Volkswagen and Audi settled environmental marketing claim with $15 million penalty

Vanessa Leung

On December 19, 2016, Volkswagen Group Canada Inc. (VW) and Audi Canada Inc. (Audi) entered into a consent agreement with the Commissioner of Competition to resolve the Commissioner’s concerns that VW and Audi had made false or misleading environmental marketing claims about certain of its 2.0 litre diesel vehicles. The consent agreement is one component of a broader Canadian settlement relating to VW’s and Audi’s allegedly misleading environmental claims.

The Bureau alleged that software installed in the affected VW and Audi vehicles could detect a test being conducted and alter the operation of the vehicle during the test to reduce nitrogen oxide emissions. The Bureau also alleged, however, that during normal use, the nitrogen oxide emissions would exceed the amounts at which the vehicle had been certified. The Bureau concluded that the statements, warranties and/or guaranties made about the performance or efficacy of these vehicles were false and misleading in a material respect, and were not based on adequate and proper testing, contrary to the Competition Act

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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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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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Telus agrees to pay $7.34 million in customer rebates to resolve false and misleading advertising allegations

Jeff Brown and Margaret Kim - 

On December 30, 2015, the Competition Bureau announced that it had reached a consent agreement with Telus Communications Inc., one of Canada’s “Big Three” wireless carriers, over allegations of false or misleading advertisements for premium text messaging and rich content services, such as trivia, daily horoscopes, and ring tones. 

As part of the consent agreement, Telus will issue rebates in an aggregate amount up to $7.34 million to certain current and former wireless customers, who the Bureau alleged were unknowingly charged extra for the text message services. The Bureau noted that the amount for consumer rebates made available under the consent agreement is the most obtained by it under any consent agreement to date.  In March 2015,  Rogers Communications Inc. settled with the Bureau, agreeing to pay $5.42 million in refunds to customers for the same fees as part of the same investigation. Similar proceedings against Bell Canada and the Canadian Wireless Telecommunications Association are ongoing.

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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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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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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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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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Competition Tribunal maintains interim supply order despite third party objections in Used Car Dealers case

Michael Laskey -

On March 16, the Competition Tribunal rejected a motion by the Insurance Bureau of Canada for the rescission of an interim supply agreement in its ongoing dispute with the Used Car Dealers Association of Ontario despite objections from one of IBC’s members, holding that the industry association had also bound its members when it agreed to the interim supply agreement. The decision, which has the effect of maintaining a mandatory supply order despite the objections of an IBC member which had directed IBC not to supply its confidential information, has important implications for industry associations and their members.

UCDA is a not-for-profit trade association representing motor vehicle dealers in Ontario. Among other services, it provides a service called “Auto Check”, which allows dealers to verify accident history information about vehicles they intend to sell. IBC, which collects and provides the data for the Auto Check service, is a not-for-profit corporation made up of 139 member insurance companies. On June 17, 2011, IBC terminated UCDA’s access to its insurance data, and UCDA was forced to suspend its Auto Check service. The reasons for the termination, and UCDA’s allegations that the termination constituted a “refusal to deal” contrary to section 75 of the Competition Act, are described in our earlier article. Meanwhile, the parties agreed to an interim supply agreement pursuant to which IBC would continue to supply UCDA with claims data while the case was before the Tribunal, and the agreement was formalized by an order of the Tribunal.

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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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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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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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Rogers Communications claims misleading advertising case, AMPs violate Canadian Constitution

Susan M. Hutton and Marisa Berswick -

Rogers Communications Inc. will appear before the Ontario Superior Court in June, claiming that two aspects of the Competition Act dealing with civilly reviewable misleading advertising are unconstitutional: AMPs (administrative monetary penalties) in the millions of dollars, and the “adequate and proper” testing requirements. If they are ruled unconstitutional, the case stands to gut the Competition Bureau’s ability to seek multi-million dollar penalties under the civil misleading advertising provisions of the Competition Act, and may have implications for its ability to do so in abuse of dominance provisions as well.

