Canadian COMPETITION & ANTITRUST LAW

The Globe and Mail has reported that new Canadian cellphone player Mobilicity has filed a complaint against Rogers with the federal Competition Bureau.  According to the Globe, Mobilicity has filed the complaint in relation to what is alleging is anti-competitive behaviour from Rogers, in particular in relation to Rogers’ new discount cellphone brand Chatr Wireless Inc.

The Globe reported:

“The Toronto-based company, which launched service in May after bidding on new wireless licenses in 2008, has alleged that Rogers’ creation of a new discount cellphone brand, Chatr Wireless Inc., is in “direct breach” of section 78 of the Competition Act.

That section of the act prohibits dominant players in any given industry from using “fighting brands,” which are often called flanker brands in the telecom industry, to eradicate new competition by coming in with lower prices.

John Bitove, Mobilicity’s chairman, said in July that he would file a complaint with the Competition Bureau, after Chatr pricing leaked onto the Internet and showed them to be nearly identical to those of the new wireless players, like Mobilicity and Wind Mobile.”

If Mobilicity’s complaint does indeed include a claim that one of Rogers’ anti-competitive acts is the introduction of a “fighting brand” (one of a non exhaustive list of anti-competitive acts under section 78 of the Competition Actfor the purposes of abuse of dominance), it may have done so given the fact that it could not establish that Rogers was engaging in below cost sales (a prerequisite for predatory pricing claims) or based on the widely known difficulty of making out predatory pricing claims.  For example, in addition to the fact that there have been an extremely small handful of contested predatory pricing claims in Canada, the challenge of persuasively arguing that the necessary conditions for successful predation exist not least of which include dominance, high barriers, below cost pricing, whatever the standard – which is unsettled in Canada – and the ability of the dominant firm to recoup its losses once the other firm has exited the market) are well known.  In this regard, the Bureau uses several “screening” criteria to weed out complaints that are unlikely to raise genuine and signficant predation issues, including reviewing the complainant’s financial condition (to assess the likelihood that the complainant is or will suffer losses as a result of the alleged predatory conduct and whether conducive market conditions exist for predation – e.g., dominance, high barriers and the ability of the low pricing rival to recoup its losses).

Having said that, the Competition Bureau is believed to want to commence more abuse of dominance cases, given the relatively small universe of abuse cases in Canada (with the corollary that there remains many legal aspects of abuse of dominance that remain unsettled).  Though having spent more than three years investigating and proceeding with the Canadian real estate case (see The CREA Abuse of Dominance Case and Hearing Dates Set for CREA Abuse of Dominance Application), it may well scrutinize the Mobilicity complaint closely before deciding whether to proceed.

For more see: Mobilicity Files Complaint Against Rogersand other competition law telecom developments: British Columbia Supreme Court Rejects Novus’ Section 79 Predatory Pricing Claim Against Shaw, Canadian Wireless Wars Continue – Bell’s Solo Wireless Brand to Offer Unlimited Plans.

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our: Abuse of Dominance, Advertising and Marketing Law, Bid Rigging, Canadian Competition Law, Canadian Competition Law Compliance, Canadian Competition Law Home, Competition Act Amendments, Competition Bureau Investigations, Competition Law Courses and Conferences, Competition Law Litigation, Competition Law Publications, Competition Law Resources, Competition Law Services, Conferences, Conspiracy and Competitor Collaborations, Conspiracy – FAQs, Global Competition / Antitrust Law Resources, Global Competition Law Updates, Investment Canada Act, Merger Control, Merger Control FAQs, Private Actions, Promotional Contests, Publications, Refusal to Deal, Team, Trade Associations or Trade Association Cases pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law and consulting services to Canadian and international clients.  For more information about our services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us on +1 604 687 0555 or +1 778 867 5558.  Visit us on the web in Toronto at www.torontocompetitionlawyer.com or www.torontocompetitionlaw.com.

We are pleased to provide this global competition law update (China) from our friends at Grandall Legal Group in Beijing.

Introduction

The Ministry of Commerce’s Anti-monopoly Bureau approved Novartis’s acquisition of Alcon on August 13 2010, subject to conditions. The ministry accepted the filing in respect of the acquisition on April 20 2010 and decided on May 17 2010 that a further review period was needed. The ministry reviewed information on: (i) the overlap of the two companies’ products in the Chinese and global markets; (ii) their respective market shares; (iii) the characteristics, applications, prices and sales methods of their products; (iv) the supervisory policies in the relevant market; and (v) the two companies’ relationships with competitors in the market.

Opinions were sought from other companies in the field. After negotiating with the filing parties, consensus was reached on how to reduce the acquisition’s undesirable effects on competition in the relevant markets.

Relevant markets

Anti-infection and anti-inflammatory drugs

The products affected by the acquisition are anti-infection and anti-inflammatory drugs used to treat eyes, particularly for post-surgical infections. Novartis’s and Alcon’s products are sold under the Infectoflam and TobraDex brands, respectively.

