Archive for the 'Compliance' Category
The Competition Bureau has published its February edition of CB In Brief (see: CB In Brief – February 2012).
This edition includes announcements relating to the Chicoutimi Hospital bid-rigging case, 2012 increase of the size of transaction merger threshold and the Bureau’s new monthly reports of concluded merger reviews.
We are pleased to announce that we will be facilitating a compliance course at the Real Estate Board of Greater Vancouver on February 29, 2012 entitled “Competition Law and REALTORS®: What You Say and Do Matters”.
About this course:
Competition Law and REALTORS®: What You Say and Do Matters was designed by ACRE with the assistance of CREA to help Canadian REALTORS® understand and comply with Canadian competition law. While Canadian competition law applies to all real estate professionals, this course was designed specifically for REALTORS®. This course provides an overview in plain language of Canadian competition law and practical compliance guidelines to assist REALTORS® in complying with Canadian competition law and a number of illustrative case studies. This national competition law course is available to members of Canadian real estate boards and associations. Read the rest of this entry »
On January 6, 2012, the Competition Bureau announced its first conspiracy (i.e., cartel) case under Canada’s amended Competition Act, partially brought under the amended section 45 of the Act.
In this case, two companies pleaded guilty of fixing the price of polyurethane foam and were fined a total of C $12.5 million (see: Cartels Update: Bureau Announces $12.5 Million Fine in First Price-fixing Case Under Amended Competition Act and Competition Bureau Sends Signal to Price-Fixers with $12.5 Million Fine).
In making the announcement, believed to be one of a number of ongoing cartel cases currently being investigated, the Bureau described its stepped-up enforcement of cartels as “reinvigorated”:
“’Yesterday’s guilty plea is the first conviction under Canada’s amended conspiracy law,’ said Melanie Aitken, Commissioner of Competition. ‘This investigation highlights the Bureau’s reinvigorated mandate to stop consumer harm caused by price-fixing, and to secure significant fines for these serious criminal offences.’
In other recent remarks, the Bureau has similarly indicated that it intends to enhance its investigation of cartels under Canada’s new conspiracy (cartel) rules:
“In our Criminal work, we continue to concentrate on the, admittedly, lengthy process of ‘changing the game’— reorienting our approach at the Bureau, our processes, and our mindset to a more appropriately aggressive stance to respond, as we must, to our new more powerful criminal provisions.
As we move forward with our new criminal regime, consistency, consistency, and consistency is our focus. There will be no arbitrary relaxing of standards under the Bureau’s watch — a practice that can only impair predictability and fairness in enforcement. Further, we will use our investigative tools such as searches, wiretaps and section 11 orders.
Cartels and bid–rigging continue to be our focus, given the seriousness of this conduct, and its unambiguously harmful nature. We are committed to advancing cases that matter to Canadians, doing so in a timely manner, and following them through to the end.”
(See: Commissioner of Competition, Keynote Speech at the Canadian Bar Association 2011 Fall Conference).
Based on these and other recent developments, we have posted a series of posts on Canadian conspiracy law (for Parts 1, 2 and 3 see: here, here and here). This is the final post – practical steps for companies to take to reduce cartel risk.
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PRACTICAL STEPS FOR COMPANIES TO TAKE TO REDUCE CARTEL RISK
Compliance programs. Adopt an effective compliance program or update the competition law section of an existing compliance program. Some of the benefits of a compliance program include reducing the risk of violating the Competition Act, reducing the costs of investigations and proceedings and potentially mitigating penalties. Options range from formal and extensive compliance programs encompassing all company activities to compliance guidelines for key activities (e.g., meetings, information exchanges and specific initiatives, such as benchmarking, research and development initiatives, joint ventures and strategic alliances with competitors, etc.). For more information on competition law compliance programs see: Compliance Programs and the Competition Bureau’s Corporate Compliance Programs Bulletin.
FEBRUARY 29, 2012
The American Bar Association (the Private Advertising Litigation, Consumer Protection and Privacy & Information Security Committees) is holding a teleseminar on February 29, 2012 entitled: “Hot Legal Issues in Social Media Marketing”.
From the ABA:
“Do you want to run a multinational promotion for tweens on Facebook to post videos of their experiences using your product? How about giving rewards to the “mayor” of your store locations on 4-Square? (Or maybe you are asking “What is that?”) Join an expert panel for a fast and furious hour and a half discussing current issues with marketing via social media and resources for your use in counseling through this minefield. The discussion will include new technologies (like 4-Square), marketing to kids, how CAN-SPAM and/or COPPA touch social media, the impact of FTC endorsement/testimonial guidelines, sweepstakes/contest laws, and more!”
On February 17, 2012, the Competition Bureau announced that Construction G.T.R.L. (1990) Inc., Acoustique JCG Inc. and Enterprises de Construction OPC Inc. pleaded guilty to bid-rigging in Quebec Superior Court in a case relating to the expansion of the Chicoutimi Hospital in 2003 (see: Quebec Construction Companies Plead Guilty to Rigging Bids for the Chicoutimi Hospital).
