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.

Private member's bill would prohibit commercial advertising to children under 13

Michael Laskey -

On June 6, 2012, NDP MP Peter Julian introduced Bill C-430, An Act to Amend the Competition Act and the Food and Drugs Act (Child Protection Against Advertising Exploitation). The private member’s bill would amend the civil misleading advertising section of the Competition Act to prohibit the direction of any advertising or promotion, for commercial purposes, at persons under 13 years of age. The proposed test for such advertising would take into account the manner, time and place of the ad and the nature and intended purpose of the product or business being promoted. The bill also clarifies that advertising may be found to be directed at persons under 13 even though it is presented in printed material intended for people 13 and older, in broadcast during air time intended for persons 13 and older, or in any manner intended for persons both over and under 13. Finally, the criminal misleading advertising section of the Act would be amended to deem all such advertising to be a “recklessly made representation that is false or misleading in a material respect”, and so child-directed advertising would also violate the criminal misleading advertising law.

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Canadian government to loosen foreign ownership restrictions in telecommunications sector

Susan M. Hutton, T. Gregory Kane & David Elder -

As part of its plan to auction rights for the 700 MHz spectrum band, the Canadian government announced yesterday that it plans to amend the Telecommunications Act to lift foreign investment restrictions for telecommunications companies holding less than a 10 per-cent share of the total Canadian telecommunications market.

The Honourable Christian Paradis, Minister of Industry, announced the following commitments designed to provide Canadians with greater choice and lower prices in the market for wireless services

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Internet Predators bill would expand investigative powers in the Competition Act

Michael Laskey -

On February 14, 2012, the Minister of Public Safety tabled Bill C-30, the government’s most recent proposal for so-called “lawful access” legislation which would enhance its online surveillance powers. Titled the Protecting Children from Internet Predators Act, the bill has faced considerable criticism from privacy advocates and legal scholars, and the government announced on February 24 that it would delay consideration of the bill while it contemplated changes to address privacy concerns.

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Increased 2012 thresholds for Competition Act notification and Investment Canada Act review

Susan M. Hutton -

The thresholds for review of acquisitions involving Canadian businesses will soon increase under both the Competition Act and the Investment Canada Act.

The Competition Bureau (Canada) announced on February 7, 2012 that, effective February 11, the pre-merger notification transaction-size threshold for 2012 will increase to Cdn$77 million from the 2011 threshold of Cdn$73 million. The threshold is based on the book value of assets in Canada of the target (or in the case of assets, of the assets in Canada being acquired), or the gross revenues from sales “in or from” Canada generated by those assets, calculated in accordance with the Notifiable Transactions Regulations under the Competition Act. After February 11, 2012, the Competition Bureau must generally be given advance notice of proposed transactions when the acquired assets in Canada or revenues generated in or from Canada exceed $77 million, and when the combined Canadian assets or revenues “in, from or into” Canada of the parties together with their respective affiliates exceed $400 million.

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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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CRTC goes global on telemarketing: will co-chair new international Do Not Call enforcement network

David Elder and Lindsay Gwyer  -

Life is about to get more difficult for foreign telemarketers that flout domestic Do Not Call rules, as twelve global regulators have joined forces to create an international enforcement network.

On October 28, 2011 the CRTC announced the creation of an International Do Not Call Network to facilitate international cooperation on telemarketing enforcement and hopefully reduce the amount of unauthorized telemarketing calls Canadians receive from abroad. 

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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 releases new guidelines on merger notification in Canada

Susan M. Hutton and Robert Mysicka -

Canada’s Competition Bureau has released three new guidelines relating to its merger review process under Part IX of the Competition Act.  The first two guidelines discuss the Bureau’s approach to the disclosure of confidential information and the running of waiting periods in the context of unsolicited (hostile) bids. The third guideline discusses the completeness of notifications, in particular with respect to the meaning of “officers and directors” for non-corporate entities, and when information can be excluded from a notification on the basis of confidentiality.

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Canada's Corruption of Foreign Public Officials Act shows its teeth

Susan Hutton and Paul Beaudry -

On June 24, 2011, Niko Resources Ltd., a Calgary-based oil and gas exploration and production company, entered a guilty plea under Canada’s Corruption of Foreign Public Officials Act (CFPOA) with respect to charges of bribing a public official in Bangladesh. Niko, which operates in a number of countries around the world, had been notified by Canadian authorities in January 2009 that it was being investigated over allegations that it had provided the Energy Minister of Bangladesh with a $190,000 vehicle for personal use as well as with trips to Calgary and New York. These gifts had been made at the time when the Minister was assessing how much compensation was owed to Bangladeshi villagers for water contamination and other environmental concerns caused by explosions at a Niko operation.

