Friday, May 7, 2021
Prosecution of the retail gasoline price-fixing cartel in Québec was the largest and most successful criminal investigation in the history of the Competition Bureau of Canada. In June 2008 the first charges were brought against 38 individuals and 14 companies under Section 45 of the pre-2010 Competition Act. Pre-2010 means that the public prosecutor had to show that the cartel not only existed but also had the effect of “unduly lessening competition.” As an expert witness and author of the crucial economic report in the case, I review here the main challenges I faced and how I dealt with them to credibly conclude that the cartel did successfully increase prices in markets under investigation. Price data, namely the dynamic standard deviation of prices across retailers, indicated that the cartel began in early 2001, while the accusation made it start in early 2004. The best estimate of damages the city-based cartels imposed on customers ranges from $18.5M to $42.0M for the period 2001–2006, and from $6.7M to $20.9M for the period 2004–2006. Following several stays of proceedings, out-of-court settlements, and trials in criminal court, individuals pleading or found guilty were fined and received conditional prison sentences, while companies pleading or found guilty were fined.