In making the announcement, the Bureau said:
“The court ordered Construction G.T.R.L. to pay a fine of $50,000, and Acoustique JCG and Entreprises de Construction OPC to pay a fine of $25,000 each. The companies are subject to a court order for a period of 10 years.
‘Bid-rigging harms everyone but the criminals who cheat the system for their own financial gain,’ said Melanie Aitken, Commissioner of Competition. ‘In this case, the bid-rigging scheme ultimately harmed the Chicoutimi Hospital and Saguenay residents, by preventing the hospital from obtaining a competitive price for its renovation.’”
The construction industry has long been a target of competition/antitrust regulators. For example, some of the construction related cases in Canada, many of which have also involved trade associations and have gone back about a century, have included building contractors, corrugated metal pipe manufacturers, electrical contractors, gypsum dealers and manufacturers, plumbing contractors, road surfacing contractors, chain link fence contractors, among many others.
There have also been a number of recent bid-rigging cases in Canada involving construction and construction supply related companies.
See for example: Guilty Plea and $425,000 Fine for Bid-rigging in Montreal, Charges Laid in Residential Construction Bid-rigging Scheme in Montreal, Competition Bureau Exposes Sewer Services Cartel in Quebec, Competition Bureau Obtains Court Order Against the Saskatchewan Roofing Contractors Association.
This is the fourth in a series of posts on Canadian bid-rigging law, which will conclude with practical steps for companies to take to reduce potential risk in light of historical risk and current heightened enforcement.
On January 6, 2012 the Competition Bureau announced its first conspiracy (i.e., cartel) case under Canada’s amended Competition Act, partially brought under the amended section 45 of the Competition Act.
In this case, two companies pleaded guilty of fixing the price of polyurethane foam and were fined a total of C $12.5 million (see: Cartels Update: Bureau Announces $12.5 Million Fine in First Price-fixing Case Under Amended Competition Act and Competition Bureau Sends Signal to Price-Fixers with $12.5 Million Fine).
In making the announcement, believed to be one of a number of new cartel cases currently being investigated, the Bureau highlighted its stepped-up enforcement of cartels described as “reinvigorated”:
“’Yesterday’s guilty plea is the first conviction under Canada’s amended conspiracy law,’ said Melanie Aitken, Commissioner of Competition. ‘This investigation highlights the Bureau’s reinvigorated mandate to stop consumer harm caused by price-fixing, and to secure significant fines for these serious criminal offences.’
In other recent remarks, the Bureau has similarly indicated that it intends to enhance its investigation of cartels under Canada’s new conspiracy (cartel) rules:
“In our Criminal work, we continue to concentrate on the, admittedly, lengthy process of ‘changing the game’— reorienting our approach at the Bureau, our processes, and our mindset to a more appropriately aggressive stance to respond, as we must, to our new more powerful criminal provisions.
As we move forward with our new criminal regime, consistency, consistency, and consistency is our focus. There will be no arbitrary relaxing of standards under the Bureau’s watch — a practice that can only impair predictability and fairness in enforcement. Further, we will use our investigative tools such as searches, wiretaps and section 11 orders.
Cartels and bid–rigging continue to be our focus, given the seriousness of this conduct, and its unambiguously harmful nature. We are committed to advancing cases that matter to Canadians, doing so in a timely manner, and following them through to the end.”
(See: Commissioner of Competition, Keynote Speech at the Canadian Bar Association 2011 Fall Conference).
Based on these and other recent developments, we will be posting overviews of Canadian conspiracy and bid-rigging laws, each concluding with practical steps companies can take to reduce potential criminal liability (and overviews of the Bureau’s Immunity and Leniency Programs, which are increasingly key to Bureau investigations and parties implicated in criminal conduct to reduce liability).
On February 24, 2012, Canada’s Privacy Commissioner Jennifer Stoddart sent an open letter to Google to request additional information about Google’s new privacy policy and set out some concerns. The Commissioner’s letter follows a meeting between representatives of the Office of the Privacy Commissioner and Google (see: Letter to Google regarding privacy policy changes).
As has been widely reported, Google is taking steps to reduce the number of its privacy policies (currently over 70) relating to its many products to a single general privacy policy (while retaining some product-specific privacy policies) (see e.g.: Advertising Update: Google’s New Privacy Policy).
In making the announcement, the Commissioner said:
“I am writing further to Google’s recently announced plans to change its privacy policy, effective March 1, 2012, and further to a meeting between a representative of Google and officials from my Office. I am pleased to take this opportunity to provide you with some of our feedback and to request some additional information on certain practices.
