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Caller identification spoofing.

CRTC, “International enforcement agencies join forces to thwart caller identification spoofing” (October 21, 2013): “As agencies responsible for enforcing do-not-call, privacy, telemarketing, consumer protection, telecommunications and other related laws, we are faced with the common challenge of caller identification spoofing.  This practice, which can accentuate the harm caused by silent or nuisance calls, occurs when callers conceal their true identity by using invalid phone numbers to make calls.  This causes harm to consumers by facilitating unwanted, misleading and fraudulent telemarketing activities which causes anxiety, annoyance and in some cases distress and financial losses.  Telemarketers who make sales calls to consumers in our countries have an obligation to identify themselves.  Callers who use technology to spoof their caller ID with inaccurate, false or misleading information to appear on a telephone’s call display violate this requirement.  A spoofed number can appear as a string of digits, such as 000-000-0000, a random number or the stolen number of a real company, person or government entity.  Law enforcement experience and reports from consumers establish that caller identification spoofing is a troubling trend, particularly as it is challenging for enforcement agencies to track down the responsible parties.”

Cartel.

“Cartel” is another term for a criminal conspiracy and is frequently used in other major jurisdictions (e.g., referring to conspiracy agreements under Section 1 of the Sherman Act in the United States and Article 101 of the Treaty on the Functioning of the European Union in the EU).  Criminal conspiracy agreements between actual or potential competitors (i.e., price-fixing, market allocation/division and output/supply restriction agreements) are prohibited by section 45 of the Competition Act and punishable by fines of up to Cdn. $25 million (per count), imprisonment for up to 14 years, or both.

Competition Bureau: “A cartel is a formal or informal group of otherwise independent businesses whose concerted goal is to lessen or prevent competition among its participants.  Typically, cartel members enter into an agreement or arrangement to engage in one or more anti-competitive activities, such as to fix prices, allocate markets or customers, limit production or supply, or rig bids.”

Irish Competition Authority, Your Business and Competition Law (2012): “Cartels, where two or more businesses agree not to compete with each other, are the most serious form of anti-competitive behavior.   The agreement does not have to be in writing.  Nor does it even have to have been carried out.  Simply making a cartel agreement is illegal.  Cartels include: agreements to fix prices for goods and services, including agreement with competitors on discounts, etc.; market-sharing where competitors divide up locations or customers among themselves; controlling the amount of goods or services in order to keep prices higher; rigging bids among competitors so that the outcome guarantees one person or company in particular wins the contract.”

International Competition Network, Anti-Cartel Enforcement Manual, Chapter 4, Cartel Case Initiation: “Cartel conduct.  Cartel conduct is the most serious form of anti-competitive practice and/or breach of competition law and it involves two or more competing undertakings, businesses or individuals seeking to limit or reduce competition by: (i) fixing prices, which occurs when competitors enter into an agreement to raise, fix, or otherwise maintain the price for a product or service.  Price fixing can include agreements to establish a minimum price, to eliminate discounts, or to adopt a standard formula for calculating prices; (ii) limiting output or sales, which occurs in the form of production or sales quota arrangements which involve an agreement between competitors to limit the volume of particular goods or services available on the market; (iii) sharing markets, which refers to agreements between competitors that divide up the market, for example, on a geographic, product or customer basis, so that the participants are sheltered from competition between each other, or (iv) rigging bids, where two or more competitors agree that they will not compete with each other for particular tenders or will share information on their tenders, and/or allow one of the participants in the agreement to win the tender.”

Cartel (London England) Vol. I, No. 1, July 1950: “It is generally agreed that the increasing influence of cartels in modern economic life has, in substituting the security of the monopolized market for the risk-taking involved by competition, slowed down technical progress and preserved out-of-date methods and equipment in the high-cost enterprises.  Prices are fixed to cover the costs of the less-efficient firms; they enjoy a secure profit, and have little incentive to increase their efficiency.  At the same time, that price allows a proportionately higher return to the more efficient firms.  The only result is a tendency for the general efficiency in cartelized branches of industry to stagnate or even to deteriorate.  And, insofar as cartelization spreads, the volume of production is restricted and the standard-of-living is prevented from rising.  The disturbances and dislocations of employment caused by trade cycles are themselves aggravated by cartelization.  In a period of declining demand, the rigid and relatively high prices of cartel products are prevented from falling.  The real purchasing power of consumers is not increased, and a further overall decline in production and growing unemployment results.  The ‘security’ of the cartelized producers is bought at the expense of production and the increase sufferings of the unemployed.  From the viewpoint of social justice, there are evidently grave defaults in a system which gives security to those who should bear the risk (carrying the losses in return for reaping the profits), while the insecurity is shifted to those who are least able to shoulder it.”

See also Competition Bureau, Competitor Collaboration Guidelines (2009); Competition Act section 45; definition of conspiracy; definition of hard core cartel.

“Car or cash pitch”

A form of deceptive telemarketing.

Rachel Larable-Lesieur, Deputy Director of Investigation and Research, Marketing Practices Branch, Bureau of Competition Policy, “Modern Communications and Global Markets”, speech to the Canadian Institute Conference on Misleading Advertising (1995): “… victims are led to believe that they have won either a vehicle or money but to get their prize, they must release money up front to cover phony taxes, insurance or handling charges.”

Category management agreement. 

European Commission, Commission Notice, Guidelines on Vertical Restraints (2010): “Category management agreements are agreements by which, within a distribution agreement, the distributor entrusts the supplier (the “category captain”) with the marketing of a category of products including in general not only the supplier’s products, but also the products of its competitors. The category captain may thus have an influence on for instance the product placement and product promotion in the shop and product selection for the shop.”

Caveat emptor

Latin for “let the buyer beware”.

Caveat venditor.

Latin for “let the seller beware”.

R. v. Colgate-Palmolive Ltd., [1970] 1 C.C.C. 100: “This legislation is the expression of a social purpose, namely the establishment of more ethical trade practices calculated to afford greater protection to the consuming public.  It represents the will of the people of Canada that the old maxim caveat emptor, let the purchaser beware, yield somewhat to the more enlightened view caveat venditor — let the seller beware.”

Cellophane fallacy.

A term sometimes used in assessing market power of a firm and relevant substitutes in an abuse of dominance (monopolization) analysis.

Competition Bureau, Enforcement Guidelines, The Abuse of Dominance Provisions: Sections 78 and 79 of the Competition Act (2012):  [Describing the concept of the cellophane fallacy]: “It is important to note that, in the context of abuse of dominance cases, the current price typically will not be the appropriate benchmark to use when defining the relevant market, as some products that appear to be good substitutes at that price level might not be considered substitutes at price levels that would have prevailed in the absence of the alleged anti-competitive act(s). Inclusion of these products could lead to an overly broad product market definition because these products do not discipline the market power of the dominant firm(s), but rather are only considered substitutes for products in the market at price levels where market power has already been exercised.”

ICN, Unilateral Conduct Working Group, Unilateral Conduct Workbook, Chapter 3: Assessment of Dominance (May, 2011): “In defining the market for the purpose of assessing dominance, it is important to consider whether the alleged dominant firm is already selling its product at or near the ‘monopoly’ price.  If a firm is dominant, it already is presumably extracting a monopoly profit.  Therefore, in this situation, the fact that a further price increase might not be profitable does not indicate that demand-side substitution is constraining prices at a competitive level.  Mistakenly concluding that it does is commonly called the ‘Cellophane fallacy.’”  This analytical error first originated in United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377 (1956).

See also Facey, Brian and Dany H. Assaf, Competition and Antitrust Law: Canada and the United States, 3rd ed. (Markham: LexisNexis Canada, 2006) at 124: “A firm’s inability to raise price is generally associated with the lack of market power, even where it may otherwise exist.  Conventional price theory establishes that even an unregulated monopolist can face restraints on its ability to impose further price increases.  Beyond some point, further price increases will cause buyers to shift to other products that were not originally regarded as sufficiently good substitutes when the monopoly price was lower.  For example, in the famous Du Pont case, the court interpreted the presence of many substitutes for Cellophane (including wax paper, aluminum foil, paper wrapping materials, etc.) at the prevailing price as evidence that Du Pont did not possess market power.  However, the proper benchmark was the competitive price rather than the prevailing price, because it was Dupont’s exercise of pre-existing market power which led to other products being viewed by consumers as substitutes.  If the court had focused on the proper competitive benchmark, it would have found that Du Pont had adopted practices that, for many years, allowed it to exclude competitors and raise its price up to the profit-maximizing monopoly level, beyond which further increases were not profitable due to the presence of these less than optimal substitutes.  The court’s approach to market definition, though proper for merger review, was in appropriate in the monopolization context.  Consistent with the very conventional economic theory of substitutability, the court’s adoption of the wrong competitive benchmark led it to commit the now famous ‘Cellophane Fallacy’.”