The Competition Bureau’s legal proceedings against Rogers began in September, 2010 when Wind Mobile filed a formal complaint with the Competition Bureau regarding Roger’s new discount cell phone service, Chatr Wireless. In November 2010, the Commissioner started legal proceedings against Rogers to stop the allegedly misleading advertising of Chatr, based on claims that it had fewer dropped calls than competitors.

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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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Used Car Dealers Association accuses Insurance Bureau of refusal to deal

Michael Laskey -

On September 9, 2011, the Competition Tribunal released a decision granting leave to the Used Car Dealers Association of Ontario (UCDA) to bring an application against the Insurance Bureau of Canada (IBC) seeking redress under the “refusal to deal” provisions contained in section 75 of the Competition Act. UCDA claims that IBC stopped supplying it with data on vehicle accident and claims history, which the IBC compiles from its member insurers. According to UCDA, it relies on being able to purchase this data to supply vehicle accident history reports to its members.  The Tribunal has granted the UCDA's application for leave to file an application under section 75, and such an application has in fact been filed.

UCDA alleges that one of its competitors in the accident history report market, CarProof, has a significant business relationship with IBC. CarProof provides its claims check service to the public at a price of $34.95 per search, while UCDA’s Auto Check service is available only to UCDA members and costs $7 per search (but includes less information than a CarProof report). UCDA alleges that IBC refuses to supply it with insurance data because of UCDA’s low pricing policy.

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Federal Court of Appeal dismisses Refusal to Deal appeal

Susan M. Hutton & Marisa Berswick

On June 2, 2011, the Federal Court of Appeal (FCA) released its decision in Nadeau Poultry Farm Limited v. Groupe Westco Inc et al., in which it upheld the decision of the Competition Tribunal to dismiss the appellant’s complaint under s. 75 of the Competition Act (refusal to deal). While the appellant was ultimately unsuccessful, both decisions shed light on the limited scope of s. 75, particularly in regulated industries where supply is statutorily restricted.

The Decision at the Tribunal

As discussed in our post of November 19, 2009, this case concerns a dispute between the appellant, Nadeau Poultry Farm, the operator of the only chicken slaughtering plant in New Brunswick, and the main respondent, Group Westco Inc., a chicken producer that, along with its subsidiaries, owns or controls just over half of the chicken production in New Brunswick. In 2007, Westco offered to buy or invest in the Nadeau plant, but negotiations between the parties broke down. Westco made it clear that if Nadeau was not willing to sell its plant, Westco would construct its own slaughtering plant in partnership with Nadeau’s main competitor and thereby deprive Nadeau of 50% of its supply. Eventually, Westco gave written notice that it would stop supplying chickens to Nadeau and the other respondents followed soon after, leading to the commencement of a private action before the Competition Tribunal for an order for resumed supply. On June 8, 2009, the Tribunal dismissed the application based on Nadeau’s inability to satisfy the five conditions required by s. 75, which require that:

  • a customer is substantially affected in its business or is precluded from carrying on business because it is unable to obtain adequate supplies of a product anywhere in a market on usual trade terms; 
  • this occurs as a result of insufficient competition among suppliers; 
  • the customer is willing and able to meet usual trade terms;
  • the product is in ample supply; and 
  • the refusal to deal is having or is likely to have an adverse affect on competition in a market.
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Toronto Real Estate Board charged with Abuse of Dominance

Susan Hutton -

Canada's Competition Bureau announced on May 27, 2011 that the Commissioner of Competition had filed an application with the Competition Tribunal alleging an abuse of dominance by the Toronto Real Estate Board in the market for residential real estate brokerage services. According to the Commissioner's application, TREB member brokers have access to detailed information about properties listed on the TREB multiple listing service (which lists almost all properties for sale in the Greater Toronto Area or GTA), such as historical prices, comparables, etc. Members of the TREB, however, are not permitted to provide their customers with direct access to the complete TREB MLS, nor to disseminate the more detailed information to their customers via searchable websites. The Commissioner alleges that such rules effectively prevent on-line brokerages from competing in the GTA as they do in the United States and Nova Scotia, for example. The allegations in the Commissioner's application are unproven, and no response has been filed.

