Canadian COMPETITION LAW

May 12, 2013

In one of the most curious Canadian competition related stories that caught my eye last week, many Canadian lobster fishermen in the Maritimes have collectively stopped fishing in an apparent protest over what they say are unfairly low lobster prices.

According to media reports (see e.g.: here, here and here), lobster fishermen in P.E.I., New Brunswick and Nova Scotia have tied up boats in a collective effort to raise wholesale lobster prices that have ranged between $2.75 and $4.00 (for canner and market-sized lobsters). Evidently, attempts by the P.E.I. Fishermen’s Association to negotiate higher prices with processors have been unsuccessful.

While RCMP are reportedly on protest scenes to “keep the peace” so to speak, relatively little is being said about the potential competition law implications of this lobster blocade.  While some fishermen have been reported as saying that the current prices are “unreasonable”, “unfair” and the like, the Competition Act prohibits agreements between competitors to fix prices, divide markets or prevent or lessen supply (i.e., the criminal conspiracy offences of the Competition Act that were amended in 2009 are potentially broad enough to make collective boycotts a criminal offence, in the absence of a valid exemption or defense).

The Competition Act does, however, include some qualified exemptions for collective bargaining activities, which include combinations between workmen or employees for their “own reasonable protection”, agreements involving employer associations relating to collective bargaining with their employees and a specific exemption for certain collective activities involving fishermen.  The fisherperson carve-out exempts: “contracts, agreements or arrangements between or among fishermen or associations of fishermen and persons or associations of persons engaged in the buying or processing of fish relating to the prices, remuneration or other like conditions under which fish will be caught and supplied to those persons by fishermen”.

While the more general collective bargaining exemptions are qualified to, among other things, combinations limited to the “reasonable protection” of workmen/employees and, in the case of the employer association exemption, collective bargaining with an employer association’s employees, the fisherperson exemption of the Act (subsection 4(1)(b)) is somewhat more broadly worded and, as such, might potentially provide more of a “safe harbour” for lobster fishermen collectively refusing to fish and sell their catches in this case.

In this regard, in one of the few Canadian cases to consider the fisherman exemption (Couture v. Hewison), the British Columbia Supreme Court described it as follows:

“A comparison of the two paragraphs reveals that para. (a) is much broader, reflecting the historical basis, that being to give legal recognition to trade union activity in general so long as it is directed towards ‘their own reasonable protection as such workmen or employees’. … para (a) is limited to activities of workmen and employees for their own reasonable protection as such, whereas para. (b) applies to both fishermen and buyers and within the limits of its scope, i.e., fish prices, remuneration or other like conditions the exemption is absolute and not subject to any test as to the ‘reasonableness’ of the arrangement. … As I mentioned during the hearing it is my view that unlawful conduct cannot be said to come within ‘reasonable’ protection.  However, it is not all unlawful conduct that may be the subject of questioning but only unlawful conduct that is relevant to the inquiry.”

Also, while there has been very limited judicial consideration of the application of these qualified collective bargaining exemptions to collective action by fishermen, the Couture case also held that fishermen were “workmen” for one of the more general collective bargaining exemptions (subsection 4(1)(a)).  Having said that, the case law considering these exemptions is rather thin.  As such, it will be interesting to see whether any competition law issues will be raised (or challenges made) in this case.

Collective bargaining and fisherperson exemptions aside, it’s also probably worth noting that while the application of the amended Competition Act to collective refusals to deal still largely remains to be tested, collective refusals to deal (i.e., boycotts) involving competing suppliers (and in some cases their associations) have been subject to criminal challenges under the former Competition Act.

As such, it is incumbent on groups of competing suppliers and their associations to carefully consider whether collective efforts to refuse to deal or supply (or indeed other collective steps that may impact competition) have the benefit of any of the Competition Act’s exemptions or defenses or, if not, whether such collective steps may potentially raise criminal competition law issues.

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