The Vancouver Sun, Montreal Gazette, Huffington Post and others have reported that Rogers has launched constitutional arguments in response to allegations by the federal Competition Bureau that it misled consumers with performance claims in relation to its Chatr cell phone brand.
In particular, according to media reports, Rogers is arguing that the civil “performance claim” provision of the Competition Act is contrary to the freedom of expression rights under the Charter and that the penalties for civil misleading advertising are unconstitutional.
In addition to “general misleading advertising” provisions, the Competition Act also prohibits or regulates a variety of other advertising and marketing conduct, including performance claims that are not based on an “adequate and proper test” made before the claim is made.
Over the past few years the Bureau has challenged a fairly wide variety of performance based advertising claims including claims relating to gas saving devices, spas and recently weight loss claims made by Nivea’s Canadian distributor in relation to some Nivea products (see: Competition Bureau Requires Maker of Nivea to Reimburse Customers for Misleading Claims).
The penalties for civil misleading advertising were also recently increased (see: Canada’s Competition Act Amendments), with maximum “administrative monetary penalties” or “AMPs” (essentially civil fines) of up to $10 million for corporations, which has led to speculation as to whether these significant penalties would be subject to constitutional challenge as essentially penal in nature, without the accompanying procedural protections available for criminal offences.
The Rogers case is the first case to challenge the constitutionality of these AMPs recently introduced for misleading advertising.
This case arose based on concerns from several new entrant cell phone companies, including Wind Mobile, that Rogers was engaging in false performance claims relating to its Chatr cell phone brand, including claims that Chatr had “fewer dropped calls than new wireless carriers.”
The Bureau’s position has been that Rogers’ performance claims were both unsubstantiated and could not be substantiated because, for example, the new entrant carriers did not disclose dropped call rates (see: Competition Bureau Takes Action Against Rogers Over Misleading Advertising).
While Rogers’ recent constitutional arguments are interesting, their success is uncertain given, among other things, that a great many of the constitutional challenges to the Competition Act in the past have failed.
This case will, however, regardless of its outcome, prove to be one of the early tests of Canada’s amended Competition Act.
Mr. Justice Kenneth L. Campbell of the Ontario Superior Court of Justice in: Dale v. The Toronto Real Estate Board:
“Accordingly, it is not plain and obvious that the plaintiffs’ claim fails to disclose a reasonable cause of action regarding the tort of conspiracy. Indeed, in my view the plaintiffs have alleged that the defendants engaged in a classic type of conspiracy, namely, combining together to drive a business competitor and their novel business model out of the marketplace.
While the plaintiffs candidly admit a lack of detailed knowledge as to all of the factual nuances of the conspiracy, this is hardly surprising given the nature of the allegation. As Cumming J. aptly stated, when faced with similar circumstances in North York Branson Hospital v. Praxair Canada Inc., [1998] O.J. No. 5993 (S.C.J.), at para. 22:
‘In truth, the very nature of a claim of conspiracy is that the tort resists detailed particularization at early stages. The relevant evidence will likely be in the hands and minds of the alleged conspirators. Part of the character of a conspiracy is the secrecy and the withholding of information from alleged victims. The existence of an underlying agreement bringing the conspirators together, proof of which is a requirement borne by a plaintiff, often must be proven by indirect or circumstantial evidence. A conspiracy is more likely to be proven by evidence of overt acts and statement by the conspirators from which the prior agreement can be logically inferred. Such details would not usually be available to a plaintiff until discoveries. These considerations and the general theme of Hunt, instructing courts not to shy away from difficult litigation, also militate against holding pleadings in civil conspiracy cases to an extraordinary standard.’”
Given that I write about monopolies from time to time, this rather fine article in the Legal Post about the regulation of the legal profession – or perhaps the control of the profession, depending on one’s perspective – caught my eye by Vern Krishna, a prominent tax lawyer in Ontario.
His articulate note is also interesting given that the Competition Bureau has on occasion reviewed Canadian self-regulated professions, including the legal profession, most recently in its Self-regulated professions report.
