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Tacit collusion.

OECD, Policy Roundtable, Unilateral Disclosure of Information with Anti-competitive Effects (2012):  “Collusion … may not necessarily involve an explicit understanding between firms.  In oligopolistic markets, firms tend to be interdependent in their pricing and output decisions so that the actions of each firm impact on, and result in, a counter response from the other firms.  In such circumstances, oligopolistic firms may take their rivals‘ actions into account and co-ordinate their actions as if they were a cartel, but without an explicit agreement.  Such coordinated behaviour is referred to as tacit (or sometimes implicit) collusion, oligopolistic interdependency or non-cooperative oligopoly.”

Technology market.

U.S. Federal Trade Commission and U.S. Department of Justice, Antitrust Guidelines for Collaborations Among Competitors (2000): “Technology markets consist of the intellectual property that is licensed and its close substitutes; that is, the technologies or goods that are close enough substitutes significantly to constrain the exercise of market power with respect to the intellectual property that is licensed.”

“Telefunding” Schemes.

Canadian Department of Justice, Report of the Canada – United States Working Group on Telemarketing Fraud (Updated December 1, 2011): “These prey on the charity of victims, soliciting donations for worthy causes, such as antidrug programs or victims of natural disasters. The pitch may simply ask for donations, or it may include other inducements, such as donor eligibility for valuable prizes which never materialize.  Charitable donors do not usually expect something in return for their contribution, and may thus never become aware that they have been defrauded.”

Telemarketer.

British Columbia Telemarketer Licensing Regulation: “’Telemarketer’ means a supplier who engages in the business or occupation of initiating contact with a consumer by telephone or facsimile for the purpose of conducting a consumer transaction.”

CRTC, National Do Not Call List: “If you make telemarketing calls or send telemarketing faxes on your own behalf or on behalf of one or more other businesses (i.e. clients), then you are a telemarketer.”

Telemarketing.

Competition Act, section 52.1:  “’telemarketing’ means the practice of using interactive telephone communications 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.”

Competition Bureau, Enforcement Guidelines, Telemarketing – Section 52.1 of the Competition Act: “’Interactive telephone conversations’ will be interpreted as live voice communications between two or more persons.  The Bureau will not consider ‘interactive telephone communications’ to have occurred with regard to: fax communications; Internet communications; or a customer’s interaction with automated prerecorded messages.”

CRTC, National Do Not Call List: “Telemarketing is the use of telecommunications facilities to make telephone calls or send faxes to consumers for the purpose of solicitation. Solicitation covers a wide range of activities, including sales calls, prospecting calls, and calls for charitable donations or volunteers. Any organization has the potential to be a telemarketer.”

Testimonial.

Competition Bureau, Misleading Advertising and Labelling: “The Competition Act prohibits the unauthorized use of tests and testimonials, or the distortion of authorized tests and testimonials.  The provision also prohibits a person from allowing such representations to be made to the public.”

Tied selling.

Competition Act, section 77:  “’tied selling’ means  (a) any practice whereby a supplier of a product, as a condition of supplying the product (the ‘tying’ product) to a customer, requires that customer to (i) acquire any other product from the supplier or the supplier’s nominee, or (ii) refrain from using or distributing, in conjunction with the tying product, another product that is not of a brand or manufacture designated by the supplier or the nominee, and (b) any practice whereby a supplier of a product induces a customer to meet a condition set out in subparagraph (a)(i) or (ii) by offering to supply the tying product to the customer on more favourable terms or conditions if the customer agrees to meet the condition set out in either of those subparagraphs.”

Competition Bureau, Pamphlet, Restricting the Supply and Use of Products:  “Tied-selling exists when a supplier, as a condition of supplying a particular product, requires or induces a customer to buy a second product.  It may also occur when the supplier prevents the customer from using a second product with the supplied product. … The exclusive dealing, tied-selling and market restriction sections of the Competition Act may apply when the following conditions are met: [1] The conduct is engaged in by a major supplier or is widespread in a market.  A firm with less than 35 percent market share is not generally considered to be a major supplier.  However, market share is only one factor that must be considered.  Others include the existence of barriers to entry that limit competition, a lack of substitute products, and lack of competition among existing suppliers.  [2] The conduct in question constitutes a practice.  Different restrictive acts considered together, as well as repeated instances of one act with one or more customers, may constitute a practice.  [3] The restrictive practice discourages a firm’s entry into, or expansion in, the market; in other words, you must show an exclusionary effect.  [4] The practice has substantially lessened competition, or is likely to do so.  This may happen when the supplier’s restrictive practice prevents, for example, a rival’s entry into the market, potential competition, product innovation or lower prices.”