As we understand it, Google has a number of goals that it wishes to achieve through this effort. Primarily, the company is aiming to reduce the number of privacy policies that currently exist (over 70) in relation to its many different products and services to one general privacy policy. In addition to that general policy, Google will still retain a small number of product-specific policies (e.g., for Google Wallet) where it believes that this makes sense or is otherwise required by law. The other goals are to create a simpler, more intuitive user experience across multiple Google products; improve search results; and make ads more relevant.
I would first like to acknowledge Google’s efforts to alert users to the new policy. Google has worked hard to simplify and streamline its privacy policy. We have long been calling for better, more user-friendly privacy policies and yours is a step in the right direction. We do, however, have a number of questions and concerns, as outlined below, that we would appreciate receiving a response from you on.”
On February 17, 2012, the Competition Bureau announced that Construction G.T.R.L. (1990) Inc., Acoustique JCG Inc. and Enterprises de Construction OPC Inc. pleaded guilty to bid-rigging in Quebec Superior Court in a case relating to the expansion of the Chicoutimi Hospital in 2003 (see: Quebec Construction Companies Plead Guilty to Rigging Bids for the Chicoutimi Hospital).
In making the announcement, the Bureau said:
“The court ordered Construction G.T.R.L. to pay a fine of $50,000, and Acoustique JCG and Entreprises de Construction OPC to pay a fine of $25,000 each. The companies are subject to a court order for a period of 10 years.
‘Bid-rigging harms everyone but the criminals who cheat the system for their own financial gain,’ said Melanie Aitken, Commissioner of Competition. ‘In this case, the bid-rigging scheme ultimately harmed the Chicoutimi Hospital and Saguenay residents, by preventing the hospital from obtaining a competitive price for its renovation.’”
The construction industry has long been a target of competition/antitrust regulators. For example, some of the construction related cases in Canada, many of which have also involved trade associations and have gone back about a century, have included building contractors, corrugated metal pipe manufacturers, electrical contractors, gypsum dealers and manufacturers, plumbing contractors, road surfacing contractors, chain link fence contractors, among many others.
There have also been a number of recent bid-rigging cases in Canada involving construction and construction supply related companies.
See for example: Guilty Plea and $425,000 Fine for Bid-rigging in Montreal, Charges Laid in Residential Construction Bid-rigging Scheme in Montreal, Competition Bureau Exposes Sewer Services Cartel in Quebec, Competition Bureau Obtains Court Order Against the Saskatchewan Roofing Contractors Association.
This is the third in a series of posts on Canadian bid-rigging law, which will conclude with practical steps for companies to take to reduce potential risk in light of historical risk and current heightened enforcement.
For Parts 1 and 2 see: here and here.
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The Antitrust Section of the American Bar Association will be holding a teleconference on February 28, 2012 entitled “Antitrust Update for In-House Counsel” from 12:00 – 1:00 p.m. Eastern Time.
From the ABA:
“Join the Corporate Counseling Committee for its monthly Antitrust Update for In-House Counsel, a telephonic committee program to be held on Tuesday, February 28 from Noon to 1pm ET.
This program, which will cover developments occurring during the month of September, continues our popular monthly series of committee programs in which antitrust practitioners report on the most recent developments at the agencies and the courts. The program will last approximately one hour, including a Q&A period at the end.”
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For more information about our regulatory law services contact: contact
The British Columbia Real Estate Association has published its 2012 Legal Update book for members of British Columbia real estate boards and BCREA.
This 2012 installment of its annual legal update series includes the following chapters:
Does One Have to be a Lie Detector in Real Estate (Greg Blanchard), Material Latent Defect or Stigmatization (Brian Taylor), Condition or Covenant (Peter Ramsay), Damages for Failure to Complete (Devin Kanhai), Licensee Remuneration – Entitlement (Devin Kanhai), The Homeowner Protection Act – What Needs to be Considered (Doug Cox and Jan Calkins), REDMA Update (Jennifer Clee), Electronic Transactions Act (Ed Wilson) and Canadian Competition Law – The New Competition Act – The First 2 Years in Force (Steve Szentesi).
The competition law update chapter in this new publication, prepared by our firm, includes discussions of: (i) the 2009 and 2010 amendments to the Competition Act, (ii) Competition Act enforcement and penalties, (iii) key enforcement developments in the past two years (including conspiracy and misleading advertising law developments), (iv) a discussion of key implications of Canada’s new competition laws for Canadian real estate agents and brokers, (v) a discussion of the CREA abuse of dominance case (settled at the end of 2010) and mere postings and (vi) and a brief overview of Canada’s new anti-spam legislation (Bill C-28).
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For more information about our regulatory law services contact: contact
In December 2010 Canada’s new anti-spam legislation was passed (the “Anti-spam Act”) which will, when it comes into force, be one of the strictest anti-spam regimes in the world (see: Anti-spam Act). The Anti-spam Act will require express or implied consent for the sending of “commercial electronic messages” or “CEMs” and also impose form (i.e., disclosure) and unsubscribe requirements for CEMs.
