Competition Bureau sets out preliminary views on patent agreement settlement enforcement

D. Jeffrey Brown and Justine Johnston -

On September 23, 2014, John Pecman, the Commissioner of Competition, delivered the keynote address at the George Mason University Pharma Conference. The Commissioner spoke about how the Competition Bureau (the Bureau) approaches the interface between competition law and intellectual property (IP), and the Bureau’s enforcement work in Canada’s pharmaceutical industry, including its treatment of reverse-payment patent settlements or pay-for-delay agreements under the Competition Act (the Act).

The Commissioner’s speech coincided with the Bureau’s release of a white paper entitled Patent Litigation Settlement Agreements: A Canadian Perspective. The white paper provides information on Canada’s pharmaceutical industry and regulatory regime, identifies the provisions of the Act that may apply to reverse-payment settlements, and explains the Bureau’s preliminary views on how the Act could apply to reverse-payment settlements. Both the Commissioner’s speech and the white paper make it clear that the Bureau will consult with stakeholders during a forthcoming second stage of public consultations for revising the Intellectual Property Enforcement Guidelines (the IPEGs) to develop appropriate enforcement guidelines.

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The Canada-China FIPA: Energizing Canadian oil & gas investment in China

Susan Hutton and Erin Dand -

On Friday, September 14, Ottawa announced the ratification of the Canada-China Foreign Investment Promotion and Protection Agreement (the Canada- China FIPA). The Canada-China FIPA, which comes into force on October 1, 2014, is the newest addition to Canada’s growing list of foreign investment protection agreements (FIPAs).

A FIPA is not a full-blown free trade agreement, but rather a bilateral agreement between two signatory states intended to protect and promote foreign investment through legally-binding rights and obligations to protect foreign investors. Specifically, a FIPA grants foreign investors from each signatory state the right to claim damages against the host state when the guarantees contained in the FIPA are contravened. These claims are heard by international arbitration tribunals, which have the power to grant legally binding awards against host states, and whose decisions are not reviewable by domestic courts.

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Foreign investment in the Canadian book industry

Shawn Neylan, John Leopold, Michel Gélinas and Michael Kilby recently co-authored the paper "Has the Canadian Government Turned the Page on its Book Policy? An Opportunity for Foreign Investors to Consider Investments in the Canadian Book Industry". The authors discuss the challenges Canadian book businesses have experienced attracting capital because they could not sell a controlling interest in their business to non-Canadians.  In recent years, there have been a number of developments which suggest that there is more openness by the Heritage Minister and the Department of Canadian Heritage to consider and allow controlling investments in the book industry by non-Canadian investors. Click here to read the full article.

Eastlink and Bruce Telecom abandon $26.5M merger amid Competition Bureau concerns

Megan MacDonald and Erica Lindberg -

On August 15, 2014, the Competition Bureau (the Bureau) announced that Bragg Communications Inc. (Eastlink) and Bruce Telecom had terminated an announced merger, which would have resulted in the acquisition of Bruce Telecom (the incumbent telecommunications provider for a large portion of Bruce County, Ontario) by Eastlink (a privately-held company that owns and operates cable systems across Canada), for a purchase price of C$26.5 million.

Eastlink’s decision to terminate followed a review by the Bureau’s Mergers Branch, pursuant to which the Bureau concluded that the acquisition would likely have resulted in a substantial lessening or prevention of competition in the towns of Port Elgin and Paisley, Ontario, where Eastlink and Bruce Telecom are the only current providers of wireline telecommunications services. Although the merger did not meet the thresholds for notification to the Bureau, it was brought to the Bureau’s attention as a result of several consumer complaints.

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Investment Canada Act approval for oil sands investment by State-Owned Enterprise

Lawson Hunter and Michael Kilby -

In May 2014, the Minister of Industry issued a net benefit approval for PTTEP’s acquisition of control of the Thornbury, Hangingstone and South Leismer oil sands projects from Statoil Canada. PTTEP is a Thai state-owned enterprise for purposes of the Investment Canada Act.

By way of background, in December 2012 the Prime Minister and the Minister of Industry issued new and revised guidance in relation to State-Owned Enterprises. In relation to the oil sands, the relevant policy provides that acquisitions of oil sands businesses by SOEs will only be approved in exceptional circumstances.  The PTTEP acquisition is significant because it represents the first test of this policy.

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Commissioner Pecman introduces realignment at the Bureau

Marisa Muchnik -

On May 21, 2014, Commissioner John Pecman announced a significant “realignment” process to the internal structure of the Bureau. The Bureau was historically divided into four enforcement branches: Criminal Matters, Civil Matters, Mergers and Fair Business Practices. The development will combine the Fair Business Practices Branch and the Criminal Matters Branch into a single branch, and also combine the Mergers Branch and the Civil Matters Branch.  All non-criminal cases, including mergers, non-criminal conduct and non-criminal competitor agreements will be handled by the civil branch, whereas criminal cases, including conspiracies, cartels, and bid-rigging, will be under the criminal branch.