Competition Bureau, Updated Draft Enforcement Guidelines on the Abuse of Dominance Provisions (2009):  “Another program with a potentially limiting effect on the number of customers that are available to rivals is tied selling. Tied selling or tying occurs when a firm that produces two or more products requires a buyer to purchase more than one product as a condition of sale; in other words, the firm refuses to sell good A to a buyer unless that buyer also purchases good B from the firm as well (and potentially goods C, D, and so on). Tying is generally combined with contractual or induced exclusivity, so that the buyer must purchase all of its requirements (present and potentially in the future) for good B from the firm in order to purchase good A, and not just a negligible amount.  Tying may also be technological if a firm can use operational controls or compatibility requirements to enforce the tie, such as with software and hardware.”

U.S. Federal Trade Commission, Guide to the Antitrust Laws: “Offering products together as part of a package can benefit consumers who like the convenience of buying several items at the same time. Offering products together can also reduce the manufacturer’s costs for packaging, shipping, and promoting the products. … For competitive purposes, a monopolist may use forced buying, or “tie-in” sales, to gain sales in other markets where it is not dominant and to make it more difficult for rivals in those markets to obtain sales. This may limit consumer choice for buyers wanting to purchase one (“tying”) product by forcing them to also buy a second (“tied”) product as well.  Typically, the “tied” product may be a less desirable one that the buyer might not purchase unless required to do so, or may prefer to get from a different seller. If the seller offering the tied products has sufficient market power in the “tying” product, these arrangements can violate the antitrust laws.

Northern Pacific Railway v. United States, 356 U.S. 1 (1958): Tying is “an agreement by a party to sell one product [the tying product] but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier.”  “[Tying arrangements] deny competitors free access to the market for the tied product, not because the party imposing the tying requirements has a better product or lower price but because of his power or leverage in another market.  At the same time buyers are forced to forego their free choice between competing products.”

European Commission, Guidelines on Vertical Restraints (2000): “Tying exists when the supplier makes the sale of one product conditional upon the purchase of another distinct product from the supplier or someone designated by the latter. The first product is referred to as the tying product and the second is referred to as the tied product. If the tying is not objectively justified by the nature of the products or commercial usage, such practice may constitute an abuse of a dominant position.”

N. Campbell, “Distribution Freedom: The Evolution of Vertical Distribution Practices Under the Competition Act”, Canadian Competition Law Review (September, 2012): “Economists also debate whether and when tied selling can achieve anti-competitive results.  Typically, tied selling concerns arise where a firm exercising market power in one area ‘ties’ purchases of that product to the purchase of a second product which it sells into a market that may be more competitive.  On one account, particularly where economies of scale or scope exist, tied selling may lead to a creep in market power and leave buyers with little option but to accept the second offering. However, many economists doubt the theory that market power can be so extended.  Rather, they note that forcing a customer to purchase two products together does not increase his or her willingness to pay.  Instead, some economists explain tied selling as akin to a subtle form of price discrimination having ambiguous, rather than negative, welfare effects.  There are also various pro-competitive explanations of tied selling, including the possibility that a bundle of two or more products may be supplied more efficiently and at lower prices. Tying may also allow manufacturers to address negative externalities.  For example, customers of some types of products may be unable to discern whether their product’s breakdown is the result of poor aftermarket service/parts or a poor product.  Independent service organizations may have a perverse incentive to provide low-quality service, which can result in a reputational spillover effect that damages the manufacturer.  A manufacturer’s tying of its product with aftermarket support can ‘correct’ this negative externality and help to ensure high-quality service and lower break-down rates.”

Irish Competition Authority, Complying With Competition Law: A Guide for Businesses and Trade Associations: Making the sale of one product conditional on the purchase of another product or services that has no essential connection with the original one.

Timing agreement.