Niko’s sentence included a $9.5 million fine and a three-year probation order that requires the company to implement a detailed compliance program subject to review by an independent auditor. Prior to Niko’s conviction, only one Canadian company had been convicted of foreign bribery under the CFPOA in the past decade. The $25,000 fine issued by the court in that case, known as R. v. Hydro Kleen Services Inc., was less than the bribe involved.

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Canada's Merger Control and Foreign Investment Regimes - selected recent developments

Shawn C.D. Neylan and Michael Kilby -

In March 2009, significant amendments to Canada’s Competition Act and Investment Canada Act were passed, with important implications for the regulatory review of mergers and acquisitions. 

Merger Control – Competition Act

Following the amendments of March 2009, Canada now has a “two-stage” merger review process. The merits and demerits of this new regime were never thoroughly debated among competition law practitioners or in Parliament, because the amendments were included in a budget implementation bill drafted in response to the global economic crisis of 2008. The bill moved through the legislative process in a matter of weeks, with the clear focus of parliamentary debate being on economic stimulus measures, rather than amendments to the Competition Act and other statutes. In any event, the new merger review process shares many similarities with the US process under the Hart-Scott-Rodino Act1. More particularly, the submission of the required notification filings by the purchaser and the target company triggers a 30 calendar day waiting period during which the transaction may not proceed, unless the Commissioner of Competition (the Commissioner) issues a positive clearance for the transaction and/or terminates the waiting period. If the 30 calendar day waiting period expires without the issuance by the Commissioner of a supplementary information request (a SIR), then there is no legal impediment to the parties closing the transaction. However, if the Commissioner issues a SIR within the 30 calendar day waiting period, the transaction may not close until 30 days after the parties have complied with the SIR, unless the Commissioner issues a positive clearance for the transaction and/or terminates the waiting period.

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Foreign investment review in Canada: "Be careful what you wish for".

Lawson A.W. Hunter, Q.C. and Susan M. Hutton -

In February, 2011, a Canadian Parliamentary committee began reviewing the Investment Canada Act (ICA) with a view to recommending measures to increase the transparency and effectiveness of the statute. The review was terminated by the federal election called in late-March, but may well recommence in the next Parliament. This article examines recent events leading to the statutory review as well as the various decision-making models under consideration and asks: “Will reforms be of “net benefit” to Canada?”

The ICA applies to the acquisition of control of existing Canadian businesses and to the commencement of new Canadian businesses by non-Canadians. In the case of most such transactions, the foreign purchaser or investor is merely required to file a short notification within 30 days following completion of the transaction, and there is no discretion on the part of the Canadian Government to block the deal from closing or to re-visit it after the fact to impose conditions. Acquisitions of control of large Canadian businesses, however, by persons controlled in WTO-member states (and smaller acquisitions if the business has a “cultural” aspect or neither party is controlled in a WTO-member state) generally require the approval of the Minister of Industry on the grounds that he or she is satisfied that the transaction is likely to be of “net benefit” to Canada, according to a prescribed set of criteria. 

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Bill introduced to assist investigations in light of new technologies

Sharon Seung -

Bill C-51, An Act to amend the Criminal Code, the Competition Act and the Mutual Legal Assistance in Criminal Matters Act (short title: Investigative Powers for the 21st Century Act) was re-introduced in the House of Commons on November 1st, 2010. As the short title of Bill C-51 implies, the bill aims to extend the current investigative powers of national law enforcement and security agencies for computer-related crimes to take into account the use of new communications technologies. While many of the proposed changes relate to the Criminal Code, they have an impact on the Competition Act and the investigative powers of the Commissioner of Competition.

Two other bills, Bill C-50, An Act to amend the Criminal Code (interception of private communications and related warrants and orders) and Bill C-52, An Act regulating telecommunications facilities to support investigations, were also introduced in October and November of last year. These three complimentary bills had previously been introduced under the former Liberal government in 2005, and under the Conservative government in 2009, but were killed by elections or prorogation.

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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.

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 gets new powers to combat online deception

David Elder -

With the passage this week of anti-spam legislation in Canada, a number of related amendments to the Competition Act aimed at combating misleading and deceptive practices online should be in force by next summer.

