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December 27, 2012

I’ve been thinking lately about writing a short note on Competition Act remedies and how the Act can be used as a strategic tool, partly from working on a few recent files with general commercial counsel who tend to ask: “what will we get and how do we get there using competition law”?

I’ve also grown to think of the Competition Act over the past few years as a collection of tools that can be used for strategic purposes (e.g., in settlement negotiations) or in an effort to achieve certain types of remedies for clients.  In other words, thinking about remedies first and the best types of competition law tools to get there.

So, with that said, the following is a short overview of Competition Act penalties and remedies (and a few of the ways the Act can be used as a strategic tool, either on its own or with other proceedings or strategies):

1. As a general matter, the Competition Act contains both civil provisions and criminal offences, and so the potential penalties/remedies vary considerably depending on the particular provision and whether a criminal offence or civil reviewable matter.

2. Competition Bureau complaints are possible under all of the provisions of the Act, by consumers or competitors (and may be filed in a number of ways).

3. Under the criminal offences of the Act (e.g., criminal conspiracy agreements, bid-rigging, deceptive telemarketing, etc.), potential penalties include fines and/or imprisonment.  The Bureau also sometimes seeks so-called “prohibition orders” for conduct to stop, which is one peculiar feature and remedy available to the Bureau.

4. The criminal offences, including section 45 (conspiracy agreements), bid-rigging and the criminal deceptive marketing provisions, also allow private civil actions to be commenced in addition to Bureau complaints (i.e., to plead violations of the criminal provisions of the Act in civil proceedings).  Civil actions based on the Competition Act must, however, make out both the elements of the relevant criminal offence (on a civil burden of proof) and actual loss or damage for recovery.

5. Under the civil provisions of the Act, potential penalties include “remedial orders” (e.g., Competition Tribunal orders to stop conduct or resupply under the refusal to deal provision), civil “administrative monetary penalties” or “AMPs” (for misleading advertising, now up to $10 million) and restitution orders (also under the civil misleading advertising provisions).

6. Under other civil provisions of the Act, while not allowing damages actions, private parties can apply to the Tribunal for orders for conduct to stop, to resupply terminated distributors/retailers, etc. or file Bureau complaints.  “Private access” applications to the Tribunal are available under the refusal to deal (section 75), price maintenance (section 76) and tied selling / market restriction / exclusive dealing sections (section 77).

7. Yet other sections only allow complaints to be filed with the Bureau (the abuse of dominance and merger provisions of the Act).  Under these, the Commissioner has exclusive jurisdiction to commence proceedings and seek remedies (e.g., orders to stop, AMPs, orders to block mergers or for the divestiture of assets, etc.).

8. Even where there are no private action/access rights available and in addition to ordinary complaints to the Bureau, under section 9 of the Competition Act, “six resident” complaints can be filed and, if the requirements for a six resident complaint are met, the Commissioner must commence an inquiry.  As such, this is an additional potential tool to cause the Bureau to begin an inquiry when it may not have otherwise (although the Commissioner retains the discretion to discontinue any inquiry once begun).

9. In addition to the above, as a practical matter, the Competition Bureau continues to be more enforcement focused at the moment than in some years (or perhaps ever) and there are growing numbers of private and class actions commenced under the Act.  As such, the prospect of Bureau enforcement and/or private litigation can also be valuable strategic tools for clients seeking remedies under the Act or generally.

10.   Finally, many of the provisions of the Competition Act are flexible (i.e., are broadly worded, courts have interpreted key elements broadly and/or under which there is limited case law).  One example are the criminal misleading advertising provisions, which can be used in civil suits against a broad range of business claims – i.e., not merely in connection with misleading advertising/marketing but also to challenge a variety of types of claims made to promote “any business interest”.  Novel arguments are also increasingly made under the Act, by both the Bureau and private plaintiffs, given that many of the boundaries of the Act have not yet been fully established.  This is particularly so since the Competition Act was significantly amended in 2009.

Given the range of potential remedies and options under the Act – for example, using competition law theories in settlement negotiations, including Competition Act causes of action in civil claims, filing complaints with the Bureau or considering Competition Tribunal applications – it is often very helpful to consider what remedies are available at the beginning of a case, either on their own or together with other theories/strategies (and what tools under the Act are available to achieve them).

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