It’s time to open legal doors – Vern Krishna
When it comes to monopolistic protection, no one does it better than the legal profession.
In a story reported earlier today in the Toronto Star, the Star reported an announcement by Interactive Advertising Bureau of Canada (“IAB”) Vice-President Sam Parent that online marketers will soon introduce self-regulation for behavioral advertising (see: Advertisers to Police Themselves When Targeting Online Users).
The National Competition Law Section of the Canadian Bar Association will holding its annual Competition Law Spring Forum on May 2, 2012 in Toronto.
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For more information see:
On January 19, 2012, the Competition Tribunal set hearing dates in the ongoing abuse of dominance case The Commissioner of Competition v. The Toronto Real Estate Board (see Scheduling Order).
The evidentiary portion of the hearing in this case is scheduled to begin on September 10, 2012 in Toronto.
A claim against two major real estate boards and their executives for breaching terms of an earlier settlement agreement, common law and Competition Act conspiracy and certain economic torts survived a motion to dismiss last week. The reasons for judgment provide insight into the sufficiency of pleadings in cases involving allegations of anti-competitive conspiracies against businesses and their executives.
Last Friday, Mr. Justice Kenneth L. Campbell of the Ontario Superior Court of Justice dismissed a motion by the defendants in Dale v. The Toronto Real Estate Board to dismiss Realtysellers (Ontario) Limited’s (“Realtysellers”) action against The Canadian Real Estate Board (“CREA”), The Toronto Real Estate Board (“TREB”) and 47 other defendants (for a copy of the decision see: Dale v. The Toronto Real Estate Board).
FEBRUARY 1-3, 2012 – Vancouver
The Antitrust Law Section of the American Bar Association and the International Bar Association (IBA) will be holding their bi-annual International Cartel Workshop in Vancouver from February 1-3, 2012 at the Fairmont Hotel Vancouver.
From the American Bar Association:
“The International Cartel Workshop, recognized globally as the premier international cartel program offered anywhere, is presented only once every two years. The next Workshop, which will have many new features, will be held in Vancouver, Canada during February 1-3, 2012. The 2012 program will continue the Workshop’s tradition of instruction by demonstration, with experienced faculty from around the globe taking you inside a hypothetical international cartel matter — from detection by government enforcers to the disposition of government prosecutions and private damage claims. The Workshop will also highlight new developments in the law and leniency practices around the world, with leading enforcers and experienced private practitioners demonstrating how critical decisions are made on both sides of the table and providing examples of important interactions between counsel and enforcers. The 2012 Workshop’s international faculty includes many of the most accomplished cartel attorneys in the world, as well as the most senior cartel enforcement officials from a variety of jurisdictions.”
For more information about the joint ABA/IBA Cartel Workshop see:
American Bar Association – Antitrust International Cartel Workshop
Businessweek, the Wall Street Journal and others reported yesterday that Maple Group Acquisition Corp., composed of 13 Canadian financial institutions, will once again extend its Cdn. $3.73 billion mixed cash and shares offer for the TMX Group beyond the previous January 31st deadline if regulatory approvals are not received.
Maple’s offer to acquire the TMX is subject to approval from provincial securities regulators and the federal Competition Bureau, which initiated a second-stage review with the Commissioner of Competition announcing in November, 2011 that the Bureau had “serious concerns” about the transaction.
Some of the potential issues the transaction raises include a high degree of consolidation in the trading services market and issues based on access and pricing of clearing and settlement services, as the transaction would also include the acquisition of CDS Inc., Canada’s currently not-for-profit equity and fixed-income clearing operator.
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For more information about the proposed transaction see:
JANUARY 25-26 2012 – Toronto
The Canadian Institute will be holding an Advertising and Marketing Law Conference on Wednesday, January 25-26, 2012 at the Four Seasons Hotel, Toronto, Ontario.
Gibson Dunn has published a very fine and detailed summary of U.S. and global criminal antitrust developments in 2011 (2011 Year-End Criminal Antitrust Update).
