Canadian COMPETITION LAW

On October 25, 2011, the Competition Bureau published the Commissioner of Competition’s speech given at the 2011 Canadian Bar Association’s Annual Competition Law Conference in Ottawa.

It is fair to say that the Commissioner’s recent speech presented a singular tone across the civil and criminal competition law areas: enhanced enforcement.

Of the Commissioner’s remarks, some of the more interesting points include the Bureau’s increased focus on reviewing non-notifiable mergers (i.e., transactions that do not trigger the notification thresholds under the Competition Act), the statement that the Bureau has begun to revoke markers in some immunity cases where in its view immunity applicants are not complying with its Immunity Program and a subtle suggestion that the Bureau was preparing to bring, but not quite yet in a position to commence, the first conspiracy cases under the amended section 45 (Canada’s new hard core criminal conspiracy offences).  The following are some highlights from the Commissioner’s recent speech.

OVERVIEW

Enforcement priorities:

“When I began my term as Commissioner, I outlined three priorities, about which I have spoken to this audience on a number of occasions. …

Accordingly, our priorities reflect, and are informed by, our ongoing and principal commitment to enforcement. They are:

first, continuing to achieve results for Canadians through active, targeted and principled enforcement;

second, applying our competition laws in a progressive and transparent way that keeps pace with a changing marketplace; and

third, cultivating our strong and agile enforcement capacity to deliver results that matter.

I believe that through both our words and our actions to date, our message is being heard: we, at the Bureau, will not hesitate to act to promote competition in the Canadian marketplace. We will hold to account companies that take advantage of Canadians.

In the last 2 years, we have brought forward a number of important cases and demonstrated that, where there is a clear violation of the law, we will not hesitate to use the tools available to us to investigate and prosecute the offenders. To my mind, a consistent, principled enforcement strategy is the best deterrent of all — bar none.”

MERGERS

Merger control initiatives:

New merger Interpretation Guidelines:

“Consistent with this goal, our Mergers Branch has issued a number of new guidance materials this year, including most recently an interpretation guideline on waiting periods for hostile transactions, and guidance on “no action” letters in merger reviews.”

Merger Enforcement Guidelines (MEGs):

“We have also consulted widely on revisions to the Merger Enforcement Guidelines (the MEGs) to reflect our current practice, and I am pleased to announce the publication of the revised MEGs this week.”

Merger Remedies Bulletin:

“We are also working to revise the Remedies Bulletin and consent agreement template, informed by the conclusions of our Merger Remedies Study and our experience over the past couple of years in developing consent agreements that have implemented the robust remedies we have been securing, and done so, increasingly effectively.”

Merger Review Process Guidelines:

“In addition, we are making changes to the Merger Review Process Guidelines based on our experience with the two–stage merger review process over the past two and a half years.”

Second phase merger reviews (Supplementary Information Requests, “SIRS”):

“In practice, our Mergers Branch has been quite busy, both in terms of the number of filings, and the size and complexity of transactions. Since the amendments came into force, we have issued thirteen supplementary information requests and finalised ten consent agreements. There have been 104 filings so far this fiscal year, which is on par with the number of filings received at this time last year.”

Monitoring non-notifiable transactions:

“As for our enforcement approach, we are determined to take action as required with respect to mergers that will have a significant anti–competitive effect, regardless of their size.

To that end, we are proactively monitoring closed and non–notifiable transactions, and recently challenged our first transaction since 2005, a completed merger in the hazardous waste industry in British Columbia.”

CIVIL (REVIEWABLE) MATTERS

Organized real estate (CREA and TREB cases):

“We have brought forward a number of important cases in our Civil Matters Branch this past year, including those against the Canadian Real Estate Association, the Toronto Real Estate Board, and Visa and MasterCard.

As you are maybe aware, the Bureau reached an agreement with the Canadian Real Estate Association late last year that fully addressed our concerns, and we are seeing positive change in the market for real estate services.

This remedy has really made a difference for Canadians, and in a very important transaction in their lives. I am very proud of what we achieved in this case.

…

Last May, we filed an application against the Toronto Real Estate Board (TREB), seeking to prohibit restrictions placed on realtors that dictate how they distribute MLS information to their clients.

Under these rules, real estate agents can share important MLS data with their clients, but only if they do so by hand, fax, or e–mail — they are prevented from sharing the very same information over the internet through password–protected websites, also known as Virtual Office Websites.

These restrictions are denying consumer choice and the ability of real estate agents to introduce innovative real estate brokerage services through the internet.

Ultimately, and unfortunately, we felt it necessary to seek a legally binding order from the Tribunal to ensure greater competition and increased innovation in the market for real estate services in Toronto.”