The Anti-spam Act is expected to have significant impacts on companies and individuals that engage in electronic marketing, including through the use of e-mail, text messaging, instant messaging and likely social media. The Anti-spam Act will also require express consent for some other practices, including altering transmission data and the installation of computer programs on other persons’ computer systems.
The Anti-spam Act will also broaden the Competition Bureau’s jurisdiction to regulate misleading advertising in the context of electronic communications – for example, misleading representations made electronically, such as in sender information, subject matter information, electronic messages or locators. The Anti-spam Act includes amendments to the civil and criminal misleading advertising sections of the federal Competition Act (sections 52 and 74.01) and related penalty and enforcement provisions.
Failure to comply with the Anti-spam Act, once in force, will expose individuals and companies to severe penalties of up to C $1 million (for individuals) and C $10 million (for companies). The Anti-spam Act also creates private rights of action, under which actual damages may be awarded, as well as statutory damages of up to $1 million per day of non-compliance. Once in force, class actions may also be commenced.
This is the fourth in a series of posts on the new Anti-spam Act, which will conclude with practical steps individuals and companies can take before the new legislation comes into force.
On February 23rd, the U.S. Department of Justice (“DoJ”) announced that two financial investors that purchased municipal tax liens at auction in New Jersey pleaded guilty to conspiring to rig bids for the sale of tax liens auctioned by municipalities in New Jersey.
In making the announcement, the DoJ said:
“Two financial investors who purchased municipal tax liens at auctions in New Jersey pleaded guilty today for conspiring to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.
A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, N.J., against Robert W. Stein of Huntington Valley, Pa., and David M. Farber of Cherry Hill, N.J. Under the plea agreements, which are subject to court approval, Stein and Farber have both agreed to cooperate with the department’s ongoing investigation.
According to the felony charge against Stein, from as early as 1998 until approximately spring 2009, Stein participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid. According to the felony charge against Farber, from as early as the beginning of 2005 through approximately February 2009, Farber also participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey. The department said that both Stein and Farber proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates. “Today’s guilty pleas demonstrate that the Antitrust Division will not tolerate those who manipulate the competitive process in order to harm home and property owners,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
The department said that the primary purpose of the conspiracies was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.”
In Canada, the federal Competition Act contains standalone bid-rigging offences under section 47 of the Competition Act. This is unlike some other major jurisdictions, where bid-rigging falls under general conspiracy (i.e., cartel) prohibitions. Under section 47 of the Competition Act, it is a criminal offence for bidders or tenderers to agree to:
1. Not submit a bid or tender;
2. Withdraw a bid or tender already submitted (an offence recently added to the Competition Act following wide-ranging amendments to the Competition Act in 2009 and 2010); or
3. Submit a bid or tender arrived at by agreement.
Bid-rigging in Canada is also a ”per se” criminal offence, in that, like conspiracy agreements under section 45 of the Competition Act, it is not necessary to prove any anti-competitive effects on a relevant market (or markets) to make out an offence. All elements of the offence do, however, need to be established on the standard criminal burden of proof – i.e., beyond a reasonable doubt.
On February 23, 2012, the U.S. Federal Trade Commission (“FTC”) announced that it had obtained a USD $359 million settlement order against an Alberta online marketer (Jessie Wilms) and related defendants.
In making the announcement, the FTC said:
“The Federal Trade Commission has stopped an Internet scheme that allegedly used bogus “free” product offers that deceived consumers in the United States and other countries and charged them for products and services they did not want or agree to purchase. A settlement order, reached as part of the FTC’s ongoing efforts to stamp out online marketing fraud, permanently bans Jesse Willms and his companies from using ‘negative-option’ marketing, a practice in which the seller interprets consumers’ silence or inaction as permission to charge them. The Willms settlement order imposes a judgment of $359 million that will be suspended upon Willms’s surrender of bank account funds and proceeds from the sale of his house, personal property, and corporate assets, including a Cadillac Escalade, fur coat, and artwork.
‘The fact that almost four million consumers fell prey to the lure of these ‘free trial’ offers is a stark reminder that ‘free’ offers can come at a huge price,’ said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. ‘The FTC has stopped about $1 billion in online marketing fraud during the past two years by shutting down operations like this. But consumers still need to beware, because scam artists are constantly coming up with new ways to deceive people online.’”
According to the FTC, it worked with Canadian law enforcement officials, including the Alberta Partnership Against Cross-Border Fraud and Competition Bureau.
On January 6, 2012 the Competition Bureau announced its first cartel case under Canada’s amended Competition Act, partially brought under the new section 45 of the Competition Act.
In this case, two companies pleaded guilty of fixing the price of polyurethane foam and were fined a total of C $12.5 million (see: Cartels Update: Bureau Announces $12.5 Million Fine in First Price-fixing Case Under Amended Competition Act and Competition Bureau Sends Signal to Price-Fixers with $12.5 Million Fine).