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.

Canadian Competition Tribunal to review real estate rules

Katherine L. Kay and Danielle Royal

In February 2010, the Commissioner of Competition commenced an application against The Canadian Real Estate Association (CREA)1 alleging that CREA violated the abuse of dominance provisions of the Competition Act. CREA is a trade association comprised of over 100 local real estate boards and 98,000 real estate brokers and agents. CREA owns the MLS® trademarks, which it licenses to local real estate boards and associations across Canada who use those trademarks in the operation of local MLS® systems.

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No Profits for Interac: Commissioner will not agree that payments association can become for-profit corporation

Shawn C.D. Neylan

On February 12, 2010, Canada's Commissioner of Competition announced that she would not agree to changes to a fourteen-year old Competition Tribunal order which, among other things, prohibits the Interac Association from operating on a for-profit basis. Interac is the organization that develops and operates a national payment network allowing Canadians to access their money through automated banking machines and point-of-sale terminals. Surprisingly, the Commissioner appears to favour a dated and cumbersome regulated structure over evolution to a market-based entity. The press release issued by the Commissioner did not explain the analysis that lies behind her decision and raises a number of questions as to why she would not support a move by a regulated entity towards a more market-based structure.
 

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Canada's Competitor Collaboration Guidelines issued in final form

Susan M. Hutton and Jeffrey Brown

The Canadian Competition Bureau published the promised Competitor Collaboration Guidelines on December 23, 2009, less than three months before the coming into force of the new, stricter, criminal cartel provisions and their companion civil provisions applicable to non-criminal, but anti-competitive, competitor agreements. The Guidelines, which were preceded by an earlier consultation draft, published in May 2009, answer several questions raised by the new sections 45 and 90.1 of the Competition Act, but (unavoidably) leave many more to be clarified by the courts. Anyone doing business in Canada will wish to take stock of their dealings with competitors prior to the implementation of the new law on March 12, 2010. Seemingly innocuous agreements that did not appear to have a significant adverse effect on competition may now attract criminal (and civil) liability.

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Tribunal cries "fowl": Rejects "refusal to deal" application in chicken case

Eliot N. Kolers

The Competition Tribunal (the "Tribunal") released a decision in Nadeau Poultry Farm Limited v. Westco Inc., et al (2009 Comp Trib 6), in which it made several valuable clarifications in its interpretation of the "refusal to deal" provision contained in section 75 of the Competition Act (the "Act"). Under this provision, a supplier of a product can be ordered to sell its product to a particular customer if certain criteria are met. This case, which came before the Tribunal through the private access provisions allowing private parties to bring cases before the Tribunal, sheds light on the Tribunal's interpretation of the concepts of "ample supply", "as a result of insufficient competition", "usual trade terms", and "adverse impact on competition", all in the context of a supply-managed industry.
 

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Canada's Competition Bureau seeks comments on revised Abuse of Dominance Guidelines

On January 16, 2009, Canada's Competition Bureau (the Bureau) released draft revised Abuse of Dominance Guidelines (the Updated Guidelines), which are intended eventually to replace the original guidelines released in 2001.

Abuse of dominance occurs when a dominant firm (or group of firms) in a market engage in a practice of anti-competitive acts with the result that competition is prevented or lessened substantially in a market. Sections 78 and 79 of the Competition Act set out the powers of the Competition Bureau to prohibit a dominant firm (or group of firms) from engaging in anti-competitive practices, or to require other remedial action if necessary to restore competition. At present, no damages or fines for abuse of dominance are provided for under the Act, although amendments to introduce fines have been proposed by the Government. To prove abuse of dominance, three principal elements must be established:

  1. one or more persons substantially or completely controls, throughout Canada, a class or species of business;
  2. the person or persons have engaged in a practice of anti-competitive acts; and
  3. the practice has had, is having, or is likely to have the effect of preventing or lessening competition substantially.
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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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Competition Policy Review Panel urges Competition Act, Investment Canada Act reforms

On June 26, the blue-ribbon Competition Policy Review Panel issued its report to the federal Industry Minister on how to raise Canada's standard of living through greater competition and productivity, calling for urgent action to improve Canada's competitive position.