A type of agreement sometimes entered into between merging parties and the Competition Bureau in the context of merger review.  In general, merging parties in Canada may complete a transaction that is reviewable by the Bureau when: (i) clearance is received (i.e., an advance ruling certificate or “ARC” or a “no action letter”) or (ii) the applicable waiting period(s) have elapsed, subject to the Bureau having obtained an injunction (i.e., an interim order under section 100 of the Competition Act) prohibiting the parties from completing or where parties have entered into a timing agreement with the Bureau.

Timing agreements may include a variety of commitments, including obligations to provide the Bureau with additional information to review the merger, the timing for completion and advance notice of completion.

See Competition Bureau, Merger Review Process Guidelines.

Tort of deceit / fraudulent misrepresentation

XY, Inc. v. International Newtech Development Incorporated, 2012 BCSC 319 (CanLII): “The tort of deceit, also known as civil fraud, is concerned with the intentional inducement of another person to rely upon a representation that the representor knows to be untrue.  The elements that make up this tort are: (1) a false representation of fact by the defendant; (2) made with the knowledge of its falsity or recklessly, i.e., not caring whether it is true or not; (3) made with the intention that the plaintiff would act on it; (4) with the intention that the plaintiff would act on it; and (5) the plaintiff suffered damages.”

Derry v. Peek (1889) 14 App. Cas. 337 (H.L.) [Combining the fourth and fifth elements]: “(1) A false representation or statement made by the defendant; (2) the statement was knowingly false; (3) the statement was made with the intention to deceive the plaintiff; and (4) the statement materially induced the plaintiff to act, resulting in damage.”

Spencer Bower, Turner and Handley, Actionable Misrepresentation (4th ed., 2000): “An action for damages for fraudulent misrepresentation at common law was an action for deceit.  The Court of Chancery exercised a concurrent jurisdiction with the Courts of Law in cases of actual fraud, and could award equitable compensation on similar, but not identical, principles, and also specific relief.  In either case a representee must allege and prove: (1) a representation; (2) that the defendant was the representor; (3) that the plaintiff was a representee; (4) inducement; (5) falsity; (6) alteration of position; (7) fraud; (8) damage.  The first six matters are common to all claims for misrepresentation … The seventh and eighth, fraud and damage, are peculiar to actions in deceit.  From the earliest times it has been recognized that the concurrence of fraud and damage is essential to a claim for damages for fraudulent misrepresentation.”

Trading stamps.

Sections 379 and 427 of the federal Criminal Code prohibits certain trading stamp promotions.  Section 379 of the Criminal Code defines “trading stamps” to include:  “… any form of cash receipt, receipt, coupon, premium ticket or other device, designed or intended to be given to the purchaser of goods by the vendor thereof or on his behalf, and to represent a discount on the price of the goods or a premium to the purchaser thereof (a) that may be redeemed (i) by any person other than the vendor, the person from whom the vendor purchased the goods or the manufacturer of the goods, (ii) by the vendor, the person from whom the vendor purchased the goods or the manufacturer of the goods in cash or in goods that are not his property in whole or in part, or (iii) by the vendor elsewhere than in the premises where the goods are purchased, or (b) that does not show on its face the place where it is delivered and the merchantable value thereof, [or] (c) that may not be redeemed on demand at any time, but an offer, endorsed by the manufacturer on a wrapper or container in which goods are sold, of a premium or reward for the return of that wrapper or container to the manufacturer is not a trading stamp.”

Section 427 of the Criminal Code sets out the substantive offence as follows:  “Every one who, by himself or his employee or agent, directly or indirectly issues, gives, sells or otherwise disposes of, or offers to issue, give, sell or otherwise dispose of trading stamps to a merchant or dealer in goods for use in his business is guilty of an offence punishable on summary conviction.  (2) Every on e who, being a merchant or dealer in goods, by himself or his employee or agent, directly or indirectly gives or in any way disposes of, or offers to give or in any way dispose of, trading stamps to a person who purchases goods from him is guilty of an offence punishable on summary conviction.”

Travel-Related Schemes.

Canadian Department of Justice, Report of the Canada – United States Working Group on Telemarketing Fraud (Updated December 1, 2011): “Fraudulent telemarketers purporting to be travel agencies offer substantial travel packages at comparatively low cost. The use of travel as a commodity makes the long-distance nature of the transaction plausible. The fraud usually involves lies, misrepresentations, or non-disclosure of information about the true value of travel and accommodations, limitations or restrictions on when or where purchasers may go, or what awaits them at the destination. In some cases, the travel proves to be a complete fabrication or has so many terms and conditions as to be completely unusable.”

