violated. To ensure that the public
standards enforced by the criminal law prevail over private attempts to
subvert them, punishment must be applied consistently and fairly and
132 Equality, supra note 104 at 152-53, 155-60.
133 See Becker (supra note 92) made this point. Though Posner (An Economic Theory, su-
pra note 92 at 1196-97) added some nuance in terms of conventional crimes, he en-
dorsed this basic point with regard to economic crimes.
134 See Ripstein, Equality, supra note 104 at 159-60.
192 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
from an omnilateral perspective. It must speak to society in general and
must convey the message that the criminal law is supreme and that viola-
tions of it will not be tolerated, thereby reinforcing the collective commit-
ment to compliance with the law and to the reciprocal freedom it upholds.
This establishes why, at the level of a general justification for punish-
ment, fairness demands that offenders be punished. This rationale estab-
lishes the general legitimacy of recourse to punishment as the response to
crime.135 It is not altered by the fact that other considerations may be rel-
evant to justifying the infliction of punishment in a specific case.136
B. Applying the Approach to Competition
In this section, I will show how Ripsteins concepts are readily adapted
to competition, and provide a desert-based justification for the two mat-
ters critical to the success of the shift in enforcement attitude: what
makes cartels criminal and why punishment is the required response to
them.
1. Competition as the Fair Terms of Interaction
The cornerstone of Ripsteins approach is the role of law in setting the
bounds of legally protected freedom. This legally protected freedom is
predicated on the existence of rules and institutions dedicated to main-
taining a system that balances freedom of action and restraints on free-
dom for the benefit of all. The perspective from which these rules and in-
stitutions must enforce this balance is omnilateral. While competition law
and especially criminal competition law has a more limited scope than
public law and criminal law in general, it lends itself very well to an anal-
ysis grounded in the concept of reciprocal freedom.
As described in Part I, competition law in general (including criminal
enforcement) is guided by the general goal of upholding and maintaining
competition. Though it sounds simple, what is being protected is not ex-
pressly defined. The Act mandates no particular form of competition, nor
does it demand that specific beneficial consequences be generated.
So what is competition and why is it important? Distilled to its es-
sence, competition closely resembles Ripsteins concept of fair terms of
135 Because I am focused on how a desert approach supports the Bureaus shift in enforce-
ment stance, I have concentrated on the importance of public enforcement and an omni-
lateral perspective to a general justification for punishment. As a result, I have not dis-
cussed the elements of Ripsteins desert-based approach that inform the actual inflic-
tion of punishment on offenders, particularly the use of hard treatment.
136 As I have said earlier, I believe that deterrence has a role to play in the distribution and
quantum of punishment.
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 193
interaction. It is the state of affairs that is expected to emerge when mar-
ket participants are free to choose how to conduct their affairs without
unacceptable interference. This freedom is not absolute,137 however. For
the system to work, the individual self-interest of each market participant
is bounded by legally enforced parameters that establish the acceptable
ways of exercising economic freedom. Moreover, what constitutes publicly
accepted standards of reasonable behaviour in a competitive economy is
not immutable and can change over time.138
At a general level, then, the role of competition law is to establish and
enforce rules to strike the balance between freedom and restraint that
current public standards require. These rules set the parameters of ac-
ceptable behaviour; what falls outside those parameters, however defined
and enforced, is anticompetitive. As I outlined in Part I, however, the Act
uses different methods of enforcement against different types of anticom-
petitive behaviour. Thus, we need to consider Ripsteins tort-crime dis-
tinction to determine what it is about cartels that makes them so repre-
hensible as to justify criminal status and enforcement.
2. What Makes Cartels Criminally Wrongful?
In Part I, I suggested that the shift in enforcement stance toward
treating cartels as truly criminal reflects the Bureaus confidence that the
amendments create a stronger criminal law mandate. This confidence
flows from the sense that the criminal provisions, as amended, are clearly
directed at a special class of anticompetitive behaviour that can be distin-
guished from other agreements among competitors. Despite this asser-
tion, however, the current explanation of the criminal nature of cartels fo-
cuses on the harm they cause, which I have argued does not allow for a
convincing distinction to be made between criminal and other collabora-
tions.