From Gibson Dunn:
“The Department of Justice obtained more than $1 billion in FY 2011 from criminal antitrust offenders, the second-highest amount in its history. The total payments consist of an estimated $523 million in criminal fines and more than $500 million in restitution, penalties, and disgorgement paid to state and federal agencies. This staggering amount represents an increase of more than 78% from FY 2010 and sends a clear message to the corporate world that DOJ’s zealous pursuit of large fines for collusive conduct continues unabated.
Another important measure of success for the Department of Justice, Antitrust Division also significantly advanced in FY 2011; the number of criminal cases filed increased 50% to 90 cases, which included 27 corporations and 82 individuals–each category significantly higher than in FY 2010.
Despite these achievements for the Antitrust Division, other metrics revealed significant year-over-year declines in FY 2011. Most notably, several statistics relating to incarceration of antitrust defendants reached multi-year lows: the number of individuals sentenced to prison decreased 28% to just 21 defendants, the length of the average prison sentence fell 44% to 17 months, and the total prison time imposed on defendants dropped 60% to 10,544 days. …
Given the Antitrust Division’s numerous ongoing investigations–a number of which involve large, complex, international cartel matters that have not yet been announced publicly–we expect 2012 to be another banner year in criminal antitrust enforcement. …”
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For the complete publication see:
We are pleased to provide this global competition update, with a focus on Asia Pacific, from our friends at Rajah Tann in Singapore.
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Happy New Year! Welcome to our refreshed Competition Review 2012, which presents an overview of developments in competition laws from around the world in the past few months, with a focus on ASEAN and Asia. This issue covers developments, which have occurred in the second half of 2011 that may interest you.
Each of the decisions and studies discussed below is intended to give you a flavor of the issues in the competition and anti-trust scene so that, when you review your business activities, structure new deals or make acquisitions, you have these issues at the back of your mind and provide for them. For ease of convenience we have organized our Competition Review into three sections – anti-competitive agreements, abuse of dominance and mergers.
We set out below some of the key principles that emerge from the cases discussed below:
(a) co-operating with competition authorities for a speedy resolution may help reduce penalties (see EU: European Commission (‘Commission’) Fines Producers Of CRT Glass €128 Million In Cartel Settlement);
(b) a competition authority may recommend shareholders to replace their directors or officers if they do not fully cooperate with investigations (see Indonesia: Indonesian Competition Authority KPPU Recommends President Director Be Replaced);
(c) even though a competition authority may not have powers to review mergers, it may investigate the transaction for other anti-competitive aspects (see Malaysia: Malaysia Competition Commission (‘MYCC’) To Investigate Air Asia-Malaysian Airlines (‘MAS’), Share Swap And Collaborative Agreement);
(d) exchanging information between competitors through a third party, such as software service providers, may lead to a violation of competition laws if the exchange is of sensitive information (see UK: Motor Insurers Agree To Limit Data Exchange And Provide Commitments to the Office Of Fair Trading (‘OFT’)); and
(e) not all jurisdictions, where merging parties have presence, will require merger notification. Undertakings with large presence in one jurisdiction may not have sufficiently significant presence in other jurisdictions that crosses notification triggers (see Indonesia: Microsoft’s Acquisition Of Skype Does Not Need Notification).
Promotional contests in Canada are largely governed by the Competition Act, the Criminal Code, privacy legislation and the common law of contract. In addition, Quebec has a separate regulatory regime governing contests and contest authority (the Régie des alcools, des courses et des jeux).
As such, given that the improper operation of a promotional contest can lead to civil or criminal liability, it is important to review proposed promotional contests for compliance with federal and provincial laws.
Guest post from Andrei Mincov at Mincov Law
Again Lego finds itself under an attack from Mega Brands, a Montreal-based competitor and maker of Mega Bloks. This time – in U.S. District Court in the Central District of California.
Lego owns a U.S trademark for the design of its world-famous blocks. Mega Brands claims that the trademark registration should be invalidated, which would allow Mega Brands to freely export its products to the United States.
The foundation of the claim is that what Lego has is not really a trademark. Rather, it is an attempt to obtain patent-like protection under the guise of a 3D trademark.