The report, "Compete to Win," is wide-ranging and thought-provoking, canvassing issues ranging from education, immigration, taxation, and securities regulation to specific proposals to amend Canada's competition and foreign investment review laws.  Implementation of all, or even many, of the Panel's sixty-five recommendations would result in fundamental changes to the way business operates in Canada.

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No hockey for Hamilton: NHL restrictions on franchise relocation not anti-competitive

Susan M. Hutton
 

On March 31, 2008 Canada's Competition Bureau announced the conclusion of its investigation into the policies of the National Hockey League (the NHL) for the approval of transfers of ownership and relocations of franchises.  The Bureau concluded they were not in violation of the civil "abuse of dominance" provisions (s. 79) of the Competition Act.  The inquiry had been commenced by the Bureau in June 2007, following media reports that James Balsillie, co-CEO of Research In Motion (makers of the BlackberryT personal communications device), had been foiled in his latest attempt to buy an NHL franchise and move it to southern Ontario (either Hamilton or Kitchener-Waterloo) when the NHL refused to consider the relocation of the Nashville franchise.

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Revised rules for Canada's Competition Tribunal

Canada's Competition Tribunal hears and disposes of all matters under the "deceptive marketing practices" and "reviewable matters" provisions of Canada's Competition Act, most notably applications by the Commissioner of Competition to challenge mergers, abuse of dominance, anti-competitive distribution practices and misleading advertising, and private applications related to refusal to deal and anti-competitive distribution or pricing practices.

On May 26, 2007, revised rules of practice for Canada's Competition Tribunal were published for a sixty-day consultation period. The stated objectives of the (extensive) revisions to the rules were to integrate existing Tribunal practice directions, establish a comprehensive case management procedure, adopt a single procedure for all applications to the Tribunal, reinstate the relevance standard for documentary discovery, establish procedures to make the hearings more efficient, and provide a more logical structure for the rules. The Tribunal's revision to its rules was undertaken in cooperation with a committee comprised of Tribunal members and staff, representatives of the Competition Bureau, Justice Canada and the National Competition Law Section of the Canadian Bar Association. Extensive consultations within and among each of these groups of Committee members were undertaken over several drafts of the revised rules. The final draft of the revised rules were presented to, and revised by, the judicial members of the Tribunal.

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Canada Pipe case remanded back to Tribunal

On May 10, 2007, Canada's Supreme Court denied leave to appeal the Federal Court of Appeal's decision in The Commissioner v. Canada Pipe et al., the first and only appellate decision in respect of the abuse of dominance and exclusive dealing provisions of Canada's Competition Act.

As a result of the Supreme Court's decision, the case will be remanded back to the Competition Tribunal for decision in accordance with the legal tests established by the Federal Court of Appeal. The Commissioner of Competition has, in previous statements, confirmed that the Federal Court of Appeal's decision will not alter the Bureau's approach to enforcement of these provisions, as detailed in its Abuse of Dominance Guidelines.

Stikeman Elliott successfully represented the Commissioner of Competition as lead counsel before the Federal Court of Appeal and the Supreme Court of Canada in this matter, during his tenure as Special Counsel to the Commissioner of Competition during 2005 and 2006.

Bureau consults on abuse of dominance provisions as applied to telecommunications industry

D. Jeffrey Brown and Kevin Rushton

On September 26, 2006, the Competition Bureau released its Draft Information Bulletin on the Abuse of Dominance Provisions as Applied to the Telecommunications Industry (the "Draft Bulletin"). The Draft Bulletin sets out the Bureau's approach to reviewing complaints under sections 78 and 79 of the Competition Act (the Act) - the abuse of dominance provisions - in respect of conduct that is not regulated by the Canadian Radio-television and Telecommunications Commission (the CRTC). Stakeholder comments on the Draft Bulletin must be submitted to the Bureau by December 29, 2006.