Bill C-28, the Fighting Internet and Wireless Spam Act (FISA), received Royal Assent this week, and is expected to come into force within 6 to 8 months. FISA contains a number of important amendments to the Competition Act which give the Commissioner and the Bureau a role in investigating and enforcing the new legislation. Industry Canada officials have indicated that the Bureau will be receiving additional budget resources and personnel to meet these new responsibilities.

The amendments clarify that offences under the Competition Act relating to false or misleading electronic messages or telemarketing are committed by those who permit messages to be sent, in addition to those who actually send them. The definition of “telemarketing’ is also expanded to cover not only “interactive telephone communications”, but to extend to “any means of telecommunication,” so would include not just voice communications, but text messages, instant messages, and social networking messages through applications such as Facebook and Twitter. Similar amendments are made to other key definitions in the Act to better capture online practices and technologies.

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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.

MCC article considers differences in Canadian/American antitrust law

The Metropolitan Corporate Counsel recently published an article discussing the differences between Canadian competition law and American antitrust law as well as some of the legislative developments occurring in the two countries. Stikeman Elliott partner Jeffrey Brown was interviewed for the article.

Higher Investment Canada Act threshold still not in force

Shawn Neylan and Michael Kilby

On March 12, 2009, the Government of Canada enacted extensive changes to the Investment Canada Act as part of Bill C-10, the budget implementation bill passed in response to the global economic crisis.  The bill was introduced in Parliament on February 6, 2009 and received royal assent only five weeks later.

In light of the speed with which the amendments were passed, it was expected that it would take some time to prepare implementing regulations that would allow the new law to come into force. Draft regulations were published one year ago, on July 11, 2009. Extensive comments were made on the draft regulations. However, final regulations have not come into force.

The amendments in question, once implemented by regulations, will change the Investment Canada Act review threshold for direct acquisitions by WTO investors from $299 million in gross assets, measured on the basis of current book value (2010 threshold), to $600 million in “enterprise value”, rising progressively to $1 billion in enterprise value over a four-year period.  The clear intent of Parliament was to lessen the number of foreign investments in Canada that would be subject to review and Ministerial approval (usually granted on the basis of binding undertakings).

While it is clear that the calculation of enterprise value raises some difficult technical questions that must be addressed in the final regulations, the amount of time this is taking is delaying the implementation of Parliament’s intent to liberalize Canada’s foreign investment regime and, to the extent this was the case, Parliament’s intent that Bill C-10 be a key part of Canada’s response to the global economic crisis.

Amendments to the Competition Act tabled as part of new legislation to fight spam

On May 25, 2010, the Canadian federal government re-introduced legislation with the stated objective of promoting the efficiency and adaptability of the Canadian economy by regulating commercial conduct that discourages the use of electronic means to carry out commercial activities.  The centerpiece of Bill C-28, the Fighting Internet and Wireless Spam Act, is a prohibition on the sending of commercial electronic messages without prior express or implied consent of the recipient, as well as prohibitions relating to the alteration of transmission data and the unauthorized installation of computer programs.  Bill C-28 is nearly identical to previous legislation that was introduced in 2009 but which did not complete the legislative process prior to conclusion of the Parliamentary session this past December.  When implemented, Bill C-28 will make related amendments to the Competition Act, the Personal Information Protection and Electronic Documents Act, the Canadian Radio-television and Telecommunications Commission Act and the Telecommunications Act.

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Canadian merger notification regulations revised

Susan M. Hutton and Ashley M. Weber

Amendments to the Notifiable Transactions Regulations made under the Competition Act (the Regulations) came into force on February 2, 2010. These amendments reflect the legislative amendments to the Competition Act passed in March, 2009. The highlights include the creation of a uniform notification form for all transactions, changes to the prescribed information that must be supplied to the Commissioner, and stipulations as to how certain asset and revenue values are to be calculated for amalgamations.
 

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Canada's tougher cartel law into force March 12, 2010

Susan M. Hutton

The one-year delay before Canada's new, tougher, cartel law comes into force expires this month. Starting March 12, 2010, prohibited agreements between competitors will be criminally illegal in Canada, regardless of their impact on competition. The amendments result in the creation of a new category of "per se" criminal offences (so-called because the outlawed categories of agreement are "per se" illegal without proof of economic effect). Penalties under the new offence will also increase: from the former maximum five years imprisonment and/or C$10 million fine, to a maximum of 14 years and/or C$25 million.

