Canadian COMPETITION LAW

The Commissioner of Competition, Melanie Aitken, addressed current enforcement priorities in two engaging and wide-ranging talks in Vancouver this evening: a keynote speech at a reception hosted by the University of British Columbia, National Centre for Business Law at the Four Seasons and a Vancouver Competition Policy Roundtable meeting organized by Professor Tom Ross of the Sauder School of Business.

Some of the highlights from the Commissioner’s remarks included the following:

General enforcement approach

– The Commissioner indicated that her general preference was for “consensual resolution”.

– However, the Bureau would not hesitate to seek remedies before the Tribunal or the courts where parties were either unwilling to discuss reasonable settlement options (or, alternatively, no viable remedy was available).

– The Commissioner views the Bureau’s role as “first and foremost” an enforcement agency and indicated that the federal Conservative Government’s position was that as a new Commissioner she should “get in there and enforce the law”.

– In this regard, the Commissioner suggested that, unlike some previous Commissioners (for example, her predecessor Sheridan Scott), advocacy was not her focus.

– The Commissioner also reiterated a common theme from other recent remarks – namely the Bureau’s interest in bringing new cases to clarify Canada’s competition laws.

– The Commissioner also generally discussed several of the key areas of the 2009 amendment to the Competition Act including second requests (“supplementary information requests”) in merger reviews, the amended conspiracy provisions and introduction of civil fines for abuse of dominance and civil misleading advertising (“administrative monetary penalties” or “AMPs” of up to Cdn. $10 million).

Mergers

– According to the Commissioner, the number of merger filings has increased this year over last and the complexity of transactions reviewed by the Bureau is up as well.  In this regard, the Bureau is seeing an increase in strategic transactions with overlap or vertical integration issues.

– Since the 2009 amendments to the Competition Act, the Competition Bureau has endeavoured to issue as many guidance documents as possible including a number of new enforcement guidelines (including the updated Merger Enforcement Guidelines, issued by the Bureau earlier this fall).

– The Bureau intends to publish more position papers on reviewed mergers (moving away from its previous practice of issuing longer more detailed Technical Backgrounders).

– The Bureau intends to establish a “merger register” with “skeletal outlines” of reviewed mergers.

– The Commissioner also indicated that as a result of recent enforcement efforts generally, it has been able to obtain “more robust remedies” in mergers.

Civil enforcement

– The Commissioner spoke in some detail about the recent CREA and TREB real estate cases and the Bureau’s ongoing Visa and Mastercard merchant fees price maintenance case.

– With respect to real estate, the Commissioner said the Bureau was “very pleased” with the CREA settlement and that its concerns had been “fully addressed” in the consent agreement negotiated with CREA late last year.  The Commissioner also said that the Bureau had been seeing “innovation in the real estate market” following the consent agreement.

– The Commissioner also described some of the new business models the Bureau was seeing in light of the CREA consent agreement, including “a la carte” (i.e., unbundled) residential real estate services.

Criminal enforcement

– In general, the Commissioner indicated that following the 2009 amendments to the Competition Act, it has proven “much tougher to effect change” with respect to the criminal provisions of the Competition Act (e.g., section 45, criminal conspiracy offences).

– In this regard, the Commissioner said that while it takes time for criminal cases to come through and mature (largely as a result of the procedural safeguards necessary in criminal matters) the Bureau was preparing to announce several new cartel cases under the amended section 45.

– The Commissioner also said that the Bureau had a “real commitment to change the game” with respect to criminal matters under the Competition Act and would “be more appropriately aggressive” in bringing new criminal cases and testing the new criminal conspiracy provisions of the Act.

– The Commissioner said that the “amendments came not a moment too soon” as Canada was at risk of falling off of the “serious cartel enforcement jurisdiction radar”, based on the difficult legal test under the former section 45 and high market effects burden.

– Finally, on the criminal side, the Commissioner indicated that the Bureau was increasingly cooperating with Asian enforcement authorities in criminal cases, citing the Korean competition/antitrust authority as one example.

Misleading advertising and deceptive marketing

– With respect to misleading advertising and deceptive marketing, the Commissioner confirmed that this remains an enforcement priority for the Bureau – as the Commissioner put it, “an area of concern.”

– In general, the Commissioner indicated that the Bureau did not have the resources to pursue all misleading and deceptive marketing matters and, with respect to fraudulent marketing, that enforcement was akin to the “whack a mole” game in that once a deceptive marketer was hit in one jurisdiction, they frequently arose in another.

– In this regard, the Commissioner did highlight some of the Bureau’s initiatives with key enforcement agencies – the U.K., Australia and the United States – that have, according to the Commissioner, been effective in more effectively fighting cross-border deceptive marketing.

Abuse of dominance

– With respect to abuse of dominance (under section 79 of the Competition Act), the Commissioner indicated that based on further changes the Bureau has made to the existing Abuse of Dominance Enforcement Guidelines, it may issue another revised draft of the Abuse Guidelines for public consultations.

– In this regard, the Commissioner suggested that a revised draft of the updated Abuse Guidelines was “imminent” and may be issued before the end of the year.

Advisory opinions

– With respect to the Bureau’s practice of issuing binding advisory opinions under section 124.1 of the Competition Act, the Commissioner discussed the fact that the Bureau’s new narrower policy, under which it now only states the provision under which its view conduct falls (and in respect of criminal matters, whether it has any present intention to commence proceedings), is intended to more accurately reflect its powers to issue opinions under section 124.1.

– The Commissioner also said that the Bureau’s current practice was not to include any view in advisory opinions as to whether particular defenses, such as the new ancillary restraints defense, were likely to apply to proposed conduct the subject of an advisory opinion application.

TMX/Maple transactions

– The Commissioner declined to comment in any detail about the TMX/Maple transaction, except to reiterate already publicly disclosed statements that the Bureau had “serious concerns” relating to both trading and clearing services.

– With respect to questions about behavioural remedies in general, which are being debated in respect of the TMX/Maple transaction, the Commissioner affirmed the Bureau’s general reluctance for behavioural remedies (as opposed to structural remedies / divestiture), though acknowledged that such remedies are generally more acceptable when a regulator such as the CRTC is involved (a potential parallel in the TMX/Maple transaction being the OSC).

Self-regulated professions

– The Commissioner received several questions regarding the Bureau’s work in the self-regulated professions area (for example, the Bureau’s 2007 Self-regulated Professions study, which compared competition in six Canadian self-regulated professions).

– The Commissioner indicated that the Bureau’s advocacy work in this area was finished for the moment, that this was largely an initiative of her predecessor (the former Commissioner, Sheridan Scott) and indicated that the Bureau had no present intentions to commence new work in this area.

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