On January 6, 2012, the Competition Bureau announced that two companies pleaded guilty of fixing the price of polyurethane foam and were fined a total of $12.5 million (see: Competition Bureau Sends Signal to Price-Fixers with $12.5 Million Fine).
In making the announcement, the Bureau said:
“’Yesterday’s guilty plea is the first conviction under Canada’s amended conspiracy law,’ said Melanie Aitken, Commissioner of Competition. ‘This investigation highlights the Bureau’s reinvigorated mandate to stop consumer harm caused by price-fixing, and to secure significant fines for these serious criminal offences.’
The charges are the first to arise from the Bureau’s investigation into price-fixing cartel in the polyurethane foam industry. Anyone with information relating to this investigation is encouraged to contact the Competition Bureau.
The Bureau’s investigation benefitted from cooperation under the Bureau’s Immunity and Leniency Programs, which create incentives for parties to address their criminal liability by cooperating with the Bureau in its ongoing investigation and prosecution of other alleged cartel participants.
Under the Competition Act, an agreement between competitors to fix prices, allocate markets or restrict output in Canada is a criminal offence. In March 2010, amendments to the conspiracy provision of the Act came into force.”
On January 4, 2012, the U.S. Federal Trade Commission (“FTC”) announced that it filed complaints against three of the largest U.S. suppliers of ductile iron pipe fittings for an alleged price-fixing cartel.
The FTC is also alleging that parties used a trade association (the Ductile Iron Fittings Research Association) to exchange information and monitor adherence to the cartel agreement.
See: FTC Action Protects Competition in Market for Iron Pipe Fittings Used in Municipal Water Systems
The past year has been a busy and eventful one for Canadian advertising and marketing law. Recent developments since 2010 span most key areas including the application of the “general misleading advertising” provisions of the Competition Act, the use of disclaimers, social media, e-mail marketing, performance claims and telemarketing.
At the same time, new legislation has been introduced that will impact how companies market in Canada, most notably the new federal anti-spam legislation (Bill C-28), and new cross-border enforcement initiatives were announced including a new international do-not-call enforcement network co-chaired by the CRTC.
These developments mean that it remains important for companies to effectively and efficiently navigate through Canadian advertising and marketing rules. Some of the more interesting and noteworthy developments in 2010 and 2011 are discussed below.
The past year has been a busy one for Canadian competition law.
Developments in 2011 include new cases, enforcement and legislation in most key areas including abuse of dominance (the Competition Bureau’s ongoing challenge of The Toronto Real Estate Board and CREA settlement in late 2010), criminal conspiracy (developments in price-fixing class action litigation and some Bureau enforcement), refusal to deal (several important private access section 75 cases, including a decision of the Federal Court of Appeal), contested mergers (in the waste and airline markets), price maintenance (the merchant fees case involving Visa and MasterCard) and misleading advertising (involving Bell Canada, Rogers and others).
The Competition Bureau is testing the new rules under Canada’s Competition Act, which came into force in 2009 and 2010, and private plaintiffs are creating new law in a number of ongoing competition/antitrust class actions in Canada (principally indirect purchaser price-fixing cases relating to the sale and supply of dynamic random access, or “DRAMs”, high fructose corn syrup and computer operating systems).
At the same time, several new pieces of legislation have been introduced including a federal omnibus crime bill, which will eliminate conditional sentences for some competition law offences, and sweeping new anti-spam legislation (Bill C-28 or “FISA“) that once in force will be among the strictest anti-spam regimes in the world.
The Commissioner of Competition, and other federal enforcement officials including the RCMP, have also expressed intentions to adopt tougher enforcement stances in relation to competition law and other white collar crime.
In general, these developments mean that it remains important for Canadian companies, organizations and their executives to maintain a practical awareness of Canadian competition law.
Some of the key competition law and related developments of 2011 include:
Our friends at Associations Plus in Alberta have launched a new blog, with their latest blog post highlighting some of the practical aspects of Canada’s new federal anti-spam legislation (Bill C-28). See: $10 Million is the New Hefty Price Tag for Unsolicited E-mail Blasts!
