R. v. Chatwin Motors Ltd. et al.

The offence lies, not in any overt act, but in the conclusion of an agreement to carry out certain acts.

The “intention” with which the parties made their agreement is irrelevant. If the effect of the agreement is unduly to lessen or prevent competition, the agreement is a criminal one, no matter what may have been the intention of the parties.

The agreement or conspiracy is only unlawful where, if the agreement were carried out, an undue restriction of competition would result.

While it is not necessary for there to be any evidence that the conspiracy has been carried out, the Court may look at any overt acts that may result from the carrying out of the conspiracy.

He cited the following passage from the judgment of my brother, Ritchie, in the case of Aetna Insurance Co. et al. v. The Queen[2], at p. 747:

The fact that an agreement existed to prevent or lessen competition in the price of insurance does not of itself constitute an offence under the section; the illegal character of the agreement lies in the fact that the prevention or lessening is undue and it appears to me that the best if not the only way in which to determine this is by considering whether competition would be unduly prevented or lessened if the design evidenced by the agreement were carried into effect. In my view it is only by assessing what the result would be if the agreement were implemented that the elusive quality of undueness can be measured, and it was for this reason that the learned trial judge in the present case heard evidence as to the effect of the plan on free competition in the insurance business.

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The trial judge then proceeded to consider the evidence.

In respect of count (1), the trial judge found that the Crown had proved the existence of an agreement among all the respondents to add a 3 per cent charge to their list prices for certain parts of a “captive” nature on which they themselves had to pay freight. He concluded, though, that the offence itself had not been made out because the agreement had no effect on competition in the market.

He also acquitted the respondents on the charge contained in count (2). He found that there was evidence of a meeting at which it was agreed to impose a 10 per cent surcharge but said that the agreement was not intended, nor shown, to have any effect on competition.

As regards count (3), the trial judge found an agreement between Katila and Chatwin but held that the Crown had failed to show that the agreement would have effected or did effect an undue lessening of competition.

The Crown appealed the acquittals on counts (1) and (2) to the British Columbia Court of Appeal. The Notice of Appeal alleged that eleven errors of law had been committed by the trial judge. These errors are as follows:

1. That the learned trial judge erred in law in his interpretation of what constitutes preventing or lessening competition within the meaning of section 32(1)(c) of the Combines Investigation Act.

2. That the learned trial judge erred in law in deciding that with respect to Count 1, the Crown was required not only to prove an agreement to pass on a 3% charge reflecting an increase in freight rates in relation to captive automobile parts, but was also required to prove that this agreement was intended as a device for controlling prices and thereby limiting competition.

3. That the learned trial judge erred in law in deciding that with respect to Count 2, the Crown was required not only to prove an agreement to pass on

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a further 10% charge reflecting labour costs in relation to captive automobile parts, but was also required to prove that this agreement was intended as a device for controlling prices and thereby limiting competition.

4. That the learned trial judge erred in law in that he misdirected himself as to the intention necessary to constitute an offence under Section 32(1)(c) of the Combines Investigation Act.

That the learned trial judge erred in law by considering the motives of the parties to the agreements as a factor in the determination of whether such agreements were unlawful.

That the learned trial judge erred in holding that he could not as a matter of law find a common agreement between the Ford dealers and the General Motors dealers as to the addition of a common 3% freight charge.

That the learned trial judge erred in holding that he could not, as a matter of law, find a common agreement between the Ford dealers and the General Motors dealers as to the addition of a common 10% surcharge.

That the learned trial judge erred by holding that it is at law necessary for the unlawful agreement contemplated in section 32(1)(c) of the Combines Investigation Act to fix a common price or follow a common pricing formula or listing.

That the learned trial judge erred in law in holding that a common surcharge, not in any way related to a common pricing policy, can have no effect upon competition.

That the learned trial judge erred in law in finding there was no evidence of any minimum or base prices to which the common 3% freight charge was agreed to be added.

That the learned trial judge erred in law in finding there was no evidence of any minimum or base price to which the common 10% surcharge was agreed to be added.