CBC News recently reported that two NDP MPs have asked the Commissioner of Competition (i.e. the Competition Bureau) to look into the alleged price fixing of frozen potato products in grocery stores.[1] This request follows from proposed class actions that have been filed in the US regarding the same matter.[2] There are two Canadian companies involved in the “cartel”: McCain Foods and Cavendish Farms.
Firstly, I thought that the Competition Bureau’s definition of a cartel was quite interesting. The Bureau states: “A cartel forms when two or more parties agree not to compete with one another. A cartel can be created through a simple verbal agreement made by a group of business people over lunch or it could be a highly structured arrangement with strict rules that are monitored and enforced.”[3] This definition of cartel reminds me of the requirements of a partnership. Section 2 of the BC Partnership Act defines a partnership as being “the relation which subsists between persons carrying on business in common with a view of profit.” While cartels are not carrying on “business in common”, they are businesses (i.e. persons) carrying on a goal in common—to not compete with each other, presumably with a view of profit. As well, just as a partnership can form from a fairly informal, verbal agreement, so too can a cartel!
Since we also recently covered the unit on corporate liability, the alleged potato cartel has raised several questions/legal issues in my mind. Under section 45 of the federal Competition Act, an agreement between competitors to fix or control the price of products is an indictable offence that is potentially accompanied by a sentence of imprisonment. To my understanding, that makes it a “true criminal offence” (i.e. requiring proof of mens rea). Therefore, if the Competition Bureau does decide to investigate the matter and proceed with criminal charges, there are probably a number of requirements that will need to be met/proven in order to establish corporate liability: whether the companies did come to an illegal agreement; whether the agents who entered into the agreement were “senior officers”; whether the senior officers were acting within their authority, etc. It’ll be interesting to see whether the Competitions Bureau will investigate the matter, and if so, whether criminal proceedings will arise.
Sources:
[1] https://www.cbc.ca/news/politics/potato-price-fixing-allegations-1.7392669
[2] https://www.cbc.ca/news/world/potato-cartel-fries-tater-tots-hash-browns-1.7387960
[3] https://competition-bureau.canada.ca/bid-rigging-price-fixing-and-other-agreements-between-competitors/bid-rigging-price-fixing-and-other-agreements-between-competitors-common-types-illegal-agreements
Thanks for the interesting article! I love your parallel between partnership and a cartel. I wish I knew more about the Competition Act- who is going to be liable and face imprisonment- the directing mind?
Hi Meena! I really enjoyed reading your discussion post. I think that is so interesting how a cartel is similar to a partnership by its definition. Your questions about criminal liability lead to more questions about sustainability of the corporation. If the directors or senior officers go to jail (for example) for this potato cartel, can’t the shareholders just elect new directors to do something similar? I think this speaks to our readings from Joel Bakan as the corporation being a psychopath. They can continue their operations despite their senior directors facing liability all in the pursuit of profit with no remorse.
The only type of punishment I could see the corporation getting is a fine. That made me think about this case I read for another class: Quebec (Attorney General) v. 9147-0732 Québec inc.. In this case, the corporation was using the Charter (Section 12, Everyone has the right not to be subjected to any cruel and unusual treatment or punishment) to argue against a fine being too harsh. The court found that section 12 of the Charter does not apply to a corporation as “cruel” refers to human beings/living things. If McCain Foods and Cavendish Farms do face fines, we know that they probably can’t get out of it with this Charter argument now!