Competition Bureau clears McKesson's acquisition of Rexall Health, subject to conditions

Gideon Kwinter and Mike Laskey

On December 14, the Competition Bureau entered into a consent agreement with McKesson Corporation in relation to its acquisition of Rexall Health from Katz Group. The agreement brings an end to the Bureau’s extensive review of the transaction, which was announced over nine months ago, on March 2, 2016.

Upon closing of the transaction, McKesson, the largest pharmaceutical product wholesaler in Canada, will acquire Rexall Health’s approximately 470 retail pharmacies. The Bureau determined that the acquisition would likely result in a substantial lessening or prevention of competition in the wholesale and retail of certain pharmacy products and services.

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Moose Knuckles resolves misleading "Made in Canada" representations

Vanessa Leung - 

On December 7, 2016, Moose International Inc. (Moose Knuckles) reached a consent agreement with the Commissioner of Competition. The consent agreement resolves the Commissioner’s concerns about deceptive marketing practices in respect of the “Made in Canada” claims on certain Moose Knuckles parkas.

According to the Bureau, Moose Knuckles claimed that its parkas are “Made in Canada” (both on its website, and on the interior of the parkas themselves). The Bureau alleged that, in fact, the parkas were imported from Vietnam and Asia in a nearly finished form. The Bureau concluded that Moose Knuckles’ advertising was therefore inconsistent with its (non-binding) “Made in Canada” guidelines, which have three key requirements:

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Template consent agreement for better transparency and predictability in merger remedy

Vanessa Leung and William Wu - 

On September 29, 2016, the Competition Bureau released a template for merger consent agreements.

As part of its enforcement mandate, the Bureau reviews certain proposed transactions to determine whether they will likely result in a substantial lessening or prevention of competition in a market. If the Bureau determines that the proposed transaction is likely to result in substantial anti-competitive effects, the Commissioner of Competition has the option to challenge the proposed transaction before the Competition Tribunal or negotiate appropriate remedial measures with the merging parties to address the proposed transaction’s likely anti-competitive effects. Such negotiated remedial measures are typically implemented by way of a consent agreement. Once registered with the Tribunal, the consent agreement has the force and effect of a court order. The Bureau, as well as merging parties, generally prefers to pursue negotiated consent agreements rather than formal litigation before the Tribunal, as Tribunal litigation is more costly, time-consuming and uncertain for both the Bureau and the merging parties.

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CRTC partners with global agencies to enforce spam and telemarketing rules

David Elder - 

The Canadian Radio-television and Telecommunications Commission (CRTC) has announced that it has signed a memorandum of understanding with 10 domestic and global enforcement agencies to aid in the enforcement of spam and telemarketing laws.  However, while the announcement is certainly a step in the right direction, many of the countries that produce the most spam were not at the table.

The agreement is intended to promote cooperation between the various enforcement agencies, and includes commitments by each signatory to share information and intelligence regarding unsolicited communications, where permitted by the laws of its jurisdiction.  

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Competition Tribunal renders a decision in the Toronto Real Estate Board case

Ashley Piotrowski

After five years of back and forth at various levels of court, the Competition Tribunal has rendered a decision in the Toronto Real Estate Board case, partially granting the application brought by the Commissioner of Competition pursuant the abuse of dominance provision (section 79) of the Competition Act.    

As mentioned in our earlier blog posts, the Commissioner’s application involves a challenge by the Commissioner 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 certain of the board’s multiple listing service® (MLS®) listing data. In particular, the Commissioner alleged that TREB’s rules restricted the manner in which real estate brokers and salespersons may display and use certain MLS® data.

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Competition Bureau completes update of Intellectual Property Enforcement Guidelines

Jeff Brown and Margaret Kim - 

On March 31, 2016, the Competition Bureau (the Bureau) released the anticipated final version of its updated Intellectual Property Enforcement  Guidelines (2016 IPEGs), seven months after the public consultation of the Phase II draft revision (Draft Phase II IPEGs) concluded in August 2015. The 2016 IPEGs further clarify, and provide practical guidance on, the Bureau’s enforcement approach to several important issues at the interface between competition and intellectual property (IP) laws, namely (1) patent litigation settlements between brand and generic pharmaceutical companies, (2) product switching (also known as product hopping), (3) patent assertion entities (PAEs) and (4) collaborative standard setting and standard essential patents (SEPs). 

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Competition Bureau bulks up Electronic Production Guidelines

Mike Laskey and Susan M. Hutton - 

On September 8, the Canadian Competition Bureau released updated instructions for the production of electronic records by merging parties responding to supplementary information requests, or “SIRs” as they are known. SIRs are thorough requests for data, e-mails and other documentation and information that are issued in connection with complex competition merger reviews, and are commonly viewed as the Canadian equivalent of US Second Requests. The updated instructions set out detailed parameters that the Bureau expects merging parties to follow when responding to SIRs, and put an increased focus on large document productions exported from specialized litigation support software. The updated instructions are similar to the US Federal Trade Commission’s Bureau of Competition Production Guide.

The updated instructions contemplate two options for document productions: (a) productions from computer systems without sophisticated litigation export capabilities; and (b) productions from specialized litigation software. The instructions associated with the former type are straightforward, and similar to the previous instructions: parties may simply produce documents in their “native” format (e.g., Word, Excel, etc.). The instructions associated with the latter type are largely new, and much more complex: parties are expected to produce documents in a specific and detailed manner, with a large amount of “metadata” (e.g., author, date created, date modified, etc.) set out in a separate index.

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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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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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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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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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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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Supreme Court of Canada declines Toronto Real Estate Board appeal

Marisa Muchnik -

The Supreme Court of Canada recently dismissed the application by the Toronto Real Estate Board (TREB) for leave to appeal the Federal Court of Appeal’s judgment overruling a decision of the Competition Tribunal that had dismissed the challenge of the Commissioner of Competition (the Commissioner) to certain restrictions by TREB on the manner in which its member real estate agents can disseminate information from TREB’s multiple listing service. The Commissioner’s application will therefore proceed to a hearing on the merits before the Competition Tribunal.

Background

The proceedings date back to May 2011, when the Commissioner brought an abuse of dominance application under subsection 79(1) of the Competition Act (Canada) (the Act) against TREB, an incorporated trade association. TREB is the largest real estate board in Canada with approximately 39,000 members. TREB is said to control a multiple listing service, which contains data about sale prices, historical house prices, and the amount of time a property has been on the market. The Commissioner alleged that TREB had abused its dominance by denying its members the ability to introduce new web-based real estate brokerage services by limiting the use members are allowed to make of the listings and related data.

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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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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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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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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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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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Commissioner of Competition makes submissions to CRTC regarding wholesale wireless roaming arrangements

Michael Laskey -

On January 29, the Commissioner of Competition made submissions to the CRTC in connection with the its ongoing public proceeding examining whether incumbent wireless carriers are unjustly discriminating, or demonstrating undue preference, with respect to wholesale mobile wireless roaming arrangements.

Wholesale roaming arrangements allow the subscribers of one wireless carrier to utilize the wireless network of another carrier in areas in which the former carrier does not operate a network. In this way, roaming agreements allow carriers without fully-developed Canadian networks (for example, U.S. carriers and new wireless entrants) to offer their customers nation-wide coverage by “piggybacking” where necessary on the network of a more developed carrier.

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Competition Bureau's Fair Business Practices Branch provides insight into key policies and enforcement issues

As advertising and marketing, both traditional and online, continue to be a large part of our economy, it is important to keep up to date with what the Competition Bureau considers to be fair advertising and marketing business practices. Senior Deputy Commissioner of Competition Lisa Campbell and Major Case Director and Strategic Policy Advisor Brendon Ross attended a breakfast seminar at Stikeman Elliott to speak to clients and answer questions regarding priorities of the Fair Business Practices Branch and recent enforcement issues in misleading advertising and marketing.

Bureau relies on EC remedy in clearance of Thermo Fisher/Life Technologies transaction

Megan MacDonald and Anne MacIsaac -

On December 5, 2013, the Competition Bureau issued a No-Action Letter (NAL) clearing Thermo Fisher Scientific Inc.’s proposed acquisition of Life Technologies Corporation. The Bureau issued this clearance based, at least in part, on a remedy obtained by the European Commission (EC) in connection with the proposed acquisition in Europe.

Both Thermo Fisher and Life Technologies produce and supply life sciences products, including laboratory instruments and consumables, globally, including within Canada, the United States and Europe. Thermo Fisher’s proposed acquisition was subject to competition review in each of these jurisdictions.

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Online crime bill would expand investigative powers in the Competition Act

Michael Laskey -

For the second time, the federal government is attempting to significantly expand the investigative powers of the Commissioner of Competition. Although described as part of an effort to prosecute online bullying and the exchange of illicit photographs, Bill C-13 (titled the Protecting Canadians from Online Crime Act), which received first reading in Canadian Parliament on November 20, would also introduce broad new powers for the Commissioner when investigating companies and individuals suspected of having contravened or engaged in reviewable conduct under the Competition Act.

The modifications to the Competition Act in Bill C-13 are very similar to those included in last year’s Bill C-30 (titled the Protecting Children from Internet Predators Act), which we described in our post last year, though provisions relating to warrantless access to internet subscriber information have been removed. Bill C-13 was roundly criticized by privacy advocates for its onerous surveillance provisions, and the federal government abandoned the bill in February, 2013.

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Bureau clears Telus to take over Public Mobile

Ashley Piotrowski and Shannon Kack -

On November 29, 2013, Canada’s Competition Bureau (the Bureau) issued a no-action letter in respect of the proposed acquisition by TELUS Communications Inc. (Telus) of Public Mobile Holdings Inc. and its operating subsidiary, Public Mobile Inc. (Public Mobile), giving Telus the green light to acquire Public Mobile’s four spectrum licenses. The Bureau’s review is noteworthy for several reasons: First, it resulted in a remedy. Second, the remedy is behavioural in nature. Third, there is no “consent agreement”, which is the usual way of formalizing a remedy. And, fourth, the precise form of the commitment made by Telus is not clear. A position statement accompanied the Bureau’s announcement.

In its position statement, the Bureau characterized the wireless telecommunications industry as having high barriers to entry and expansion, readily accessible information about competitor pricing, and the existence of industry organizations that could facilitate the dissemination of market and pricing information amongst competitors, all of which are factors the Bureau states could potentially raise concerns not only of unilateral, but coordinated conduct. The Bureau also characterized the industy as having a high concentration of market share, with the vast majority of wireless subscribers served by three national incumbents (Telus, Rogers and Bell). Following Industry Canada’s 2008 spectrum auction, the Bureau states that national incumbents responded to increased competition from new entrants (WIND Mobile, Public Mobile, Mobilicity and Videotron Mobile) by lowering prices, accelerating the introduction of new products, plans and services, and expanding the overall range and diversity of wireless products, plans and services available to customers.

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Termination of franchise agreements required in minority interest acquisition

Jeffrey Brown and Shannon Kack -

On November 1, 2013, the Competition Bureau (the Bureau) announced a Consent Agreement with La Coop fédérée (LCF) and Groupe BMR (BMR) in relation to LCF’s acquisition of a minority interest in BMR. A position statement was released on November 13, 2013, outlining the Bureau’s analysis of the proposed merger.

Under the terms of the Consent Agreement, LCF and BMR are required to (i) terminate franchise agreements with certain retail store franchisees in four Quebec regions; and (ii) continue to supply these franchisees on competitive terms until a new franchisor is found or until December 31, 2014. In essence, the Consent Agreement will require the affected franchisees to find new competitor banners under which to carry on their retail businesses in these regions or to otherwise carry on business independently of LCF and BMR.

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Supreme Court of Canada grants leave in wiretap disclosure cases

Paul Beaudry -

On October 3rd, the Canadian Bar Association held a panel on the disclosure of confidential information in competition cases as part of its Annual Competition Law Fall Conference. The panel was moderated by our own Louis P. Bélanger, who represents intervener Ultramar Ltd. in two high-profile cases involving the disclosure of wiretap evidence, Couche-Tard Inc v Jacques and Pétrolière Impériale v Jacques. The Supreme Court of Canada recently granted leave to appeal in both cases, which are contesting an interlocutory order of the Québec Superior Court that required the Competition Bureau and the Director of Public Prosecutions of Canada to disclose wiretap evidence to third parties in civil proceedings under the Competition Act in “follow-on” suits to the criminal prosecutions under the same Act.  Section 36 of the Competition Act allows a person to sue for loss or damage arising from a breach of the statute’s criminal provisions.

Between 2005 and 2006, the Competition Bureau had intercepted and recorded numerous telephone conversations as part of its “octane” criminal investigation, which involved a gasoline price-fixing cartel in the Estrie region of Québec. The Crown subsequently laid criminal charges against fifty-two individuals and companies for illegally conspiring to inflate gas prices. During the criminal proceedings, the Director of Public Prosecutions of Canada disclosed to the accused over 5000 recordings of conversations involving the accused parties intercepted during the investigation.

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Divestitures required in Canadian Movie Theatre Merger

Susan M. Hutton and Shannon Kack -

On October 10, 2013 the Competition Bureau issued a no-action letter in respect of the acquisition by Cineplex Inc. (Cineplex) of 24 movie theatres in Atlantic Canada from its competitor, Empire Theatres Ltd. (Empire), indicating that the Commissioner does not, at this time, intend to challenge the proposed acquisition pursuant to section 92 of the Competition Act.

By way of background, Cineplex originally sought  to acquire two additional theatres in Ontario along with Empire’s 24 movie theatres in Atlantic Canada. Following a three-month review of the proposed transaction, the Bureau raised concerns over the competitive overlap of the parties in Ontario, determining that the proposed transaction would likely result in a substantial lessening of competition in that province. The Bureau had no concerns with respect to a lessening of competition in Atlantic Canada, as Cineplex currently has no theatres there.

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Divestitures Required in Agrium's Agri-Products Acquisition

Marisa Muchnik -

On September 5, 2013, Canada’s Competition Bureau announced that a Consent Agreement had been negotiated requiring a number of divestitures by Agrium Inc. in relation to its acquisition of the majority of Viterra Inc.’s retail agri-products businesses from Glencore International plc. A position statement accompanied the Bureau announcement. 

Under the terms of the Consent Agreement, Agrium will divest seven retail stores and nine anhydrous ammonia businesses.

By way of background, 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 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).

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Canada's Competition Tribunal dismisses RPM case against Visa and MasterCard - no "resale"

Susan M. Hutton and D. Jeffrey Brown -

On July 23, 2013, the Competition Tribunal dismissed the Commissioner of Competition’s resale price maintenance (RPM) case against Visa Canada Corporation and MasterCard International Incorporated (CT-2010-010).  In a summary of its decision (which will be made available in full once confidential information is identified and redacted), the Tribunal said that section 76 of the Competition Act requires a resale and that, in this case, the Commissioner of Competition had not established that Visa and MasterCard’s customers resell Visa and MasterCard’s products. Furthermore, the Tribunal held that the Commissioner’s proposed interpretation of section 76 of the Act was not supported by the legislative history of the provision or other decisions.