Charitable donation scam.

A type of fraud.

Ontario Ministry of Consumer Services: “Phony fundraisers can contact you through mail, e-mail, telephone, or by knocking on your door.  They claim to represent a charitable organization that helps people in need or is involved in a social issue, such as protecting the environment. They ask you for money. If you hesitate, they may try to pressure you. They may say the problem is desperate. They may say you need to act immediately. But beware. If you give them money, it often goes right into their own pockets.  Once you make your donation, there is usually nothing you can do to get your money back. And real charities are cheated out of the money you would have given them.”

“Cheap gift pitch”

A form of deceptive telemarketing.

Rachel Larable-Lesieur, Deputy Director of Investigation and Research, Marketing Practices Branch, Bureau of Competition Policy, “Modern Communications and Global Markets”, speech to the Canadian Institute Conference on Misleading Advertising (1995): “… victims are told they are winners of one of several prizes but in order to qualify for the prize, they need to purchase a cheap product at an inflated price.”

Circumstantial evidence.

In Canada, anti-competitive agreements under the conspiracy provisions of the Competition Act may be proven by direct or circumstantial evidence.  Sometimes this concept is also discussed under the terms “facilitating factors” or “plus factors”.

Competition Act, section 45(3): “In a prosecution under subsection (1), the court may infer the existence of a conspiracy, agreement or arrangement from circumstantial evidence, with or without direct evidence of communication between or among the alleged parties to it, but, for greater certainty, the conspiracy, agreement or arrangement must be proved beyond a reasonable doubt.”

Competition Bureau contribution, OECD Roundtable, Information Exchanges Between Competitors under Competition Law (2010): “Information exchanges in and of themselves are not per se illegal under section 45 of the [Competition Act].  However, proof that competitors have exchanged information can sometimes serve as evidence of an agreement to fix prices, allocate markets or restrict output.  For example, the exchange of pricing information followed by parallel price increases could be sufficient to infer an agreement to fix prices, particularly if accompanied by other ‘plus factors’, such as evidence that representatives of the competitors were present at the same function or communicated prior to the price increases coming into effect.  Other ‘plus factors’ include: a relatively small number of firms a relatively homogenous product; inelastic demand; evidence that prices were well above costs or moved in a way that seemed inconsistent with competition; actions that can only be explained by the existence of an agreement, such as secret meetings and enforcement activities; and the simultaneous adoption of facilitating practices that make coordination possible without the need for any direct communications, such as pre-announcing price increases, the advance circulation of price lists, open pricing policies, net pricing schemes, similar consignment sales programs, similar delivered pricing systems, most-favored-nation clauses, meet-or-release clauses, common product standards and public statements about the need to achieve pricing stability.”

OECD, Policy Roundtable, Prosecuting Cartels without Direct Evidence (2006):  “Circumstantial evidence is employed in cartel cases in all countries.  … There are two general types of circumstantial evidence: communication evidence and economic evidence.  Of the two, communication evidence is considered to be the more important.  Economic evidence is almost always ambiguous.  It could be consistent with either agreement or independent action.  Therefore it requires careful analysis.”  “There are different types of circumstantial evidence.  One is evidence that cartel operators met or otherwise communicated, but does not describe the substance of their communications.  It might be called ‘communication’ evidence … It includes: records of telephone conversations between competitors (but not their substance), or of travel to a common destination or of participation in a meeting, for example during a trade conference.  Other evidence that the parties communicated about the subject – e.g., minutes or notes of a meeting showing that prices, demand or capacity utilization were discussed; internal documents evidencing knowledge or understanding of a competitor’s pricing strategy, such as an awareness of a future price increase by a rival.  A broader category of circumstantial evidence is often called ‘economic’ evidence.  Economic evidence identifies primarily firm conduct that suggests that an agreement was reached, but also conduct of the industry as a whole, elements of market structure which suggest that secret price fixing was feasible, and certain practices that can be used to sustain a cartel agreement.  Conduct evidence is the single most important type of economic evidence. … observation of certain, suspicious conduct frequently triggers an investigation of a possible cartel.  Conduct evidence includes … parallel pricing … capacity reductions, adoption of standardized terms of sale and suspicious bidding patterns …”

Antitrust Law Developments (Fifth), Volume I, p. 11:  “While some decisions have suggested that parallelism is a factor to be weighed, and generally to be weighed heavily, other facts and circumstances, often referred to as ‘plus factors’, typically must be combined with evidence of conscious parallelism to support an inference of concerted action.  The courts emphasize that these plus factors should not be viewed in a vacuum but should be considered as a whole against the entire background in which the alleged behaviour takes place.”

William E. Kovacic, et al., “Plus Factors and Agreement in Antitrust Law” (2012): “Plus factors are economic actions and outcomes, above and beyond parallel conduct by oligopolistic firms, that are largely inconsistent with unilateral conduct but largely consistent with explicitly coordinated action.

William E. Kovacic, et al., “Plus Factors and Agreement in Antitrust Law” (2012):  The line that distinguishes tacit agreements (which are subject to section 1 scrutiny) from mere tacit coordination stemming from oligopolistic interdependence (which eludes section 1 [of the Sherman Act’s] reach) is indistinct.  The size of the safe harbor that Theatre Enterprises recognized depends on what conduct courts regard as the “extra ingredient of centralized orchestration of policy which will carry parallel action over the line into the forbidden zone of implied contract and combination.  Courts enjoy broad discretion to establish the reach of section 1 [of the Sherman Act] by defining this “extra ingredient” broadly or narrowly.  Legal scholars have recognized that certain industry structures, firm histories, and market environments are conducive to and/or facilitate collusion.  However, courts have relied on operational criteria known as plus factors to determine whether a pattern of parallel conduct results from an agreement.  The chief plus factors have included: (i) actions contrary to each defendant’s self-interest unless pursued as part of a collective plan; (ii) phenomena that can be explained rationally only as the result of concerted action; (iii) evidence that the defendants created the opportunity for regular communication; (iv) industry performance data, such as extraordinary profits, that suggest successful coordination; and (v) the absence of a plausible, legitimate business rationale for suspicious conduct (such as certain communications with rivals) or the presentation of contrived rationales for certain conduct.

In Re: Electronic Books Antitrust Litigation, 11 MD 2293 (DLC), citing Anderson News, L.L.C. v. Am. Media, Inc., No. 10-4591-cv, 2012 WL 1085948 at 17 (2d Cir. Apr. 3, 2012), Monsanto, 465 U.S. at 764: “Because unlawful conspiracies tend to form in secret, such proof will rarely consist of explicit agreements.  Rather, conspiracies ‘nearly always must be proven through inferences that may fairly be drawn from the behavior of the alleged conspirators.’  Thus, to prove an antitrust conspiracy, ‘the antitrust plaintiff should present direct or circumstantial evidence that reasonably tends to prove that the [defendant] and others had a conscious commitment to a common scheme designed to achieve an unlawful objective.’”

North York Branson Hospital v. Praxair Canada Inc., [1998] O.J. No. 5993 (S.C.J.): “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 its 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 statements by the conspirators from which the prior agreement can be logically inferred.  Such details would not usually be available to a plaintiff until discoveries.”

“Class or species of business”.

The first branch of the test for abuse of dominance under the Competition Act (section 79) requires the Commissioner of Competition to show before the Competition Tribunal that a firm (or firms) is dominant in one or more relevant markets.  The language of the section is that a person (or persons) “substantially control, throughout Canada or any area thereof, a class or species of business.”  “Class or species of business” has been held to be synonymous with product market in the economic sense.  See e.g. Competition Bureau, Enforcement Guidelines on the Abuse of Dominance Provisions (2001).  See also Canada (Director of Investigation & Research) v. NutraSweet Co. (1990), 32 C.P.R. (3d) 1 (Comp. Trib.); Canada (Director of Investigation and Research) v. Laidlaw Waste Systems Ltd. (1992), 40 C.P.R. (3d) 289 (Comp. Trib.); Canada (Director of Investigation and Research) v. The D&B Companies of Canada Ltd. [1995], 64 C.P.R. (3d) 216 (Comp. Trib.).