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Primer on amendments to Canada's Competition Act and Investment Canada Act

Susan M. Hutton and Kevin Rushton

On March 12, 2009, the Canadian government enacted the most significant amendments in over 20 years to Canada's competition and foreign investment regimes, as part of Bill C-10, the Budget Implementation Act, 2009. The amendments to the Competition Act result in fundamental changes to the way that business operates in Canada, and provide the Competition Bureau with unprecedented enforcement tools and/or penalties in all areas. Fewer foreign investments in Canada will meet the increased thresholds for Ministerial review and approval under the changed Investment Canada Act, but all such investments will face potential scrutiny under a new "national security" test. The most significant amendments to both these laws are discussed below.

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Bill C-10 Competition Act and Investment Canada Act amendments enacted

Jeffrey Brown and Kevin Rushton

On March 12, 2009, the most significant amendments to Canada's competition and foreign investment regimes in more than 20 years were enacted when Bill C-10, the Budget Implementation Act, 2009, received Royal Assent. The amendments were described in detail in the February 20, 2009 edition of The Competitor.
 

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Massive amendments to Competition Act and Investment Canada Act tabled today

Susan M. Hutton

The Canadian Competition Bureau will be pleased today, as significant and far-reaching amendments to the Competition Act and the Investment Canada Act were included in the Budget Implementation, 2009 bill (C-10), which was tabled today in the House of Commons by the Canadian government (see Parts XII and XIII).

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Throne speech promises big changes to Canada's competition and foreign investment regimes

Susan M. Hutton

Canada's 40th Parliament opened on Wednesday, November 19, 2008 with the traditional Speech from the Throne, outlining the government's legislative priorities. In keeping with the turbulent economic times and with calls for greater supervision of business, the throne speech promised to "proceed with legislation to modernize our competition and investment laws, implementing many of the recommendations of the Competition Policy Review Panel."

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Something old, something new: Private member's Bill moves forward with potential for big changes to Canada's Competition Act

Susan M. Hutton

Nearly six years after the Standing Committee on Industry, Science and Technology released its report "A Plan to Modernize Canada's Competition Act," and more than two years after the death of Bill C-19 on the parliamentary order paper, Parliament is once again considering a proposal to make significant amendments to the Competition Act.

A private member's bill, introduced by Bloc Québécois MP Roger Gaudet last October, has received second reading in Parliament, and will now move to Committee for debate. If passed in its current form, it would entail such significant - and controversial - changes as:

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Update on Bill C-299

Susan M. Huttonand Ian Disend

Bill C-299 is an Act to amend the Criminal Code, the Canada Evidence Act and the Competition Act (personal information obtained by fraud) and was introduced in Parliament as a Private Member's Bill.

Bill C-299 was introduced in Parliament by The Honourable James Rajotte on May 17, 2006, and was referred to the Standing Committee on Justice and Human Rights after it had received Second Reading on November 1, 2006.

The bill proposes amendments to the three statutes in its title, designed to penalize the fraudulent collection of personal information. In both the Code and the Competition Act, a definition of "personal information" is created, consistent with that of federal privacy legislation (Personal Information Protection and Electronic Documents Act), while the "false pretences" section of the Code is expanded to criminalize its fraudulent collection and related actions. The amendment to the Canada Evidence Act would also render fraudulently obtained information inadmissible as evidence.

Under the Competition Act, obtaining personal information under false pretences would be added to the criminal provisions contained in s. 50 (price discrimination and predatory pricing) as an illegal trade practice, and the promotion of a fraudulently provided service would be deemed a false or misleading representation under both the criminal (s. 52) and the civil ( s.74.01) misleading advertising provisions. Recovery of damages by those suffering loss from any of these violations would also be made easier by allowing the victim to sue the Canadian affiliate of an international corporation that has committed the offense, regardless of whether the Canadian affiliate was involved.

Canadian government varies CRTC VoIP decision

D. Jeffrey Brown and Kevin Rushton

On November 15, 2006, Canadian Minister of Industry Maxime Bernier announced that the Governor in Council (effectively, the federal Cabinet) had exercised its power under the Telecommunications Act (the Act) to vary the Canadian Radio-television and Telecommunication Commission's (CRTC) 2005 voice over Internet Protocol (VoIP) decision. Cabinet ordered the CRTC to forbear from regulating retail local access-independent VoIP services provided by incumbent local exchange carriers (ILECs) within their incumbent territories to the same extent the CRTC has forborne from regulating retail local telecommunications services, including VoIP services, provided by competitive local exchange carriers (CLECs ).

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Bill C-19: Off Again-On Again

On March 9, 2005 The House of Commons Standing Committee on Industry, Science and Technology resumed consideration of Bill C-19, which proposes to amend the Competition Act by creating, among other things, stiff fines for abuse of dominance and misleading advertising practices.