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Federal Court of Appeal Orders Re-determination in Canada Pipe Abuse of Dominance Case

Kim D.G. Alexander-Cook and Michael Kilby

On June 23, 2006, the Federal Court of Appeal (the FCA or the Court) issued its decisions and reasons in the appeal by the Commissioner of Competition (the Commissioner) and the cross-appeal by Canada Pipe Company Ltd. (Canada Pipe) from an earlier ruling by the Competition Tribunal (the Tribunal). At issue was the Tribunal's dismissal, in February 2005, of the Commissioner's abuse of dominance and exclusive dealing case against Canada Pipe.1 This appeal represents the first time the FCA has been asked to consider the application of the abuse of dominance (section 79) and exclusive dealing (section 77) provisions under Canada's Competition Act (the Act). In allowing the Commissioner's appeal and, rejecting Canada Pipe's cross-appeal, the Court considered in detail each of the specific elements the Commissioner must address in bringing an application under sections 77 and 79 of the Act. The case has been sent back to the Tribunal for re-determination.

While the Court found errors of law in the way the Tribunal had framed and conducted its analysis under both sections 77 and 79, it is far from obvious that the result on re-determination by the Tribunal will be any different than at first instance.

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Labatt Fined $250,000 for Price Maintenance

Susan M. Hutton

The Competition Bureau announced on November 23, 2005 that Labatt Brewing Company pleaded guilty to price maintenance in Quebec court, and was fined $250,000 - a fine that equals the largest fine previously issued in a price maintenance case. The charges were laid in relation to attempts "by agreement, threat, promise or like means" by Labatt company representatives to increase the price of discount beer sold by nine independent convenience/grocery retailers in Sherbrooke and elsewhere in Quebec. The Bureau said that "Labatt's attempts, when successful, affected the price of discount beer sold by these nine retailers, including brands from its competitors".

How Much Competition is Enough? Commissioner Files Factum in Canada Pipe Appeal

The Commissioner of Competition (the Commissioner) has filed a Memorandum of Fact and Law (the factum) in connection with the appeal of the Competition Tribunal's February 3, 2005 dismissal of her abuse of dominance and exclusive dealing case against Canada Pipe.1 The factum makes interesting reading.2 The Commissioner raises some important questions regarding the proper legal analysis of the abuse of dominance and exclusive dealing provisions of the Competition Act (the Act). In addition, certain of her arguments seem to favour turning business practices such as exclusivity discounts and loyalty programs into per se illegal behaviour for dominant firms. Therefore, the ultimate decision of the Federal Court of Appeal will be of significant interest not only to Canada Pipe, but also to competition law practitioners in Canada and elsewhere. Moreover, should Bill C-19 become law, giving the Tribunal the power to issue fines in respect of abuse of dominance, the Federal Court's decision in this case will only increase in importance.

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Amendments to Canada's Competition Act Could Pass this Spring

Susan M. Hutton and Patricia Martino

As reported in the March, 2005 edition of this newsletter, the House of Commons Standing Committee on Industry, Natural Resources, Science and Technology resumed consideration of Bill C-19 on March 9, 2005, after a hiatus of several months due to political skirmishing between opposition parties and the minority government members of the Committee. Further witnesses appeared on March 23, 2005. Although more witnesses may appear, it is still possible that Bill C-19 may become law this spring. So far, the Bill appears to have general all-party support, despite the opposition of some witnesses to certain aspects of the Bill.

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Canada Pipe Prevails in Abuse of Dominance Case

Commissioner of Competition to Appeal
Kim Alexander-Cook

On February 14, 2005 the Competition Tribunal released its decision in the abuse of dominance and exclusive dealing case brought by the Commissioner of Competition against Canada Pipe in 2002.1 The main conduct at issue was a loyalty program comprised of rebates and purchase discounts to distributors who offered Canada Pipe's Bibby Ste-Croix division exclusivity in supplying their cast iron drain, waste and vent (DWV) requirements. The Commissioner alleged that this program worked to substantially prevent competitors from gaining access to Canada Pipe's distributors and sought an order that would eliminate the program. The Tribunal accepted that Canada Pipe held a dominant position in the relevant markets, but concluded that Canada Pipe's conduct was not intended to have a negative effect that was predatory, exclusionary or disciplinary on competitors, did not prevent or lessen competition substantially, and was not likely to do so. On March 8, 2005, the Commissioner announced her intention to appeal the Tribunal's decision in the case.