Closed loop gift card.

Financial Consumer Agency of Canada: “There are two main types of prepaid cards.  Both require you to pay up front to ‘load’ money on to a card for later use and both are sometimes referred to as ‘gift cards’.  Prepaid cards from retailers can only be used at a single store or group of stores, such as a chain or shopping mall.  Other prepaid cards, usually branded with a payment card network operator’s logo, such as American Express, MasterCard or Visa, can be used at most merchants that display the specific network’s logo.”

Datacard Group: “A gift card is a type of stored-value payment card commonly issued by retailers and banks.  Gift cards are preloaded with a set value.  There are two major types of cards – those that can be used only at one store chain or one location (closed loop) and those that can be used anywhere (open loop).  Closed loop gift cards generally carry no fees or expiration date – the issuing store makes its money off the profit from selling merchandise.  Open loop gift cards always carry fees.  Because they are issued by banks or credit card transaction processors, such as Visa or MasterCard, fees are the only way they can profitably issue gift cards.”

Cluster market.

OECD, Policy Roundtable, Market Definition (2012): “Markets where several goods are jointly demanded and supplied are referred to as cluster markets in the literature.  Cluster markets are characterized by transaction complementarities between the various components of a bundle of products or services.”

Collusion.

OECD, Policy Roundtable, Unilateral Disclosure of Information with Anti-competitive Effects (2012): “In the economic literature, the term ‘collusion‘ refers to any form of co-ordination or agreement among competing firms with the objective of raising prices (or lowering output) to a level which is higher than the non-collusive equilibrium.  In other words, collusion is a joint profit maximization strategy put in place by competing firms in order to achieve monopoly prices and profits jointly, rather than competing independently.  Firms can collude on different competitive variables.  In most cases, co-ordination involves keeping prices above the competitive level.  In other markets, however, collusion may aim at limiting production or the amount of new capacity brought to the market.  Firms may also co-ordinate by dividing the market, for instance by geographic area or other customer characteristics, or by allocating contracts in bidding markets.”

Combination remedy.

Merger remedies are usually thought of as one of three types: (i) structural, (ii) behavioural or (iii) combination.

Competition Bureau, Information Bulletin on Merger Remedies in Canada (2006): “A combination remedy refers to a structural divestiture combined with other relief that is behavioural in nature.  Certain behavioural terms may help ensure an effective remedy is ultimately implemented when they supplement or complement the core structural remedy …”

The Bureau has in some cases required some supporting behavioural remedies to divestiture, for example to assist a buyer of divested assets operate the new business (e.g., technical assistance, access to supply/inputs, etc.).  See also definitions of “structural remedy” and “behavioural remedy”.

Competition Bureau, in OECD, Policy Roundtables, Paper, Remedies in Merger Cases (2011): “The Bureau recognizes that the use of combination remedies, that is, the combination of certain behavioural terms with structural relief, may help to ensure the implementation of an effective remedy, particularly where such behavioural remedies are used during transition periods until a competitive market structure has developed. The inclusion of behavioural elements in a remedy may contribute to the success of a buyer of divested assets by providing the buyer with the ability to operate effectively and as quickly as possible in the relevant market. As with standalone behavioural remedies, the Bureau will not agree to such behavioural measures, unless they require minimal on-going monitoring by the Bureau and are enforceable by either the Bureau or the Tribunal.  The types of behavioural remedies commonly used by the Bureau to supplement structural remedies include short-term supply agreements for the buyer of divested assets, agreements to provide technical assistance for a limited time, waivers by the merged entity of restrictive contract terms, and codes of conduct. In a specific case in the pharmaceutical industry, a structural divestiture was complemented by a short-term supply agreement, a transition services agreement, and by ensuring that the purchaser had access to key personnel of the acquired business.”

Combine.

Another term for conspiracy and a rather antiquated term for criminal conspiracy agreements in the former Combines Investigation Act.

“Then what is a combine?  The statute does not answer.  The word was not known to the dictionaries as a noun till less than fifty years ago.  It does not appear in the Imperial Dictionary (London), 1859, or in Worcester’s Dictionary (Boston) 1872.  Its first appearance as a noun, so far as I have been able to discover, was in the Century Dictionary (New York) 1889, where the following definition is given: – ‘Combine, a combination or agreement: especially a secret combination for the purposes of committing fraud; a conspiracy.  (Colloq. and recent; First publicly used in the trial of an alderman for bribery in New York in 1886.)  This definition is carried without change into the last definition of the Century Dictionary (1913).   The word appears as a noun in Murray’s New English Dictionary (Oxford) 1893, with this definition: – ‘Combine – A combination, conspiracy, plot, U.S. colloq., – A combination of persons in furtherance of their own interests, commercial or political; a private combination for fraudulent ends.’  The New Standard dictionary (New York and London), 1913, carries this definition: – ‘Combine, A combination of persons, especially a union to effect, by underhand dealings what honest efforts openly employed cannot obtain; cabal; conspiracy.’  Webster’s New International Dictionary (Springfield, Mass.), 1914, has the word with this definition: ‘Combine.  Usually a combination of persons to effect some commercial, industrial or political object; – usually in a bad sense, and implying illegality or fraud.”  (R. v. Alexander Ltd. (1932))

Cartel (London England) Vol. I, No. 1, July 1950: “It is generally agreed that the increasing influence of cartels in modern economic life has, in substituting the security of the monopolized market for the risk-taking involved by competition, slowed down technical progress and preserved out-of-date methods and equipment in the high-cost enterprises.  Prices are fixed to cover the costs of the less-efficient firms; they enjoy a secure profit, and have little incentive to increase their efficiency.  At the same time, that price allows a proportionately higher return to the more efficient firms.  The only result is a tendency for the general efficiency in cartelized branches of industry to stagnate or even to deteriorate.  And, insofar as cartelization spreads, the volume of production is restricted and the standard-of-living is prevented from rising.  The disturbances and dislocations of employment caused by trade cycles are themselves aggravated by cartelization.  In a period of declining demand, the rigid and relatively high prices of cartel products are prevented from falling.  The real purchasing power of consumers is not increased, and a further overall decline in production and growing unemployment results.  The ‘security’ of the cartelized producers is bought at the expense of production and the increase sufferings of the unemployed.  From the viewpoint of social justice, there are evidently grave defaults in a system which gives security to those who should bear the risk (carrying the losses in return for reaping the profits), while the insecurity is shifted to those who are least able to shoulder it.”

Commercial electronic message.

Canada’s new anti-spam legislation (Bill C-28) introduces an “opt-in” regime for electronic marketing using “commercial electronic messages” (“CEMs”).

“CEMs are defined in Bill C-28 as follows: “For the purposes of this Act, a commercial electronic message is an electronic message that, having regard to the content of the message, the hyperlinks in the message to content on a website or other database, or the contact information contained in the message, it would be reasonable to conclude has as its purpose, or one of its purposes, to encourage participation in a commercial activity, including an electronic message that (a) offers to purchase, sell, barter or lease a product, goods, a service, land or an interest or right in land; (b) offers to provide a business, investment or gaming opportunity; (c) advertises or promotes anything referred to in paragraph (a) or (b); or (d) promotes a person, including the public image of a person, as being a person who does anything referred to in any of paragraphs (a) to (c), or who intends to do so.”

“Commercial activity” is defined very broadly as follows: “any particular transaction, act or conduct or any regular course of conduct that is of a commercial character, whether or not the person who carries it out does so in the expectation of profit, other than any transaction, act or conduct that is carried out for the purposes of law enforcement, public safety, the protection of Canada, the conduct of international affairs or the defence of Canada.”

Commercialization agreement.

European Commission, Guidelines on horizontal cooperation agreements (2011): “Commercialisation agreements involve co-operation between competitors in the selling, distribution or promotion of their substitute products. This type of agreement can have widely varying scope, depending on the commercialisation functions which are covered by the co-operation. At one end of the spectrum, joint selling agreements may lead to a joint determination of all commercial aspects related to the sale of the product, including price. At the other end, there are more limited agreements that only address one specific commercialisation function, such as distribution, after-sales service, or advertising.”

Comparative Advertising.