In the event that the Tribunal’s interpretation of section 76 of the Act was incorrect, the Tribunal conducted an alternative analysis that assumed that Visa and MasterCard engaged in RPM, as defined by the Commissioner, by implementing the no-surcharge rule. The no-surcharge rule prohibits merchants from applying a surcharge for customers paying with credit cards. Under these circumstances, the Tribunal found there had been an adverse effect on competition. However, even under this alternative analysis, the Tribunal said that it would not have issued an order and stated that a regulatory, rather than competition, response would be better suited to address the concerns raised by the Commissioner. The Tribunal further noted that the experience in other jurisdictions showed consumer concerns related to surcharging would arise and regulatory intervention would then take place.

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Competition Bureau consents to Re-structuring of Interac Payment Association

Susan Hutton, Michael Laskey, Erica Lindberg -

On July 12, 2013, the Interac Association – responsible for operating Canada’s on-line, point-of-sale and ABM debit system - filed a request with the Competition Tribunal to amend the Consent Agreement under which it has been operating since 1996. The original agreement required, among other things, that Interac be managed on a not-for-profit basis. The Commissioner of Competition has consented to the proposal, after rejecting a similar request in 2010.

Interac seeks to restructure to become a for-profit corporation, with an independent board. It believes this change will provide the flexibility necessary in order to remain a low-cost payment alternative for merchants in what has become an increasingly competitive payments marketplace. The new Interac Corporation would operate its services under a cost-recovery model, which would it says will permit the allocation of funds for the research and development of new and innovative payment services.

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Competition Bureau puts deferred payment plans under the microscope in misleading advertising charges against Canadian Furniture Retailers

Ashley Weber and Erica Lindberg -

On July 9, 2013, the Competition Bureau announced that it would be pursuing civil charges of deceptive marketing under the Competition Act against Canadian furniture retailers Leon’s Furniture Ltd. and The Brick Ltd. (acquired by Leon’s earlier in 2013).

In a civil action filed with the Ontario Superior Court of Justice, the Bureau alleges that the retailers’ “buy now, pay later” programs, in which consumers are encouraged to purchase products under a deferred payment program, gives the false general impression that consumers can take advantage of the programs at no extra charge, and fails to adequately disclose the surcharges that will be applied to the balance of the purchase price (section 74.01(1)(a)).  By way of example, a customer wanting to defer payment on a $1500 sofa could be required to pay up to $350 at the time of purchase, despite advertisements stating customers would pay “absolutely nothing” for up to 21 months.

The Bureau also alleges that the administration and processing fees applicable to the deferred payment programs are “hidden”, and can result in substantial additional costs (including both up-front costs as well as costs added to the balance to be paid), which result in the final price of the product being higher than the advertised price (section 74.05(1)).

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Supreme Court of Canada will hear appeal in the Tervita (CCS) merger

Susan M. Hutton -

On July 11, 2013, the Supreme Court of Canada granted leave to appeal in Tervita Corporation et al v Commissioner of Competition. Five months earlier, the Federal Court of Appeal had upheld an order of the Competition Tribunal requiring Tervita Corporation (formerly known as CCS Corporation) to divest its acquisition of a hazardous waste landfill site on the grounds that it had likely substantially prevented competition in the market for the supply of hazardous waste landfill services in northeastern British Columbia.  The transaction had already closed, and was below the threshold for merger notification. At issue in the Federal Court were, among other things, the required time frame for poised entry in a “prevent” case, and the proper approach to the efficiencies defence. Please refer to our earlier blog posts to read more about the decisions of the Competition Tribunaland the Federal Court of Appeal.

Alberta Court of Appeal grants appeal in buyer-side cartel action

Susan M. Hutton and Justine Johnston -

The Alberta Court of Appeal issued a decision on June 14, 2013, in a private action for damages under section 36 of the Competition Act, reversing the trial court’s decision that Husky and ExxonMobil, co-owners of certain oil and gas properties near Rainbow Lake, Alberta, had illegally conspired to lessen competition for purchases of fluid hauling services, contrary to section 45 of the Act.

In 321665 Alberta Ltd. v ExxonMobil Canada Ltd., the trial judge had held that Husky and ExxonMobil’s decision to single-source their acquisition of fluid hauling services at Rainbow Lake unduly lessened competition and violated section 45 of the pre-2009 Act. The Act has since been amended and the Crown no longer has to prove the impugned agreement led to or was likely to lead to an undue lessening of competition. To read more about the Alberta Court of Queen’s Bench decision, please see our earlier blog post here.

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John Pecman is appointed Commissioner of Competition

John Pecman, who has served as Canada’s Interim Commissioner of Competition since September 2012, has been appointed to serve a five-year term as Commissioner of Competition, as announced today by the Honourable Christian Paradis, the Minister responsible for the Competition Bureau.

Paul Collins, leader of the Competition Law and Foreign Investment practice group at Stikeman Elliott and formerly head of the Mergers Branch at the Bureau said of the appointment: “John Pecman is an excellent choice to take the helm of the Competition Bureau for the next five years. I have had the distinct pleasure of working across from and with John during my appointment with the Bureau and look forward to continuing to do so.”

Said Lawson Hunter, former Commissioner of Competition (then, Director of Investigation and Research) and founder of the Stikeman Elliott practice group: “John has demonstrated sound judgment throughout his career at the Bureau. His broad experience in all aspects of the Competition Act makes him almost uniquely qualified for this most important position.”

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Criminal charges laid in Canadian chocolate cartel

On Thursday, June 06, 2013, the Competition Bureau laid criminal charges against three corporations and three individuals for their roles in allegedly fixing the price of chocolate confectionery products in Canada.

The alleged price-fixing occurred before the 2010 amendments to the Competition Act, and the accused have been charged under the criminal cartel provision in the old section 45. Under that provision, the Bureau must prove not only that there was an agreement between competitors to fix prices but also that the agreement had or was likely to unduly lessen competition in a market. If convicted, the accused face fines of up to $10 million and/or a prison term of up to five years.

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Interim Commissioner emphasizes importance of trust and enhanced collaboration'

Michael Laskey -

Interim Commissioner of Competition John Pecman and Senior Deputy Commissioner of Mergers Kelley McKinnon recently attended a breakfast seminar at Stikeman Elliott, to speak to an overflow crowd of clients and to answer questions related to their visions for the future of the Competition Bureau.


 

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Call me maybe? ONCA says standing offers could be contract bids under Bid-Rigging Offence

Susan M. Hutton and Solène Murphy -

April 3, 2013 the Ontario Court of Appeal released its reasons for decision in R v. Dowdall, affirming the Superior Court’s earlier decision to commit 17 defendants to stand trial on charges of bid-rigging under s.47 of the Competition Act. The defendants had argued that tenders submitted to pre-qualify as approved suppliers, or to create a standing order, if and when such services were required, was not a “bid or tender” and thus fell outside the ambit of the prohibition against bid-rigging.

Both the Superior Court and Court of Appeal agreed that the preliminary inquiry judge reasonably concluded that there was some evidence that the process of obtaining a Standing Offer Agreement was contractual and could be considered a “request for bids or tenders” under the bid-rigging offence.

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Competition Tribunal dismisses Competition Bureau's Abuse of Dominance Application against the Toronto Real Estate Board

Sultana L. Bennett -

On April 15, 2013, the Competition Tribunal dismissed the Competition Bureau’s application (the Application) against Canada’s largest real estate board, the Toronto Real Estate Board (TREB). The Tribunal found that the abuse of dominance provision under section 79 of the Competition Act (the Act) did not apply to the facts of the case, which pertained to TREB’s membership rules governing the use of its Multiple Listing Service (MLS) data.

The Bureau’s May 27, 2011 application requested that TREB eliminate rules allegedly denying its real estate agent members the ability to introduce Internet-based real estate brokerage services by limiting the use the members could make of the MLS listings and related data.

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Federal Court of Appeal Upholds Competition Tribunal's Decision in the Tervita (CCS) Merger

Susan M. Hutton, Paul Beaudry and Solene Murphy -

On February 25, 2013, the Federal Court of Appeal (FCA) released its decision upholding the Competition Tribunal’s Order requiring that Tervita Corporation (formerly known as CCS Corporation) divest the Babkirk hazardous waste landfill site in northeastern British Columbia following its acquisition of Complete Environmental Inc. The decision provides guidelines for determining a reasonable period of time for likely market entry in a “prevent” case, as well as clearer guidance on what is “in” and what is “out” for a section 96 efficiencies defense.  It also marks a rare challenge to a closed, and non-notifiable transaction.

Background

In February 2010, Complete received regulatory approval to open the Babkirk landfill. Construction had not yet commenced when Tervita acquired the site from Complete. At the time of the transaction, Tervita operated the only two operational secure landfills for hazardous waste in British Columbia.  The Commissioner of Competition therefore alleged that the transaction substantially prevented competition in hazardous waste landfill in northeastern B.C.

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The Competition Bureau clears Leon's/The Brick Furniture merger

Marisa Berswick -

Parties considering retail mergers should take note of the approach that the Canadian Competition Bureau took in analyzing the proposed acquisition of The Brick Ltd. and its subsidiaries (The Brick) by Leon’s Furniture Limited (Leon’s). Stikeman Elliott LLP has experience acting as competition counsel in a number of retail mergers, including the recent acquisition by Canadian Tire of Forzani, in which the Bureau took a similar approach. Both retail merger reviews highlighted the key role of econometrics in the Bureau’s assessment of whether the merged entity will have the ability to increase prices.

On March 19, 2013, the Bureau released a position statement in respect of the merger of the two national retailers of furniture, mattresses, appliances and electronics. The Commissioner of Competition issued a “no action letter” to Leon’s and The Brick on March 11, 2013, meaning the merger will not be challenged. The Bureau’s review focused on the potential competitive effects in the retailing of furniture and mattresses. Leon’s and The Brick were viewed as particularly close competitors in respect of furniture and mattresses, with a high degree of differentiation from other competitors.

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Canada's Commissioner of Competition toughens stance

Susan M. Hutton and Robert Mysicka -

Recent remarks by Canada’s Interim Commissioner, John Pecman, reinforce the view that the Bureau is pursuing all avenues available to it under the Competition Act to fulfill its mandate of investigating and challenging civil and/or criminal anti-competitive practices. In this respect, the interim Commissioner noted three of the Bureau’s priorities going forward:

  • focused enforcement and strategic regulatory interventions designed to benefit Canadians;
  • applying Canada's competition laws in a transparent and predictable manner; and
  • developing trust through enhanced collaboration

In addition to these priorities, Mr. Pecman noted that the Bureau would assist in providing clarification on the Act’s price maintenance provisions, issues that have arisen in the context of electronic document production, the Bureau’s leniency program for those that cooperate in criminal investigations, and investigative procedures.

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Canadian and foreign investment regulation outlook for 2013

Michael Kilby  -

Investment Canada – The Year of the State-Owned Enterprise

2012 proved to be a highly eventful year for foreign investment law in Canada. Although numerous foreign investments by SOEs in the Canadian energy sector had received foreign investment approvals in recent years1, the summer of 2012 saw the announcement of two multi-billion dollar energy transactions involving SOEs that collectively posed an unprecedented test for the Investment Canada Act and for Canadian policymakers. In June, Petronas (the Malaysian state-owned oil company) announced its $6 billion acquisition of Progress Energy. At the time, this was the largest-ever proposed acquisition of a Canadian company by a state-owned enterprise. But that record did not stand for long: just a month later, in July, CNOOC Limited (a majority Chinese state-owned oil company)announced its $15 billion acquisition of Nexen.

These proposed acquisitions became the subject of intense scrutiny in the national media throughout the summer and fall, and indeed attracted attention in the business press globally, particularly in Asia. With few exceptions, large-scale M&A activity in the Canadian oil patch ground to a halt in the fall of 2012 as market participants stood still and held their collective breath pending the outcome of the government reviews of these proposed foreign investments. Tension was only heightened in October when the Minister of Industry rejected the Petronas transaction on a preliminary basis, immediately recalling the rejection of BHP Billiton’s hostile bid for Potash Corporation of Saskatchewan less than two years earlier.

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The Bureau withdraws charges related to waste company's breach of consent agreement

Marisa Berswick -

On December 14, 2012, the Competition Bureau announced that it had withdrawn criminal charges related to the breach of a consent agreement in a waste-collection company merger due to the accidental leak of privileged information during the course of the Bureau’s investigation.

The Bureau said in its statement that on September 19, 2012, it “became aware of an unfortunate procedural error, where certain information subject to solicitor-client privilege had been inadvertently shared with investigators.” As previously covered on this blog, on September 11, 2012, the Bureau laid criminal charges against Progressive Waste Solutions Ltd. and its subsidiary BFI Canada Inc. (known together as Progressive). The Bureau alleged that Progressive had violated the terms of a consent agreement it had entered into with the Bureau in 2010. The Bureau concluded at the time that the merger would result in a substantial lessening or prevention of competition in the waste collection market in several Canadian cities.

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Competition Bureau disputes public statement by RBS Group

Michael Laskey -

On November 14, the Competition Bureau published a news release disputing a statement made by the Royal Bank of Scotland Group (RBS) related to the Bureau’s ongoing investigation of alleged collusive conduct in the setting of the LIBOR benchmark rate. In its third-quarter Interim Management Statement, RBS stated that it was “co-operating fully” with investigations by the Bureau and other regulators. The Bureau’s news release argued that this statement was false, in light of the fact that RBS had not applied to its leniency or immunity programs and that RBS had challenged a court order obliging it to produce documents in connection with the Bureau’s investigation.

In its reply, RBS emphasized that it did want to cooperate with the Bureau, but that the production of documents requested by the Bureau would violate privacy laws in the United Kingdom. RBS stated that it had offered a number of alternative mechanisms, but that the Bureau had refused such offers.

This is not the first time the Bureau has intervened when it believed a public statement by a company was inaccurate. In September 2011, the Bureau required Beiersdorf Canada Inc. to correct an allegedly inaccurate public statement the company made in relation to a settlement it had reached with the Bureau. Businesses should take note that the Bureau is active in monitoring comments they make in the press and in public disclosure filings.

Canada's new interim Commissioner of Competition emphasizes compliance programs

Robert Mysicka and Marty McKendry -

In his first published remarks as Interim Commissioner of Competition, John Pecman discussed a number of competition-related issues, underscoring the importance of compliance programs, the competition risks associated with participation in trade associations, and the Bureau’s key enforcement priorities going forward.

Mr. Pecman, who was appointed Interim Commissioner on September 26, noted the increasing international prevalence and cooperative enforcement of competition law. He also emphasized the seriousness of cartel activity, referring to Chief Justice Crampton’s remarks in the case against Maxzone Auto Parts, where Mr. Justice Crampton likened cartel agreements to fraud and approved incarceration as an effective deterrent.

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Seminar considers recent developments in competition and foreign investment law

Michael Kilby -

On September 12, my colleagues in the Competition & Foreign Investment Group hosted a breakfast seminar at which many of the recent developments in Canadian competition and foreign investment law were discussed and analyzed. As many of you know, there have been a number of important legal changes in the competition field in recent years. For example, a per se criminal offence for cartel conduct and a new civil provision for reviewing certain types of competitor collaborations have been introduced, competition law-related class action lawsuits have proliferated, a US-style two-stage merger review process has been created, penalties and enforcement activities associated with misleading advertising have been enhanced, and amendments to the Investment Canada Act have come into effect.