In making the announcement, believed to be one of a number of new cartel cases currently being investigated, the Bureau highlighted its stepped-up enforcement of cartels:
“’Yesterday’s guilty plea is the first conviction under Canada’s amended conspiracy law,’ said Melanie Aitken, Commissioner of Competition. ‘This investigation highlights the Bureau’s reinvigorated mandate to stop consumer harm caused by price-fixing, and to secure significant fines for these serious criminal offences.’
In other recent public remarks, the Bureau has similarly indicated that it intends to enhance its investigation of cartels under Canada’s new conspiracy (cartel) rules:
“In our Criminal work, we continue to concentrate on the, admittedly, lengthy process of ‘changing the game’— reorienting our approach at the Bureau, our processes, and our mindset to a more appropriately aggressive stance to respond, as we must, to our new more powerful criminal provisions.
As we move forward with our new criminal regime, consistency, consistency, and consistency is our focus. There will be no arbitrary relaxing of standards under the Bureau’s watch — a practice that can only impair predictability and fairness in enforcement. Further, we will use our investigative tools such as searches, wiretaps and section 11 orders.
Cartels and bid–rigging continue to be our focus, given the seriousness of this conduct, and its unambiguously harmful nature. We are committed to advancing cases that matter to Canadians, doing so in a timely manner, and following them through to the end.”
(See: Commissioner of Competition, Keynote Speech at the Canadian Bar Association 2011 Fall Conference).
Based on these and other recent developments, we will be posting overviews of Canadian conspiracy and bid-rigging laws, each concluding with practical steps companies can take to reduce potential criminal liability (and overviews of the Bureau’s Immunity and Leniency Programs, which are increasingly proving to be key for both Bureau investigations and parties to reduce liability).
For Part 1 see: here.
We read this rather fine article by Ted Banks recently on corporate antitrust compliance in Competition Policy International and reprint it here with permission. CPI is currently featuring a series of articles on corporate compliance.
By Theodore L. Banks
Ted Banks is counsel to the law firm of Schoeman Updike Kaufman & Scharf: www.schoeman.com and President of Compliance & Competition Consultants, LLC: www.complianceconsultants.com). First published in Competition Policy International (CPI) Antitrust Chronicle (February 2012(1)).
Antitrust Compliance – It’s All About the Culture
INTRODUCTION
What does it take to develop an antitrust compliance program that works? There are a lot of pieces. The employees must be presented with materials that are directly relevant to each of their jobs. It must be done in a way that is easily understandable. It must be ubiquitous, so that little or no effort is needed to gain access to information. There should also be business controls so that violations are not easy to accomplish—or difficult to detect.
We’ve known these things for a long time. In antitrust, which in many ways is the grandfather (or perhaps the godfather) of corporate compliance programs, we’ve had detailed policies, handbooks, training courses, videos, slides. No shortage of information—yet the violations continue. The Justice Department seems to have given up on compliance when it comes to antitrust. Their main method to control cartel behavior is not to encourage prevention (i.e., compliance), but to encourage confession (i.e., the amnesty program). In fact, they are apparently so disgusted with the sorry state of compliance[1] that they got a carve-out from the Federal Sentencing Guidelines when it comes to antitrust. If convicted of a violation of any other federal criminal law, the company can get credit for good intentions if its compliance program met the definition of an “effective” program. But not true for antitrust.
It is not as if antitrust is the only area where compliance programs do not seem to be making continuous improvement. The recently released 2011 National Business Ethics Survey from the Ethics Resource Center is not very encouraging. It showed an increase in companies that employees thought had a “weak ethics culture” and where employees felt pressured to ignore the company’s own ethical policies or break the law. Employees perceive there is more retaliation against employees that report wrongdoing, and more employees thought their managers were unethical. And what do they think of senior management? More perception of self-interest without being guided by ethics.
Interestingly, the failures that were identified were not ones of lack of knowledge, but were failures of culture.
Marlene Koury of Constantine Cannon LLP has written an interesting comparative article on the extension by some international enforcement agencies of protections to whistleblowers, in addition to existing immunity or leniency program protections (see: Making It Easier to Whistle While You Work).
According to the author, while approximately 50 foreign jurisdictions now have leniency programs in place, and while the U.S. pioneered leniency as a cartel detection tool, the U.S. does not yet have whistleblower protections.
In this interesting article, the author describes the fact that, for example, while the Antitrust Division of the U.S. Department of Justice, like Canada’s Competition Bureau, relies on its Corporate Leniency Program to encourage self-reporting of cartel activity, it is limited in that it fails to offer people who are aware of, but not complicit in, cartel activity with any incentive to report:
“The question of whether U.S. antitrust enforcement should emulate foreign whistleblower rewards programs as part of a crackdown on cartels is analyzed in a recent article by a Constantine Cannon attorney: Making It Easier to Whistle While You Work.