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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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Final Submissions Filed with Competition Tribunalin Canada Pipe Abuse of Dominance Proceeding

Kevin Rushton

Following a hearing in the spring of 2004, the Competition Tribunal (the Tribunal) received this past August the final submissions of the Parties in Canada Pipe1.

Market Definition in Dispute

In his 2002 Application, the Commissioner alleged that a "Stocking Distributor Program" (the Program) operated by Canada Pipe's Bibby Ste-Croix Division ("Bibby") was substantially lessening or preventing competition among manufacturers and importers in the markets for cast iron drain, waste and vent (DWV) pipe, fittings and mechanical joint couplings (the "Products"), in six Canadian regions2. During the period from 1998 to 2002, Bibby accounted for more than 85% of total sales of the Products in Canada and for 80% or more of total sales of the Products in each of the six geographic markets. The Program provided preferential discounts and rebates to customers who purchased the Products exclusively from Bibby.

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IMS Health: A Review of European and Canadian Approaches to the Interface of Competition and Intellectual Property Law

On April 29, 2004, the European Court of Justice (the ECJ) provided guidance on when, under European law, a company could be considered to be abusing its dominant position when it refuses to grant an intellectual property (IP) licence. This article will review the ECJ's decision in IMS Health GmbH & Co. OHG v. NDC Health GmbH & Co. KG, and then consider whether Canadian competition law can be used to compel an IP owner to license its IP to a third party.

The IMS Health case concerns the rights to IMS Health's proprietary system for collecting and distributing drug sales data. In 1988, an IMS Health director left the company to establish a competing business, which eventually adopted a new database structure resembling that used by IMS Health.

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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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Reforming Competition Law in Canada: Evolution or Revolution?

An Overview of Proposed Changes to Canada's Competition Act
Paul Collins

On June 23, 2003, the Government of Canada released its much-anticipated discussion paper, entitled Options for Amending the Competition Act: Fostering a Competitive Marketplace (the White Paper).[1] The White Paper sets out potential amendments to the Competition Act (the Act) and reflects the analytical work done by the Competition Bureau over the past year, following the House of Commons Standing Committee on Industry, Science and Technology's April 2002 report, A Plan to Modernize Canada's Competition Regime.

The White Paper raises the prospect of sweeping changes to the Act that, if implemented, will have far-reaching repercussions for the business community.  Indeed, the proposed amendments would be the most significant changes to the Act since its enactment in 1986, and represent a veritable  seismic shift in the Canadian competition law landscape. 

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Competition Bureau will not challenge drug export ban on Canadian Internet pharmacies

On March 21, 2003, the Competition Bureau (the "Bureau") announced that it would not proceed against GlaxoSmithKline (GSK) for blocking Canadian-based Internet pharmacies from exporting its drugs to the United States. The Bureau examined potential violations to both the criminal and civil provisions of the Competition Act (the "Act").

The complaints arose from GSK's notification to Internet-based pharmacies and wholesalers in January 2003 that it would not allow its products to be exported to the United States. GSK argued that the export of Canadian medicines to the United States presented serious issues for the Canadian health care system, placed a strain on the supply of medicines for Canadians and posed a safety risk for patients in the United States accessing unregulated Canadian medicines.

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Appeal Court Strikes Down Commissioner's Power to Issue Temporary Orders

D. Jeffrey Brown

As a result of a recent decision of the Quebec Court of Appeal, the Commissioner of Competition has lost what he had touted as an essential tool in his arsenal for controlling potential anti-competitive conduct by Air Canada.  In a unanimous judgment dated January 16, 2003, the Court held that section 104.1 of the Competition Act, which empowered the Commissioner to issue "temporary orders" against a dominant air carrier without prior notice to the carrier or prior judicial approval, is inoperative on the basis that it is inconsistent with paragraph 2(e) of the Canadian Bill of Rights.

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