During the seminar, Paul Collins, having just returned to Stikeman Elliott following a two-year term as Senior Deputy Commissioner – Mergers Branch, spoke of recent developments at the Competition Bureau with a focus on recent enforcement activities and priorities. Litigator Katherine Kay summarized the current state of play of competition law class actions in Canada, while Shawn Neylan emphasized the importance of implementing an effective competition law compliance program in light of the Bureau’s recent enforcement activities. Meanwhile, Susan Hutton provided an update on and explained the significance of recent amendments and proposed amendments to the Investment Canada Act in relation to enforcement, review thresholds and new filing requirements.

A video and booklet of the seminar are available.

Global competitiveness report ranks Canada's competition regime 21st in world

Michael Laskey -

On September 5, the World Economic Forum released the 2012-2013 edition of its Global Competitiveness Report. The Report uses financial and statistical data as well as executive opinion surveys to rank countries on a wide variety of metrics related to social and economic competitiveness. Canada was ranked 14th overall, down two places from its result in 2011-2012.

Of interest to businesses and competition counsel, Canada ranked 21st overall in the “effectiveness of anti-monopoly policy” category. Respondents to the executive opinion survey were asked to what extent they felt that anti-monopoly policy promoted competition in their respective countries, on a scale of one to seven (with a score of seven meaning that anti-monopoly policy “effectively promote[d] competition”). The mean score was 4.0. Canada scored 4.9, beneath countries such as the U.S. (also 4.9; 17th overall) and the U.K. (5.2; 10th overall), and even Qatar (5.3; 8th overall) and South Africa (5.3; 6th overall). The honour of ‘most effective anti-monopoly policy’ went to Norway, with a score of 5.7.

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John Pecman Appointed as Canada's Interim Commissioner of Competition

Shawn C.D. Neylan

On September 26, 2012, John Pecman was appointed as the new Interim Commissioner of Competition, to lead the Competition Bureau until a new Commissioner of Competition is appointed. In announcing Mr. Pecman’s appointment the Minister of Industry, the Honourable Christian Paradis said “"With nearly 30 years of experience at the Bureau, Mr. Pecman has a keen understanding of competition law and marketplace conduct."

Mr. Pecman joined the Competition Bureau in 1984 and has worked extensively in the enforcement branches of the Competition Bureau, the agency that he now heads as Interim Commissioner. He has been involved in numerous leading cases as the senior officer, some of which were resolved on consent or by guilty plea, others of which were contested before the Competition Tribunal.

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Canada releases new Enforcement Guidelines on Abuse of Dominance; minimal change from draft guidelines

Susan M. Hutton and Edwin Mok -

On September 20, 2012, Canada’s Competition Bureau (the Bureau) published the final version of its long-awaited Enforcement Guidelines on the abuse of dominance provisions (sections 78 and 79) of the Competition Act (the Final Guidelines). The Guidelines have been more than three years in the making. An initial draft released in January of 2009 was the subject of considerable public comment, but was never finalized. The Bureau released a draft version of substantially revised guidelines for public consultation on March 22, 2012 (the Draft Guidelines). After receiving and reviewing submissions from interested parties, the Bureau has now released the final version, which replaces all of the Bureau’s previous publications on the abuse of dominance provisions.

In general, the Final Guidelines are substantively similar to the Draft Guidelines. There are no significant changes in the Final Guidelines as compared to the Draft Guidelines.

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Canada's Competition Bureau uses big stick for breach of consent agreement in merger case

Michael Laskey -

On September 11, the Competition Bureau announced that it had laid criminal charges against Progressive Waste Solutions Ltd. and its subsidiary, BFI Canada Inc., alleging that Progressive had violated the terms of a consent agreement it had entered into in 2010. The consent agreement was reached in respect of a merger between IESC-BFC Ltd. and Waste Services Inc. (now known together as Progressive), two commercial waste collection companies. The Bureau concluded at the time that the merger would result in a substantial lessening or prevention of competition in the waste collection market in several Canadian cities, and entered into a consent agreement with the merging parties which required them to divest certain assets in the affected markets. The consent agreement also provided that the parties could not attempt to reacquire the customers of the companies who purchased the divested assets for one year following the divestitures. In October and December of 2010, the Bureau approved divestiture buyers. Now, the Bureau alleges that Progressive violated the terms of the agreement by soliciting and reacquiring a customer whose contract had been divested, and then providing a false declaration of compliance and failing promptly to notify the Bureau of the breach.

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CCS appeals Competition Tribunal's landfill decision; stay granted

 Susan M. Hutton & Edwin Mok -

The Canadian landfill company that lost a merger challenge at the Competition Tribunal in Canada’s first pure prevention of competition case has appealed to the Federal Court of Appeal.

On January 4, 2011, the Commissioner of Competition applied to the Tribunal for an order to dissolve a merger between CCS Corporation and Complete Environmental Inc. In the alternative, the Commissioner sought an order for CCS to divest itself of Complete or Complete’s wholly–owned subsidiary, Babkirk Land Services. Babkirk had obtained approval to operate a secure landfill site in northeastern British Columbia. As such, Babkirk had been poised to compete directly with CCS. The Commissioner alleged that the merger between CCS and Complete would result in a substantial prevention of competition in the market for hazardous waste disposal in northeastern British Columbia.

On May 29, 2012, the Tribunal ruled in favour of the Commissioner, finding that CCS’s acquisition of Complete would likely prevent competition substantially in the market for the supply of landfill services for solid hazardous oil and gas waste. The Tribunal ordered that CCS divest its shares or assets of Babkirk by December 28, 2012. On July 17, 2012, the Tribunal further issued a divestiture procedure order.

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Real estate advisory company pleads guilty to bid-rigging

Susan M. Hutton and Robert Mysicka -

On July 30, 2012 Corporate Research Group Ltd. (CRG) pled guilty to a charge of bid-rigging under subsection 47(2) of the Competition Act. The bid-rigging was in relation to federal government contracts for real estate advisory services in Canada.

The guilty plea follows the Competition Bureau’s investigation into CRG’s activities after being contacted by the Department of Public Works and Government Services Canada (PWGSC). The specific complaint related to a Request for Standing Offers (RFSO) issued by PWGSC for real estate advisory services. In its guilty plea, CRG admitted that Louis Facchini, a company representative carrying on business as First Porter Consultancy, submitted bids, in response to the RFSO, that were arrived at through an agreement that was not disclosed to PWGSC.

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Competition Bureau clears Maple acquisition of TMX

Michael Kilby -

Today, the Commissioner of Competition issued a “no-action letter” to Maple Group in respect of its proposed acquisition of TMX Group, Alpha Group and Canadian Depository Services. 

The Competition Bureau’s review of the Maple / TMX transaction was extensive. Maple Group (whose investors are Alberta Investment Management Corporation, Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board, CIBC World Markets Inc., Desjardins Financial Group, Dundee Capital Markets Inc., Fonds de solidarité des travailleurs du Québec (F.T.Q.), National Bank Financial & Co. Inc., Ontario Teachers' Pension Plan, Scotia Capital Inc., TD Securities Inc. and The Manufacturers Life Insurance Company) announced on May 15, 2011, in the midst of the failed bid by the TSX to merge with the LSE, that the Group had submitted a proposal to acquire the TMX Group. Maple filed an application for an advance ruling certificate on June 7, 2011. The transaction was therefore under active Competition Bureau review for a period of some 13 months.   

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Canadian Commissioner to step down in September; new head of Mergers Branch

Paul Beaudry and Megan MacDonald -

On June 28, 2012, Canada’s Commissioner of Competition, Melanie Aitken, announced  her decision to leave her post, effective September 21, 2012.

Commissioner Aitken was appointed to a five-year term in August 2009, having replaced the previous Commissioner, Sheridan Scott, as Interim Commissioner just prior to the enactment of significant amendments to the Competition Act in March, 2009.

Ms. Aitken held the role of Assistant Deputy Commissioner in the Mergers Branch from 2005 to 2007, and was appointed head of the Mergers Branch at the end of that term. Prior to joining the Bureau, Ms. Aitken had been a commercial litigation partner with two Canadian law firms, with a secondment to the Federal Department of Justice as Senior Counsel from 2001 to 2003.

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Guilty pleas in Quebec sewer services cartel

On June 22, 2012, Canada’s Competition Bureau announced that Colmatec Inc. and its operations director, Rénald Drouin, have pleaded guilty in a scheme to rig bids on contracts for specialized sewer services in the province of Québec. Charges are still pending against five other companies and their directors as part of the conspiracy, which involved bids on 37 municipal contracts worth over $3 million. A sixth company had previously pleaded guilty on November 22, 2011. Colmatec has been fined $50,000 and is subject to a court order, while Rénald Drouin will perform 100 hours of community service and is subject to a two year probation period. Bid-rigging is a criminal offence under section 47 of the Competition Act.

Canada's Commissioner wins prevent case - Tribunal orders divestiture of hazardous waste landfill

Ashley Weber -

On May 29, 2012, the Competition Tribunal ruled in favour of the Commissioner of Competition, and ordered CCS Corporation to divest a hazardous waste landfill site, the acquisition of which the Commissioner had alleged would result in a substantial prevention of competition in the market for hazardous waste disposal in northeastern British Columbia. This was the first contested challenge to a merger by the Commissioner since 2005. 

Complete Environmental had received regulatory approval to open the Babkirk landfill in February 2010, and had not yet started construction when CCS Corporation acquired the site. CCS already operates the only two operational secure landfills for hazardous waste in British Columbia. The Commissioner alleged that, through the acquisition of the Babkirk landfill, CCS had prevented the entry of a potential competitor, thereby substantially preventing competition.

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Competition Bureau conducts performance review of its mergers branch

Susan M. Hutton and Robert Mysicka

The Competition Bureau has released an updated Merger Review Performance Report (Report) tracking the activities of its Mergers Branch since the last report published in May, 2010 and discussed in our previous post.

Since 2010, the Bureau has published a series of revised guidelines as part of its ongoing efforts to realign its merger review procedures following the 2009 amendments to the Competition Act and the Notifiable Transactions Regulations. The updated guidelines include:

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Competition Bureau releases statement on Chartwell and Health Care REIT's acquisition of Maestro Retirement Residences

Marisa Berswick -

On April 11, 2012, the Competition Bureau released a statement summarizing its review of the acquisition of retirement residences by Chartwell Seniors Housing REIT (Chartwell) and Health Care REIT Inc. (HC) of the Maestro Retirement Residences Portfolio (Maestro). The Bureau issued a No Action Letter in respect of the acquisition.

Both Chartwell and Maestro operate retirement residences in Canada, while Ohio-based HC operates retirement residences in the United States. The Bureau’s review focused on the different types of retirement residences and the local nature of competition among retirement residences. The relevant product markets were defined as Independent Supportive Living programs (ISL) and Assisted Living programs (AL), due to differences in the services offered and demand considerations for each.

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Competition Bureau releases statement on Cardinal Health's acquisition of Futuremed

Ashley Weber and D. Jeffrey Brown -

On April 16, 2012, Canada’s Competition Bureau issued a statement outlining the analysis it had undertaken of Cardinal Health’s then-proposed acquisition of Futuremed to conclude that, despite some concerns expressed by certain customers, the transaction was unlikely to result in a substantial prevention or lessening of competition in any relevant Canadian market. Stikeman Elliott acted on behalf of Cardinal Health.

Cardinal Health and Futuremed were both distributors of a broad range of medical supplies and surgical equipment to various healthcare facilities in Canada, supplying products from hundreds of global manufacturers. The Bureau noted that prices in the healthcare products distribution industry are typically set through a tendering process between manufacturers and customers, whereby manufacturers sell direct to the individual healthcare facility or, alternatively, to a buying group acting for several healthcare facilities. As such, authorized distributors of manufacturers, such as Cardinal Health and Futuremed, do not compete on price, but rather compete through the use of distribution fee rebates, quality of service and technical expertise offered to customers.

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Supreme Court of Canada: average consumer is "credulous and inexperienced" for misleading advertisement purposes

Ashley Weber -

In February 2012, the SCC released its decision in Richard v. Time Inc., a case brought forward from the Quebec Court of Appeal, which considered the “general impression” test in relation to the misleading advertising provisions of the Quebec Consumer Protection Act (CPA). Given the recently increased enforcement activity of the Competition Bureau with respect to deceptive marketing practices, companies that advertise to consumers anywhere in Canada should take heed of the SCC decision. The misleading advertising provisions of the Quebec CPA are based, to a large extent, on what is now the federal Competition Act, and similar types of consumer protection laws exist in the other Canadian provinces. Accordingly, the impact of the SCC decision will go beyond the CPA, affecting enforcement of deceptive marketing practices under both federal and provincial consumer protection laws in Canada. 

The SCC decision provides clear guidance on how to assess an advertisement’s target audience for purposes of the “general impression” test, and clarifies that both the layout of the advertisement and the meaning of the words, taken in their entirety, form the general impression of an advertisement. As such, regulators and companies now have a firmer understanding of what test to consider when determining whether an advertisement is misleading in a material respect.

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Competition Bureau releases additional Pre-Merger Interpretation Guideline for consultation

Susan M. Hutton & Kim Lawton -

Competition Bureau (the Bureau) has published a draft new Pre-Merger Interpretation Guideline for public consultation (Guideline #15), providing details as to how the Bureau calculates the value of “assets in Canada” and “gross revenues from sales” for purposes of the merger notification thresholds.  It will be open for comment from interested parties until June 13, 2012.

The purpose of the guideline is to assist parties and their counsel in interpreting and applying the provisions of theCompetition Act (the Act) relating to notifiable transactions. This guideline sets out the general approach taken by the Bureau and may assist businesses in determining whether the parties-size and transaction-size thresholds under sections 109 and 110 of the Act are exceeded.

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New interpretation guidelines on pre-merger notification released by Competition Bureau

Susan M. Hutton & Robert Mysicka -

On March 23, 2012, the Competition Bureau announced its publication of two draft Pre-Merger Notification Interpretation Guidelines for public consultation.

The publications, dubbed Pre-Merger Notification Interpretation Guideline Number 12 and Number 14 relate respectively to the requirement to submit a New Pre-merger Notification and/or ARC Request Where a Proposed Transaction is Subsequently Amended, and Duplication Arising from Transactions Between Affiliates.

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Competition Bureau releases new draft guidelines on abuse of dominance

D. Jeffrey Brown & Robert Mysicka -

The Competition Bureau announced yesterday that it has released its long-awaited revised draft Abuse of Dominance Guidelines outlining the Bureau’s approach to reviewable matters under sections 78 and 79 of the Competition Act. The newly released Guidelines are intended to replace the draft guidelines released in January, 2009, which was the first time the Bureau had updated its enforcement approach to abuse of dominance since 2001.

Abuse of dominance occurs when a dominant firm (or group of firms) in a market engage in a practice of anti-competitive acts that result, or are likely to result, in a substantial prevention or lessening of competition. Sections 78 and 79 of the Competition Act allow the Competition Tribunal, on application by the Commissioner of Competition, to prohibit dominant firms from engaging in anti-competitive practices, or to order such further remedial action as is reasonable and necessary to restore competition in the market.