Cartel detection and prosecution are top priorities for the Antitrust Division of the U.S. Department of Justice (“Antitrust Division”) – regardless of which political party occupies the White House. Given the often secretive nature of cartels, however, they can be hard to detect. The Antitrust Division relies on its Corporate Leniency Program to encourage self-reporting of cartel activity, by offering immunity and/or reduced sanctions.
As important as leniency programs are, however, they are limited. Given their narrow focus on those at the heart of the cartel, corporate leniency programs fail to offer people who are aware of, but not complicit in, cartel activity with any incentive to report illegal activity. This absence of an antitrust informant rewards program undoubtedly means that much cartel activity victimizing U.S. consumers goes unreported.
Over the past 10 years, four jurisdictions – South Korea, Pakistan, the United Kingdom and Hungary – have addressed the limitations of their corporate leniency programs by adding an antitrust informant, or whistleblower, rewards program. Each jurisdiction noted that the aim of adding a rewards program was to increase reporting from those who are either uninvolved in, or on the periphery, of a cartel.”
In December 2010 Canada’s new anti-spam legislation was passed (the “Anti-spam Act”) which will, when it comes into force, be one of the strictest anti-spam regimes in the world (see: Anti-spam Act). In general, the Anti-spam Act will require express or implied consent for the sending of “commercial electronic messages” or “CEMs” and also impose form (i.e., disclosure) and unsubscribe requirements for CEMs.
The Anti-spam Act is expected to have significant impacts on companies and individuals that engage in electronic marketing, including through the use of e-mail, text messaging, instant messaging and likely social media. The Anti-spam Act will also require express consent for some other practices, including altering transmission data and the installation of computer programs on other persons’ computer systems.
The Anti-spam Act will also broaden the Competition Bureau’s jurisdiction to regulate misleading advertising in the context of electronic communications – for example, misleading representations made electronically, such as in sender information, subject matter information, electronic messages or locators. In this regard, the Anti-spam Act includes amendments to the civil and criminal misleading advertising sections of the federal Competition Act (sections 52 and 74.01), as well as related penalty and enforcement provisions.
Failure to comply with the Anti-spam Act, once in force, will potentially expose individuals and companies to severe penalties of up to C $1 million (for individuals) and C $10 million (for companies). The Anti-spam Act also creates private rights of action, under which both actual and statutory damages may be awarded of up to $1 million per day of non-compliance. Class actions may also be commenced once the legislation is in force.
This is the third in a series of posts on the new Anti-spam Act, which will conclude with practical steps individuals and companies can take before the new legislation comes into force.
On February 17, 2012, the Competition Bureau announced that Construction G.T.R.L. (1990) Inc., Acoustique JCG Inc. and Enterprises de Construction OPC Inc. pleaded guilty to bid-rigging in Quebec Superior Court in a case relating to the expansion of the Chicoutimi Hospital in 2003 (see: Quebec Construction Companies Plead Guilty to Rigging Bids for the Chicoutimi Hospital).
In making the announcement, the Bureau said:
“The court ordered Construction G.T.R.L. to pay a fine of $50,000, and Acoustique JCG and Entreprises de Construction OPC to pay a fine of $25,000 each. The companies are subject to a court order for a period of 10 years.
‘Bid-rigging harms everyone but the criminals who cheat the system for their own financial gain,’ said Melanie Aitken, Commissioner of Competition. ‘In this case, the bid-rigging scheme ultimately harmed the Chicoutimi Hospital and Saguenay residents, by preventing the hospital from obtaining a competitive price for its renovation.’”
The construction industry has long been a target of competition/antitrust regulators. For example, some of the construction related cases in Canada, many of which have also involved trade associations and have gone back about a century, have included building contractors, corrugated metal pipe manufacturers, electrical contractors, gypsum dealers and manufacturers, plumbing contractors, road surfacing contractors, chain link fence contractors, among many others.
Telemarketing Update: CRTC Refuses to Vary Do Not Call List Penalty Imposed on Telemarketing Company
On February 13, 2012, the CRTC denied an application by Les Distributions Triple A Inc. (“Triple A”) to review an earlier decision imposing a $6,000 administrative monetary penalty (“AMP”).
In the earlier decision, the Commission imposed a total $6,000 AMP for violations of the Unsolicited Telecommunications Rules, in relation to calls to consumers registered on the National Do Not Call List (“DNCL”) and for failing to pay applicable DNCL subscription fees.
Triple A sought to have the earlier decision annulled on several grounds, including that it only initiates calls for market research and the AMP imposed was a substantial amount for a small business.
In reviewing Triple A’s application, the Commission considered the criteria for reviewing, rescinding or varying Commission decisions, relying on Telecom Public Notice 98-6 to find that applicants must show that there is a “substantial doubt as to the correctness” of the original decision due to, for example, an error in law in fact, a fundamental change in circumstances or facts or a failure to consider a basic principle raised in the original proceeding (or a new principle arising from the decision).