CRIMINAL MATTERS

More aggressive criminal enforcement:

“In our Criminal work, we continue to concentrate on the, admittedly, lengthy process of ‘changing the game’— reorienting our approach at the Bureau, our processes, and our mindset to a more appropriately aggressive stance to respond, as we must, to our new more powerful criminal provisions.”

Continued use of investigative powers:

“There will be no arbitrary relaxing of standards under the Bureau’s watch — a practice that can only impair predictability and fairness in enforcement. Further, we will use our investigative tools such as searches, wiretaps and section 11 orders.”

Criminal enforcement priorities: cartels and bid-rigging:

“Cartels and bid–rigging continue to be our focus, given the seriousness of this conduct, and its unambiguously harmful nature. We are committed to advancing cases that matter to Canadians, doing so in a timely manner, and following them through to the end.”

Enforcement of new conspiracy (cartel) rules:

“For cartels, while it will necessarily take some time before we bring our first case under the new section 45, we do have a number of ‘hybrid’ cases underway that will give us experience with the new provisions.”

Penalties against individuals:

“In both cartel and bid–rigging cases, we will be appropriately aggressive when dealing with individuals. To date, 38 individuals have been charged in the Quebec Octane case, and last December, five individuals were accused of rigging bids for private sector contracts in residential highrise buildings in the Montreal area.”

Seeking to drive the leniency/immunity processes:

“Our commitment to a consistent approach will also extend to our dealings with cooperating parties. Our goal is to move our investigations along in a timely way and, to that end, we will insist that all leniency applicants engage in settlement negotiations very shortly after applying for leniency.

Whatever may have been your experience in the past, this is under the Bureau’s control, and we do intend to require compliance with our clearly stated policy. No one has a right to retain the leniency privilege without delivering on their end of the bargain.”

Revoking markers:

“The Immunity and Leniency Bulletins specify that information must be proffered within 30 days to qualify for immunity or a fine reduction. We have begun to revoke markers where there has not been a sufficient proffer of information within that specified time. To be very clear, we expect, and will require, cooperating parties to fulfill their obligations in a timely way.”

ADVERTISING AND MARKETING

Use of new misleading advertising penalties:

“Moving then to talk about our Fair Business work. Misleading representations continue to be an area of concern for the Bureau, as consumers need accurate information in order to make informed choices. It’s very simple — don’t mislead the public by hiding charges or conditions in fine print, or by making claims you can’t back up.

In such cases, where appropriate, we are also seeking restitution for consumers, as we are in the Rogers Chatr and Nivea cases. We want tangible results for Canadians.

Most recently, in June, we signed a consent agreement with Bell Canada under which Bell agreed to stop making misleading representations about the prices offered for its services.

We had determined that, since December 2007, Bell had charged higher prices than advertised for many of its services, including home phone, Internet, satellite TV and wireless.

Under the terms of that consent agreement, which Bell entered into to its credit with no need for the Bureau to commence litigation, Bell also agreed to pay an administrative monetary penalty of $10 million dollars, the maximum amount allowed under the Act, and Bell agreed to modify all of its non–compliant advertising within 60 days.”

Enforcement of settlement terms (consent agreements):

“I should also note that we are also taking firm steps to communicate the seriousness with which we expect parties to view consent resolutions. We will not allow messages to the public to be diluted or compromised.

For example, in September, we reached a consent agreement with Beiersdorf, the maker of Nivea products, over what the Bureau concluded were false or misleading performance claims.

Following the settlement, the company asserted in the media and on its own website — directly contrary to our conclusions — that its performance claims were based on independent research and complied with Canadian requirements and guidelines.

These assertions were not in accordance with the consent agreement, as Beiersdorf had agreed that it did not contest the Bureau’s conclusions. After being advised by the Bureau that it was required to adhere to the letter and spirit of the commitments it made, Beiersdorf complied, and removed the offending statement from its website.

As in this case, we will continue to be vigilant in monitoring consent agreements, and should a violation of one occur, we will not hesitate to take further enforcement action as warranted. Indeed, we have a contempt proceeding in the works right now, with respect to another consent agreement and have even searched the non–compliant party in that proceeding.”

Cross-border enforcement (misleading advertising and deceptive marketing):

“Unfortunately, misrepresentations, and in particular, fraudulent misrepresentations, continue to ensnare consumers, and new technology is only making it easier for perpetrators to export scams to other countries. To that end, international cooperation is very important in enforcement, and there are huge benefits to piling on enforcement action in multiple jurisdictions at the same time. We are working closely with our committed colleagues at the ACCC, in the U.K. and at the FTC.”

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