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Canadian court comes down hard on misleading business directory scam

Ashley Weber -

On March 1, 2012, the Ontario Superior Court put an end to a deceptive marketing scam that had resulted in thousands of Canadians falling victim to false and misleading representations, to the tune of an estimated $7 million. In response to an application filed by the Commissioner of Competition, the court held that representations made to the public about a business directory service with a similar name and website to the well-established Yellow Pages business directory were false or misleading in a material respect, contrary to Section 74.01(1)(a) of the Competition Act. The court imposed an administrative monetary penalty (AMP) of $8 million on the related companies, and AMPs of $500,000 on each of the companies’ two principals. The court also ordered that restitution be paid to the individuals that had been victimized by the scam.

Playing on Canadians’ familiarity with the Yellow Pages business directory operated by the real Yellow Pages Group, the respondents had been marketing themselves under a similar name and offering online business directory services to Canadians since January 2010, leading many Canadians to believe that they were receiving communications from the established Yellow Pages Group. Through those communications, recipients were asked to “update” their existing records in order to obtain an additional free Google advertisement. A review of the fine print, however, revealed that it was actually an agreement to sign a new two-year contract for a fee of $2,856. If recipients did not respond and/or pay the requested fee, they were subsequently sent as many as three additional invoices, reminder notices or letters. The communications contained a logo similar to that of the real Yellow Pages Group, and referenced “Yellow Page” (no “s”) in large font.  In reality, the communications were coming from companies and individuals that were in no way related to Yellow Pages Group or its business directory service.

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Novel costs award in trial of first buyer-side conspiracy claim for damages in Canada

Michael Kilby and Kim Lawton -

The Court of Queen’s Bench in Alberta has recently ruled in 321665 Alberta Ltd. v. ExxonMobil Canada Ltd,  on several issues relating to costs under section 36 of the Competition Act. The ruling follows an award of damages in a civil case involving a rare buyer-side conspiracy, brought under the pre-2009 section 45 of the Act.

By way of background, section 36 of the Competition Act provides a statutory cause of action to any person who has suffered loss or damage arising from the breach of any of the criminal provisions in Part VI of the Act. These criminal provisions include conspiracy, bid-rigging, misleading advertising, and deceptive telemarketing.

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Quebec construction companies plead guilty to bid-rigging in Chicoutimi hospital expansion project

Susan Hutton and Robert Mysicka -

On February 17, the Competition Bureau announced that three construction companies—Construction G.T.R.L. (1990) Inc., Acoustique JCG Inc., and Entreprises de Construction OPC Inc.—have pled guilty to charges of bid-rigging in a construction project involving the expansion of the Chicoutimi hospital. The case comes less than half a year after a similar bid-rigging scheme involving ventilation companies in Montreal was uncovered and prosecuted, resulting in the imposition of a substantial fine and a prohibition order.

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Bureau's decision to launch merger register raises confidentiality issues under the Competition Act.

Susan Hutton & Robert Mysicka -

On February 6, 2012, the Competition Bureau announced that as part of its efforts to increase transparency in the merger review process it will begin publishing monthly reports of concluded mergers.  The first report, for the month of February, will be published in March and will appear as a table with information on the parties to the transaction, the industry, and the result (i.e. whether the merger was concluded following the issuance of an Advanced Ruling Certificate (ARC) under section 102 of the Competition Act, the issuance of a “No-action Letter”, the registration of a consent agreement, or a judicial decision). 

The Bureau’s decision to publish a list of completed merger reviews comes after its previously announced decision to discontinue issuing detailed backgrounders on the facts of particular cases. Such backgrounders had been sporadic, and subject to permission by the parties to reveal non-public information, but had been helpful in shedding light on the Bureau’s enforcement approach to mergers – no such details of individual cases will be provided in the merger register.

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CRTC's vertical integration decision in broadcasting proposes controls on vertically-integrated broadcasters

Michael Laskey -

On February 1, 2011, the Competition Bureau issued a statement in respect of the proposed acquisition of CTVglobemedia Inc. by BCE Inc. The statement noted that the Bureau was “cognizant of the growing trend toward vertical integration in the broadcasting industry” and that it was reviewing issues of vertical foreclosure. The statement also noted that the Commissioner of Competition would “closely monitor” the CRTC’s vertical integration hearings and subsequent regulatory developments in that same regard.

On September 21, 2011, the CRTC released its decision, Broadcasting Regulatory Policy CRTC 2011-601, setting out a regulatory framework for vertical integration among broadcasting and programming companies. In its decision, the CRTC imposes a number of restrictions on the activities of “vertically integrated” companies, which for the purposes of the decision it defines as companies that control both programming services (such as conventional television stations) and distribution services (such as cable or satellite systems). More specifically, some of the restrictions imposed by the decision include:

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Competition Tribunal orders production of unredacted documents

D. Jeffrey Brown and Lindsay Gwyer -  

In a recent decision, the Competition Tribunal granted the Commissioner of Competition’s motion requesting that the Toronto Dominion Bank (TD) produce complete versions of a number of documents, including several that had previously been produced in a redacted form. The motion was part of the Commissioner’s proceedings against Visa Canada and Mastercard International under the Competition Act’s civil resale price maintenance (RPM) provision, enacted as part of the substantial amendments to the Competition Act in 2009. TD was granted leave to intervene in that proceeding in respect of a number of issues earlier this year.

The motion stemmed from the redaction by TD of certain documents produced by it in response to the Tribunal’s order granting it leave to intervene, which also ordered it to produce documents relative to the issues within the scope of its intervention. TD submitted that redactions are permitted if information is irrelevant and confidential, or if it is contained in an irrelevant portion of a segmented document. The Tribunal rejected this view, and held that, as a general rule, irrelevant portions of otherwise relevant documents must be disclosed. After reviewing relevant jurisprudence, the Tribunal held that redaction is permissible only in exceptional circumstances, such as where the redacted information is embarrassing or harmful or where there is an “enormous” volume of redacted material.

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Superior Court issues partial sealing order in Commissioner's case against Chatr Wireless

D. Jeffrey Brown and Robert Mysicka - 

In a recent ruling, Ontario’s Superior Court of Justice explored the principles underlying the law respecting sealing orders and its application to reviewable matters under Part VII.1 of the Competition Act.  On a motion by the Commissioner of Competition, the Court issued a partial confidentiality (or sealing) order with respect to certain information used by the Commissioner in her application against Rogers Communications Inc. and its wholly owned subsidiary, Chatr Wireless Inc., for alleged misleading advertising. Information about “dropped call” rates, which the Court characterized as being at the “very heart” of the Commissioner’s application, was excluded from the sealing order after the Court determined that it was essential for that aspect of the proceedings to remain transparent. 

Investigation into Misleading Advertising

The application to which the confidentiality order relates originated in November, 2010, when the Competition Bureau commenced legal proceedings against Rogers and Chatr. The Bureau’s application came after complaints were made by competing discount wireless carriers, Wind Mobile and Mobilicity, alleging that Rogers’ Chatr discount brand was misleading consumers into believing that its network was more reliable and had fewer “dropped calls” than those of other discount carriers.

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Competition Bureau publishes final version of revised Canadian MEGs

Megan MacDonald -

On October 6, 2011, the Competition Bureau announced the publication of the final version of its revised Merger Enforcement Guidelines (MEGs), only thirteen months after announcing its intention to review the guidelines in September 2010. The revised MEGs replace both the 2004 version of the guidelines and the Bureau’s 2009 Efficiencies in Merger Review bulletin.

The revisions aim to better describe the Bureau’s analytical approach to merger review by addressing discrete areas where the 2004 MEGs no longer fully reflected Bureau practice or current economic and legal thinking. It is generally understood that the 2010 revisions to the U.S. Horizontal Merger Guidelines (U.S. Guidelines) also constituted an important factor driving the need for review. Whereas the U.S. Guidelines are limited to horizontal mergers, however, the revised MEGs also address vertical merger analysis and go further than the U.S. Guidelines with respect to horizontal merger analysis by incorporating more recent thinking on Canada’s own unique efficiencies defence.

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Competition Bureau releases Canadian Tire/Forzani "Position Statement"

Jeffrey Brown -

On October 5, 2011, the Competition Bureau released a “Position Statement” summarizing its approach in reviewing Canadian Tire’s recent acquisition of the Forzani Group.  The transaction, which took the form of a takeover bid, was announced on May 9, 2011, and the Bureau cleared the transaction on August 3, 2011.  The transaction provided the Bureau with the relatively rare opportunity to review a retail merger between retailers carrying on business using different business models: Forzani is a national sporting goods retailer (including sports apparel and equipment), and Canadian Tire is a mass merchandiser selling products, through a network of independent dealers, across a range of categories, including sporting goods as well as automotive parts, tools, house wares and electronics.

In reviewing the transaction, the Position Statement notes that the Bureau analysed its potential competitive effects in a number of possible product markets (retail sale of sporting equipment; retail sale of certain sporting equipment categories, such as hockey equipment; and the retail sale of specific sporting equipment products, such as hockey skates), but ultimately concluded that it was not necessary to conclusively define the relevant product market(s) in light of econometric evidence showing that neither party responded competitively to the presence of the other in local markets, and to evidence that this was unlikely to change post-merger. To our knowledge, this is the first time the Bureau has expressly relied on such a competitive effects analysis in its assessment of a merger, although the potential for such an approach was signalled in its draft revisions to the Merger Enforcement Guidelines, published earlier in 2011.

Stikeman Elliott LLP acted as competition counsel to Canadian Tire, with a team consisting of Lawson Hunter, Jeffrey Brown, Paul Beaudry, Megan MacDonald and Alexandra Stockwell.

Criminal charges laid in Canada for international telemarketing fraud

Michael Laskey -

On September 22, 2011, the Competition Bureau (the Bureau) announced that charges had been laid against five individuals and four Montreal-based companies involved in an allegedly fraudulent telemarketing operation. According to the Bureau’s Backgrounder, the companies hired telemarketers to contact businesses and falsely suggest (i) that the telemarketers were regular suppliers of the businesses looking to obtain renewals for services; (ii) that purchases of medical kits were required to comply with new legislation; (iii) that an order had already been pre-authorized by someone else in the business; or (iv) that the purpose of the telemarketer’s call was to verify an address when in fact it was to obtain an order confirmation. The companies allegedly sold products which were inflated up to ten times the market value, and threatened collection actions against businesses when they refused to pay.

Based in Montreal, the telemarketing operation had allegedly targeted businesses in Canada, the United States, Europe and Central America since at least 2001. The accused individuals and companies are charged with deceptive telemarketing and misleading representations (both criminal offences) under the Competition Act, and fraud under the Criminal Code. Last year, in remarks made to the International Consumer Protection and Enforcement Network, the Commissioner of Competition remarked that “[i]t is now clear that victims do not need to be Canadian in order for [the Bureau] to take action. This is an important step forward in the international fight against fraud.”

Competition Bureau releases review of 2007 self-regulated professions study

Susan M. Hutton and Paul Beaudry

On September 2, 2011, the Competition Bureau released the results of an ex-post assessment of its December 2007 study entitled “Self-Regulated Professions: Balancing Competition and Regulation.” The Bureau’s review assessed developments since the publication of its 2007 study, which contained 53 recommendations aimed at eliminating unwarranted regulatory restrictions on competition in five self-regulating professions: accountants, lawyers, optometrists, pharmacists and real estate agents.

In addition to specific recommendations, the 2007 study also included six guiding principles set forth by the Bureau to help regulators develop regulatory frameworks that maximize consumer welfare through competition:

  1. Regulation should have clearly defined and specific objectives.
  2. Restrictions should be directly linked to clear and verifiable outcomes.
  3. Regulation should be the minimum necessary to achieve stated objectives.
  4. The regulatory process must be impartial and not self-serving.
  5. A regulatory scheme should allow for periodic assessment of its effectiveness and be subject to regular reviews.
  6. A primary objective of the regulatory framework should be to promote open and effectively competitive markets.
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Competition Bureau finds slimming creams not as effective as advertised

Ashley Weber -

The Competition Bureau announced last week that it has entered into a Consent Agreement with Beiersdorf Canada Inc., the Canadian distributor of Nivea, regarding misleading claims associated with Nivea's "My Silhouette" product. According to the Competition Bureau, certain claims about the product, including that it can slim and reshape the body and cause a reduction of up to three centimetres on targeted areas, were false or misleading, and not based on adequate and proper testing. As part of the settlement, Beiersdorf has agreed to pay an administrative penalty of $300,000 plus $80,000 in costs, in addition to providing refunds to consumers.

The settlement follows on the heels of another high profile misleading advertising decision by the Commissioner of Competition pertaining to Bell Canada, which we described in a post of July 29. In that decision, the Commissioner concluded that Bell had misled consumers in its advertising regarding the prices consumers are required to pay for its TV, internet, home phone and wireless services. Bell Canada agreed to pay an administrative monetary penalty of $10 million, as well as revise its current and future advertising to ensure that consumers are no longer misled by the prices advertised and the fine-print disclaimers that accompany the advertising.

Given the recent activity by the Commissioner to exercise her powers under the Competition Act to crack down on misleading advertising, and further, given the steep penalties that can be imposed under the Act on companies found to have engaged in deceptive marketing ($10 million initially for a corporation and $15 million for repeat offenders), companies should take the time to carefully review their advertising and disclaimers prior to going to print, in order to ensure representations made to the public do not run afoul of the Act.

If you have any questions about the misleading advertising or other provisions of the Competition Act, I invite you to contact me or any other member of our Competition & Foreign Investment Group.

Canadian Competition Bureau introduces new standard language for "no action" letters

Paul Beaudry -

On August 8, 2011, the Competition Bureau provided guidance regarding the standard language parties can expect to see in standard “no action” letters issued in the context of merger reviews.

The Bureau’s approach better aligns the default language in no action letters with subsection 123(2) of the Competition Act and will no longer refer to the sufficiency of grounds to challenge. After September 1, 2011, “no action” letters will specify that:

“…the Commissioner does not, at this time, intend to make an application under section 92 in respect of the proposed transaction.”

For years, there has been a disconnect between the requirements of section 123 of the Competition Act for early termination of the initial 30-day waiting period under subsection 123(2) of the Act and the language actually used in “no action” letters, which granted such early termination, but mimicked the language used in advance ruling certificates issued under section 102 of the Act. The Bureau’s new standard language, while not changing the intended meaning of “no action” letters, aligns “no action” letters with the statutory requirements.

Competition Bureau releases study of Canadian merger remedies

Susan M. Hutton and Robert Mysicka -

On August 11, 2011 the Competition Bureau (Bureau) released a summary of an internal study on the efficacy of remedies obtained under the merger provisions of the Competition Act The study examined the efficacy of the Bureau’s policies and procedures on merger remedies for the years 1995-2005. In particular, the survey focused on 23 merger cases in which different remedial measures were implemented over the ten-year period. The Bureau interviewed different stakeholders in the merger review process, including merged entities, customers and purchasers of divested assets, as well as third parties affected by the remedy.   The study utilized 135 interviews, approximately 50% of which were responses from customers.