The National Competition Law Section of the Canadian Bar Association will be holding a teleconference on February 29, 2012 entitled: “Criminal Conspiracy or Legitimate Competitor Collaboration? Tips for In-House Counsel”
From the Canadian Bar Association:
“Authorities have recently noted their first conviction under Canada’s amended conspiracy law, commenting: “[This investigation] highlights the Bureau’s reinvigorated mandate to stop consumer harm caused by price-fixing, and to secure significant fines for these serious criminal offences.”
In-house counsel practising competition law are often asked to evaluate the competition law risks associated with activities such as joint selling initiatives, joint ventures, buying groups, participation in trade associations, and merger transactions. As such, in-house counsel are an organization’s first line of defence to identify potential illegal arrangements to fix prices, allocate markets or restrict output, that create risks of criminal investigation and prosecution; and that can result in significant fines, imprisonment, damage to an organization’s reputation, and civil damage claims.
The line between criminal conspiracies and pro-competitive strategic alliances among competitors, however, can at times be difficult to detect. It is critical that in-house counsel have the tools necessary to distinguish benign or pro-competitive activity from potentially criminal conduct.”
On January 6, 2012 the Competition Bureau announced its first cartel case under Canada’s amended Competition Act (partially brought under the new section 45 of the Competition Act).
In this case, two companies pleaded guilty of fixing the price of polyurethane foam and were fined a total of C $12.5 million (see: Cartels Update: Bureau Announces $12.5 Million Fine in First Price-fixing Case Under Amended Competition Act and Competition Bureau Sends Signal to Price-Fixers with $12.5 Million Fine).
In making the announcement, believed to be one of a number of new cartel cases currently being investigated, the Bureau said:
“’Yesterday’s guilty plea is the first conviction under Canada’s amended conspiracy law,’ said Melanie Aitken, Commissioner of Competition. ‘This investigation highlights the Bureau’s reinvigorated mandate to stop consumer harm caused by price-fixing, and to secure significant fines for these serious criminal offences.’
The charges are the first to arise from the Bureau’s investigation into price-fixing cartel in the polyurethane foam industry. Anyone with information relating to this investigation is encouraged to contact the Competition Bureau.
The Bureau’s investigation benefitted from cooperation under the Bureau’s Immunity and Leniency Programs, which create incentives for parties to address their criminal liability by cooperating with the Bureau in its ongoing investigation and prosecution of other alleged cartel participants.
Under the Competition Act, an agreement between competitors to fix prices, allocate markets or restrict output in Canada is a criminal offence. In March 2010, amendments to the conspiracy provision of the Act came into force.”
The Bureau also recently confirmed that it is investigating potential effects in Canada from the alleged global LIBOR-TIBOR bank cartel (see: Cartel Update: Competition Bureau Investigates Alleged Interbank Lending Rate Coordination), that it continues to receive guilty pleas in the Quebec gasoline price-fixing case, which was the largest such investigation in the Bureau’s history (see: Cartels Update: Seven More Individuals Plead Guilty in Criminal Quebec Gasoline Price-fixing Cartel) and that it remains focused on both maintaining and increasing its cooperation with global enforcement agencies in the detection and enforcement of cartels.
Last week, the Competition Bureau announced that Construction G.T.R.L. (1990) Inc., Acoustique JCG Inc. and Enterprises de Construction OPC Inc. pleaded guilty to bid-rigging in Quebec Superior Court in relation to the expansion of the Chicoutimi Hospital in 2003 (see: Quebec Construction Companies Plead Guilty to Rigging Bids for the Chicoutimi Hospital).
In making this announcement, the Bureau said:
“The court ordered Construction G.T.R.L. to pay a fine of $50,000, and Acoustique JCG and Entreprises de Construction OPC to pay a fine of $25,000 each. The companies are subject to a court order for a period of 10 years.
‘Bid-rigging harms everyone but the criminals who cheat the system for their own financial gain,’ said Melanie Aitken, Commissioner of Competition. ‘In this case, the bid-rigging scheme ultimately harmed the Chicoutimi Hospital and Saguenay residents, by preventing the hospital from obtaining a competitive price for its renovation.’”
The construction industry has long been a target of competition/antitrust regulators. For example, some of the construction related cases in Canada, many of which have also involved trade associations (and have gone back about a century), have included building contractors, corrugated metal pipe manufacturers, electrical contractors, gypsum dealers and manufacturers, plumbing contractors, among many others.
There have also been a number of recent bid-rigging cases in Canada, many of which have involved construction and construction supply related companies.
For example, see: Guilty Plea and $425,000 Fine for Bid-rigging in Montreal, Charges Laid in Residential Construction Bid-rigging Scheme in Montreal, Competition Bureau Exposes Sewer Services Cartel in Quebec, Competition Bureau Obtains Court Order Against the Saskatchewan Roofing Contractors Association.
Theodore Banks (from the firm Schoeman Updike Kaufman & Scharf) has published an interesting new article on competition/antitrust compliance entitled “Antitrust Compliance – It’s All About the Culture”.