A common type of advertising/marketing that can be the subject of challenge by provincial or federal enforcement agencies (e.g., provincial consumer protection officials or the federal Competition Bureau) is comparative advertising.  Generally speaking, comparative advertising is where individuals or companies compare prices, product or service quality or performance to their competitors.

See e.g.: Advertising Standards Canada, Canadian Code of Advertising Standards: “Comparative advertising is advertising (as defined in the Code) that compares the advertiser’s products or services, and the products or services of one or more identifiable organization(s) or of the marketplace as a whole, concerning, for example, product or service characteristics, value, performance, consumer preference, market share, sales origin or availability.”

Like performance claims, comparative advertising can be an effective and legitimate way to distinguish products or services from the competition. For example, the Competition Bureau has endorsed the potentially pro-competitive benefits of comparative advertising, including in its 2007 Report on the self-regulated professions in Canada (Self-regulated professions – Balancing competition and regulation) with respect to legal fees: “[c]omparative advertising fosters price competition by allowing prospective clients to compare fees.  When consumers cannot compare the prices for legal services, there is little or no incentive for lawyers to compete on price, thereby raising the costs to consumers.”

However, comparative advertising can also raise misleading advertising concerns in some cases – for example, where the information in a comparative advertising claim is false or misleading or where it includes a performance claim that is not substantiated (i.e., that is not based on adequate and proper testing, which is required under the Competition Act).  As such, it is important to ensure that comparative advertising claims are, among other things, true, accurate and that any important information (e.g., conditions, limitations, etc.) is clearly disclosed.  In addition, if comparative advertising involves performance claims, such as claims relating to the performance or reliability of a product/service, it is also important that any such claim be both accurate and substantiated before being made.

OECD, Guidance, Competition Assessment Toolkit (2011): “Comparative advertising has the objective of extolling the virtues of the product sold by the advertiser compared to its competitor(s).  Comparisons can be very specific, highlighting, for example, technical differences.  Or they could be general and more subjective in nature.  Comparative advertising can also provide price comparisons between the advertiser’s product and its competitors.  A car manufacturer can, for example, advertise and make statements about how their cars are safer relative to their competitors and cite scientific crash test studies.  A carbonated drink producer could advertise that their drink tastes better than a competitor’s based on surveys of consumers.”

Competition.

R. Hesse, Deputy Assistant Attorney General, Antitrust Division, U.S. Department of Justice, “Six ‘Small’ Proposals for SSOs Before Lunch”, remarks to the ITU-T Patent Roundtable, Geneva, Swizerland (October 10, 2012): “Competition creates incentives for invention, innovation and risk-taking by allowing competitors to profit from being at the forefront of technological change.  The desire to improve existing products to maintain or gain market share pushes competitors to improve function, design and production processes.  Standing on the shoulders of those who come before them, some leap over existing offerings to introduce radically new products and services that transform the lives of consumers.”

Sir John Vickers, former Chairman of the Office of Fair Trading, U.K.: “Competition is good for consumers for the simple reason that it compels producers to offer better deals – lower prices, better quality, new products, and more choice.”

Competition Bureau, Draft Updated Enforcement Guidelines: The Abuse of Dominance Provisions (2009): “Competitive markets provide consumers with lower prices, greater choice, and innovative products, and protecting the integrity of competition is important to ensure both the efficiency of the Canadian economy and the prosperity of Canadians.”

McMillan (J. & A.) Ltd. v. McMillan Press Ltd. (1989), 99 N.B.R. (2d) 181 (N.B.C.A.):  “… the effort of two or more parties acting independently to secure the business of their party by offering the most favourable terms.”

Judge Frank Easterbrook, “The Limits of Antitrust”, 63 Tex. L. Rev. 1, 5 (1984): “every successful competitive practice has victims.  The more successful a new method of making and distributing a product, the more victims, the deeper the victims’ injury”.

United States v. Topco Associates Inc. 405 U.S. 596 (1972): “Antitrust laws … are the Magna Carta of free enterprise.  They are as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms.”

Minister of Consumer and Corporate Affairs, Proposals for Amending the Combines Investigation Act (1981): “The consumer benefits when product innovation or improved distribution systems result in a firm outdistancing its rivals in the marketplace.  If competitors fall from the market because a dominant competitor is more effective in meeting consumers needs, this is not an abuse of market power, but rather a natural consequence of the competitive process.”

R. v. Electrical Contractors (1961): “Rivalry in the market and striving for custom between those who have the same commodities to dispose of is essential for the benefit of all members of the public interested in such commodities in any manner described in the section.  There is no absolute right of unlimited freedom to carry on business without competition.”

R. v. Howard Smith Paper Mills Ltd. (1957): “The public is entitled to the benefit of free competition, and the prohibitions of the [Combines Investigation Act] cannot be evaded by good motives.”

Howard Smith Paper Mills Ltd. v. The Queen (1957): “The statute proceeds upon the footing that the preventing or lessening of competition is in itself an injury to the public.  It is not concerned with public injury or public benefit from any other standpoint.”

A. Andras, “Labour and Combines” (1952): “Freedom to compete is, then, the essence of free enterprise.  The question arises to what extent enterprise in Canada is truly free or whether ‘free enterprise’ has become merely a phrase to be used unctuously by the economic imperialists.  If patriotism is the last refuge of the scoundrel, the slogan of ‘free enterprise’ may be last refuge of the monopolist.”

R. v. Container Materials Ltd. (1942): “The legislation is not aimed at protecting one party to the agreement against stipulations which may be oppressive and unfair as between him and the others; it is aimed at protecting the public interest in free competition.”

Weidman v. Shragge (1912), 46 S.C.R. 1: “Destroy competition and you remove the force by which humanity has reached so far”.

Weidman v. Shragge (1912):  “On the other hand, every step taken in the past to enlarge the bounds of human freedom of thought and action has stimulated discovery and invention, and as a product thereof, increased competition, which may have left by the way here and there financial wrecks as the result thereof.  This has made men cry aloud in denunciation of the waste of human energy, and loss of human comfort resulting from competition.  The cry is often a thoughtless one.  People raising it seldom reckon with the absolute necessary waste there is and must ever be incidental to growth, though all nature attests it on every hand.  Destroy competition and you remove the force by which humanity has reached so far.  The altruism some people would substitute for it may, when it has arrived, bring with it a higher sense of justice but it has not arrived.  To apply the standard of profit that might enable the stupid, the slothful, the ignorant, the over-capitalized man working with antiquated machinery, and a mill or warehouse over-manned, to compete with the standard that may be fairly reached by the men of brains, of energy, of sleepless vigilance, with only adequate capital to earn dividends for, and all the advantages that the latest improvements, invention or discovery can furnish, would be a sorry one indeed for society.  The fate of the former class must not be considered.  But the latter must not resort to unfair devices.  They do not need them.  They are without them the best kind of commercial asset the world can have, and must never be depressed or suppressed by the law.”

R. v. Clarke (1907):  “If there is anything important in connection with the affairs of a new country, anything important in connection with the affairs of a business community, it is that men should have the right – and I have no doubt that that was the intenion of parliament so far as this section is concerned – that men should have the absolute right, so long as they did not interfere with the rights of the public, to conduct their own business in the manner in which they see fit.  If this firm did not desire to make profits in selling lumber to the city of Edmonton or in selling lumber to the city of Calgary, that was a matter of their own concern, and it was not in the interests of the public that the members of this association assumed to bulldoze this particular individual in regard to the manner in which he should conduct his business.  Various other instances were brought forward in which practically the same class of thing was done.”

Competition Bureau.

Competition Bureau: “The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.  Headed by the Commissioner of Competition, the Bureau is responsible for the administration and enforcement of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.  The basic operating assumption of the Competition Bureau is that competition is good for both business and consumers.”

Competition law.

Competition Bureau, Intellectual Property Enforcement Guidelines:  “The principle underlying competition law is that the public interest is best served by competitive markets, which are socially desirable because they lead to an efficient allocation of resources.  Competition law seeks to prevent companies from inappropriately creating, enhancing or maintaining market power that undermines competition without offering offsetting economic benefits.”

Competition Tribunal.

Competition Tribunal website:  “The Competition Tribunal is a specialized tribunal that combines expertise in economics and business with expertise in law. The Tribunal is a strictly adjudicative body that operates independently of any government department. The cases it hears are complex and deal with matters such as mergers, misleading advertising and restrictive trade practices.  The Competition Tribunal should be distinguished from the Competition Bureau.  The Competition Bureau investigates complaints and decides whether to proceed with the filing of an application to the Tribunal.”  See also: Competition Tribunal Act and Competition Tribunal Rules.