Commissioner Pecman noted that the alignment will not decrease the size of the Bureau. However, the realignment will undoubtedly result in many other synergies, and promote greater collaboration within the branches. Pecman noted that the realignment is “about building a stronger, more flexible and more adaptive agency.”

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What's old is new - dusting off the OSP rules

Jennifer Rad -

It has been almost a decade since the Competition Bureau sunk its teeth into the enforcement of ordinary price claims, pursuant to the Competition Act’s deceptive marketing practices provisions. But what is old may be new again as recent signals from the Competition Bureau point towards increased enforcement focus on these types of claims in the future. As such, Canadian businesses should ensure that their corporate compliance programs and pricing practices are in-line with the OSP rules of the Act and the Bureau’s Ordinary Price Claims Guidelines which the Tribunal relied on heavily when analyzing past cases.In particular, Subsections 74.01(2) and (3) of the Act set out specific requirements for the calculation of the ordinary selling or reference price on which savings claims are based, known as the “volume test” and the “time test”:

Volume Test In order to meet the volume test, the reference price must be one at which a substantial volume of product has been sold at that price (or a higher price), within the relevant geographic market, within a reasonable period before or after the savings claim is made.

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Canadian Sentenced to 3 years in Prison for Foreign Bribery attempt

Susan M. Hutton -

On May 23, 2014, the Ontario Superior Court sentenced Mr. Nazir Karigar, an Ottawa-based business executive, to a three-year prison term for attempting to bribe foreign public officials. This judgment marks the first time an individual has been found guilty and convicted under Canada’s Corruption of Foreign Public Officials Act (CFPOA). Enacted in 1998, the CFPOA criminalizes the offering of bribes or other advantages to foreign public officials, and is Canada’s equivalent to the United States’ Foreign Corrupt Practices Act.

The court held that Karigar, 67, conspired with employees and associates of Cryptometrics Canada in Ottawa in an effort to win a $100 million security contract with Air India. He arranged illicit payments for officials of Air India and an Indian Cabinet Minister. Karigar’s defense counsel submitted that Karigar’s age and his lack of prior criminal involvement, as well as Cryptometric’s ultimate failure to receive the contract, should be considered as mitigating factors in sentencing, and requested a conditional sentence. In his judgment, Judge Charles Hackland rejected the notion that Karigar should avoid jail, noting a list of aggravating factors, namely that:

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Competition Bureau contemplating pre-notification regime for competitor collaborations

Michael Laskey -

The Competition Bureau is contemplating a new pre-notification regime, similar to the regime that currently exists for mergers, whereby businesses will be permitted (or, potentially, obliged) to seek advance clearance from the Bureau before entering into agreements with their competitors. Speaking on a panel at an American Bar Association conference on March 27, Commissioner of Competition John Pecman noted that the plan is in its “early days”, and that the Bureau has not decided whether a regime should be implemented (and if so, whether it should be voluntary or mandatory), but that it is something the Bureau is considering. Such a regime could apply to a variety of types of “normal-course” agreements, such as joint purchasing and selling agreements, buying groups, information sharing agreements, R&D agreements, joint production agreements, non-competition clauses and even joint venture agreements.

The motivation for such a regime may stem from the Competition Act’s dual-track approach to competitor collaborations. In Canada, two provisions of the Act govern agreements among competitors. A criminal provision, intended to capture “naked” price fixing (as well as output restrictions and market allocation), carries significant fines and jail terms. A second, civil provision captures only agreements which adversely affect competition, and carries no such penalties. Although these provisions are intended to serve different purposes, it is up to the Bureau to decide which route it wishes to take when investigating (or prosecuting) any particular agreement. The Bureau has released a guidance document which outlines the types of situations in which it will choose to use the criminal and civil provisions, but this guidance is not binding. So, a pre-clearance regime may give businesses additional certainty in knowing that their joint purchasing agreement or non-compete clause will not be challenged (at least, under the criminal provision).

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Bureau approves Agrium asset sale to CHS

Marisa Muchnik -

On March 17, 2014, Canada’s Competition Bureau announced that it has approved the sale of certain assets of Agrium Inc. to U.S. farm cooperative CHS Inc.  Agrium was required to sell seven retail outlets and nine anhydrous ammonia businesses in Alberta and Saskatchewan, as well as its anhydrous ammonia bullet tank in Medicine Hat, AB and the Viterra Inc. retail outlet in Craddock, AB, pursuant to a Consent Agreement entered into by Agrium on September 5, 2013. The sale to CHS is expected to close on April 1, 2014.