Treble damages.

In Canada, under section 36 of the Competition Act, persons that have suffered actual damages as a result of a violation of the criminal provisions of the Act (most commonly the criminal conspiracy or “cartel” offences) may commence civil damages actions and seek to recover the actual damages suffered as a result of anti-competitive conduct.  In the United States, however, treble (i.e., triple) damages can be available (treble damages are not available in Canada).

See e.g., U.S. Department of Justice, Antitrust Division, An Antitrust Primer for Federal Law Enforcement Personnel (2005): “Criminal prosecution, incarceration, and substantial fines are the most effective, but not the only, deterrents to antitrust crimes. In those instances when the federal government or its agencies have been the victims of antitrust violations, the Department of Justice may obtain treble damages under the Clayton Act (15 U.S.C. § 15a) and civil penalties up to treble damages under the False Claims Act (31 U.S.C. § 3729). In addition, private parties (including state and local governments) can recover three times the damages they suffer as a result of an antitrust violation, and they may use successful federal prosecution of collusion as prima facie evidence against a defendant in a follow-on suit for treble damages.”

Trieu model.

A term used in criminal conspiracy cases.  One potential basis for party liability in a conspiracy.

See e.g.: R. v. J.F., 2013 SCC 12:  “There are two schools of thought in Canada as to how, and under what circumstances, a person can be found liable as a party to the offence of conspiracy.  The narrower approach (the Trieu model) limits such liability to aiding or abetting the formation of the agreement.  The broader approach (the McNamara model) extends such liability to also include aiding or abetting the furtherance of the conspiracy’s unlawful object.  The approach to be followed is Trieu and not McNamara.  Party liability is limited to cases where the accused aids or abets the initial formation of the agreement, or aids or abets a new member to join a pre‑existing agreement.  The Trieu model is a legitimate basis for party liability to a conspiracy.  A person becomes party to an offence if he aids or abets a principal in the commission of the offence.  It follows that party liability to a conspiracy is made out where the accused aids or abets the actus reus of conspiracy, namely the conspirators’ act of agreeing.  The McNamara model is not a basis for party liability to conspiracy.  Acts that further the unlawful object of a conspiracy are not an element of the offence of conspiracy.  Aiding or abetting the furtherance of the unlawful object does not establish aiding or abetting the principal with any element of the offence of conspiracy, and thus cannot ground party liability for conspiracy.  However, where a person, with knowledge of a conspiracy, does or omits to do something for the purpose of furthering the unlawful object, with the knowledge and consent of one or more of the existing conspirators, this provides powerful circumstantial evidence from which membership in the conspiracy can be inferred.  While party liability to conspiracy includes aiding or abetting the formation of a new agreement (the Trieu model), it also includes aiding or abetting a new member to join a pre‑existing agreement.  Such assistance or encouragement facilitates the new member’s commission of the offence of conspiracy — that is, the act of agreeing.”

Twisted text prize.

Consumer Protection BC, “Top Ten Scams 2013 – Just in case a scam is around the corner”: “You receive a text message.  When you open it, you are surprised by a message informing you that you’ve won a major retailer’s gift card.  You just need to go to a website and enter a PIN, and the card is yours.  You are asked to enter the PIN and an email address.  Then, you are taken to a form and instructed to fill out your name, cell number, mailing address and answer unrelated personal questions, such as ‘Are you interested in going back to school?’ and ‘Are you diabetic?’ When you reach the page to ‘claim your gift card,’ you instead find yourself directed to another site to apply for a credit card.  In the end, you never receive a credit card and you have given out personal information.”

“Two-sided market” or “two-sided platform”.

Robert H. Bork & J. Gregory Sidak, “What Does the Chicago School Teach About Internet Search and the Antitrust Treatment of Google?” (2012): “Internet search can be considered an intermediary platform that brings together two parties—the search user and the advertiser—to an exchange that occurs over the Internet.  In a “two-sided” market of this sort, the demand that one party has for the product is complementary to the demand that the other party has for the same product.  Internet search is inherently two-sided because of the intensity of, and payoffs to, finely granulated search that brings advertisers (and producers) in touch with potential consumers of a product. … Complementary demand for Internet search also enables search providers to offer search at zero cost to the consumer.  Google sells highly focused advertising that responds to the interests revealed by the Internet user’s search request.  Those revenues subsidize the cost of providing free search to consumers.”