Framing this matter in Ripsteins terms, if cartels are criminal, then
they must be characterized by the extra element of deliberate disregard
for the fair terms of interaction. This disregard is special because it is a
deliberate attempt at asymmetrical participation in the system and a re-
jection of the reciprocity inherent in the fair terms of interaction.
137 Though it may exist in theory, in practice, a competitive market is not the same thing
as an uncontrolled market. Even in so-called free market economies, governments exert
some control over the functioning of competitive markets.
138 Competition theory and policy evolve over time, as do ideas about what constitutes a
competitive market and what is acceptable and unacceptable conduct. The history of
the Act illustrates this clearly: see e.g. Khemani & Stanbury, supra note 46; Ross, supra
note 12; Doern, supra note 12 at 26-38; Famula, supra note 70.
194 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
Focusing on the asymmetric effect of this disregard is important be-
cause it gets to the essence of a cartel. What sets cartels apart from other
collaborations is the attempt by their members to alter the normal work-
ings of the system of legally protected competition in an unacceptable
way. This is because cartels use the wrongful means of deceptionthey
deliberately mislead by pretending to abide by the rules of free competi-
tionin an effort to appropriate a benefit that would not accrue to them if
they were open about their intentions.139 Following this analysis, what
makes cartels criminal is the pursuit of gain through means that are anti-
thetical to the openness expected in order for competitive markets to func-
tion well.140 By acting as though they have the power to ignore the public
rules designed to uphold competition for the benefit of all, cartel members
reject not only the rules themselves but also the public and omnilateral
perspective from which those rules are created and enforced.
This is a special kind of wrong because it violates an assumption that
honest participants in an economy rely on when they exercise their free-
dom of action, namely that the ground rules of competition apply to eve-
ryone. Cartels deserve to be treated as criminal because they abuse the
very economic freedom made possible by the existence of the anticartel
rules. Thus the primary rationale for sanctioning cartel behaviour is not
to prevent the negative effects caused, however significant, but rather to
protect the economic system itself. This purpose demands consistent141
and fair enforcement that is independent of the private reasons that car-
tel members might have had in entering their agreement (which, argua-
139 As mentioned in note 91, Warner and Trebilcock have argued that the covert nature of
cartels is one of their defining characteristics, akin to a kind of fraud: supra note 67 at
715-18. They view the purpose of a criminal prohibition against cartels, however, as
primarily one of deterrence and prevention of harm.
140 I have chosen my language with care. Not all markets are purely competitive in the
sense that economists use the term. Nevertheless, cartels offend the basic principles of
free competition regardless of the competitiveness of an individual market. Indeed, it
may be socially beneficial in some markets where there is less than pure competition to
allow some collaboration among competitors. However, as the new division between sec-
tions 45 and 90.1 of the Act highlights, to be legally permitted, these collaborations
must be open (at least enough for regulators to scrutinize them) and justified on effi-
ciency, or other legitimate, grounds (e.g., industry-wide safety, standardization). By
contrast, cartels are collaborations that use deception to gain an advantage that the
normal openness of the market would prevent. Though this is not the typical explana-
tion offered for calling cartels per se illegal, I believe that emphasizing the use of decep-
tion helps to explain why this kind of collaboration is presumed not to be justified by a
legitimate reason.
141 Consistent enforcement does not necessarily mean frequent enforcement. Consistency
is reflected in the response to crime when it is discovered, regardless of the frequency of
that detection.
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 195
bly, ought to be rational).142 In other words, unless the public standard
against engaging in cartel behaviour is upheld, the exercise of economic
freedom within the confines of a free and fair system would become im-
possible.
3. Why Do Cartels Require Punishment?
Having argued that cartels are properly a criminal wrong under a de-
sert-based conception of criminal law, we now need to examine the second
issue: Why is punishment a necessary and legitimate response to the rep-
rehensible nature of cartels?