The divestiture was required in relation to Agrium’s acquisition of the majority of Viterra’s retail agri-products businesses from Glencore International plc. Viterra – successor to the former Saskatchewan, Alberta and Manitoba Wheat Pool co-operatives, as well as the largest grain handler in South Australia and a significant food processor in Canada, Australia, New Zealand and the United States - was initially sold to Glencore, but Glencore simultaneously announced side agreements to divest some Viterra assets variously to Agrium and Richardson International Ltd., and (later) to CF Industries. The Bureau cleared the acquisition of Viterra by Glencore in May 2012, and Richardon’s acquisition of some of Viterra’s Canadian grain handling assets in December 2012 (Stikeman Elliott LLP acted as counsel to Richardson).  

In September 2013, the Bureau issued a position statement outlining its review of Agrium’s retail agri-products businesses from Glencore International plc. The details of the Consent Agreement, and the review undertaken by the Bureau, were the subject of a previous post. 

Government agencies to coordinate in Alberta energy markets

Susan M. Hutton and Shannon Kack -

In an effort to coordinate their overlapping mandates, the two agencies charged with ensuring that Alberta power markets remain competitive have signed a Memorandum of Understanding (MOU) calling for continued and more defined cooperation between the agencies.

On March 3, 2014, the Competition Bureau announced that the Commissioner of Competition (head of Canada’s Competition Bureau) and the Market Surveillance Administrator of Alberta (MSA) have signed an MOU, implementing a framework for information sharing and enforcement cooperation and collaboration in matters of mutual interest among the agencies.

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Canada's Anti-Spam Law: Will Your Business Be Ready?

On February 13th, the Communications Group hosted a breakfast seminar in the Toronto office entitled “Canada’s Anti-Spam Law: Will Your Business Be Ready?”.  David Elder briefed those in attendance on key requirements of Canada’s Anti-Spam Law (CASL), the electronic messaging requirements of which will come into effect on July 1, 2014. Among those requirements, David spoke of the obligation to obtain prior consent in the delivery of commercial electronic messages (CEMs) and the prescribed form requirements for those messages, outlined a number of the key exemptions that may be available to some senders, and reviewed the timeline for implementation of various aspects of the new law.  David also reviewed some of the particular challenges that organizations are facing in implementing the new law and discussed the work that organizations must do to be able to continue to send marketing messages to established contact lists.   

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Canadian Tire Becomes Even More "Canadian" with the Acquisition of Pro Hockey Life

Marisa Muchnik -

On February 7, 2014, the Competition Bureau released a Position Statement summarizing the approach taken in its review of the acquisition by Canadian Tire, through its wholly-owned affiliate FGL Sports, of Pro Hockey Life. The transaction was entered into on November 28, 2012, and closed on August 12, 2013. The Bureau determined that the transaction was not likely to substantially lessen or prevent competition in the retail market for hockey equipment and hockey-related merchandise.

The transaction provided the Bureau with the opportunity to review a retail merger between retailers carrying on business using three different business models: Canadian Tire is a national mass merchandiser selling products, through a network of independent dealers, across a range of categories; FGL Sports is a national sporting goods retailer; and Pro Hockey Life is a specialized hockey retailer with a geographic presence limited to 11 areas in Canada.

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Government agencies clarify roles under Canada's Anti-Spam Legislation

David Elder and Shannon Kack -

In an effort to coordinate their potentially overlapping mandates, the three agencies charged with enforcement of Canada’s new anti-spam law have signed a Memorandum of Understanding (MOU) dealing with cooperation and sharing of information among the agencies.

On January 23, 2014, the Competition Bureau announced that the Commissioner of Competition, the Privacy Commissioner of Canada and the Canadian Radio-television and Telecommunications Commission (CRTC), have signed an MOU regarding the implementation of their respective mandates under Canada’s Anti-Spam Legislation (CASL).

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Federal Court of Appeal sends Toronto Real Estate Board case back to Competition Tribunal

Susan M. Hutton and Shannon Kack -

On February 3, 2014, Canada's Federal Court of Appeal (FCA) overturned the Competition Tribunal’s decision to dismiss the Competition Bureau’s abuse of dominance application against the Toronto Real Estate Board (TREB), sending the application back to the Tribunal for reconsideration on its merits.

As mentioned in our earlier blog post, the Competition Bureau’s application involves a challenge by the Bureau against TREB for allegedly abusing its dominance under section 79 of the Competition Act in relation to membership rules governing the use by members of the board’s multiple listing service (MLS®) listing data.

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