No defined limit on AMPs, court says

A recent decision of the Ontario Court of Appeal upholding the Ontario Securities Commission power to impose administrative monetary penalties, or AMPs, of up to $1 million suggests that even higher AMPs provided for in the Competition Act would also be upheld. (The case is Rowan v. Ontario Securities Commission. For a summary of this decision, see How high is too high?)

AMPs have become rampant in Canadian legislation in recent years (see Raising the AMPerage). Thus while this decision relates to securities law, it will be of interest to lawyers practising in other areas that provide for AMPs, notably, competition law.

An AMP is a fine provided for in a civil, as opposed to criminal, legislative provision. AMPs allow regulators to have their cake and eat it too: their civil nature allows regulators to collect fines without having to prove the case on the onerous criminal "beyond a reasonable doubt" standard. The issue, however, is whether providing for AMPs turn legislative provisions from civil into criminal, thus requiring the full panoply of rights accorded to accused persons in criminal proceedings, including the "beyond a reasonable doubt" standard of proof.

In 1999, the civil Deceptive Marketing Practices provisions were introduced into the Competition Act. These provisions allowed the imposition of AMPs of up to $50,000 individuals and $100,000 against corporations for their first breach of these provisions. The AMPs could be doubled for subsequent breaches.

In 2005, the Competition Tribunal affirmed the civil nature of these provisions in Commissioner of Competition v. Gestion Lebski.

In the meantime, however, AMPs were added to the Competition Act's abuse of dominance provisions. These provisions provided for $15 million AMPs, much higher than the AMPs upheld in Lebski, and higher even than the maximum fine (at the time) for criminal conspiracies (such as price-fixing). Many, including Professor Hogg, took the view that AMPs of this magnitude constitute a "true penal consequence" and thus attracted the protections afforded criminal defendants.

More recently, the AMPs for breaching the deceptive marketing practices have been increased, to $750,000 for individuals and $10 million for corporations, for the first breach, and $1 million and $15 million respectively for subsequent orders. In a recent case, the Ontario Superior Court ordered $8 million in AMPs against companies operating a business directory scam (see our article). The AMPs for abuse of dominance have also been adjusted, to $10 million for the first breach and $15 million for subsequent orders, but AMPs have yet to be awarded in an abuse case. As well, criminal penalties for conspiracy have been increased to a fine of up to $25 million and/or 14 years in jail.

The Rowan case is helpful in answering the question whether AMPs of this magnitude in the Competition Act can withstand constitutional challenge. In particular, the court noted that the constitution does not impose a defined limit on how high AMPs can go; rather, the limit must be determined by "reference to the purpose of the penalty in relation to the regulatory mandate of the tribunal". The Competition Act's AMPing provisions expressly provide that the purpose of AMPs is to promote conformity with the Act, and not to punish.

The court also compared the million dollar AMP to the billion dollar transactions that constituted the offence; indeed, the AMP was less than the profit made by the respondents in Rown from the unlawful transactions. Similar arguments may be available in competition cases, where the volume of commerce affected by anti-competitive behaviour can easily dwarf even the large penalties provided for in the Competition Act.