The Competition Act allows for the Commissioner of Competition to make an application to the Competition Tribunal preventing a merging entity, alone or in combination with others, from having the ability to exercise market power as a result of its merger. The Commissioner can challenge the merger under section 92 of the Act, or seek to resolve the competition concerns by negotiating remedies with the merging parties. In practise, very few merger cases in Canada are litigated. Accordingly all of the remedies examined had been agreed with the parties. The Bureau’s 2006 Bulletin on Merger Remedies specifies four types of remedial measures used by the Bureau and the Tribunal to address mergers that have, or are likely to have, detrimental effects on competition. The study, which will be used to validate and refine certain aspects of the Bureau’s practice, describes key observations on the four principal remedies currently used by the Bureau, including: structural remedies, quasi-structural remedies, combination remedies, and stand-alone behavioural remedies. For purposes of the public summary of the report, however (details of the complete study must remain confidential pursuant to the confidentiality provisions of section 29 of the Competition Act), results have been summarized for structural, and for all other categories.

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Canada leads international effort to stop business directory scam

Jennifer Rad -

The Competition Bureau announced on July 28, 2011 that it had filed an action against five companies (Yellow Business Marketing Ltd. in Canada; Yellow Publishing Ltd. and Yellow Data Services Ltd. in the UK; Yellow Page Marketing B.V. in the Netherlands, and Backoffice Support SL in Spain) and three individuals (Brandon Marsh, manager of Yellow Business Marketing Ltd. and Jan Marks and Steve Green, Spanish residents) with the Ontario Superior Court of Justice in connection with a deceptive marketing scheme targeting businesses in Canada.

"We are committed to cracking down on fraud that victimizes consumers and businesses. Significantly, the action we are taking today underscores the importance of working with our international partners to frustrate these types of multi-jurisdictional scams." said Melanie Aitken, Commissioner of Competition.

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Quebec ventilation contractor fined for bid-rigging

Susan M. Hutton and Robert Mysicka -

Les Entreprises Promécanic Ltée (Promécanic), a ventilation company based in Laval, Québec, has pleaded guilty to three criminal charges of bid-rigging for tenders issued by its contractors in 2004 and 2005. On July 19, 2011, Promécanic was fined C$425,000 by the Superior Court of Québec for participating in agreements to fix the outcome of bids for the installation of residential ventilation systems in Montreal.

In December, 2010, the Competition Bureau’s investigation of eight ventilation systems companies culminated in the laying of criminal charges for bid-rigging against Promécanic and seven others. Bid-rigging, which is defined in section 47 of the Competition Act, prohibits bidders from entering into an agreement not to submit bids or to submit pre-arranged bids when responding to a bid or tender call. The criminal sanction under section 47 applies if the person calling for the bids is not made aware of the agreement at or before the time when the bid or tender is submitted or withdrawn. In this case, the Bureau’s investigation found evidence of collusion among the eight ventilation companies in five separate competitive bidding processes valued at approximately C$8 million. The maximum penalties for bid-rigging include a fine that is at the discretion of the court and/or a prison term not exceeding 14 years.

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Bell Canada to pay $10-million penalty for misleading advertising

Ashley Weber and Jennifer Rad -

On June 28, 2011, Bell Canada entered into a Consent Agreement with the Commissioner of Competition that will require Bell to pay a $10-million administrative monetary penalty for making false or misleading representations in its advertising regarding the prices consumers are required to pay for its Home Phone, Internet, Television, and Wireless services. 

Upon completion of its investigation, the Competition Bureau concluded that Bell has, since December 2007, advertised monthly prices which were lower than the actual price it charges consumers for its services. Section 74.01 of the Competition Act prohibits any representation to the public, for the purposes of promoting a product, that is false or misleading in a material respect, and takes into account both the general impression conveyed by a representation as well as its literal meaning.

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Canadian Competition Bureau updates handbook for binding written opinions

Susan M. Hutton and Edwin Mok -

On May 18, 2011, the Competition Bureau released a new Fee and Service Standards Handbook for Written Opinions with updated guidance on required information, service times, and fees for binding written opinions. Section 124.1 of Canada’s Competition Act, which was added in 2002, gives the Commissioner the ability to issue a written opinion as to whether particular provisions of the Act would apply to the facts described in the application.  These opinions are binding upon the Commissioner provided that all material facts have been disclosed.

The Bureau’s new Handbook aims to assist applicants in determining what material facts need to be disclosed.  It provides non-exhaustive lists of required information for some of the most frequently reviewed provisions, including: s. 76 (price maintenance), ss. 77 to 79 (other civil reviewable practices including abuse of dominance), s. 90.1 (non-criminal agreements with competitors that substantially lessen or prevent competition), s. 45 (cartels, i.e., criminal competitor agreements), s.52 (misleading advertising), s. 52.1 (deceptive telemarketing), s. 53 (deceptive notice of winning a prize), and ss. 74.01 to 74.06 (civil deceptive marketing practices). The new Handbook reflects some recent changes to the Act, such as the addition of s. 90.1 and the corresponding “per se” nature of the cartel offence.  It also makes some changes to the information required for certain provisions.  For example, requests for written opinion for s. 45 and ss. 77 to 79 now require the submission of “any relevant agreement(s)”, a requirement not stipulated in the previous Handbook.

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Canadian Merger Enforcement Guidelines to be revised

Michael Kilby -

On February 24, 2011, the Commissioner of Competition announced that the Competition Bureau will undertake “moderate revisions” to the Canadian Merger Enforcement Guidelines (MEGs). This announcement follows a series of roundtable consultations with competition law practitioners across Canada, consultations with foreign agencies and an internal Bureau review. A wide variety of opinions were expressed during these roundtable consultations, including opinions as to whether revisions were necessary, particularly given that the MEGs were last revised in 2004 following a thorough review and consultation process. In this regard, an important factor driving the revisions is generally believed to be the 2010 revisions to the U.S. Horizontal Merger Guidelines (although these had last been revised in 1992).

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Competition Bureau raises "size of target" merger threshold

The Competition Bureau announced today that the threshold for the size of the assets or revenues of the "target" of acquisitions involving businesses in Canada will increase to $73 million.  The change will take place following publication in the Canada Gazette, which is expected to take place on February 12, 2011.  Generally speaking, transactions involving parties whose combined assets in Canada or revenues in, from or into Canada (including those of affiliates) exceeds C$400 million must be notified in advance of closing to the Competition Bureau, if the business in Canada has assets in Canada or revenues generated therefrom exceeding the "size of target" threshold.  This threshold may be modified annually under the indexing provisions of the Competition Act.

Competition Bureau challenges waste acquisition

Susan M. Hutton and Sharon Seung

On January 26, 2011, Canada’s Competition Bureau announced that it has applied to the Competition Tribunal for an order to dissolve CCS Corporation’s acquisition of Complete Environmental Inc., which owns the Babkirk Secure Landfill located in northeastern British Columbia. Interestingly, the theory of harm in this case is founded on a likely “prevention” rather than a “lessening” of competition – typically harder to prove.

CCS’ acquisition of the Babkirk Secure Landfill is said to be likely to substantially prevent competition for the disposal of hazardous waste produced largely at oil and gas facilities in northeastern British Columbia. According to the Commissioner of Competition: “[b]y purchasing, rather than face competing with the Babkirk Secure Landfill, CCS will prevent the entry of competition into the market for secure hazardous waste disposal in Northeastern British Columbia.” Complete Environmental had received regulatory approval to open the landfill in February 2010, but had not yet started construction. According to the Bureau, had the Babkirk Secure Landfill opened, it would have become a competitor to CCS, which currently operates the only two operational secure landfills for hazardous waste in British Columbia.

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Competition Bureau's new powers resulting in increased merger scrutiny?

An article in the Globe and Mail considers whether enhancements to the Competition Bureau's enforcement tools  have led to more aggressive scrutiny of corporate mergers in Canada. Some in the legal community see an increase in the Competition Bureau's demands for remedies emerging from the Bureau's ability, since 2009, to request additional documents and information from merging parties without having to obtain court approval, and to extend waiting periods while such requests are complied with. Others, however, disagree that the Bureau's substantive approach to merger review has been affected by the enhanced investigative powers. According to the head of Stikeman Elliott's Competition Law practice group, Lawson Hunter, who was quoted in the article,

I don’t see any evidence that the bureau is getting more aggressive in how they are analyzing mergers because of these changes at all.

Commissioner of Competition Melanie Aitken, has also suggested that the Bureau is taking a cautious approach to its expanded powers. In a September 2010 speech to the CBA Fall Competition Law Conference, Ms. Aitken stated:

The Guidelines [the Bureau's Merger Review Process Guidelines, which explain the Bureau's approach to administering Canada's merger review process] also emphasized our commitment to use our new information gathering powers judiciously, only in respect of those transactions that raise significant competition issues and for which the Bureau requires additional information to conduct a sufficiently thorough review.

Since the introduction of the amendments in 2009, the Bureau has issued only ten SIRs [Supplementary Information Requests, also called "second requests" in the United States]. To put this into perspective, the Bureau has received more than 300 merger filings over this same period, approximately 90% of which were cleared within the initial 30-day review period.

Truth in Tweeting: Competition Bureau advertising rules apply to sponsored tweets

This past weekend, the UK's Guardian published an interesting article on the practice of celebrity endorsements on social networking sites like Twitter. As described by the Guardian, the Office of Fair Trading, the UK's consumer and competition authority, investigated a media company last year that engaged in remunerating individuals that published online content promoting the company's clients. At issue was the fact that the content was published "without sufficient disclosures in place to make it clearly identifiable to consumers that the promotions had been paid for." In the United States, the Federal Trade Commission suggested last year that the disclosure of sponsored tweets be made using a hashtag like #paid or #ad.

At home, meanwhile, the Financial Post recently reported on the Competition Bureau's response to the issue.

In Canada, a spokesman for The Competition Bureau said that promoted tweets in Canada must conform to existing Canadian advertising legislation.

Anyone endorsing a product must actually use the product and their opinion of the product must not have changed, he said. However, Canadian law does not have any specific laws governing the use of promoted tweets on Twitter.

Thus, Canadian companies (and social media users) should be reminded that even in the Twitterverse, the Deceptive Marketing Practices provisions of the Competition Act continue to apply.

Reading the fine print: advertising, anti-spam and class action update

Some of the most rapidly-evolving issues facing Canadian businesses concern the increasingly-complex labyrinth of advertising regulations, anti-spam legislation, privacy issues and the rise of competition law-related class action lawsuits. Companies must remain on top of the latest developments in these areas in order to effectively manage their risk.  The webcast of a recent seminar hosted by Stikeman Elliott LLP, which featured panellists from the Competition Bureau and members of the firm's Competition/Antitrust Group, is now available on-line. Printed materials are also available.

Competition Bureau challenges credit card rules

D. Jeffrey Brown -

The Competition Bureau of Canada announced on December 15, 2010 that it had filed an application with the Competition Tribunal to strike down certain rules that Visa and MasterCard impose on merchants who accept their credit cards. The Bureau is challenging Visa and MasterCard's rules under the price maintenance provisions of the Competition Act. The Bureau launched its investigation in response to complaints by merchants and their associations and initiated a formal inquiry in April 2009. It marks the second civil case launched by the Commissioner in the past year challenging unilateral conduct - a significant increase in the pace of enforcement of the reviewable practice provisions of the Competition Act, if it persists, although the case has taken almost two years to come to fruition.

Sector inquiries by Competition Bureau (Bill C-452) deliberated by Industry Committee

Susan M. Hutton

Bill C-452 proposes to give the Commissioner of Competition and the Competition Bureau broad powers to review the state of competition in entire industry sectors, absent grounds to believe that the Competition Act has been violated. The Bill was referred to the Standing Committee on Industry, Science and Technology (Parliament, House of Commons) in June, 2010. The Committee has now asked for an extension of its review, beyond February 1, 2010, in order to enable it to hear from a wide range of witnesses prior to clause-by-clause review. 

Currently, the Commissioner's extensive investigative powers can only be used in relation to an "inquiry" which requires that grounds exist for believing either than an offence has been committed under the criminal provisions of the Competition Act, or that grounds exist for the Tribunal to make an order under one of the civil provisions of the Act.  There is no explicit power for the Commissioner to inquire into the state of competition in an industry, absent allegations of wrong-doing under the Act. A predecessor to the Competition Bureau, the Restrictive Trade Practices Commission, made extensive use of sector inquiry powers under the Combines Investigation Act, most notably inquiring into competition in the oil and gas sector for over ten years, between 1973 and 1985, while ultimately failing to find any evidence of wrongdoing.  In 2000, Industry Canada and Natural Resources Canada jointly sponsored an independent review of the sector by the Conference Board of Canada, which again found the industry to be reasonably competitive.  In response to the introduction by a Private Member of Bill C-452, the grounds for which again focus on competition in relation to gasoline prices, the Competition Bureau has said that it does not need the extra powers.

Canadian Competition Bureau releases new Mergers Handbook and Procedures Guide

Susan M. Hutton

As of November 1, 2010, new internal processing deadlines apply to Canadian merger review by the Competition Bureau, pursuant to the release of the Fees and Service Standards Handbook for Mergers and Merger-Related Matters. The Handbook’s release followed the release of a draft handbook in May, 2010 and extensive public consultations.  A key purpose of the new Handbook is to better align the Bureau’s own (non-binding) internal timelines for processing merger files (so-called “service standards”) with the statutory waiting periods. 

At the same time, in a related Procedures Guide for Notifiable Transactions and Advance Ruling Certificates, the Bureau has clarified that electronic merger notifications will now only be accepted between 9 am and 5 pm Eastern Time on business days for same-day receipt (the Bureau had previously accepted paper filings until 5:00 pm, but electronic filings until midnight for same-day receipt), and waiting periods that end on a weekend or other statutory holiday in the province of Quebec will be extended to expire on the next business day.

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Local waste divestitures approved

Shawn Neylan

On October 5, 2010, the Competition Bureau announced that it has approved the divestiture of waste collection assets of BFI Canada Inc. in Calgary, Ottawa and Edmonton. The divestitures were announced as a remedy in relation to the merger of IESI-BFC Ltd. (BFI) and Waste Services Inc. on June 29, 2010. In each city, there was a different buyer, illustrating that in transactions involving smaller geographic markets, different buyers in each market may be acceptable. Divestitures in other cities are still required under the terms of the consent agreement.

Competition Bureau clears Shaw's acquisition of Canwest Global's Television Business

The Competition Bureau announced on August 13 that it will not challenge the proposed acquisition of the over-the-air and specialty television businesses of Canwest Global Communications Corp. (Canwest) by Shaw Communications Inc. (Shaw). According to the Bureau, the transaction would not likely give rise to a substantial lessening or prevention of competition, being the statutory test for a merger challenge under the Competition Act. The Bureau based its conclusion on a number of factors, including effective remaining competition, the effect of the regulatory environment and a lack of relevant competitive concerns on the part of market participants. Concerns from market participants are typically a very important factor in the Bureau's assessment of the competitive impact of a transaction. In terms of the transaction's potential impact on advertising, the Bureau found that there were numerous alternative options available to advertisers. The transaction remains subject to CRTC approval.