Daniel Michaels, “An Analysis of Visa and MasterCard Merchant Restraints: Illegal Price Maintenance or a Necessary Tool for the Efficient Working of the Credit Card Network Services Market” (2012): “Two-sided markets are economic platforms that have two distinct user groups that provide each other with network benefits.  Such a platform can only prosper if it can appropriately coordinate the demands of the two user groups by expanding both markets to have sufficient numbers.  For example, video game platforms such as Nintendo’s Wii and Sony’s PlayStation need to attract sufficient gamers to convince developers to design games for the system, but also need games in order to induce gamers to buy and use the video game console.”

Marc Rysman, “The Economics of Two-Sided Markets”, Journal of Economic Perspectives, 23(3): 125-43: “Broadly speaking, a two-sided market is one in which 1) two sets of agents interact through an intermediary or platform, and 2) the decisions of each set of agents affects the outcomes of the other set of agents, typically through an externality.  In the case of a video game system, for instance PlayStation, the intermediary is the console producer — Sony — while the two sets of agents are consumers and video game developers. Neither consumers nor game developers will be interested in the PlayStation if the other party is not. Similarly, a successful payment card requires both consumer usage and merchant acceptance, where both consumers and merchants value each others’ participation.  Many more products fit into this paradigm, such as search engines, newspapers, and almost any advertiser-supported media (examples in which consumers typically negatively value, rather than positively value, the participation of the other side), as well as most software or title-based operating systems and consumer electronics.”

OECD, Policy Roundtable, Two-Sided Markets (2009): “Firms operating in two-sided markets are more aptly called “two-sided platforms” because of their differences with firms that operate in one-sided markets.  A two-sided platform is characterized by three elements.  The first element is that there are two distinct groups of consumers who need each other in some way and who rely on the platform to intermediate transactions between them. A two-sided platform provides goods or services simultaneously to these two groups.  The second element is the existence of indirect externalities across groups of consumers.  That means that the value that a customer on one side realizes from the platform increases with the number of customers on the other side. For example, a search platform is more valuable to advertisers if it is more likely that it will reach a larger number of potential buyers.  At the same time, it is more valuable to potential buyers if the platform has more advertisers because that makes it more likely that a buyer will see a relevant advertisement.  The third element is non-neutrality of the price structure, i.e., the price structure of the platform affects the level of transactions.  The price structure is the way prices are distributed between consumers on the two sides of the market.  The platform can affect the volume of transactions by charging more to one side of the market and reducing the price paid by the other side by an equal amount. Since the price structure matters, the platform must design it so as to induce both sides to join the platform.”

OECD, Policy Roundtable, Market Definition (2012): “Two-sided markets (or platforms) serve two or more distinct groups of customers that would like to interact but cannot do so without the platform.  Examples of two-sided markets include inter alia online auction platforms, dating clubs, payment card systems, newspapers, video game platforms.  A common feature of two-sided platforms is that the size of one group of customers, for example the number of sellers active on an online auction platform, has a positive impact on the utility of the buyers and vice versa.  These effects are termed indirect network effects.  A two-sided platform enables these groups to internalize the indirect network externalities thereby creating value for at least one side, something that would not be possible absent the platform.”

The Commissioner of Competition v. Visa Canada Corporation and MasterCard International Incorporated, 2013 Comp. Trib. 11 (Comp. Trib.): “Both the Commissioner’s and the Respondents’ expert economists agree that credit card networks are examples of two-sided platforms.  They agree that a characteristic of two-sided platforms is that the attractiveness of the platform to potential users on one side depends on the number of users there are on the other side.  For example, a newspaper, recognized by the experts as a reasonably representative example of a two-sided platform, is more valuable to advertisers the more readers it has and can be more valuable to readers the more advertisers it has.  For that reason, the response to a change in the price charged to users on one side of the platform can also affect demand on the other side of the platform.   A consequence of this interdependence or feedback effect is that it may be optimal from the perspective of maximizing use of the platform concerned, for users on one side of it to bear a disproportionate fraction of platform costs.”

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