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Former execs of Canadian cannabis producer CannTrust acquitted in ‘quasi-criminal’ case

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Three former executives of Canadian cannabis producer CannTrust, including its ex-CEO, have been acquitted of all charges after the case collapsed this week.

The charges came from a nearly two-year joint investigation by the Ontario Securities Commission (OSC) and Royal Canadian Mounted Police (RCMP) after a whistleblower alerted Canada’s cannabis regulator in 2019 about five “unlicensed” cultivation rooms the company had been operating since 2018.

Peter Aceto, the company’s CEO at the time of the alleged incidents, had been charged with fraud and making false or misleading statements to the OSC and to the market, among other purported infractions.

Mark Litwin, formerly a director of the company, and Eric Paul, a former CannTrust chair, faced fraud and insider trading charges, among others.

The charges under the Securities Act (Ontario) had been described as “quasi-criminal” by the OSC.

The Financial Post newspaper reported that a key witness had testified a week earlier in the Ontario Court of Justice that he was mistaken about using the term “unlicensed” to describe “noncompliant” cannabis growing areas in the company’s Pelham greenhouse.

The key witness’ confusion over the terms “unlicensed” and “noncompliant” apparently caused the OSC to concede there was no reasonable prospect of conviction.

However, the company itself said in a 2019 news release that it grew cannabis “in unlicensed rooms,” and Canada’s federal cannabis regulator, Health Canada, also had said some of the rooms used in the company’s greenhouse were “unlicensed.”

A lawyer for one of the defendants presented as evidence a Nov. 9, 2018, license covering “the entire Pelham greenhouse,” the Financial Post reported, which was reportedly within documents seized by the OSC.

CannTrust’s federal licenses, including the one covering the Pelham greenhouse, were suspended for about nine months starting in September 2019.

‘Law seems to be against you’

CannTrust, now called Phoena Holdings, did not immediately respond to MJBizDaily queries for comment.

Justice Victor Giourgas said he was persuaded to acquit the three former executives based on the law and the arguments of the defense attorneys, the Financial Post reported.

The newspaper reported that the justice had rejected the OSC’s attempt to withdraw the charges.

“The law seems to be against you,” the justice reportedly told the OSC lawyers.

In a statement to MJBizDaily, the OSC said it’s considering the implications of the decision and assessing its options “in light of the significant investor losses following the issuance of CannTrust’s press release on July 8, 2019.”

In that news release, CannTrust stated that it received a “noncompliant” rating from Health Canada “based on observations by the regulator regarding the growing of cannabis in five unlicensed rooms and inaccurate information provided to the regulator by CannTrust employees.”

“Growing in unlicensed rooms took place from October 2018 to March 2019 during which time CannTrust had pending applications for these rooms with Health Canada,” the company said at the time.

‘No unlicensed growing’

Scott Fenton and Michelle Psutka, counsel to Litwin, said in a statement to MJBizDaily that their client conducted himself lawfully and ethically during his tenure as a member of CannTrust’s board.

“There was no credible evidence that he knew about unlicensed growing at CannTrust and the trial evidence conclusively proved that no unlicensed growing ever took place,” they said in a statement issued on behalf of Litwin.

“Mr. Litwin looks forward to vindicating his good reputation and erasing the stain caused by this ill-founded prosecution.”

In the statement, Litwin thanked the OSC for dismissing the changes as unprovable.

Gerald Chan, who, along with Paul Le Vay, has been representing Paul, said the former chair earned a reputation as a leader with integrity over a distinguished business career.

“That reputation was unfairly tarnished by a misguided prosecution,” the lawyers said in a statement to MJBizDaily.

“Mr. Paul maintained from the beginning that when the evidence was revealed, it would show that he had done nothing wrong. That evidence has now emerged, and Mr. Paul has been declared innocent.

“We are thrilled that he has been fully and finally vindicated.”

Legal representatives for Aceto, the company’s former CEO, did not immediately respond to MJBizDaily‘s request for comment.

Health Canada still says ‘unlicensed’

In an email to MJBizDaily late Thursday, Health Canada said it hit CannTrust with “critical observations” and a noncompliant rating after an unannounced inspection on June 17, 2019, at the Pelham facility.

“The critical observations were for conducting unauthorized activities, namely producing cannabis in unlicensed rooms before obtaining approval from Health Canada, providing false and misleading information to inspectors during the course of the inspection, and inadequate record keeping,” a Health Canada spokesperson wrote.

Health Canada said that producing cannabis in “unlicensed” rooms had been considered “noncompliant” with federal regulations governing the industry at that time, because federal license holders were required to receive federal approval before making changes to a production-site plan.

Health Canada used the word “unlicensed” to describe the rooms in question.

But in 2020, the federal regulator notified cannabis production licensees they were no longer required to submit such an amendment for review and approval by Health Canada.

Health Canada stated that ensuring the integrity of the legal cannabis production system is a priority for the Canadian government.

“That is why the federally regulated system contains multiple measures that are designed to protect the health and safety of Canadians and the integrity of the system,” the spokesperson wrote.

“These measures include stringent requirements for physical and personnel security, record keeping, inventory controls and reporting that are verified through Health Canada inspections and other regulatory oversight activities.”

Fenton, who has been representing Litwin, told MJBizDaily that the Health Canada statement regarding the “unlicensed” rooms “is factually and legally incorrect.”

Source: https://mjbizdaily.com/former-execs-of-canadian-cannabis-producer-canntrust-acquitted-in-quasi-criminal-case/

Business

EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices

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A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.

Investigation Under Digital Markets Act Gains Momentum

The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.

Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.

Industry Groups Demand Swift Action

Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.

Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.

In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.

Google Denies Allegations

Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.

However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.

Potential Billion-Euro Penalties

If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.

Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.

Wider Implications for Big Tech

The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.

A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.

As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.

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AI & Technology

Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations

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Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).

The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.

Trial Push Despite Multi-Million Euro Settlement

The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.

Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.

A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.

Allegations of VAT Evasion Through Marketplace Sellers

At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.

Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.

Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.

Italian Government Named as Affected Party

In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.

Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.

Multiple Investigations Add to Pressure

The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.

Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.

In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.

Amazon Denies Allegations

Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.

Broader Impact on Europe’s Digital Economy

If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.

With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.

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Aviation

IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?

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Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.

Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.

Root Cause: IndiGo’s Market Monopoly

The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.

This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.

Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.

Government Intervention and Regulatory Weakness

The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.

Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.

The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.

If Telecom Giants Fail: A National Paralysis

The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?

If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.

In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.

E-commerce Monopoly: Another Fragile Ecosystem

The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.

Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.

A Wake-Up Call for Regulators

The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.

As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.

Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.

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