Competitively sensitive information.

The exchange of competitively sensitive information between competitors – for example between members of a trade or industry association – can raise competition issues.  Such information may include information relating to prices, suppliers, customers, costs, markets and market shares and business and strategic plans.  Generally speaking, the risk is two-fold: first, the exchange of competitively sensitive information may lead to an agreement that violates section 45 of the Competition Act (criminal conspiracy agreements); second, information exchanges can be used by the Competition Bureau, a court or a private plaintiff to infer the existence of an agreement that contravenes section 45 (or raises issues under other provisions of the Act).

Competition Bureau, Competitor Collaboration Guidelines (2009):  “An agreement to disclose or exchange information that is important to competitive rivalry between the parties can result in a substantial lessening or prevention of competition.  For example, exchanging pricing information, costs, trading terms, strategic plans, marketing strategies or other significant competitive variables can raise concerns under the Act.  Where competitors agree to share competitively sensitive information, it can become easier for these firms to act in concert, thereby reducing or even eliminating competitive rivalry.”

European Commission, Guidelines on horizontal cooperation agreements (2011): “The exchange between competitors of strategic data, that is to say, data that reduces strategic uncertainty in the market, is more likely to be caught by Article 101 than exchanges of other types of information. Sharing of strategic data can give rise to restrictive effects on competition because it reduces the parties’ decision-making independence by decreasing their incentives to compete. Strategic information can be related to prices (for example, actual prices, discounts, increases, reductions or rebates), customer lists, production costs, quantities, turnovers, sales, capacities, qualities, marketing plans, risks, investments, technologies and R&D programmes and their results. Generally, information related to prices and quantities is the most strategic, followed by information about costs and demand.”

Confidentiality waiver.

International Competition Network (ICN), “Waivers of Confidentiality in Merger Investigations”:  “Confidentiality laws typically limit the type of information that reviewing agencies can share with one another. When a merger is subject to review by more than one agency, the merging and other interested parties may conclude that it is in their interest to waive confidentiality protections because they believe this may increase the likelihood of consistent analyses and compatible enforcement decisions. Waivers typically allow the agencies to share parties’ information and to discuss the information while maintaining its confidentiality with respect to other interested parties and the public.   Confidentiality waivers can facilitate cooperation among the agencies and coordination of their investigations and enforcement decisions.  Coordination is particularly appropriate and useful when the reviewing agencies have common enforcement interests, such as in cases in which their investigations focus on the same markets.  Waivers of confidentiality enable more complete communication between the reviewing agencies and with the merging parties regarding evidence that is relevant to the investigation.”

Conglomerate merger.

OECD, Policy Roundtable, Portfolio Effects in Conglomerate Mergers (2001): “… a conglomerate merger is defined as one in which the parties to the merger ‘… are not actual or potential competitors and the parties do not have an actual or potential customer-supplier relationship.’”  … the basic idea in the case of competitors would be that neither firm was exerting any competitive discipline on the other prior to the merger.  As regards a potential customer-supplier relationship … this refers to a situation where a party to a merger is presently competing with another party’s current supplier or client.”

Conscious parallelism.

Competition Bureau contribution, OECD Roundtable, Information Exchanges Between Competitors under Competition Law (2010): “The Bureau does not consider that the mere act of independently adopting a common course of conduct with awareness of the likely response of competitors, or in response to the conduct of competitors, commonly referred to as ‘conscious parallelism’, is sufficient to establish an agreement.  For example, in retail gasoline markets, the visibility of posted prices and the predominant consumer perception that gasoline sold by different companies is essentially the same product could logically produce similar or identical prices without an agreement.  However, parallel conduct coupled with facilitating practices, such as sharing competitively sensitive information, may be sufficient to prove that an agreement was concluded between the parties.”

Fundamentals of Canadian Competition Law, J. Musgrove ed., Chapter 4, Criminal Conspiracy, p. 49:  “Identical price changes [that may] occur almost simultaneously among competitors without any agreement among them.  One competitor may take the lead at raising prices.  The others will then follow suit, with the unspoken mutual understanding that all will reap greater profits from the higher prices as long as no one attempts to undercut the others.”

Antitrust Law Developments (Fifth), Volume I, p. 9: “Allegations of concerted action by competitors are frequently based on a pattern of uniform business conduct, which the courts often refer to as ‘conscious parallelism’”.

Blomkest Fertilizer, Inc. v. Potash Corp. of Saskatchewan, 203 F.3d 1028, 1032 (8th Cir.):  “Conscious parallelism is the process not in itself unlawful, by which firms in a concentrated market might in effect share monopoly power, setting their prices at a profit-maximizing, supracompetitive level by recognizing their shared economic interests.”

Competition Bureau, Competitor Collaboration Guidelines, p. 7: “… the mere act of independently adopting a common course of conduct with awareness of the likely response of competitors or in response to the conduct of competitors …”

Consent agreement.

Consent agreements are the form of settlement document entered into under the civil provisions of the Competition Act (the deceptive marketing and reviewable practices provisions), and have replaced the former process of obtaining consent orders from the Competition Tribunal.  Under Part VII.1 (Deceptive Marketing Practices) the Commissioner of Competition and a person in relation to whom the Commissioner has applied (or may apply) for an order may enter into a consent agreement to settle the matter.  Consent agreements are registered with the Competition Tribunal, upon which any proceedings are terminated and the consent agreement has the same force and effect as a court order (i.e., an order of the Competition Tribunal, Federal Court or provincial superior court, all of which are “courts” for the purposes of Part VII.1 of the Act).  Consent agreements may also be entered into under the Part VIII Reviewable Matters provisions, including in relation to sections 75 (refusal to deal), 76 (price maintenance), 77 (tied selling / exclusive dealing / market restriction) and 79 (abuse of dominance).  See section 105.  As under Part VII.1 of the Act, consent agreements entered into under Part VIII, once registered with the Tribunal, terminate the proceedings, if any, and have the same force as a Competition Tribunal order.

See also Competition Bureau, Bulletin, Corporate Compliance Programs: “Depending on the circumstances, conduct contravening the Acts may be resolved without fully contested proceedings. The Act contains provisions that provide the Tribunal with the power to issue consent agreements under section 105 to address civil reviewable matters under Part VIII of the Competition Act. The Tribunal also has the authority to issue consent orders, which may include the publication of corrective notices under section 74.12. Section 34 provides that a court may, on application of the Attorney General of Canada, issue a consent prohibition order with or without an admission of guilt.”

Conspiracy (Competition Act).

Section 45 of the federal Competition Act makes it a criminal offence for actual or potential competitors to enter into price-fixing, market allocation or supply restriction agreements.  Section 45 of the Act provides: [e]very person commits an offence who, with a competitor of that person with respect to a product, conspires, agrees or arranges (a) to fix, maintain, increase or control the price for the supply of the product; (b) to allocate sales, territories, customers or markets for the production or supply of the product; or (c) to fix, maintain, control, prevent, lessen or eliminate the production or supply of the product.”  Persons who contravene section 45 of the Act are potentially subject to penalties that include criminal fines of up to $25 million (per count), imprisonment for up to fourteen years, or both.  Conspiracy agreements, or “cartels” which is the term frequently used in the United States, are considered to be “hard core” anti-competitive conduct typically punishable by significant penalties in most major jurisdictions.  For more information see: Competition Bureau, Competitor Collaboration Guidelines.

Conspiracy (common law).

In addition to statutory conspiracy under the federal Competition Act, plaintiffs in Canada can, and commonly do, also plead common law conspiracy as a cause of action in competition law related civil claims.  In this regard, Canadian courts have distinguished between two types of common law conspiracy: (i) “predominant purpose conspiracy” and (ii) “unlawful means conspiracy”.