Framing the question in this way underscores the important link be-
tween the essence of what makes cartels reprehensiblethe deliberate at-
tempt to subvert the ground rules of competitionand the need for a pub-
lic response through criminal enforcement. In particular, it highlights the
significance of the omnilateral perspective from which a justification for
punishment is examined.
If punishment is to uphold the supremacy of law, it must do more than
convey that disregard of the law will not be tolerated. It must also reas-
sure those who have abided by the restraints on their individual freedom
of action that they have indeed made the right choice. This matters be-
cause the fair terms of interaction depend on the collective acceptance of
constraints protected by law. Private opinion as to the merits of the con-
straints is irrelevant. Without public confidence that responses to viola-
tions of standards will be guided by the need to protect the public interest
in maintaining the system of freedom itself (independent of whether the
response can generate effects on the incidence of harm), the collective im-
petus to abide by the standards could eventually collapse.
In criminal competition law, little attention is focused on this unique
public perspective on punishment. General deterrence, though it is con-
cerned with influencing more than just one specific offender, responds on-
ly to the private perspective of the offenderthe threat of punishment is
only as effective as the strength of the individual desire to avoid punish-
ment. In the absence of evidence that punishment will cause others to
change the way that they behave, the justification for punishment disap-
pears. There is no space in such an account for the need to convey a com-
142 The economic consensus that cartels are without redeeming features also treats as ir-
relevant the private benefits that cartel members expect to obtain from their arrange-
ments. However, this treatment is based on presumed inefficiency (i.e., in aggregate
terms, one expects that the private benefit to cartel members will not make up for anti-
competitive effects on others), rather than on a judgment that it is wrong for cartel
members to behave as though their private interest in gain can subvert the public in-
terest in competitive markets: see supra notes 12, 67, 88, and accompanying text.
196 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
mitment on the part of the authorities to the public good (i.e., the competi-
tive system) that criminal competition law protects and that cartels
threaten.
Adopting an omnilateral view of punishment, where punishment is
the response to the need to uphold competition against asymmetrical par-
ticipation by cartel members, casts competition enforcement in a different
light. Those who choose private advantage over respect for the terms of
engagement in a competitive economy deserve to be censured publicly.
Independently of any harm caused, their actions represent not only an
unwillingness to play by the rules that must apply to everyone for the sys-
tem to work, but also a wrongful belief that they can unilaterally define
their own, more advantageous economic freedom, from which everyone
else is excluded. This contempt for, and failure to attribute value to, the
free market system is what demands the special censure of punishment.
This response is needed regardless of whether punishment might also
cause the offender to modify his or her private cost-benefit analysis.
4. The Role of the Shift as the Public Expression of an Omnilateral Perspective
I have stressed the importance of the omnilateral perspective in un-
derstanding both what makes cartels wrongful and also what about them
necessitates punishment. I believe that the Bureaus shift to a more crim-
inal law-oriented mindset regarding cartels fits into this framework. If we
think of the shift not as a promise of actual enforcement primarily intend-
ed to influence the private decision to form a cartel, but rather as the ex-
pression of the uniquely public perspective that will determine how en-
forcement policy and decisions are made, it is possible to say that the shift
will lead to more effective enforcement.
The key is for the shift to make clear that cartels are criminally repre-
hensible because, through the use of deceit, they seek to create asymmet-
rical participation in the competitive system, which is fundamentally at
odds with the notion of a free and fair market. Punishment is the unique
appropriate response because it is informed by the collective interest in
upholding, consistently and fairly, the reciprocal balance between freedom
of action and restraint that is essential to competition. This understand-
ing of the shift reinforces public confidence that, once discovered, cartels
will be taken seriously, as the deliberate attacks on competition they em-
body, independently of whether the prospect of punishment is capable (in
theory or practice) of altering individual cost-benefit assessments.
