May 7, 2013 – Canada’s Competition Bureau should improve the incentives for cartel members to abandon cartels and report their existence, according to the C.D. Howe Institute’s Competition Policy Council.
Cartels, in the form of agreements among competitors to set prices, rig bids, or share markets, for example, may harm Canadian consumers and the economy, and normally constitute practices contrary to the Competition Act, noted the Council. That is why in the course of its enforcement activities, the Competition Bureau participates in international investigations and settlements, including, for example, the current and high-profile LIBOR case. However, in comparison with actions directed at international cartels, domestic investigations and prosecutions are relatively rare. The consensus of the Council, which held its fifth meeting on April 30, 2013, was that the Bureau’s policies may create insufficient motivation for members of domestic cartels to self-report, potentially allowing harm to Canadian consumers and the economy.
The Competition Policy Council comprises top-ranked academics and practitioners active in the field of competition policy. The Council, chaired by Finn Poschmann, Vice President, Research at the C.D. Howe Institute, provides analysis of emerging competition policy issues. The Council, whose members participate in their personal capacities, convenes a neutral forum to test competing visions and to share views on competition policy with practitioners, policymakers and the public.
The Council noted that the Competition Bureau uses self-reporting under its Immunity Program as its principal means of detecting the existence of cartels and cartel-like behaviour. However, there was a consensus that the Bureau could do more to improve the incentives for cartel members to defect from cartels and to report their existence. The Council recommended that the Bureau revise its Immunity and Leniency Programs to ensure they are not at cross-purposes by, for example, ensuring that the net benefit to a first-mover – the first defector from a cartel – is significantly greater than the leniency granted to subsequent self-reporters or other cartel members. The Council also thought that the Bureau should assign more resources than are currently deployed to active prosecution of domestic anticompetitive behaviour. A greater focus on domestic policy, practice and case law would complement the Bureau’s participation in international cartel enforcement, it concluded.
Click here for the full Communique.
For more information contact: Finn Poschmann, Vice President, Research, or Benjamin Dachis, Senior Policy Analyst, C.D. Howe Institute, 416-865-1904