Dale v. The Toronto Real Estate Board, 2012 ONSC 512:  “There are two types of civil conspiracy.  First, there is a conspiracy where the predominant purpose of the defendants is to cause injury to the plaintiffs, regardless of whether the means employed are lawful or unlawful.  Second, there is a conspiracy where the conduct of the defendants is unlawful, is directed toward the plaintiff alone, and the defendants should have known that, in the circumstances, injury to the plaintiff was likely to result.   More particularly, the elements of ‘predominant purpose conspiracy’ require the plaintiff to establish that: (1) the defendants acted in combination, that is, in concert, by agreement or common design; (2) the predominant purpose of the defendants was to intentionally harm the plaintiff; and (3) the defendants’ conduct caused harm to the plaintiff.  The elements of ‘unlawful means conspiracy’ require the plaintiff to establish that: (1) the defendants acted in combination, again that is, in concert, by agreement or common design; (2) the defendants committed some unlawful act such as a crime, a tort, or breached some statute; (3) the defendants conduct was directed towards the plaintiffs; (4) the defendants knew or ought to have known that injury to the plaintiffs was likely to occur from their unlawful act; and (5) the defendants’ unlawful conduct in furtherance of their conspiracy caused harm to the plaintiff.”

Fournier Leasing Co. v. Mercedes-Benz Canada Inc., 2012 CarswellOnt 6068 (Ont. Sup. Ct.), per K.M. van Rensburg J., citing Agribrands Purina Canada Inc. v. Kasamekas (2011), 106 O.R. (3d) 427 (Ont. C.A.): “For defendants to be liable for the tort of unlawful conduct conspiracy, a plaintiff must prove that (a) the conspirators acted in combination; that is, in concert, by agreement or with a common design; (b) their conduct is unlawful; (c) their conduct is directed towards the plaintiffs; (d) the conspirators should know that, in the circumstances, injury to the plaintiffs is likely to result; and (e) that their conduct causes injury to the plaintiffs.”

See also: Canada Cement LaFarge Ltd. v. British Columbia Lightweight Aggregate Ltd., 1983 CanLII 23 (SCC), [1983] 1 S.C.R. 452, at pp. 471-472; Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959; Lombardo v. Caiazzo, [2006] O.J. No. 2286 (C.A.); Robinson v. Medtronic, Inc., [2009] O.J. No. 4366 (S.C.J.); Harris v. GlaxoSmithKline Inc. et al. (2010), 106 O.R. (3d) 661 (C.A.).

Consumer marketing.

Canadian Marketing Association, Code of Ethics and Standards of Practice: “Marketing products or services to individuals when they are purchasing for personal or household use.”

Consumer rebate promotion.

Competition Bureau, Enforcement Guidelines, Consumer Rebate Promotions (2009):  “Consumer rebate promotions include any type of promotion that involves a partial refund or discount from a manufacturer or retailer to consumers upon the purchase of a product.  Refunds are normally paid in the form of cash or a cheque.  For the purposes of this publication, ‘rebate’ is defined as excluding gift cards and other forms of credit on future purchases, given that the term ‘rebate’ can create the general impression in the minds of consumers that a portion of the price of the product will be returned to them.  Rebates can be beneficial to both consumers and businesses. For consumers, rebates can result in lower effective prices.  For businesses, rebates provide a flexible tool that may increase the volume of sales.  However, when rebates are not promoted or administered correctly, consumers may ultimately pay more than intended, and competitors can be unfairly disadvantaged.  There are two types of rebates: Instant rebates – Consumers receive the rebate at the time of purchase. The rebate is generally available to anyone who purchases the product, without further condition; Mail-in rebates – Consumers apply for the rebate after the purchase, by mail-in application, online or by other means.  ‘mail-in rebate’ includes mail-in, Internet and other delayed- payment rebates.  Various market participants may be involved in promoting and administering rebates.”

Competition Bureau, News Release, “Are You Getting the Real Deal?  Understand Rebate Promotions Before You Buy” (December 14, 2009): “True rebates involve a partial refund or discount on the purchase of a product, which is normally paid in the form of cash or a cheque.  By contrast, some promotions offer gift cards or credits to be used on future purchases.  While these may be a good deal, they are not rebates.”

Consumers Council of Canada:  “True rebates involve a partial refund or discount on the purchase of a product, which is normally paid in the form of cash or a cheque.  By contrast, some promotions offer gift cards or credits to be used on future purchases.  While these may be a good deal, they are not rebates.”

Computer virus fixing scheme.

Consumer Protection BC, “Top Ten Scams 2013 – Just in case a scam is around the corner”: “This scam starts when you receive a call with a warning that your computer has been infected with a virus and an offer to clean your computer.  What is really happening in this computer virus fixing scheme?  The scammer is trying to gain remote access to your computer and get your credit card information.  The scammer will say they need remote access to provide the supposed services, and will ask for your computer passwords and related information.  They will also ask for your credit card information, so they can be billed for the supposed services.”

Contest.

Promotional contests in Canada are largely governed by the federal Competition Act (statutory disclosure and misleading advertising rules), federal Criminal Code (provisions governing “illegal lotteries” that must be avoided), federal and provincial privacy legislation (relating to the collection of entrant personal information), the common law of contract (contests have been held to be contracts) and intellectual property laws (e.g., relating to the transfer of original artistic materials, for example in skill contests, or reproduction of 3rd party logos, trade-marks or other intellectual property not owned by a contest organizer).  In addition, Quebec has a separate regime governing contests, regulated by the Régie des alcools, des courses et des jeux.

With respect to the Competition Act, subsection 74.06 makes it a reviewable (i.e., civil) matter, subject to civil penalties, to operate a contest without certain required disclosure, to unduly delay the award of prizes and also governs the selection of participants and distribution of prizes:

“A person engages in reviewable conduct who, for the purpose of promoting, directly or indirectly, the supply or use of a product, or for the purpose of promoting, directly or indirectly, any business interest, conducts any contest, lottery, game of chance or skill, or mixed chance and skill, or otherwise disposes of any product or other benefit by any mode of chance, skill or mixed chance and skill whatever, where: (a) adequate and fair disclosure is not made of the number and approximate value of the prizes, of the area or areas to which they relate and of any fact within the knowledge of the person that affects materially the chances of winning; (b) distribution of the prizes is unduly delayed; or (c) selection of participants or distribution of prizes is not made on the basis of skill or on a random basis in any area to which prizes have been allocated.”

Contextual Advertisements.  

One form of Internet advertising.  Office of the Privacy Commissioner of Canada, Policy Position on Online Behavioural Advertising:  “Contextual advertising uses information about a user’s current visit to a site in order to serve a targeted advertisement to the user on that site. For example, if a user is visiting a website about pets, then ads related to pets might be shown.”

Control.

The definition of “merger” under section 91 of the Competition Act includes acquisitions of both control over or a “significant interest” in a business.

Competition Bureau, Merger Enforcement Guidelines: “[w]ith respect to corporations, section 2(4) of the Act defines ‘control’ to mean de jure (legal) control—that is, a direct or indirect holding of more than 50 percent of the votes that may be cast to elect directors of the corporation, and which are sufficient to elect a majority of such directors. With respect to partnerships, section 2(4) provides that a partnership is controlled by a person when the person holds an interest in the partnership that entitles the person to receive more than 50 percent of the profits of the partnership or more than 50 percent of its assets on dissolution.”

“Control” of a relevant market is also a necessary element for the abuse of dominance provisions of the Competition Act (under the first branch of the test for abuse of dominance under section 79).  In this regard, “control” has been held to mean market power in the economic sense.  See e.g., Competition Bureau, Enforcement Guidelines on the Abuse of Dominance Provisions (2001).  See also Canada (Director of Investigation & Research) v. NutraSweet Co. (1990), 32 C.P.R. (3d) 1 (Comp. Trib.); Canada (Director of Investigation and Research) v. Laidlaw Waste Systems Ltd. (1992), 40 C.P.R. (3d) 289 (Comp. Trib.); Canada (Director of Investigation and Research) v. The D&B Companies of Canada Ltd. [1995], 64 C.P.R. (3d) 216 (Comp. Trib.).

Cookie.

Office of the Privacy Commissioner of Canada: “A cookie is a small piece of text that is placed on a computer when an individual visits a website. Cookies were created so that information could be saved between visits to a website. They collect and store information about individuals based on their browsing patterns and information they provide to a site. Cookies record language preferences, for example, or let users avoid logging in each time they visit a site. Almost all of the most popular websites use them. Cookies can be very useful because, without them, individuals would have to enter certain bits of their personal information each time they visit their favourite sites.”

Coordinated effects.

Competition/antitrust enforcement agencies often consider two main types of anti-competitive effects arising from a merger: (i) unilateral effects; and (ii) coordinated effects.

