Electronic surveillance evidence up for grabs

To date, the Competition Bureau has sparingly used its powers to obtain electronic evidence such as wiretaps and videos, but it appears that in the not-so-distant future, there will be a whole lot more surveillance taking place.

Not only is the government designing lawful access legislation to strip away legal and constitutional safeguards on obtaining electronic evidence, but the courts are now granting civil plaintiffs access to prosecution materials that previously remained sealed.

Mark Katz, a partner in the competition and foreign investment review practice at Davies Ward Phillips & Vineberg LLP, believes the changes are affecting the whole protective regime around electronic evidence.

The federal government’s lawful access legislation will remove the need to obtain a warrant to access information such as subscriber name, address, telephone number, e-mail address, Internet protocol address, and name of service provider.

The Competition Bureau will be one of the main beneficiaries of the new enforcement powers.

The bureau’s officers will still need to obtain a warrant to intercept private communications, but designated persons will be able to compel telecommunications service providers to release identifying information upon request.

Once prosecutors have the evidence, they can now pass it on.

In a decision in late June 2012, Jacques v. Pétroles Irving Inc., the Superior Court of Quebec ordered the Competition Bureau and the director of public prosecutions to turn over copies of wiretap transcripts to plaintiff’s counsel in a class action related to the fixing of gasoline prices in certain markets in that province.

“This is massively important evidence and that is now going to be made public for civil plaintiffs,” says Katz.

“This is another sobering aspect of the enforcement regime that parties need to seriously take into account when designing their actions, particularly if the new proposed legislation encourages the bureau to use wiretaps more frequently.

Unless the court’s ruling is overturned, parties have to consider that their illicit conversations could potentially be intercepted and the wiretap transcripts secured by the bureau could now be used against them not only in criminal prosecutions but also in civil proceedings for damages.”

The federal government’s lawful access legislation may be on hold at the moment, but its reappearance in Parliament in the fall will cause no surprise.

“These provisions or provisions like them have been reintroduced a number of times in recent years,” says Susan Hutton of Stikeman Elliott LLP.

“The biggest sticking point is that some measures will be taken directly by law enforcement without a warrant. There has been a lot of flak from privacy advocates and the privacy commissioner. They say there needs to be prior approval by the court and appropriate oversight.”

Hutton says that while the debate extends beyond the Competition Act, there are particular concerns in this area.

“These changes would allow them to compel the production of extensive personal information about people who own various devices. It all comes down to people’s cellphones,” she says.

“Traditionally, courts distinguish the rights of the individual and the rights of business with business seen as not deserving as much protection. But companies don’t use phones.

The [service providers] will have to provide information about individual users, allowing law enforcement officers to track devices without having to prove that it’s part of a valid investigation.”

The bureau sees the legislative efforts as modernizing provisions of the Competition Act when it comes to e-mail, social networking, and advanced technology.

“Bill C-30 will further strengthen the bureau’s ability to overcome the technology-related challenges that can delay evidence-gathering related to the bureau’s enforcement of the Competition Act, including its new responsibilities under Canada’s anti-spam legislation,” says a bureau spokesperson.

“We believe that enhancing the Competition Act will ensure that Canadian businesses and consumers continue to prosper in a competitive and innovative marketplace.”
These measures would echo similar efforts in other jurisdictions.

The U.S. Department of Justice has had the power to intercept communications without consent since 2006. Since then, antitrust authorities there have had great success with electronic surveillance.

Britain’s Office of Fair Trading can also conduct “intrusive surveillance,” which includes wiretaps and videotaping, when authorized by its chairman and the Office of Surveillance Commissioners.

Hutton says she understands that law enforcers in general feel they need surveillance tools that are as sophisticated as those used by criminals. “No one is questioning the need to use updated technology. The question is whether they should use it without a warrant.

The Supreme Court feels that checks and balances are appropriate before privacy rights are invaded.”
Hutton refers to Hunter v. Southam Inc., which prompted the inclusion of a requirement to obtain a warrant for intrusive investigation techniques in the 1986 Competition Act.

“The mere fact that you have to go and justify the request means making sure they have the grounds to ask for it. The gathering of this sort of information should be consistent with the provisions regarding wiretaps and search warrants.”

The bureau has so far used the electronic surveillance powers it does have sparingly. In 2005, it used them to gather evidence in a telemarketing fraud case and in 2008 they formed the backbone of a matter involving retail gasoline price-fixing in Quebec.

Katz has seen how compelling this type of evidence can be. “In the last two years, it’s fair to say that there have been a fair number of prosecutions coming out of the gasoline case,” he says.

“In a large measure, that is due to the fact that there is wiretap evidence there. One conclusion that can be drawn is that when it is used, it is quite effective in driving settlements and encouraging defendants to plead guilty. In that case, many of the accused are accepting sentences that involve some form of home incarceration.”

Katz is surprised that this type of evidence isn’t coming up more often. “If the difficulty is in obtaining permissions and that is removed, expect to see a lot more of it,” he says.

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