The Retail Gasoline Price-Fixing Cartel in Québec
36 Pages Posted: 27 Mar 2021 Last revised: 6 Feb 2022
Date Written: February 22, 2021
Abstract
Prosecution of the retail gasoline price-fixing cartel in Quebec was the culmination of the largest
and one of the most successful criminal investigations 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. The last trial occurred in the Fall of 2019. Pre-2010
Competition Act means that the public prosecutor had to show that the cartel not only existed but
also had the effect of “unduly lessening competition.” Pre-2010, an unsuccessful cartel was not a
crime. As an expert witness and author of the crucial economic report in the case, I here review
the significant empirical challenges faced and how they were dealt with to credibly conclude that
the cartel did successfully increase prices in the markets under investigation. Price data, namely
the dynamic standard deviation of prices across retailers, indicated that the cartel began in early
2001, while the charges only covered the period after early 2004. Based on a difference-indifferences approach, 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. In addition to fines imposed on individuals and companies pleading or found
guilty, numerous individuals received conditional prison sentences.
Keywords: retail gasoline markets, price-fixing cartel, difference-in-differences, undue lessening of competition
JEL Classification: L41, K14, C81
Suggested Citation: Suggested Citation