Competition Bureau, Merger Enforcement Guidelines: “A coordinated exercise of market power can occur when a merger reduces the competitive vigour in a market by, for example, removing a particularly aggressive competitor or otherwise enabling or enhancing the ability of the merged firm to coordinate its behaviour with that of its competitors. In these situations, higher post-merger prices are profitable and sustainable because other competitors in the market have accommodating responses. … Coordination involves interaction by a group of firms (including the merged firm) that is profitable for each firm because of each firm’s accommodating reactions to the conduct of the others. Coordinated behaviour may relate to price, service levels, allocation of customers or territories, or any other dimension of competition. … Coordinated behaviour may involve tacit understandings that are not explicitly negotiated or communicated among firms. Tacit understandings arise from mutual yet independent recognition that firms can, under certain market conditions, benefit from competing less aggressively with one another.  Coordinated behaviour may also involve express agreements among firms to compete less vigorously or to refrain from competing. Such agreements may raise concerns under the conspiracy and bid-rigging provisions of the Act.”

U.S. Department of Justice and Federal Trade Commission, Horizontal Merger Guidelines (2010): “A merger may diminish competition by enabling or encouraging post-merger coordinated interaction among firms in the relevant market that harms customers. Coordinated interaction involves conduct by multiple firms that is profitable for each of them only as a result of the accommodating reactions of the others. These reactions can blunt a firm’s incentive to offer customers better deals by undercutting the extent to which such a move would win business away from rivals. They also can enhance a firm’s incentive to raise prices, by assuaging the fear that such a move would lose customers to rivals.  Coordinated interaction includes a range of conduct. Coordinated interaction can involve the explicit negotiation of a common understanding of how firms will compete or refrain from competing. Such conduct typically would itself violate the antitrust laws. Coordinated interaction also can involve a similar common understanding that is not explicitly negotiated but would be enforced by the detection and punishment of deviations that would undermine the coordinated interaction. Coordinated interaction alternatively can involve parallel accommodating conduct not pursuant to a prior understanding. Parallel accommodating conduct includes situations in which each rival’s response to competitive moves made by others is individually rational, and not motivated by retaliation or deterrence nor intended to sustain an agreed-upon market outcome, but nevertheless emboldens price increases and weakens competitive incentives to reduce prices or offer customers better terms. Coordinated interaction includes conduct not otherwise condemned by the antitrust laws.  The ability of rival firms to engage in coordinated conduct depends on the strength and predictability of rivals’ responses to a price change or other competitive initiative. Under some circumstances, a merger can result in market concentration sufficient to strengthen such responses or enable multiple firms in the market to predict them more confidently, thereby affecting the competitive incentives of multiple firms in the market, not just the merged firm.”

OECD, Roundtable, Substantive Criteria Used for Merger Assessment (2002): “… mergers likely to reduce competition by facilitating anti-competitive co-operation.”

European Commission, Guidelines on the assessment of horizontal mergers: “In some markets the structure may be such that firms would consider it possible, economically rational, and hence preferable, to adopt on a sustainable basis a course of action on the market aimed at selling at increased prices. A merger in a concentrated market may significantly impede effective competition, through the creation or the strengthening of a collective dominant position, because it increases the likelihood that firms are able to coordinate their behaviour in this way and raise prices, even without entering into an agreement or resorting to a concerted practice within the meaning of Article 81 of the Treaty.  A merger may also make coordination easier, more stable or more effective for firms, that were already coordinating before the merger, either by making the coordination more robust or by permitting firms to coordinate on even higher prices.  Coordination may take various forms.  In some markets, the most likely coordination may involve keeping prices above the competitive level.  In other markets, coordination may aim at limiting production or the amount of new capacity brought to the market.  Firms may also coordinate by dividing the market, for instance by geographic area or other customer characteristics, or by allocating contracts in bidding markets.”

OECD, Policy Roundtable Report, Economic Evidence in Merger Analysis (2011): “The broad intuition for coordinated effects is reasonably clear. If there is a link between concentration within a market and the degree of competition within that market, then significant increases in concentration in a market should be expected to lead to a reduction in the level of competition in that market.”

Counterfactual.

ICN Merger Working Group, ICN Merger Guidelines Workbook (April, 2006):  “… basic merger analysis relies on understanding the effects that a merger may have on the expected state of competition in a market.  A central concept of any competition test is therefore a comparison of competition with and without the merger. The competitive situation without the merger is sometimes referred to as the counterfactual.  In most cases, the best starting point for the counterfactual is prevailing conditions of competition, i.e., the conditions of competition existing before the merger.  It is necessary, however, in most instances to take into account likely and imminent changes in the nature of competition in order to reflect, as accurately as possible, the nature of rivalry without the merger.  Examples of such circumstances may include: expected near-term entry or exit from the market or committed expansion plans by existing competitors; there are committed expansion plans in place by one or both of the merging firms absent the merger; where one of the parties to a merger is a failing firm or a merger involves the acquisition of a failing division, pre-merger conditions of competition might not prevail even if the merger were prohibited …; there may be changes to the regulatory structure of the market such as liberalization or tighter environmental constraints that will change the nature of competition; there may be other changes in the market that have implications for the assessment of the competition.”

Countervailing power.

Buyer market power.

Competition Bureau, Enforcement Guidelines, The Abuse of Dominance Provisions: Sections 78 and 79 of the Competition Act (2012):  “Market power can also arise on the buying side when a single firm or group of firms has the ability to profitably depress prices paid to sellers to a level that is below the competitive price for a significant period of time.”

Competition Bureau, Report, Round Table on Monopsony and Buyer Power (2008): “Countervailing power is normally the expression used when considering whether an act, such as a merger, is likely to result in the ability to sustain a material price increase and the Bureau assesses whether one or more buyers have a countervailing ability to constrain that exercise of market power.  Conversely, in the case of monopsony, oligopsony or bargaining power, one or more sellers may have a countervailing ability to constrain the exercise of monopsony, oligopsony, or bargaining power.”

European Commission, Guidelines on the assessment of horizontal mergers: “The competitive pressure on a supplier is not only exercised by competitors but can also come from its customers. Even firms with very high market shares may not be in a position, post-merger, to significantly impede effective competition, in particular by acting to an appreciable extent independently of their customers, if the latter possess countervailing buyer power. Countervailing buyer power in this context should be understood as the bargaining strength that the buyer has vis-à-vis the seller in commercial negotiations due to its size, its commercial significance to the seller and its ability to switch to alternative suppliers.”

“Cover”, “courtesy” or “complementary” bidding.

One type of bid-rigging.

There are a number of types of bid-rigging that can contravene the criminal bid-rigging provisions of the Competition Act under section 47.  These include “cover”, “courtesy” or “complementary” bidding, where some firms submit bids that are too high to be accepted, or with terms that are unacceptable to the party calling for bids, to protect an agreed upon low bidder.

OECD, Recommendation of the Council on Fighting Bid Rigging in Public Procurement (2012): “Cover (also called complementary, courtesy, token, or symbolic) bidding is the most frequent way in which bid-rigging schemes are implemented. It occurs when individuals or firms agree to submit bids that involve at least one of the following: (1) a competitor agrees to submit a bid that is higher than the bid of the designated winner, (2) a competitor submits a bid that is known to be too high to be accepted, or (3) a competitor submits a bid that contains special terms that are known to be unacceptable to the purchaser. Cover bidding is designed to give the appearance of genuine competition.”

Cramming.

U.S. Federal Trade Commission: “Cramming is the placement of unauthorized charges on phone bills.”

U.S. Federal Trade Commission, Consumer Information, Mystery Charges on Your Phone Bill: “You’re looking at your phone bill thinking someone must have made a mistake.  How can you be charged for web hosting when you don’t know what web hosting is?  Why does your bill list a couple of international calls when all your friends and business contacts are stateside?  Chances are you’ve been crammed.  Cramming happens when a company adds a charge to your phone bill for a service you didn’t order, agree to, or use.  Cramming charges can be small, say $2 or $3, and easy to overlook.  But even when the phony charges aren’t small, they may sound like fees you do owe.  That makes them tough to pick out, especially if your phone bill varies month to month.”

Cross-border remedy.

OECD, Policy Roundtables, Paper, Remedies in Merger Cases (2011): “The term ‘cross-border remedy’ is used to refer to a situation where a competition authority is seeking a remedy in a merger case, but the merging parties and/or their assets are located abroad and therefore a remedy would require the sale of assets or certain conduct of the merged entity in another jurisdiction. Issues which could arise with cross-border remedies involve mainly (i) co-operation and co-ordination of enforcement actions among competition authorities reviewing the same transaction and seeking remedies; and (ii) monitoring and enforcing remedies that are not purely domestic.”