Absolute discharge for price-fixing upheld

Shawn Neylan and Sharon Seung

On March 19, 2010, the Quebec Court of Appeal upheld a decision rendered by the Quebec Superior Court, unconditionally absolving Mr. Daniel Drouin, the accused, of a price-fixing charge. The Court of Appeal dismissed the Crown’s application for leave to appeal on the basis that the lower court judge had not made a reviewable error which would merit judicial review.

In the original Superior Court decision, the court had ordered an absolute discharge. The accused had pleaded guilty to a charge brought against him for fixing the price of gas in the city of Victoriaville in 2005, when he was the supervisor of Les Pétroles Cadrin Inc. In his capacity as supervisor, the accused was responsible for setting the price of gas sold by the service station. The price-fixing charge was brought against the accused following an investigation by the Competition Bureau.
 

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More retail gasoline price fixing charges

The Competition Bureau today announced new criminal charges against 25 individuals and three companies with respect to alleged price fixing in Québec and stated that other investigations with respect to alleged price fixing in retail gasoline outside of Québec were ongoing.  Among other things, the bureau used wiretaps in its investigation.

The bureau stated in a backgrounder that: “[w]hile some of the accused operated under the name or "banner" of a major oil company, it was the local operators of the gas stations who were responsible for setting the final price at the pump. There is no evidence that the three major national oil companies' corporate offices were involved in these offences.”

The bureau acknowledged that: “[s]imilar gasoline prices, or similar changes in the price of gasoline, do not necessarily indicate price-fixing. High prices are a concern under the Competition Act only when they are the result of anti-competitive conduct, such as price-fixing.”

The accused are presumed to be innocent and are entitled to all of the rights and defences provided by law including a fair and public hearing before an independent and impartial tribunal.
 

Savings cards enforcement action

On June 29, 2010, the Competition Bureau announced that Zellers Inc. agreed to take steps to address the Bureau's position that a Zellers' savings card promotion violated the Competition Act.  The Bureau stated that Zellers promoted the savings cards, valued at $10, with the purchase of the movie Avatar on DVD or Blu-Ray and that one of the conditions associated with the savings card was a $50 minimum purchase in order to redeem the savings card. The Bureau claimed that this condition was omitted from the advertising for the promotion and only disclosed after consumers made their initial purchase.

The steps to be taken by Zellers to resolve the Bureau's concerns are as follows:

  • Customers who present a $10 savings card, or a sales receipt for the movie Avatar purchased between April 22 and 24, 2010, will receive a $10 credit with no minimum purchase required;
     
  • The redemption period will be extended to August 6, 2010;
     
  •  Zellers will bring these changes to the attention of consumers through in-store signage and a notice posted on their Web site; and
     
  • Two corrective notices will be published in major Canadian newspapers, and Zellers will advertise the details of the redemption in flyers.

Commissioner obtains waste divestitures in BFI - WSI transaction

On June 29, 2010, the Competition Bureau announced that it had negotiated a merger remedy in connection with the IESI-BFC Ltd. (BFI) and Waste Services Inc. (WSI) transaction.  The remedy is set out in a Consent Agreement filed with the Competition Tribunal. The divestiture will include commercial front end (as opposed to roll off bin) waste collection assets, including customer contracts, vehicles, bins and other equipment in Calgary, Edmonton, Hamilton, Ottawa and Simcoe County, Ontario as well as a waste transfer station located in Hamilton, Ontario.

The Consent Agreement includes specific provisions regarding national accounts, unassignable contracts and the prospect of different buyers in the various markets.

Red light for bid-rigging charge

Shawn Neylan and Sharon Seung

On May 25, 2010, the Quebec Superior Court acquitted Electromega Limited (Electromega), a traffic lights manufacturer, of a bid-rigging charge relating to the supply of LED traffic lights in Quebec.

Prior to the trial, Electromega had brought an application for a stay of proceedings on the basis that the death of its president in September 2009 deprived it of an essential witness and therefore a right to a fair and public hearing pursuant to paragraph 11(d) of the Canadian Charter of Rights and Freedoms. The court concluded that Electromega had not proven that the missing evidence created a prejudice of such magnitude that it amounted to a deprivation of the opportunity to make full answer and defence. Consequently, Electromega’s application was dismissed. However, at trial, the case was dismissed on the basis that the Crown had failed to prove an agreement.

The facts in issue arose in July 2004, when the city of Quebec solicited bids for the supply of LED traffic signals sourced by Gelcore (distributed in Quebec by Electromega), or Dialight (distributed by Tassimco Technologies Inc. (Tassimco)).

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New era at Mergers Branch of the Competition Bureau

Shawn C.D. Neylan

Building on extensive institutional leadership and expertise, three important positions have recently been filled in the Mergers Branch of the Competition Bureau.  Leading the Mergers Branch, Paul Collins has recently been appointed Senior Deputy Commissioner of Competition, Mergers.  Mr. Collins has extensive experience from his many years as a highly regarded competition law advisor in the competition bar in Toronto.  Mr. Collins is second-in-command at the Bureau, reporting directly to the Commissioner of Competition, Melanie Aitken.

The Mergers Branch includes three divisions and the Merger Notification Unit, the heads of which report to Mr. Collins.  Ann Wallwork has been Assistant Deputy Commissioner of Competition for Division A for a number of years, and also assumed the role of Acting Senior Deputy Commissioner of Mergers between December 2009 and May 2010. 

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Commissioner paints bright fence around cartel conduct

In the text of a May 4, 2010 speech that was released by the Competition Bureau on June 7, 2010, the Commissioner of Competition, Melanie Aitken, has affirmed the guidance in the Competitor Collaboration Guidelines regarding the care with which she will proceed under the cartel provision (section 45 of the Competition Act).  The Commissioner said:     “[l]et me be crystal clear: if an agreement among competitors does not constitute a naked agreement to fix prices, allocate markets, or restrict output, that agreement will be subject to – at most, and only – a separate, civil review requiring proof of economic harm.” 

The Commissioner also confirmed the written guidance that certain types of agreements will not be the subject of cartel prosecutions: “we have explicitly removed whole categories of agreements from the scope of criminal enforcement action, such as dual distribution agreements, franchise agreements and non–competes, unless, of course, the agreement is just a sham. We are doing our best to put a fence around the conduct we would consider investigating as criminal, and to paint that fence in bright, bold colours.”

These unequivocal statements of the Commissioner will be welcomed by businesses who are considering legitimate collaborative conduct which may raise issues under the new and potentially very broad cartel law.   Still, it must be noted that the Commissioner’s guidance is not binding and will not remove the risk of private actions in which cartel conduct is alleged.

The Commissioner also discussed merger review issues and her case against the Canadian Real Estate Association in the May 4, 2010 speech.

New Bureau policy for information in hostile transactions

On June 2, 2010, the Competition Bureau released a policy statement regarding its approach to the disclosure of information to companies involved in hostile transactions. Bidders and targets in hostile or unsolicited transactions can have competing interests, posing challenges for the Bureau when it comes to complying with its confidentiality obligations under the Competition Act. Although the Bureau has an explicit obligation to immediately notify a target of the date upon which the Bureau receives a pre-merger notification filing from the bidder, the Act does not otherwise address the issue of information sharing in the context of hostile or unsolicited transactions.

The Bureau's new policy statement sets out that when the Bureau provides to one party information regarding such matters as the anticipated duration of the Bureau review and its views on whether the transaction would substantially lessen or prevent competition, it will also “strive to disclose” that information “equitably” with the other party, subject to the restrictions in the Competition Act.  There is therefore a stance favouring the sharing of information but which also recognizes that there will be limitations required by law in some cases.

Waste firm divests Alberta landfill

On May 31, 2010, the Competition Bureau announced that Clean Harbours, Inc., a US-based company that provides environmental waste services in Canada, had implemented a merger remedy as required by the terms of its July 2009 agreement with the Commissioner of Competition.  The agreement required the divestiture of the Pembina Area Landfill in Alberta which Clean Harbours had acquired as a result of its 2009 acquisition of Eveready Inc., an Alberta-based company that also provided environmental waste disposal services.  In July 2009, the Bureau stated that it had concluded that Clean Harbours' acquisition of Eveready would likely prevent or lessen competition substantially in respect of Class I solid hazardous waste disposal in Alberta. In particular, the Bureau was concerned that the transaction “could result in higher prices for solid hazardous waste disposal” since Clean Harbours would have owned the only two Class I hazardous waste landfills in the province.

The landfill was sold to Secure Energy Services Inc.  Although the Initial Sale Period (during which Clean Harbours would have conduct of sale) set out in the agreement is still confidential, it is possible that it was considerably shorter than the 10-month period it took to complete the divestiture.  If so, the Commissioner may have agreed to one or more extensions of the Initial Sale Period so as to allow for the orderly sale of the business by Clean Harbours, rather than resorting to a forced sale by a divestiture trustee as provided for in the agreement if a sale was not completed by Clean Harbours within the Initial Sale Period.
 

Bureau issues draft revised Mergers Fee and Service Standards Handbook

On May 31, 2010, the Competition Bureau released for consultation a draft revised Fee and Service Standards Handbook for Merger-Related Matters. The Bureau proposes changes to timelines as well as some adjustments to the assessment of transaction complexity. Service standards are wholly distinct from statutory waiting period under the merger filing provisions of the Competition ActThey set out, depending on substantive complexity, non-binding maximum time periods within which the Bureau will endeavour to complete a merger review.

Merger reviews are designated as being either “non-complex”, “complex”, or “very complex”. The draft Handbook proposes:

  • the “non-complex” service standard period will remain at 14 days (practically speaking, there is probably not much room for a shorter period)
  • the “complex” service standard period will be reduced from 70 days to 60 days (this reflects the Bureau’s record of generally completing complex reviews in substantially less than 70 days)
  • the “very-complex” service standard period will also be reduced from 5 months to 120 days (reflecting the bureau’s overall success in completing reviews in less than 5 months but still a courageous move given the challenges that may be associated with such reviews)
  • the introduction of a new service standard period to apply where the Bureau issues a formal Supplementary Information Request (“SIR”) – the new period will be 30 days following the completion of the parties’ response to the SIR (a reasonably tight time line for the Bureau to impose on itself).

The Bureau will accept comments on the draft until July 31, 2010.

Competition Bureau releases Merger Review Performance Report

On May 31, 2010, the Competition Bureau released its Merger Review Performance Report which provides an update on the performance of the Bureau's Mergers Branch.

For the Bureau’s year of April 1, 2009 - March 31, 2010, the Bureau commenced a total of 216 merger reviews. Reviews were commenced after receiving merger notifications under Part IX of the Competition Act or requests for advance ruling certificates under s. 102 of the Competition Act or for other reasons.  Merger review numbers were slightly less than previous years.  The Bureau commenced 239 merger reviews in the 2008 – 2009 year and 337 merger reviews in the 2007 – 2008 year (the highest number since at least the 2003 – 2004 year).

The Bureau also reported on the breakdown of complexity designations. In the 2009 – 2010 year the Bureau classified 173 transactions (84%) as non-complex (subject to a non-binding maximum 2 week review period), 27 transactions (13%) as complex (subject to a non-binding maximum 10 week review period), and 6 transactions (3%) as very complex (subject to a non-binding maximum 5 month review period).  These results were generally in line with previous years.  From 2003 to 2010, approximately 88% of merger reviews were classified as non-complex, 10% as complex and 2% as very complex. 

The Bureau reported that in the 2008 – 2009 year it completed its merger reviews within the designated review period 93% of the time for non-complex transactions, 89% of the time for complex transactions and 83% of the time for very complex transactions.  Thus, while exceptions do exist, overall the Bureau completes its merger reviews within the applicable review period in a high percentage of cases.

It is important to keep in mind that review periods are based on non-binding review periods set out in the Bureau’s Fee and Service Standards Handbook. These are wholly distinct from the statutory waiting periods set out in Part IX of the Competition Act.

Joint venture cartel exemption of the United States to apply in Canada?

Canada’s recent move to a stricter cartel law that does not require proof of market effect is considered to be a shift towards American cartel law, where hard core cartels receive per se treatment. The new Canadian law can raise complicated issues with respect to joint venture activities. It defines criminal cartels as agreements between “competitors” to engage in the activities of fixing price, allocating markets or controlling supply. These activities may also arise in the context of what would otherwise be considered legitimate joint ventures. Although the Commissioner’s Competitor Collaboration Guidelines indicate that the new parallel reviewable matter provision for agreements that substantially lessen or prevent competition is the preferred approach for the assessment of legitimate joint venture agreements, she nonetheless has the discretion to recommend that such agreements be subject to criminal prosecution. Private litigants may also bring private actions in respect of joint venture activities that they allege contravene the cartel provision.

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Commissioner of Competition and Director of Public Prosecutions sign Memorandum of Understanding

On May 14, 2010, the Commissioner of Competition, Melanie Aitken, and the Director of Public Prosecutions, Brian Saunders, announced that they entered into a Memorandum of Understanding (MOU). The MOU establishes the guiding principles of the relationship between the Competition Bureau and the Public Prosecution Service of Canada (PPSC). Stakeholders now have a clearer understanding of the working relationship between the Bureau investigators and PPSC counsel, such as their respective roles and responsibilities at different stages of an investigation. The MOU was not intended to change the relationship between the two organizations, but to crystallize their existing relationship.  This announcement continues the Bureau's policy of providing transparency where possible.

Competition Bureau confirms enforcement approach to new Guidelines on "Made in Canada" and "Product of Canada" claims

The Competition Bureau today clarified its enforcement approach with respect to the Bureau's revised Enforcement Guidelines for "Product of Canada" and "Made in Canada" Claims released in December 2009. The Guidelines will be an important resource for businesses who need to understand the Bureau's approach in assessing "Product of Canada" and "Made in Canada" claims for non-food products under the false or misleading representations provisions of the Competition Act, the Consumer Packaging and Labelling Act and the Textile Labelling Act. The Guidelines will take effect on July 1, 2010 and a six-month transitional period will follow. During this period, the Bureau states that it will only consider enforcement action in circumstances of bad faith.  In other cases, the Bureau will limit its response to apparent non-compliance to education and warning letters.

Reitmans agrees to revise Smart Set promotion

Today,the Competition Bureau announced that Reitmans (Canada) Limited, a major Canadian clothing retailer, will modify a promotion, alleged to be misleading, offered by Smart Set, a division of Reitmans. The promotion in question consisted of a "Savings Pass" offered to customers of Smart Set. There were conditions associated with the redemption of the "Savings Pass" that the Bureau viewed as not being disclosed in Smart Set's in-store signage or Smart Set's Web site. The Bureau considered this to be contrary to the false or misleading representations provisions of the Competition Act.

Solvay Chemicals fined $2.5 Million for price-fixing

The Competition Bureau announced today that Solvay Chemicals Inc. has been fined $2.5 million by the Federal Court after the company pleaded guilty to criminal charges for fixing the price of hydrogen peroxide sold in Canada. Solvay Chemicals Inc. is the second party to plead guilty in this alleged price-fixing conspiracy. The Bureau's investigation of other companies alleged to be participants in the conspiracy is ongoing.