In my view, this change in the perspective from which the goals of the
shift in paradigm are understood means that the shift can be successful
without being more than the change in attitude that it is. By adopting the
view that treating cartels as truly criminal is appropriate and just, it es-
tablishes the clear omnilateral basis for its commitment to upholding
competition and vindicating the standards of acceptable behaviour de-
THE SHIFT IN PARADIGM ON CARTEL ENFORCEMENT 197
signed to protect competition. Though others might enhance the message
(i.e., prosecutors and courts), the Bureaus prominent role in setting the
tone of enforcement is sufficient to make the commitment credible. This is
different from holding out the prospect that the shift will lead to harm re-
duction by influencing offenders, which to be credible, depends on persons
and factors outside the control of the Bureau.
Conclusions
In my view, if the efforts initiated by Commissioner Aitken to stake
out a tougher stance on cartelsa stance that I think is really the adop-
tion of a more conventionally criminal law-oriented mindsetare to suc-
ceed, the Bureau must shift its primary justification for enforcement from
deterrence toward desert. This is because referring to harm and deter-
rence does not speak to the two critical elements on which the Bureaus
shift in enforcement attitude rests: that there is a strong basis on which to
consider cartels as criminal and that punishment is the required response
to this criminal nature. Moreover, it is difficult to see how this shift will
make deterrence more effective than before.
Fortunately, there is a way to explain why criminal enforcement is not
simply one of many responses to cartels but rather the necessary response
to the truly criminal nature of cartel behaviour. Drawing on the idea that
the essence of a crime is the choice to act without regard to those public
standards that set the outer bounds of acceptable behaviour, cartels at-
tempt to offer an advantage to their members by acting outside the per-
mitted bounds of competition law. Cartels are different from other poten-
tially welfare-reducing collaborations (also entered into for the purpose of
gaining an advantage) because cartels are premised on using deceit to
generate an asymmetrical application of rules that are intended to apply
equally to all.
The focus on cartels as a misuse of the competitive system casts the
role of criminal enforcement in a new light. In the context of a general
goal of upholding competition, the criminal prohibition against cartels
identifies the limited range of behaviour that, by its natureexempting
cartel members from the rules of competition while expecting, and even
relying on, others to continue to abide by themmust fall outside the
bounds of what can be tolerated. Thus, the primary purpose of criminal
punishment becomes the consistent and fair enforcement of minimum
standards of behaviour that reflect a public commitment to competition.
What does this mean for enforcement effectiveness? I would argue
that the Bureaus shift in attitude can make a difference, but not in the
way suggested by the former commissioner. Though it is but one player in
the process of bringing concrete enforcement measures to bear on actual
offenders (and thus it is unclear how the Bureaus shift might directly af-
198 (2012) 58:1 MCGILL LAW JOURNAL ~ REVUE DE DROIT DE MCGILL
fect these measures), the Bureau is uniquely positioned to use the shift as
a means to reinforce the general justification for the use of criminal en-
forcement. It can do so by communicating a desert-based justification that
explains the particular wrongfulness of cartels and the basis for punishing
them from the omnilateral perspective of upholding the integrity of the
competitive system for the benefit of all. By signalling that cartels are an
abuse of this system, criminal enforcement is justified by the need for
competition to be consistently and fairly upheld, regardless of the fre-
quency with which violations might be detected. This does not mean that
actual enforcement efforts do not matter; it only means that the primary
justification for enforcement comes from elsewhere. Indeed, one can hope
that actual enforcement efforts give concrete expression to the importance
of consistent and fair application of the rules of competition. I would fur-
ther add that, although it is unlikely to do so directly, there is nothing in
the shift in attitude that is inconsistent with trying to reduce the inci-
dence of cartels.
A shift in paradigm cannot happen overnight. Nevertheless, by setting
out a clear and convincing rationale for making the shift toward treating
cartels as truly criminalone that explains why the shift is justified and
why it mattersthe Bureau places itself in a strong position to deliver on
its ultimate goal of more effective cartel enforcement.