Summary:
“What does it take to develop an antitrust compliance program that works? There are a lot of pieces. The employees must be presented with materials that are directly relevant to each of their jobs. It must be done in a way that is easily understandable. It must be ubiquitous, so that little or no effort is needed to gain access to information. There should also be business controls so that violations are not easy to accomplish-or difficult to detect.
We’ve known these things for a long time. In antitrust, which in many ways is the grandfather (or perhaps the godfather) of corporate compliance programs, we’ve had detailed policies, handbooks, training courses, videos, slides. No shortage of information-yet the violations continue. The Justice Department seems to have given up on compliance when it comes to antitrust. Their main method to control cartel behavior is not to encourage prevention (i.e., compliance), but to encourage confession (i.e., the amnesty program). In fact, they are apparently so disgusted with the sorry state of compliance that they got a carve-out from the Federal Sentencing Guidelines when it comes to antitrust. If convicted of a violation of any other federal criminal law, the company can get credit for good intentions if its compliance program met the definition of an “effective” program. But not true for antitrust.”
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On February 15, 2012, an $18,000 “administrative monetary penalty” or “AMP” was imposed by the CRTC on a British Columbia telemarketing company, Imperial Data Supply Corp. (“Imperial”).
The Commission found that six telemarketing calls were made to consumers that were (or should) have been on Imperial’s internal do not call list, violating the Unsolicited Telecommunications Rules, and that six fax telemarketing calls were made without being registered with the Do Not Call List.
The CRTC has the legislative authority to impose AMPs on any telemarketer that violates the Unsolicited Telecommunications Rules. The maximum penalty for a violation is $1,500 (for individuals) and $15,000 (for corporations). Violations that continue for more than a day are separate violations.
In making the decision, the Commission also considered whether Imperial had established a due diligence defense (subsection 72.1(1) of the Telecommunications Act provides a defense for a person in a proceeding relating to a violation to show that they exercised due diligence to prevent the violation) and whether the amount of the AMP imposed was reasonable.
In rejecting Imperial’s due diligence defense, the CRTC found that while it made submissions regarding the occurrence of periodic errors, and took the position that they were not systematic, it had failed to submit any evidence of reasonable steps or business practices to prevent the violations. The CRTC also pointed to notifications by Commission staff for Imperial to renew its registration and its continuation to make telemarketing calls after the expiration of its registration.
With respect to the amount of the AMP, the CRTC noted that the financial health of a company is not a relevant factor in determining whether to impose (or reduce) a penalty and refused to reduce the AMP imposed in this case. The Commission pointed to, among other things, evidence of notifications of Imperial’s obligations to maintain an internal do not call list under the Unsolicited Telecommunications Rules and its failure to do so.
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In December 2010 Canada’s new anti-spam legislation was passed (the “Anti-spam Act”) which will, when it comes into force, be one of the strictest anti-spam regimes in the world (see: Anti-spam Act). Canada had been criticized prior to its passage as being the only G8 nation without stand-alone anti-spam legislation.
In general, the Anti-spam Act will require express or implied consent for the sending of “commercial electronic messages” and will also impose certain form (i.e., disclosure) and opt-out (i.e., unsubscribe) requirements.
The Anti-spam Act will have significant impacts on companies that engage in electronic marketing, including marketing through e-mail, text messaging, instant messaging and likely social media.
The Anti-spam Act will also require express consent for other electronic practices, including altering transmission data and the installation of computer programs on other persons’ computer systems.
In addition, the Anti-spam Act will also broaden the Competition Bureau’s jurisdiction to regulate misleading advertising in the context of electronic communications – for example, misleading representations made electronically, such as in sender information, subject matter information, electronic messages or locators. In this regard, the Anti-spam Act also includes amendments to the civil and criminal misleading advertising sections of the Competition Act (under sections 52 and 74.01).
Contravention of the new legislation will expose individuals and companies to significant penalties of up to C $1 million (for individuals) and C $10 million (for corporations). The Anti-spam Act also creates private rights of action, under which both actual and steep statutory damages may be awarded (of up to $1 million per day of non-compliance) and will also allow class actions to be commenced.
In passing the Anti-spam Act, Industry Canada said:
“On December 15, 2010, the Government of Canada passed the Fighting Internet and Wireless Spam bill, Bill C-28. In doing so, the government delivered on a key commitment made by Prime Minister Harper to Canadians and Canadian businesses in September 2008.
The intent of the legislation is to deter the most damaging and deceptive forms of spam, such as identity theft, phishing and spyware, from occurring in Canada and to help to drive out spammers.
This law addresses the legislative recommendations of the Task Force on Spam, which brought together industry, consumers and academic experts to design a comprehensive package of measures to combat threats to the digital economy.
As well the government studied successful legislative models in other countries and, based on their experiences, has developed a focused plan to address spam and related online threats.”
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