Merger remedy in Danaher acquisition of MDS

The Competition Bureau announced today that it has reached an agreement with Danaher Corporation to resolve its concerns with respect to Danaher's acquisition of MDS Inc.'s Analytical Technologies business. Danaher has also signed a consent decree with the United States Federal Trade Commission, which the Bureau determined was sufficient to adequately resolve competition concerns in Canada.

Pursuant to the U.S. decree, Danaher agreed to a divestiture of MDS's Arcturus brand of laser microdissection (LMD) instruments, reagents and consumables to Life Technologies Corporation. The divestiture package includes all relevant Canadian intellectual property rights relating to Arcturus LMD instruments in Canada.

Bamboo labelling and advertising

The Competition Bureau announced today that more than 450,000 textile articles have been re-labelled and over 250 Web pages corrected as a result of the Bureau's efforts to ensure that textile articles derived from bamboo are accurately labelled and advertised. The Bureau took this initiative because of concerns over potentially misleading labelling and advertising in the marketplace with respect to textile articles labelled "bamboo".

Tassimco Technologies pleads guilty to bid-rigging in Quebec City

Today the Competition Bureau announced that Tassimco Technologies Canada Inc.has pleaded guilty before the Superior Court of Quebec to a bid-rigging charge in respect of the sale and supply of light emitting diode modules for traffic signals. The company was fined $50,000 and is subject to a court order requiring the implementation of a corporate compliance program and the education of employees about bid-rigging and conspiracy offences under the Competition Act.

Competition Bureau Requires Divestitures by Ticketmaster

The Competition Bureau announced today that it has reached a consent agreement with Ticketmaster Entertainment, Inc. and Live Nation, Inc. that resolves the Bureau's concerns about their proposed merger. The agreement requires divestitures by Ticketmaster to facilitate competition in the ticketing services market.  It also requires Ticketmaster to sell its Paciolan ticketing business and to licence its ticketing system for use by a third party event promoter.  The consent agreement also contains some behavioural provisions.
 

Competition Bureau Reaches Agreements with Hot Tub Retailers on ENERGY STAR Claims


The Competition Bureau announced today that it has entered into consent agreements with two Canadian hot tub retailers, Polar Spas (Edmonton) Ltd. and Sleepwise Inc., regarding claims that certain hot tub products were associated with the ENERGY STAR Program.

Bureau Guidelines focus on consumer rebate promotions

Kim D.G. Alexander-Cook


On September 21, 2009, the Competition Bureau released its Enforcement Guidelines on Consumer Rebate Promotions. These Guidelines set out the Bureau's (non-binding) interpretation of both the criminal and the civil provisions relating to false or misleading representations under the Competition Act, the Consumer Packaging and Labelling Act, and the Textile Labelling Act as applied to consumer rebate promotions, and include examples of recommended best practices.
 

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New Bill to enhance Commissioner's investigative powers

Michael Kilby

On June 18, 2009, the Minister of Justice tabled a new statute, Bill C-46, also known as the Investigative Powers for the 21st Century Act, proposing amendments to the Criminal Code, the Mutual Legal Assistance in Criminal Matters Act, and the Competition Act. The stated purpose of the new Bill, which has received first reading in Parliament, is to enhance the investigative powers of law enforcement agencies in order that they may keep pace with modern communications technologies. Amendments to the Criminal Code are intended to give investigators better tools to perform complex investigations into communications that have occurred over the Internet and/or electronic communication networks. Among other things, Bill C-46 will create a new concept of "transmission data," and extend investigative powers currently restricted to telephone data to all means of telecommunications. The Bill will enhance the power of investigators to seek court orders to compel the production of data with respect to the transmission of communications, and the location of transactions and individuals. Government investigators will also be given powers to seek orders for the preservation of electronic evidence and warrants to help track transactions and individuals.

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Personnel changes at the Competition Bureau

Commissioner of Competition Sheridan Scott announced in December that she was stepping down as Commissioner of Competition, head of Canada's competition enforcement agency, the Competition Bureau - to enter private practice.  The Government has announced that Melanie Aitken, previously Senior Deputy Commissioner, Mergers Branch has taken over as Interim Commissioner.  Adam Fanaki, a former private competition law practitioner who has been Special Counsel to the Commissioner for the past two years, takes over as Acting Senior Deputy Commissioner, Mergers Branch.

Bureau revises corporate compliance bulletin

Jennifer MacArthur

Canada's Competition Bureau has published a revised Information Bulletin on Corporate Compliance Programs, in conjunction with the publication of a draft bulletin on trade associations, described in the preceding article.

The original information bulletin was issued by the Bureau in 1997, and the updated version largely elaborates on the principles set out in the original, but with some notable changes.  In particular, the revised bulletin has been expanded to include a template compliance program, a template "certification letter" for execution by employees following training, and a "due diligence checklist" for senior management. Although the revised bulletin has no legal effect and is not binding on the Bureau, it provides businesses with guidance as to the elements of a credible and effective corporate compliance program - which could prove important in the Bureau's consideration of a recommendation for leniency or alternative resolutions, should prosecution under the Competition Act nonetheless become a possibility.

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Bureau publishes new Predatory Pricing Enforcement Guidelines

Susan M. Hutton

On July 21, 2008, the Competition Bureau (Bureau) published its new Predatory Pricing Enforcement Guidelines (New Guidelines), following the issuance of draft guidelines in October, 2007 and a period of public consultation.1 The New Guidelines supersede all previous statements of the Bureau and the Commissioner of Competition on the subject.

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New Canadian standards for industry and advertisers: Bureau releases Environmental Claims Guide

Kim D.G. Alexander-Cook

On June 25, 2008 Canada's Competition Bureau (Bureau) released Environmental Claims: A guide for industry and advertisers (Environmental Claims Guide or Guide), its new environmental claims guidance document produced in partnership with the Canadian Standards Association (CSA).

The Environmental Claims Guide is meant to provide industry and advertisers with best-practices guidance for compliance with the prohibitions against false or misleading advertising in Canada's Competition Act, Consumer Packaging and Labelling Act and Textile Labelling Act, in addition to providing industry with a guide to the application of the CAN/CSA-ISO 14021, Environmental labels and declarations - Self-declared environmental claims (Type 11 environmental labelling) regulations.1

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Bureau issues draft information bulletin on sentencing, leniency in cartel cases

Danielle Royal

The Competition Bureau also recently issued a Draft Information Bulletin on Sentencing and Leniency in Cartel Cases for public consultation.1 The Bulletin sets out the factors that the Commissioner of Competition and the Bureau will consider in making recommendations to the Director of Public Prosecutions (DPP) that those accused of criminal cartel and bid-rigging offences under the Competition Act2should be treated leniently in sentencing.

The Bureau's goal is to establish a transparent and predictable Leniency Program to complement the Bureau's existing Immunity Program. Under the Immunity Program, full immunity from prosecution is available, subject to certain conditions, to the first business organization or individual that comes forward to assist the Bureau with an investigation into the activities of a cartel or bid-rigging scheme - in other words, full immunity is available to the "first in."

In the past parties who co-operated with the Bureau's investigations in a timely and valuable way have also qualified for lenient treatment in sentencing. The formal Leniency Program clarifies the terms on which leniency will be made available in the future, on the expectation that parties will then be more likely to come forward and cooperate with investigations.

The Bulletin is divided into three parts. The introduction provides an overview of how the Bureau, the Act and the cartel provisions operate, and the respective roles of the Commissioner of Competition, the DPP and the Courts in enforcing the Act.  The second part of the Bulletin sets out the general principles of sentencing that the Courts will consider, and which the Bureau therefore considers in the course of making sentencing recommendations. The third part of the Bulletin describes the more specific terms on which the Bureau will recommend a reduced sentence for participants in the Leniency Program as a result of cooperation and assistance during the investigation.  This article focuses on the second and third parts of the Bulletin.

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Canadian Bureau bulletin on search and seizure practices

The Competition Bureau recently published its Information Bulletin on Sections 15 and 16 of the Competition Act, which sets out the Bureau's practices and policies under the Competition Act's search warrant provisions and related powers for the search of computer systems. The Bulletin sets out what persons or businesses should expect from the Bureau during a search and with respect to the handling of any "records or other things" seized as a result of the search.

Although unable to provide for all eventualities, in our view the Bulletin provides general insight into the Bureau's approach to section 15 search warrants and the related use of computer systems. The Bulletin does not, however, reveal any material changes in the search procedures utilized by the Bureau in recent years.

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New draft guidance on multi-level marketing and pyramid selling

Kim D.G. Alexander-Cook

On March 31, 2008 the Commissioner of Competition (the Commissioner) issued a draft Information Bulletin entitled Multi-level Marketing and Scheme of Pyramid Selling, Sections 55 and 55.1 of the Competition Act.  Once finalized, this bulletin will replace existing 1996 guidance on the same topic.  Written comments on the draft Bulletin will be accepted by the Competition Bureau until June 30, 2008.
 

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Brian Gover appointed to advise the bureau on section 11

Susan M. Hutton

March 3, 2008:  Brian Gover, a partner at Stockwoods LLP Barristers, a former criminal crown counsel and experienced trial lawyer, has been appointed to advise Sheridan Scott, Commissioner of Competition, and John Sims, Deputy Minister of Justice, on the Bureau's section 11 process. 

In particular, he is to report on the standard of disclosure required in ex parte applications under s. 11 for orders for the production of documents and information under the Competition Act, and to make recommendations to assist in ensuring that the Competition Bureau makes adequate disclosure to the courts in ex parte section 11 proceedings.

The Bureau was roundly rebuked by the Federal Court in a January, 2008 decision setting aside section 11 orders issued by it in November, 2007 in the ongoing Labatt/Lakeport merger inquiry, saying that the information filed by the Commissioner had been "misleading, inaccurate and incomplete." For further detail see "Substantial disclosure obligations for production orders: Federal Court rebukes Commissioner" (The Competitor, February 11, 2008). Mr. Gover is to report by June.

Canadian Bureau releases draft bulletin on trade associations

On October 24, 2008, the Competition Bureau (the Bureau) released its draft Information Bulletin on Trade Associations (the Bulletin) for public comment.  

According to the Bureau, participation in trade associations - particularly those whose members compete - carries with it an inherent risk that the association may be used as a forum for anti-competitive conduct, particularly anti-competitive agreements or collective action that violates the criminal conspiracy (cartel) provision of the Competition Act.  "Association activities that deal with subjects such as pricing, customers, territories, market shares, terms of sales and advertising restrictions" are of particular concern to the Bureau. The draft Bulletin aims to provide guidance to trade associations on how best to ensure compliance with the Competition Act; it calls upon trade associations to "ensure that appropriate safeguards are implemented" to guard against anti-competitive conduct.

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Substantial disclosure obligations for production orders: Federal Court rebukes Commissioner

On January 28, 2008, at the request of Labatt Brewing Company Limited (Labatt), the Federal Court set aside its own order (of November 8, 2007) requiring Labatt to produce documents related to the Commissioner's ongoing investigation of the Labatt/Lakeport merger (the merger), which closed on March 29, 2007. The original order was obtained on an ex parte (without notice to Labatt) application by the Commissioner of Competition (the Commissioner) under Section 11 of the Competition Act1 (the Act). The Court did so on the grounds that the disclosure made to secure the order was misleading, inaccurate and incomplete and, had complete disclosure been provided, the November 8, 2007 order would not have been granted (at least not on the terms on which it was granted). This most recent decision is just the latest in a series of decisions against the Commissioner respecting her investigation into the merger2 and raises a number of interesting questions about how this may affect the Competition Bureau's approach to formal investigations going forward.

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Commissioner swallows defeat in beer battle

Shawn Neylan and Michael Kilby

On January 22, 2008, the Federal Court of Appeal dismissed the appeal by the Commissioner of Competition in the Labatt/Lakeport merger, delivering its judgment from the bench, after having heard arguments only from the Commissioner's counsel.
 

The Tribunal decision

The appeal was from an order of the Competition Tribunal made on March 28, 2007, dismissing the Commissioner's application under s.100 of the Competition Act to delay closing of the acquisition of Lakeport Brewing Income Fund (Lakeport) by Labatt Brewing Company Limited (Labatt). This transaction closed on March 29, 2007. Shawn Neylan of Stikeman Elliott LLP led the competition team for Lakeport, supported by Michael Kilby. Litigation partner Katherine Kayargued the case for Lakeport at the Tribunal.

The determinative issue in the Tribunal's decision was whether the potential post-closing remedies of dissolution and divestiture could effectively remedy a substantial lessening of competition (SLC) assuming an SLC were later established, since at the time of the hearing the Commissioner had not concluded that there would be a SLC as a result of the transaction, but was requesting more time to complete her review. The Tribunal found that the Commissioner had not met the burden of establishing that closing would substantially impair the Tribunal's ability to remedy an SLC, and accordingly dismissed the Commissioner's application. The Tribunal pointed out that Canadian merger remedies need not restore the pre-merger situation (as in the U.S.), but need only restore competition to the point that there is no substantial lessening of competition, a point which the Tribunal's decision indicated that the Commissioner's evidence had not addressed.

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Canadian Report calls for changes in the self-regulated professions

Susan M. Hutton

Canada's Competition Bureau released its report, Self-regulated professions - Balancing competition and regulation (the Report) on December 11, 2007 (see www.competition.gc.ca). According to a recent study by the Conference Board of Canada, labour productivity of the professions in Canada is about half that of the professions in the United States. Citing an OECD report that identified decreasing regulation of the professions as one of five key ways to improve the future prosperity of Canada, the Bureau report has specific proposals for improvement.

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Sharpening Canada's competitive edge

Shawn Neylan

On October 30, 2007 the federal government's Competition Policy Review Panel (CPRP) issued its consultation paper "Sharpening Canada's Competitive Edge" (the Consultation Paper). The government established the CPRP in the Spring of 2007 to undertake a review of Canada's competition policies and its framework for foreign investment policy. The government's objective is to ensure that Canada's policies keep pace with changes in the global economy (including the opening of national markets, the increase in global investments and the orientation of production around global supply chains) in order to create a highly competitive national economy and help create more and better jobs for Canadians.

The Consultation Paper is thoughtful, well written and comprehensive. It is designed to facilitate discussion that will enable the CPRP to provide recommendations to the government on how to enhance Canadian productivity and competitiveness. It notes that the CPRP will no longer consider issues related to state-owned enterprises and national security as the government has indicated its intent to provide more immediate attention to these issues.

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Canadian Bureau releases Generic Drug Sector Study

Kim D.G. Alexander-Cook

On October 29, 2007 the Competition Bureau ("Bureau") released its Canadian Generic Drug Sector Study, initiated in September, 2006, to identify areas where changes in the market framework might attain greater benefits through competition. The study was initiated in response to several studies that had found the price of prescription generics to be high in Canada compared to other countries.1

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New Canadian Bulletin on the protection of confidential information

Michael Kilby

On October 10, 2007, following consultations that began in 2005, the Competition Bureau (the Bureau) published a new information bulletin outlining its policies on the communication of confidential information (the New Bulletin). The New Bulletin updates a previous information bulletin on the same subject (published in 1995) in order to provide more practical guidance and to reflect subsequent amendments to the Competition Act (the Act) as well as increasing international cooperation between competition authorities.