Cross-coupon promotion.

D.M.W. Young & B.R. Fraser, Canadian Advertising & Marketing Law:  “One very popular avoidance scheme [to the trading stamp offence under the Criminal Code] relies upon circumventing the requirement that the device must be ‘given’ (gratis) by the vendor of goods to the purchaser thereof to be a trading stamp within the meaning of section 379.  This requirement is arguably circumvented by having the purchaser ‘pay’ a nominal sum for the device.  This approach has been used by various companies in so-called ‘cross-coupon’ promotions in which, by purchasing goods from one company in excess of some specified value, the purchaser becomes entitled to coupons representing a discount or premium in respect of certain goods sold (or manufactured) by another company, upon payment to the first company of some minimal sum (e.g., one cent).  When the other (often related) company engages in a reciprocal promotional scheme, the result is a ‘cross-coupon’ promotion.”

Cross-price elasticities.

Competition Bureau, Enforcement Guidelines, The Abuse of Dominance Provisions: Sections 78 and 79 of the Competition Act (2012):  “Demand elasticities indicate how buyers change their consumption of a product in response to a change in the product’s price (own-price elasticity) or in response to changes in the price of another identified product (cross-price elasticity). While cross-price elasticities do not directly measure the ability of a firm to increase price, they are particularly useful for determining whether differentiated products are substitutes for one another and whether such products are part of the same relevant market.”

Crown jewel.

A term used to refer to key assets in the context of negotiated merger remedies.

Competition Bureau, Merger Remedies Study: “A crown jewel provision allows for additional specific asset(s) to be added or substituted into the initial divestiture package to increase the viability of a remedy.  Typically a crown jewel is triggered if a divestiture is not completed within the specified initial sale period, and thus the presence of a crown jewel is intended, in part, to provide an incentive for timely completion of a divestiture.”

Competition Bureau, Information Bulletin on Merger Remedies in Canada.  “The Bureau’s goal is to design a remedy package that will eliminate the substantial lessening or prevention of competition arising from a merger without going beyond what is necessary to resolve such competition concerns.  However, given the prospective nature of proposed divestitures, there is frequently some uncertainty as to whether the remedy will be viable (i.e., whether the divestiture will be completed).  Thus, an additional asset package (commonly referred to as a ‘crown jewel’) may be required as part of the remedy in order to reduce any such uncertainty.”

European Commission, Commission notice on remedies:  “In certain cases, the implementation of the parties’ preferred divestiture option (of a viable business solving the competition concerns) might be uncertain in view, for example, of third parties’ pre-emption rights or uncertainty as to the transferability of key contracts, intellectual property rights, or the uncertainty of finding a suitable purchaser.  Nevertheless, the parties may consider that they would be able to divest this business to a suitable purchaser within a very short time period.  In such circumstances, the Commission cannot take the risk that, in the end, effective competition will not be maintained. Accordingly, the Commission will only accept such divestiture commitments under the following conditions: (a) absent the uncertainty, the first divestiture proposed in the commitments would consist of a viable business, and (b) the parties will have to propose a second alternative divestiture which the parties will be obliged to implement if they are not able to implement the first commitment within the given time frame for the first divestiture.  Such an alternative commitment normally has to be a ‘crown jewel’, i.e. it should be as least as good as the first proposed divestiture in terms of creating a viable competitor once implemented, it should not involve any uncertainties as to its implementation and it should be capable of being implemented quickly in order to avoid that the overall implementation period exceeds what would normally be regarded as acceptable in the conditions of the market in question.”

CryptoLocker.

A type of online fraud.

Canadian Anti-Fraud Centre: “… the Canadian Anti-Fraud Centre (CAFC) has received … complaints regarding a new variation of Ransomware using CryptoLocker malware.  Ransomware is malware that restricts access to infected computers and requires victims to pay a ransom in order to regain full access.  The malicious software is being spread through email attachments.  Once opened, CryptoLocker installs itself to the home or business computer and encrypt a variety of file types such as images, documents and spreadsheets. The malware searches for files to encrypt on all drives and in all folders.  Once the malicious software is installed on the computer, a pop up appears claiming the files are blocked and that the data will be lost unless the private key is obtained from the scammers. In order to obtain the private key, a ransom payment in the amount of $300.00 is demanded to be paid by Bitcoin, UKash, Green Dot or other digital payment systems.  The user is given approximately 72 hours before the private key is destroyed and the files are lost forever.  Once the malware has encrypted files on a victim’s computer there is no way to decrypt them without the private key and by paying the ransom there is no guarantee that the files will be decrypted.”

Curber.

Consumer Protection BC, “Top Ten Scams 2013 – Just in case a scam is around the corner”: “Curbers, or unlicensed used-car ‘traffickers,’ often acquire junk cars and then sell them from parking lots or curbsides.  They advertise through local newspapers and online ads.  Later, the used car you bought privately may turn out to have a lien against it, the VIN (vehicle identification number) number switched, or the odometer rolled back.  In some cases, the car turns out to be stolen.”

Customer foreclosure.

OECD, Policy Roundtable Report, Economic Evidence in Merger Analysis (2011): “Customer foreclosure arises where [a] downstream merging party [in a merger] stops buying inputs from the competitors of its upstream merging partner.  If the downstream merging party is sufficiently large, this may have the effect of reducing the ability of upstream firms to compete with the upstream merging party as a result of a loss of economies of scale.  The potential result would then be that input prices would rise, leading to an increase in costs for downstream competitors of the merging parties and hence to a reduction in competition and harm to consumers. This requires that the downstream merging party is large and that the loss of its business is enough to increase the average costs of the upstream firms.”

Competition Bureau, Statement Regarding Proposed Mergers of Pork Producers and Hog Producers (2012): “This statement summarizes the approach taken by the Competition Bureau in its review of two proposed vertical mergers in the pork industry. On October 16, 2012, Olymel L.P. (Olymel) entered into an agreement to acquire Big Sky Farms Inc. (Big Sky), the largest independent hog producer in Western Canada, pursuant to a receivership sale process. On November 1, 2012, Maple Leaf Foods Inc. announced that it had agreed to acquire the Puratone Corporation, the second largest independent hog producer in Western Canada. […] Based on information obtained, the Bureau determined that due to the significant presence of Big Sky and Puratone in the upstream markets and the existence of barriers to entry and expansion in Western Canadian hog production, each of Olymel and Maple Leaf would likely have the ability and incentive post-transaction to harm certain rivals by foreclosing access to live hogs (input foreclosure). However, the Bureau concluded that input foreclosure, whether partial or complete, would be unlikely to result in a substantial lessening or prevention of competition because effective competition will remain downstream, including competition between Olymel and Maple Leaf.  The Bureau also determined that post-transaction each of Olymel and Maple Leaf would likely have the ability to harm rivals by foreclosing hog producers’ access to a sufficient customer base (customer foreclosure) as both control a significant amount of the slaughter capacity available to hog producers in one or more Western Canadian province. However, the information obtained from the parties and third parties indicated that neither Olymel nor Maple Leaf would have the incentive to foreclose rival hog producers from access to their slaughter facilities since the costs associated with limiting or ceasing the procurement of hogs from upstream rivals would likely exceed the gains from doing so, thereby rendering such a strategy unprofitable. The Bureau therefore concluded that it was unlikely that either transaction would result in a substantial lessening or prevention of competition through customer foreclosure.”

Cyber crime.

Foreign Affairs and International Trade Canada, International Crime and Terrorism:  “Cyber crime consists of specific crimes dealing with computers and networks (such as hacking) and the facilitation of traditional crime through the use of computers (child pornography, hate crimes, telemarketing /Internet fraud). In addition to cyber crime, there is also ‘computer-supported crime’ which covers the use of computers by criminals for communication and document or data storage. While these activities might not be illegal in and of themselves, they are often invaluable in the investigation of actual crimes. Computer technology presents many new challenges to social policy regarding issues such as privacy, as it relates to data mining and criminal investigations.”

Cyberlibel.

USLegal.com: “Cyberlibel is essentially same as defamation, except that the alleged defamatory material is posted on the Internet. Defamation may also be referred to as libel, slander, disparagement, defamation of character, etc. Defamation in the Internet can be classified as libel in view of that material communicated on the Internet is published e.g. bulletin boards, emails, chat rooms etc.”

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