Canadian COMPETITION LAW

In an interesting Canadian Bar Association (Competition Law Section) teleseminar earlier today (November 6^th), the Competition Bureau’s Acting Senior Deputy Commissioner of Competition, Criminal Matters Branch, discussed the enforcement of cartels in small jurisdictions from a Canadian perspective.

The teleseminar, which included enforcement agency panelists from Canada (Matthew Boswell, Competition Bureau), Ireland (Patrick Kenny, Irish Competition Authority), New Zealand (Mary-Ann Borrowdale, New Zealand Commerce Commission) and Israel (Gadi Perl, Israel Antitrust Authority), focused on three aspects of “Cartel Enforcement in Smaller Jurisdictions”: the preparation of effective cartel laws; practical cartel enforcement issues; and enforcement results.  In sum, the spectrum from the preparation of cartel rules to carrying them out.

The Senior Deputy Commissioner’s remarks focused on the Bureau’s Immunity and Leniency Programs and recent enforcement results.  Interestingly, the Deputy Commissioner also discussed Bureau efforts to detect domestic (i.e., Canadian) cartels, a renewed focus on associations and the Bureau’s participation in the ongoing Quebec corruption/competition probe, which resulted in the resignation of Montreal’s Mayor last night and involved searches of four Laval engineering-consulting firms this morning.

Continued Reliance on Immunity and Leniency Programs

With respect to the Bureau’s Immunity and Leniency Programs, the Senior Deputy Commissioner summarized some of their key elements, confirmed that they continue to be the Bureau’s most important cartel detection tools (calling them “extremely important to the successful detection” of cartels in Canada), reminding applicants that the threshold to obtain markers was extremely low (to encourage participants to come forward at their “earliest opportunity”), while emphasizing that the Bureau continues to expect strict compliance with the timelines in both programs.

With respect to the latter point, the Senior Deputy Commissioner made it clear that while the Bureau is willing to grant extensions to perfect markers beyond its 30-day guideline, extensions are not granted lightly and the Bureau looks for applicants to justify delays – for example, with reference to internal company investigations, a concrete work-plan to provide information and status updates on the progress of cooperation with other jurisdictions.

The Senior Deputy Commissioner also confirmed the Bureau’s continued expectation for Immunity and Leniency applicants to provide waivers for the Bureau to communicate and cooperate with foreign agencies (although backstopped his waiver comments by noting that the Bureau rarely exchanged documents and understood immunity/leniency applicants’ interest in maintaining a paperless process generally, including through the proffer process).

He also discussed the importance of predictability and transparency for the Bureau’s Immunity and Leniency Programs to operate effectively, noting the fact that the requirements for both Programs are set out in detail on the Bureau’s website (and in its Immunity and Leniency Bulletins), including key requirements, director and officer rights and guidelines for fine calculations.

Interestingly, however, the Senior Deputy Commissioner did not raise the recent Federal Court decision in the Maxzone case, which has created uncertainty of whether the Federal Court will accept mathematically derived joint sentencing submissions (see e.g.: here) particularly around the Bureau’s 20% of affected Canadian volume of commerce figure historically used as a starting point for fine negotiations.

Enforcement Priorities & Recent Developments

With respect to enforcement, which was in some ways the more interesting aspect of the Deputy Commissioner’s remarks earlier today, he discussed the Bureau’s practical need to divide its enforcement resources between international and domestic cartel cases, saying at one point that the Bureau could, if it wished, “completely fill its [cartel enforcement] dance card with international cases”.  He did, however, emphasize the Bureau’s continued interest in detecting and commencing enforcement in relation to domestic (i.e., Canadian) cartels.

In this regard, the Deputy Commissioner indicated that while the Bureau’s Immunity and Leniency Programs had been very successful in attracting cross-border cartel immunity/leniency applicants, they had been less so for domestic cartels (saying that they had had “moderate success” in Canada to date).

As such, in order to find new ways to detect Canadian cartels, he discussed a four-pronged enforcement approach currently being utilized by the Bureau involving: (i) developing relationships with Canadian public procurement authorities, (ii) partnerships with Canadian law enforcement agencies, (iii) outreach efforts to Canadian companies and other organizations (e.g., trade and professional associations), and (iv) media and public awareness efforts (e.g., Bureau news releases, education, speeches, etc.).

Of these efforts, I found several rather interesting.

First, the Deputy Commissioner indicated that the Bureau has taken a reinvigorated interest in associations.  While there have been in Canada, like other major jurisdictions, many association related competition law cases over the past century (see e.g.: here and here), the Bureau’s interest in associations has varied over the years.

The Deputy Commissioner’s remarks today echo other recent Bureau comments.  For example, the Interim Commissioner of Competition, John Pecman, also focused specifically on associations and in some detail in his first official speech as acting Commissioner (see: here).  The Interim Commissioner’s remarks last week in Toronto, among other things, highlighted the specific potential risks of associations (saying that associations face “unique compliance issues” and are “naturally exposed to greater risks of anti-competitive behavior”) and emphasized the importance for associations to have effective compliance programs.  The Interim Commissioner also said that the Bureau would be likely to show an interest in trade association conduct where they engaged in three categories of conduct: (i) restricting the types of professional service practice offerings (e.g., setting limits on things like office location or size); (ii) limiting the number or range of members’ ability to compete (e.g., through mandatory or suggested fee schedules or product standards); or (iii) conduct that reduces incentives to compete vigorously (e.g., information sharing agreements and the exchange of competitively sensitive information).

As such, the Bureau appears to be increasing its focus on associations once again, with several ongoing cases involving major trade associations (the ongoing TREB abuse of dominance litigation, with hearings having recently concluding before the Competition Tribunal, as well as the Bureau’s recently commenced misleading advertising law challenge of Bell, Rogers and Telus and the Canadian Wireless Telecommunications Association).

Second, he described the Bureau’s ongoing efforts to educate public procurement authorities to better detect bid-rigging activities, which, according to the Deputy Commissioner, has led to the detection of at least one significant bid-rigging case and a marked increase in tips from Canadian procurement authorities.

Finally, the Deputy Commissioner described the Bureau’s ongoing partnership with the Quebec police and its anti-corruption unit in the ongoing Quebec construction corruption probe, including Competition Bureau officers being included in the searches of Laval engineering-consulting firms earlier today in Quebec.

All in all, a rather interesting teleseminar with perspectives on cartel law and enforcement in a number of smaller jurisdictions, including Canada.

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