Confirming the bulletin issued in 1995, the Bureau states that its general policy is to minimize the extent to which confidential information is communicated outside the Bureau, and that it will be vigilant in avoiding the communication of confidential information unless it is specifically permitted by the Act, and even if it is permitted, will consider whether the disclosure is advisable or necessary.

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SCC divided on key issues of copyright law and policy: Grey marketer prevails

Justine Whitehead, D. Jeffrey Brown

On July 26, 2007, the Supreme Court of Canada (SCC) issued its decision in the case of Kraft Canada Inc. v. Euro Excellence Inc. The SCC allowed the appeal of Euro Excellence, thereby disallowing Kraft Canada's claim of secondary infringement of copyright against Euro Excellence.

While the SCC's decision to allow the appeal was made by a margin of seven to two, a deeply divided SCC produced four sets of reasons in reversing the decisions of both the Federal Court of Appeal (2005 FCA 427) and Federal Court (2004 FC 652). The decision raises interesting questions about the interface of intellectual property and competition law, in particular the extent to which copyright law can and should be used to limit competition from grey-market imports.

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Canada and the EU: Continued Cooperation and Convergence?

An extract from The European Antitrust Review 2008, a Global Competition Review special report.

Susan Hutton

Any discussion of the enforcement cooperation activities of the Canadian Competition Bureau (the Bureau) and the Directorate General for Competition of the European Commission (the Commission) must at this stage focus not only on communications between them but also on results. It would appear that after years of working together in both bilateral and multilateral fora on the development of competition law enforcement policies and practices, and of cooperationin the investigation of individual cases, different results are still sometimes apparent. That said, the ultimate goal of consistency and convergence among the agencies can only be achieved through continued such dialogue and cooperation, and overall the glass should likely still be viewed as half full.

Commissioner Signals Interest in Innovation Issues

Shawn C.D. Neylan

Sheridan Scott, the Commissioner of Competition, has recently stated that, together with Industry Canada and the Canadian Intellectual Property Office, the Competition Bureau has commissioned a review paper of several major issues arising at the interface between competition law and intellectual property law. This project will include a top level symposium early in 2007.

The issues identified by the Commissioner at this time will clearly be viewed as significant in a variety of industries that heavily invest in innovation. The issues under review include:

  • Authorized generic drugs - the extent to which brand-name pharmaceutical companies have launched authorized generics, and the impact this may have had on the entry of other generics.
  • Collective management of copyright -does the current system of copyright collectives minimize transaction costs and encourage new works?
  • Official marks - the impact of the current system on competition, and whether competition principles can improve the system.
  • IP rights extension - the ways in which firms have attempted to extend their IP rights.
  • Compulsory licensing - do the current statutory provisions meet their legislative intent? What alternatives are available?
  • Tying - when can bundling practices extend IP protection and block innovation?
  • International context - a comparison of Canada's patent regime with its international obligations, and consideration of whether the current regime could be improved.

Innovation is obviously a very important part of the economy. IP rights and competition principles can in some cases conflict, or be difficult to reconcile. The Commissioner's interest in developing a better understanding of these issues can only be viewed as positive. However, there is much room for debate on most if not all of the above issues and interested parties - particularly innovation-based businesses - will want to follow this closely.

For more information, please contact the author, Shawn C.D. Neylan, or your Stikeman Elliott representative, or any other member of the Competition/Antitrust Group.

Changes to Counter-Intuitive Prices (Inputs to Dispatch Scheduling and Pricing Process)

(MR-296)

In addition to the foregoing amendments, the IESO Board unanimously approved further amendments to remedy counter-intuitive pricing. The purpose of these amendments is to allow the IESO to make changes to real-time pricing signals in order to hopefully reduce the instances of counter-intuitive pricing. The proposed amendments are two-fold. First, emergency energy purchases may produce counter-intuitive pricing because they reduce demand in constrained sequences by an amount equivalent to the emergency energy purchase; the dispatch scheduling algorithm automatically carries that demand reduction to the market schedule which thereby depresses the market price. As such, section 3.2.1.4 in Appendix 7.5 will be amended so that demand in the market schedule is not reduced when the IESO makes emergency energy purchases (although demand will still be reduced in the constrained schedule so that other resources are dispatched appropriately). Second, other emergency control actions such as voltage reductions or load cuts may produce counter-intuitive pricing because they result in an actual decrease in electricity demand. Accordingly, a new section 3.2.1.12 will be added to Appendix 7.5 to enable the IESO to increase or decrease demand in the market schedule to offset the counter-intuitive impact on market pricing and market signals triggered by emergency control actions.

LINKS:

IESO Board Decision
Technical Panel Recommendation on Amendment Proposal
Amendment Proposal R00-R01 - Request for Stakeholder Review and Comment
Amendment Submission

Draft ''Information Bulletin on the Communication and Treatment of Information under the Competition Act'' Released for Comment

Vicky Eatrides

The Competition Bureau (the Bureau) is seeking public comment on a revised "Information Bulletin on the Communication and Treatment of Information under the Competition Act (Draft for Consultation, August 2005)". As the original policy was introduced in 1995, the revised bulletin reflects amendments made to the Competition Act (the Act) in 2002. The Bureau notes, in particular, that section 29 of the Act also protects information provided voluntarily pursuant to the Act, rather than only protecting information obtained using formal powers, as had previously been the case.

 

The revised bulletin also provides examples illustrating when, in the Bureau's view, information can be communicated to third parties under the various exceptions to section 29. It also clarifies the treatment of information when it is communicated to or received from foreign authorities. Finally, the revised bulletin includes a section discussing other matters where the treatment of information is of concern; for example, the Bureau's Immunity Program, the whistle-blowing provisions, binding written opinions, the right of access to records, requests under the Access to Information Act, private actions for damages and private access to the Competition Tribunal.

 

The Bureau will accept comments on the revised bulletin until December 2, 2005

Canada and Japan Sign Competition Cooperation Agreement

A cooperation agreement to improve competition law enforcement between the governments of Canada and Japan was signed on September 6, 2005. The agreement is similar to existing agreements that Canada has signed with the United States, the European Communities and Mexico. It will come into force on October 6, 2005, and is available on the Competition Bureau's website.
 

Consent Agreement Process Under Attack

A key aspect of Canada's consent procedure for settling matters with the Commissioner of Competition (the Commissioner) before the Competition Tribunal (the Tribunal) has come under attack. The procedure was streamlined in 2002, with a change from the issuance by the Tribunal of an order on consent, often following a hearing, to the simple registration of a consent agreement - which then has the force of an order of the Tribunal.

There are several differences between the old and the new procedures, one being that supporting evidence is no longer filed with the Tribunal, and another being that the scope for intervention by third parties is (or was thought to have been) significantly narrowed. Previously, intervenors in consent order proceedings could potentially delay them for months, as in the case of Canada (Director of Investigation and Research) v. Imperial Oil Ltd. (1989), 45 B.L.R. 1 (Comp. Trib.), or even derail them altogether. Under the new procedures, potential intervenors are limited to an application to vary or rescind a consent agreement, within sixty days after its registration. In addition, they must show that they are directly affected by the agreement, and that the terms of the agreement "could not be the subject of an order of the Tribunal."

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Advisory Panel of Experts to Assess the Role of Efficiencies

Susan M. Hutton and Patricia Martino

In the Fall of 2004, Canada's Commissioner of Competition (the "Commissioner") called for comments on a Consultation Paper issued by the Competition Bureau which dealt with the treatment of efficiencies under the Competition Act.1 On March 18, 2005, pursuant to calls by the Canadian Bar Association and others for more in-depth analysis, she announced that an advisory panel of experts had been appointed to assess the role that efficiencies should play "in the context of Canada's economy in the 21st century".

A springboard for this debate was the decision in The Commissioner of Competition v. Superior Propane,2in which the Federal Court of Appeal ultimately upheld the Competition Tribunal's decision that section 96 of the Act applied to save an otherwise anti-competitive merger, because the evidence showed that the efficiencies likely to be generated by the merger outweighed its likely anti-competitive effects. In so doing, the Federal Court of Appeal rejected the use of the "total surplus" standard for the measurement of anti-competitive effects in all cases. The appropriate treatment of efficiencies has also been the subject of debate in other countries, including the European Union, where Section VII of the EC Horizontal Merger Guidelines sought to clarify the European approach, and more recently, the United States, where the Antitrust Modernization Committee will study whether current policies are appropriate and effective.

The Canadian Advisory Panel on Efficiencies will consider the general economic and business implications of the current treatment of efficiencies under the Competition Act as well as the characteristics required of Canada's competition policy in order to ensure that efficiencies are properly addressed. The Panel is to report to the Commissioner by June, 2005 - a somewhat short time-frame for such a task.

FOOTNOTES:

1] See the The Competitor, October 2004.

2] (2000), 7 C.P.R. (4th) 385 (Comp. Trib.); revd Canada (Commissioner of Competition) v. Superior Propane Inc. (2001), 11 C.P.R. (4th) 289, [2001] F.C.J. No. 455 (F.C.A.); (leave to appeal to S.C.C. refused 14 C.P.R. (4th) vii, 202 D.L.R. (4th) vi, 278 N.R. 196; reconsidered Canada (Commissioner of Competition) v. Superior Propane Inc. (2002), 18 C.P.R. (4th) 417 (Comp. Trib.), affd [2003] F.C.A. 53.

Canada and Japan Reach Agreement in Principle for Competition Law Co-operation

Canada and Japan recently announced that they have agreed on the major elements of a draft cooperation agreement. The draft agreement is modeled on those already in place between Canada and the U.S., the U.K., and the E.U. It is to include five elements: notification of enforcement activities that may affect important interests of the other party; co-operation in the form of assistance to one another's competition authorities; co-ordination of enforcement activities in mutually related matters; "positive comity" through requests for enforcement action to be taken by the other party in relation to conduct affecting important interests of the requesting party; and "negative comity" through the careful consideration of important interests of the other party in enforcement activities.

The draft agreement is the product of several rounds of negotiations that were first announced in November 2002. With the major elements settled, it still remains for these elements to be put into the form of a definitive agreement.

New Initiatives Announced by Canada's Commissioner of Competition

Susan M. Hutton and Patricia Martino

In her first address to the National Competition Law Section of the Canadian Bar Association since her appointment last January, the Commissioner took the opportunity in her annual address to the fall Competition Law Conference in Ottawa on September 23, 2004 to announce several new policy initiatives. Of particular note to competition law practitioners and in-house counsel are the following:

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Tribunal Denies CWS Application

On June 28, 2004, the Competition Tribunal denied an application by Canadian Waste Services Inc. (CWS) (Now Waste Management of Canada Corporation) to rescind an October 2001 order under section 92 (mergers) requiring the divestiture of the Ridge landfill in Chatham, Ontario. In May 2003, CWS applied to the Tribunal to set aside the divestiture order under s. 106 of the Competition Act on the basis that the circumstances that led to the making of the order had changed, and that in the present circumstances, the Tribunal would not have made the order. The Tribunal's decision is currently under appeal. Although the Tribunal's recent decision terminated the July 10, 2003 stay of its order to divest the Ridge landfill, on August 6, 2004, the Federal Court of Appeal granted a stay of the divestiture order pending appeal of the Tribunal's recent s. 106 decision. The appeal is scheduled to be heard on November 4, 2004.

Competition Bureau Closes Inquiry IntoAlleged Misuse of Drug Patent Rules

Catherine Mckenna and Jeffrey Brown

On February 27, 2004, the Competition Bureau announced that it had closed its inquiry into alleged misuses of Canada's drug patent rules by brand name pharmaceutical companies. Despite expressing some concerns about whether the appropriate balance existed in Canada between "protecting intellectual property rights and facilitating a competitive supply of pharmaceutical products for Canadian consumers", the Bureau concluded that the Competition Act "is not the appropriate vehicle for resolving what amounts to a patent dispute between two firms."1

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New Commissioner of Competition for Canada

BY SUSAN HUTTON

The Government of Canada confirmed on Monday, November 10, 2003 that the out-going Prime Minister, Jean Chrétien, has filled the position of Commissioner of Competition, with the appointment of Sheridan Scott, currently Chief Regulatory Officer for Bell Canada. The position, Canada's senior competition law enforcement post, has been vacant since the August 14, 2003 appointment of Konrad von Finckenstein to the bench of the Federal Court of Canada. Although not a Bureau insider, Ms. Scott has extensive public and private sector credentials, having clerked at the Supreme Court of Canada before serving with the Canadian Radio-television and Telecommunications Commission (during which time the CRTC held, among other things, land-mark hearings on long distance de-regulation) and the Canadian Broadcasting Corporation, and is well-known in Ottawa circles. The appointment has been received positively.
 

Competition Act amendments: Bureau to issue discussion paper on the next round

Comments have been invited on the government's proposed amendments to section 45 of the Competition Act, to be outlined in a June, 2003 discussion paper.
At a recent conference, senior Competition Bureau officials announced the forthcoming release of a discussion paper outlining the Government's proposals on the next round of amendments to the Competition Act. The paper, which is expected to be released in late June 2003, would affect four areas of the Competition Act by:

  • strengthening enforcement of the civil provisions to achieve deterrence and encourage compliance;
  • introducing a dual criminal/civil track review of agreements between competitors;
  • replacing the criminal pricing provisions relating to price discrimination, predatory pricing and promotional allowances with a civil provision containing a competition effects test; and
  • enabling the Commissioner of Competition to ask the Canadian International Trade Tribunal (CITT) to inquire into the state of competition in any industry sector
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Changes to fees, thresholds and service standards will significantly affect businesses dealing with the Competition Bureau

On April 1, 2003, long-anticipated changes to the thresholds for merger notification under the Competition Act (the "Act") and to Competition Bureau (the "Bureau") fees, service standards and advisory opinions process came into effect. These include:

  • an increase in the transaction-size threshold for merger notification from C$35 million to C$50 million;
  • the doubling of fees for merger notification filings and Advance Ruling Certificates (ARCs) from C$25,000 to C$50,000;
  • the coming into force of a recent amendment to the Act providing for legally binding written opinions from the Commissioner of Competition (the "Commissioner") on proposed business conduct; and
  • an increase in fees for written opinions from the Commissioner.

The Bureau describes these changes as enhancing client service, presumably as a result of benefits derived from higher fees, the availability of binding opinions and a reduction in the regulatory burden for smaller businesses.

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Other Developments

Bureau Will Apply Identical Standards to Online Representations and Traditional Media

On February 18, 2003, the Competition Bureau (the "Bureau") released its Information Bulletin on the Application of the Competition Act to Representations on the Internet (the "Bulletin"). The Bulletin is designed to ensure that businesses that are making online representations understand their responsibilities under the misleading representation and deceptive marketing provisions of the Competition Act (the "Act"). The Bulletin, which followed a consultation process with stakeholders, details the Bureau's approach to the application of the Act to online representations. The Bureau's position is that the Act applies equally to false or misleading representations, regardless of the medium used, and that the same basic principles that govern truthfulness in traditional advertising and marketing practices apply to their online counterparts. The Bureau does not believe that the enforcement of the Act will bias business activity either toward or away from the Internet.

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