Parkland announces closing of Pioneer transaction as Competition Act merger proceedings continue

Michael Laskey and Katarina Zoricic -

On June 25, Parkland Fuel Corporation announced the closing of its acquisition of the assets of Pioneer Energy LP. The closing follows an order of the Competition Tribunal, issued on May 29, 2015, which partially granted the Commissioner of Competition’s request for an injunction against Parkland’s acquisition of 14 of the 393 gas stations and exclusive long-term supply contracts. The Commissioner of Competition filed an application under section 92 of the Competition Act on April 30, 2015, seeking to block the acquisition of the 14 stations, alleging that the transaction (announced on September 17, 2014) would likely lead to a substantial lessening of competition in 14 already concentrated markets across Ontario and Manitoba.

Issued under section 104 of the Competition Act (see below), the interim injunction requires Parkland to preserve and independently operate the assets to be acquired from Pioneer in six of the 14 communities until the Tribunal issues its final decision.

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Competition Bureau releases "Phase II" Draft Revision of the Intellectual Property Enforcement Guidelines

 D. Jeffrey Brown and Jessica Rutledge - 

On June 16, 2015, the Competition Bureau released an updated draft version of the Intellectual Enforcement Property Guidelines (IPEGs), which set out its approach to enforcing the Competition Act  against potentially anti-competitive practices involving intellectual property. The draft updates concentrate on the Bureau’s enforcement approach in three areas, namely (a) patent litigation settlements, (b) standard-essential patents and (c) patent assertion entities. The most significant changes include the creation of a “safe harbour” for settlements of patent infringement litigation between branded and generic drug manufacturers that do not involve a reverse payment (i.e., a payment from the branded manufacturer to the alleged infringer). The draft IPEGs also signal a narrow scope of litigation settlements that may be subject to enforcement under the criminal cartel provisions of the Act.

Background

The IPEGs set out the Bureau’s enforcement approach with respect to the Competition Act and potentially anti-competitive practices involving intellectual property. 

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Privacy Commissioner study finds compliance gaps with online behavioural advertising

David Elder - 

New research released by the Office of the Privacy Commissioner of Canada (OPC) suggests that most advertising organizations placing behaviourally targeted online advertising are meeting privacy requirements, although the report also suggests there are a number of areas for improvement.

The study showed that most advertising organizations are providing some form of notification to users, as well as an opt-out mechanism; however, the research also suggests that some opt-out procedures can be confusing or cumbersome, and some of the advertising organizations are continuing to serve ads based on sensitive topics.

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Canada's Competition Bureau loses major bid-rigging case: 60 not guilty verdicts

Susan M. Hutton and Gina Demczuk

In a further blow to the track record of the Competition Bureau and the Public Prosecution Service of Canada in contested criminal trials, on April 27, 2015, a jury in the Ontario Superior Court of Justice found nine defendants not guilty on 60 charges of bid-rigging and conspiracy to rig bids. Another individual - David Watts, who waived his right to a preliminary inquiry, and sought an order directing a verdict of acquittal for himself only - was acquitted in February, 2015 of similar charges in a directed verdict.

The Competition Bureau had commenced a criminal inquiry in 2006 into bid-rigging allegations against 14 individuals and seven companies, regarding allegations that the accused had coordinated their bids for certain information technology (IT) services contracts with the Canadian federal government. The Attorney General filed the charges in February, 2009. One corporation had sought immunity from the Competition Bureau under its immunity program, in which the corporation and its employees are not prosecuted in exchange for assisting the Bureau with its inquiry and subsequent prosecution.  Two of the individuals pleaded guilty. Prior to the preliminary inquiry, the Crown had dropped charges against one individual.

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CRTC shows great interest in US-based robocaller offering low credit card rates - $145,000 fine imposed

David Elder -

For the second time in a month, the CRTC has imposed a penalty against a foreign telemarketer.

In the most recent case, an administrative monetary penalty of $145,000 was issued against Arizona-based Rainmaker Marketing/Maple Accounting for making unsolicited telemarketing calls pitching lower credit card rates.