We wish them all the best with their new associations blog.
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For more information about Bill C-28 see:
Most association activities are legitimate and unlikely to raise competition law concerns. However, given that many, if not most, association activities involve the direct interaction of competitors, it is prudent for association executives, staff and their advisors to take practical steps to reduce potential competition law risk.
In an interesting article published today by the Globe and Mail, the Globe reported that the new head of the RCMP, Bob Paulson who was named RCMP Commissioner last month, is taking a new “tough line on white-collar crime” (See: New RCMP head takes tough line on white-collar crime), particularly in relation to major fraud and securities law investigations.
Mr. Paulson indicated that rather than waiting for securities regulators to “throw [enforcement officials] bones”, enforcement officials should:
“… go to the arena where the crime is happening … see who is doing it, and [get] in there. You talk to humans, … recruit sources, … do undercover operations. … get evidence in the near term and … bring it to court.”
We are pleased to announce that Jessica Forman has joined Hakemi & Company Law Corporation as an articled student. She is admitted to practice in California, where she has represented clients in a variety of litigation matters, and at all stages of litigation, from pre-dispute negotiations, through trials, and appeals.
She has provided civil litigation advice to clients in a variety of industries, including representing a large construction company, an international airline and a non-profit housing rights organization. Her criminal litigation experience includes advising clients in criminal matters relating to securities issues as well as insurance disputes, legal malpractice issues, fraud and negligence. She has appeared before United States Federal courts as well as California state courts.
Prior to her legal practice, she worked for several years in Washington D.C. as a legislative assistant to a member of Congress. She is a graduate of the University of Southern California Gould School of Law in Los Angeles and earned her undergraduate degree from Emory University in Atlanta, Georgia.
For more information about Jessica and her experience see: Jessica Forman
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Hakemi & Company Law Corporation is a Vancouver-based law firm with a focus on civil litigation and regulatory proceedings, particularly in the areas of securities and competition/antitrust law. Our clients contact us when they need to pursue or defend a claim or address regulatory issues; or they seek our advice on how to comply with their legal obligations. They want objective, experienced and candid advice on their options. They also want effective and efficient representation in any proceedings. We provide legal services in the following areas:
Litigation Services. We represent clients in a broad range of complex business disputes and regulatory matters.
Compliance Services. We advise clients on how to comply with their obligations in areas including securities and competition/antitrust law.
A.D.R. Services. We act as mediators and arbitrators to assist domestic and international parties resolve disputes.
For more information about our firm and practices see:
MARCH 28-30 2012 – Washington
The Section of Antitrust Law of the American Bar Association will be holding its 60th Antitrust Spring Meeting in Washington from March 28th to 30th 2012.
From the ABA:
“Please plan to be in Washington, DC this year for the 60th ABA Section of Antitrust Law Spring Meeting. Spring Meeting is the Antitrust Bar’s premiere conference, offering the most comprehensive review of developments in antitrust and consumer protection law, training, and networking opportunities available anywhere. In this time of belt-tightening, the Spring Meeting is the one conference that you cannot afford to miss.
The Spring Meeting programming covers cutting-edge antitrust and consumer protection issues featuring a faculty of government enforcers and leading practitioners, corporate in-house counsel, and economists and academics from around the globe. To best meet your needs, the program is organized to offer separate tracks for sessions covering international issues, litigation, and consumer protection. There is sure to be something of interest for everyone, from the least to most experienced lawyers.”
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For more information see:
ABA Section of Antitrust Law – 60th Antitrust Spring Meeting
In an interesting Washington Post article, Cecilia Kang and Jia Lynn Yang write about why the U.S. Federal Communications Commission (FCC) opposed AT&T’s acquisition of T-Mobile (see: How AT&T Fumbled its $39 Billion Bid to Acquire T-Mobile).