Parliamentary Hearings Suspended on Canada's Competition Act Amendments (Bill C-19)

Susan M. Hutton

In a surprising turn of events, the House of Commons Standing Committee on Industry, Science and Technology voted on December 2, 2004 to suspend further discussion of Bill C-19, An Act to Amend the Competition Act and to Make Consequential Amendments to Other Acts, for an indefinite period. The Committee had only recently commenced hearings concerning Bill C-19, the Government bill proposing important changes to the abuse of dominance, pricing and misleading advertising provisions of the Act, among others (see the November, 2004 issue of The Competitor for details).

The Committee had already heard from several witnesses, including the Commissioner of Competition, Sheridan Scott, as well as representatives from various business and lawyers' groups including the Canadian Council of Chief Executives, the Competition Law Section of the Canadian Bar Association, and the Canadian Chamber of Commerce. Several other witnesses were scheduled to be heard, but their appearance has been postponed, along with further discussion of the bill.

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Competition Act Amendments:One Step Closer to Reality with Bill C-19

Kevin Rushton

On November 2, 2004, by tabling Bill C-19, the Canadian government took the first step toward implementing some of the long-debated amendments to Canada's Competition Act (the Act). If Bill C-19 manages to weave its way successfully through Canada's minority Parliament, it will implement the most wide-ranging changes in decades to Canada's competition legislation. Likely the most significant of these is the introduction of the additional remedy of fines ("administrative monetary penalties") for abuse of dominance, which should cause leading Canadian businesses to re-evaluate the way in which they operate.

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PPF Report on Proposed Amendments to Canada's Competition Act

Public Reaction to White Paper is Mixed

As reported in the July 2003 issue of The Competitor, the Government of Canada released a discussion paper on June 23, 2003 entitled Options for Amending the Competition Act: Fostering a Competitive Marketplace (the White Paper), which proposed significant amendments to Canada's Competition Act (the Act).

The White Paper generated significant public comment and debate, and the Public Policy Forum (PPF), an independent non-profit organization, was mandated by the Government to steer a consultation process, which included written submissions and roundtable discussions.

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Bill C-249 Reintroduced

As reported in the June 2003 issue of The Competitor, Bill C-249 - An Act to amend the Competition Act, was passed by the House of Commons in May 2003. Bill C-249 is a Private Member's Bill, introduced in response to the January 31, 2003 decision of the Federal Court of Appeal, which upheld the Competition Tribunal's determination that efficiencies to be generated by the merger of Superior Propane Inc. with ICG Propane Inc. would outweigh its anticompetitive effects, thereby "saving" the merger pursuant to section 96(1) of the Competition Act (the "efficiencies defence"). In the view of the Commissioner of Competition, this decision had two potentially undesirable consequences, first that an anticompetitive merger might survive on the basis of efficiencies, notwithstanding harm to consumers and, second, that the efficiencies defence could be applied so as to condone mergers that create a monopoly in certain instances.

Bill C-249 would narrow the application of the "efficiencies defence" by providing that efficiencies be considered as just one part of the overall assessment of the merger, along with the other factors set out in section 93 of the Competition Act. A previous version of the Bill went even farther, requiring efficiencies to be passed on to consumers. However, this requirement was removed from the current Bill as many commentators had observed that it all but negated the possibility of the defence ever applying to a merger that causes a substantial lessening or prevention of competition in the first place.

Last fall, Bill C-249 had passed second reading (in the Senate), and had been referred to the Standing Committee on Banking, Trade and Commerce. However, the federal Parliament was prorogued on November 12, 2003, and as a result, Bill C-249 "died on the order paper". On February 2, 2004, Bill C-249 was re-introduced from the previous legislative session, deemed to have had First through Third Readings in the House of Commons, and First Reading in the Senate on February 3, 2004

Amendments Process Continues

Even as the Commissioner of Competition is being replaced, the process set in motion last June to examine sweeping proposals to overhaul Canada's Competition Act continues.  Written public comments were due September 30, 2003, and the Public Policy Forum, a private firm engaged to direct the public consultation process, has published its Summary Report on the Submissions by Intervenors , summarizing the submissions to date.  The submissions themselves are also available on the PPF web-site.  Roundtable discussions will be held across the country during November, leading to a final PPF report.  Of course, the future of the amendments will depend quite heavily on the views of, among others, the new Commissioner of Competition.  Opinion has been sharply divided on the merits of many of the proposed reforms.