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Changes to Canadian Foreign Investment Regime: higher bar for review, more burdensome disclosure requirements under the Investment Canada Act

Michael Laskey -

Earlier today, the Canadian government published changes to the Investment Canada Act regulations that will - when they become effective in 30 days (on April 24) - make it significantly easier for many transactions to escape a lengthy review process, while at the same time increasing the disclosure burden for the routine notifications required of all foreign investors in Canada and – effective March 13, 2015 – lengthening the timelines for national security reviews.

The “net benefit” review threshold will be changed from an asset value test to an enterprise value test, and will be increased from C$369 million to C$600 million, for most investors. At the same time, the revised regulations impose invasive and burdensome new disclosure obligations for investments that fall short of the review threshold. These new disclosure obligations will require purchasers to provide, among other things, personal information about their directors, highest-paid officers and significant investors. National security review timelines have been extended, and made subject to potential further extension at the government’s discretion.

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Red Light: Competition Bureau alleges misleading advertising by car rental firms

Jennifer Rad -

The Competition Bureau has filed an application with the Competition Tribunal against Aviscar and Budgetcar, and their parent company, Avis Budget Group Inc., alleging deceptive marketing practices contrary to several provisions of the Competition Act. The Bureau’s investigation into the pricing practices of Avis and Budget, two of the largest rental car companies in Canada, uncovered price representations which the Bureau considers to be false or misleading in a material respect, dating back to 1997.

In its Notice of Application, the Bureau submits that the prices advertised to the public by Avis and Budget are “not in fact attainable,” thereby creating a false general impression about prices and discounts. The Bureau submits that actual rental costs could be up to 35% higher than advertised once “non-optional” fees imposed by both companies are included. Although these “non-optional” fees are known to Avis and Budget, the Bureau alleges that the companies choose to exclude them from advertised prices and/or discounts. The Bureau also alleges that the “non-optional” fees, once revealed to the customer, are characterized as charges being imposed on customers by governments or other third-parties, when in fact they are Avis’ and Budget’s own charges related to the cost of doing business.

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CRTC sends shot across the bow to international telemarketers; issues $200,000 fine to US company selling cruise vacations

David Elder

In a precedent-setting ruling, the Canadian Radio-television and Telecommunications Commission (CRTC) has issued its first penalty to a foreign-based telemarketer for violations of the Unsolicited Telecommunications Rules.

The administrative monetary penalty (AMP) was paid by a Florida company as part of a settlement for making unsolicited telemarketing calls via an automatic dialing-announcing device (ADAD) to offer cruises to Canadians, many of whom have their phone number registered on the National Do Not Call List (DNCL). In addition, the company did not possess a valid exemption to the National DNCL

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Media mergers and the Competition Bureau: Is the medium the market?

Michael Kilby -

The rapid growth of digital media in recent years and the simultaneous pressures on traditional media have led to a number of fascinating media transactions in which the Competition Bureau has had to confront the difficult question of product market definition in industries characterized by disruptive technological change.

In March 2015, the Bureau cleared a magazine publishing transaction (TVA Group’s acquisition of Transcontinental’s magazine business) due, in its words, to the “presence of effective remaining competitors in all overlapping genres of magazines and the ability of advertisers to reach the same demographics through other magazines and media” (emphasis added). The Bureau also stated that it considered the “general decline in readership of magazines, in part attributable to the increasing importance of the Internet as an alternative for readers” (emphasis added).

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First blood: CRTC imposes $1.1 million fine in first ever finding under anti-spam law

David Elder -

Eight months after Canada’s Anti-Spam Law (CASL) came into force, the Canadian Radio-television and Telecommunications Commission (CRTC) has made public its first ever finding of non-compliance with the Act, issuing an administrative monetary penalty of $1.1 million against Compu-Finder, a firm that provides training and consulting services.

Surprisingly, this much anticipated enforcement action was not against a firm targeting consumers, as many had suspected, but rather was directed at a firm sending email messages to businesses to promote various training courses related to topics such as management, social media and professional development.   It is believed by many that the overwhelming majority of the more than 250,000 complaints received by the CRTC since the law came into force have been from consumers.  In the case at hand, the CRTC indicated that over one quarter of all complaints about the training industry sector received by the Spam Reporting Centre related to Compu-Finder, although it is not known how many complaints were received.