While the Department of Justice sued to block the merger in August (see: Justice Department Files Antitrust Lawsuit to Block AT&T’s Acquisition of T-Mobile) the FCC issued a report on November 29th which concluded that the transaction raised “significant competitive concerns” in the mobile market, and “’substantial and material’ questions about [the transaction’s] competitive effects on roaming, wholesale, and resale services, backhaul, and handsets” (see: Commissioner Copps on the Staff Report on the ATT/T-Mobile Merger). The FCC also concluded that the “parties’ claim that [the transaction] would lead to lower prices is flawed and over-estimates the benefits that would be passed on to consumers.”
According to the authors of the Post article, the “king of Washington lobbyists” and a “bare-knuckled brawler that spares no expense to win any fight”, may have used undue lobbying pressure on Washington regulators that resulted in its failure to acquire T-Mobile.
On December 7, 2011, the International Competition Network (ICN) published its updated ICN Work Product Catalogue, with interactive links to ICN reports and documents from 2008 to 2011 in the advocacy, cartel (conspiracy), mergers and unilateral conduct (monopoly / abuse of dominance) areas.
JANUARY 30-31 2012 – Toronto
The Canadian Institute will be holding an Anti-Corruption and Bribery Compliance conference from Monday January 30 to Tuesday January 31, 2012 at the Four Seasons Hotel, Toronto, Ontario.
On December 5, 2011, a federal omnibus crime bill (Bill C-10) was passed that will, among other things, have the effect of eliminating conditional sentences of two years or less from being ordered by courts for violation of two of the core criminal offences under the Competition Act: criminal conspiracy agreements (section 45) and bid-rigging (section 47).
To quote the Legislative Summary issued with Bill C-10, “conditional sentencing … allows for sentences of imprisonment to be served in the community, rather than in a correctional facility. It is a midway point between incarceration and sanctions such as probation or fines.”
Currently, a number of criteria must be met for a sentencing judge to impose a conditional sentence under the Criminal Code as follows: (i) the offence is not a “serious personal injury offence” (as defined in the Code), (ii) the offence is not a terrorism offence, (iii) the offence is not a criminal organization offence prosecuted by way of indictment for which the maximum term of imprisonment is 10 years or more, (iv) the offence is not punishable by a minimum term of imprisonment and (v) the sentencing judge has determined that the offence should be subject to a term of imprisonment of less than two years, is satisfied that serving the sentence in the community would not endanger the safety of the community and the conditional sentence would be consistent with the fundamental purpose and principles set out in the sentencing guidelines of the Code.
Bill C-10 amends section 742.1 of the Criminal Code to remove the current reference to serious personal injury offences and to provide that a conditional sentence of two years or less may be ordered unless, among other things, the offence is an indictable offence with a maximum term of imprisonment of 14 years or life.
The Wall Street Journal reported earlier today that the Ontario Securities Commission (“OSC”) has approved Alpha (Alpha Trading Systems Limited Partnership and Alpha Exchange Inc.), Canada’s largest alternative trading platform to the TSX, as a stock exchange (see: Ontario Securities Regulator Allows Alpha to be Exchange).
The OSC’s Recognition Order sets out the terms and conditions of Alpha’s recognition as an exchange and the review process to be followed for the rules, policies and other similar instruments of Alpha Exchange.
The TMX, which owns and operates the TSX, is currently subject to a Cdn. $3.8 billion friendly bid by Maple Group, which requires, in addition to Provincial securities regulatory approvals in Ontario, Quebec, Alberta and British Columbia, clearance by the federal Competition Bureau. Alpha’s shareholders include a number of the Maple Group consortium’s investors including CIBC, Dejardins, National Bank and Scotia.
Last week the Commissioner of Competition expressed “serious concerns” about the Maple/TMX transaction, which is currently subject to a second stage review by the Bureau (see: Commissioner of Competition Addresses Current Enforcement Priorities in Two Wide-ranging Talks in Vancouver).
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For the OSC’s Notice of Approval and Recognition Order see:
Recognition of Alpha Trading Systems Limited Partnership and Alpha Exchange Inc. as an Exchange
OUR BOOKS
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Competition Law and REALTORS®: What You Say and Do Matters was designed by ACRE with the assistance of CREA to help Canadian REALTORS® understand and comply with Canadian competition law.
This course is available
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For more information see ACRE