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Grocery mergers in the United States and Canada: Something to chew on

Michael Kilby -

On January 27, the U.S. Federal Trade Commission announced a competition law remedy in respect of the Albertsons / Safeway grocery merger, requiring the divestiture of 168 supermarkets in 130 local markets in numerous states. This remedy is of particular interest from a Canadian competition law perspective in light of the recent completion of two Canadian grocery sector transactions, namely, Sobeys’ acquisition of Canada Safeway and Loblaw’s acquisition of Shoppers Drug Mart, both of which resulted in divestitures.

Several comparisons may be drawn between the approach taken by the U.S. FTC and the Canadian Competition Bureau in reviewing these mergers.

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New 2015 thresholds for Competition Act merger notification and Investment Canada Act review

Susan M. Hutton and Mike Laskey -

Both the Competition Act and the Investment Canada Act thresholds for review of acquisitions involving Canadian businesses are expected to increase in 2015. The “size of target” threshold for Competition Act notification, if adjusted pursuant to the formula prescribed in the Act, will increase to C$86 million, although this increase has yet to be confirmed by the Minister and is subject to his discretion. Industry Canada has announced that the threshold for review applying to most direct acquisitions under the Investment Canada Act will increase to C$369 million for transactions closing in the remainder of 2015.

Competition Act:

The Competition Bureau must generally be given advance notice of proposed transactions under the merger notification provisions of the Competition Act, when the “size of the target” exceeds the specified threshold, and when the combined Canadian assets or revenues “in, from or into” Canada of the parties together with their respective affiliates (the “size of parties” test) exceeds C$400 million. Transactions involving Canadian subsidiaries, as well as the direct acquisition of Canadian businesses or assets, and acquisitions of interests of as little as 20% (for public companies) or 35% (for private companies and interests in non-corporate business combinations) can trigger merger notifications in Canada.

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Supreme Court clarifies "prevention" and revitalizes efficiencies defence in Tervita merger case

Susan M. Hutton and Michael Laskey -

Canada’s Supreme Court of Canada issued its much-anticipated decision in the case of Tervita Corp. v. Canada Commissioner of Competition yesterday, upholding the Federal Court of Appeal’s (and the Competition Tribunal’s) treatment of likely future entry in cases involving the “prevention” of competition, but overturning their rulings as to the application of the efficiencies defence, and in the process increasing the evidentiary burden on the Commissioner to mount a successful challenge to an anti-competitive merger.

The Tervita case has important implications for risk assessment by merging parties, who must now consider what may seem to be somewhat remote alternatives to their proposed merger when considering whether the merger will “prevent” competition. It also could have significant spillover effects as the Commissioner may well now, as a result of losing this case on the grounds of efficiencies, seek to gather even more data and do even more analysis regarding quantification of anti-competitive effects than had previously been the case.

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The Price Transparency Act: Frequently asked questions

Michael Laskey -

As we blogged about in December, the Government of Canada has introduced legislation that will grant the Commissioner of Competition broad powers to investigate and report on so-called “price gaps” between Canada and the US (i.e., products or classes of products whose selling price in Canada is higher than their selling price in the US).

The “frequently asked questions” below are intended to assist businesses in understanding (i) who will be affected by the law; (ii) what investigatory powers the Commissioner will have; and (iii) the ultimate outcome of “price gap” reviews.

You can also download a PDF copy of the FAQ.

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Parliament proposes bill to tackle geographic price discrimination

Megan MacDonald and Erica Lindberg

On December 9, 2014, the Government of Canada introduced legislation aimed at addressing geographic price discrimination, specifically in the form of the much-discussed “U.S.-Canada price gap”. If passed, Bill C-49, titled the Price Transparency Act, will amend Canada’s Competition Act (the Act) to give the Commissioner of Competition the power to make inquiries into complaints that the selling price of a product or class of products (or of a similar product or class of similar products) is, or was, higher in Canada than in the United States.

What You Should Know about Bill C-49

  • Scope of the Proposed Investigative Power: When making an inquiry into potentially discriminatory pricing practices, the Commissioner will be empowered to make ex parte applications to obtain court orders compelling a person to (a) attend and be examined under oath or affirmation; (b) produce specified records, copies of records, or any other thing; or (c) deliver a written return showing in detail the information specified in the order. The amendments to the Act will permit such orders to be made even where the person who is the subject of an order is located outside Canada. 
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