After the concentration, Alcon’s share of the Chinese market will exceed 60% and Novartis’s share will be less than 1%. According to information in the filing, Novartis has made a strategic decision to withdraw from the Chinese and global markets.

In deciding to approve the acquisition with conditions, the ministry considered that if Novartis’s decision to exit the market were motivated solely by the purposes of the acquisition, it would still be able to re-enter the market after the transaction and either eliminate or restrict competition in the Chinese market.

Contact lens care products

The post-acquisition enterprise will have almost 60% of the global market for contact lens care products and almost 20% of the Chinese market, making it the second-largest player in China after Hydron Contact Lens.

In 2008 CIBA Vision Shanghai, a Novartis subsidiary, signed a sales and distribution agreement with Hydron whereby the latter became CIBA Vision’s sole distributor in China. The arrangement makes CIBA Vision Shanghai and Hydron strategic partners. However, it will also give the post-acquisition enterprise and Hydron the motive and opportunity to engage in concerted pricing practices and to restrict the volume and location of sales of their products with the effect of eliminating or restricting competition.

In order to mitigate these competition concerns, the ministry has imposed conditions on the transaction.

Conditions

Anti-infection and anti-inflammatory drugs

Novartis is required to cease sales of Infectoflam in China by the end of 2010. In addition, the ministry has stated that:

- for five years after the decision’s effective date, Novartis may not reintroduce Infectoflam (or the same product under a different name) into the Chinese market;

- until the acquisition is completed, Novartis may not sell other ocular anti-infection or anti-inflammatory drugs that are sold in other countries in the Chinese market; and

- for the next five years, Novartis must report annually to the ministry on its compliance with its promise.

Contact lens care products

The CIBA-Hydron agreement must be terminated within 12 months of the ministry’s decision. The relevant party will then have one week in which to notify the ministry of the termination.

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our: Abuse of Dominance, Advertising and Marketing Law, Bid Rigging, Canadian Competition Law, Canadian Competition Law Compliance, Canadian Competition Law Home, Competition Act Amendments, Competition Bureau Investigations, Competition Law Courses and Conferences, Competition Law Litigation, Competition Law Publications, Competition Law Resources, Competition Law Services, Conferences, Conspiracy and Competitor Collaborations, Conspiracy – FAQs, Global Competition / Antitrust Law Resources, Global Competition Law Updates, Investment Canada Act, Merger Control, Merger Control FAQs, Private Actions, Promotional Contests, Publications, Refusal to Deal, Team, Trade Associations or Trade Association Cases pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law and consulting services to Canadian and international clients.  For more information about our services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us on +1 604 687 0555 or +1 778 867 5558.  Visit us on the web in Toronto at www.torontocompetitionlawyer.com or www.torontocompetitionlaw.com.

The Competition Bureau announced today that it will be commencing consultations on its Merger Enforcement Guidelines (“MEGS”), holding a series of roundtables to “explore the merits of revising the Merger Enforcement Guidelines”.

In making the announcement, the Bureau stated:

“The Merger Enforcement Guidelines which were issued in 2004, set out the framework the Bureau uses to evaluate the potential competitive effects of mergers.

The purpose of the roundtables will be to assess whether the guidelines accurately reflect current merger review practices at the Bureau and the potential impact of the recent publication of the revised Horizontal Merger Guidelines by the antitrust authorities in the United States, as well as other legal and economic developments.”

While Canada’s merger control regime was substantially amended in March, 2009, the changes were restricted to the pre-notification process, with the substantive framework for merger review in Canada remaining unchanged.  See: Merger Control and Competition Act Amendments.  If the MEGs are revised as a result of the Bureau’s new consultations, it will reflect continuing efforts by the Bureau to revise, update and further standardize its approach to the review of mergers in Canada, which has resulted in a number of recent changes over the past year, including a new policy on hostile transactions (see: Competition Bureau Publishes Policy Relating to Hostile Transactions) and a new draft Fee and Service Standards Handbook for mergers (see: Competition Bureau Issues New Draft Fee and Service Standards Handbook for Mergers for Comment).

As well, if the MEGs are updated to be consistent with new Horizontal Merger Guidelines recently issued by the U.S. DOJ and FTC (see: U.S. Department of Justice and Federal Trade Commission Issue New Horizontal Merger Guidelines), this would represent one more step in aligning Canada’s merger control regime with that of its largest trading partner, the United States, which has included the adoption in Canada of a U.S.-style two-stage merger control regime – see: Canadian Merger Control).

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our: Abuse of Dominance, Advertising and Marketing Law, Bid Rigging, Canadian Competition Law, Canadian Competition Law Compliance, Canadian Competition Law Home, Competition Act Amendments, Competition Bureau Investigations, Competition Law Courses and Conferences, Competition Law Litigation, Competition Law Publications, Competition Law Resources, Competition Law Services, Conferences, Conspiracy and Competitor Collaborations, Conspiracy – FAQs, Global Competition / Antitrust Law Resources, Global Competition Law Updates, Investment Canada Act, Merger Control, Merger Control FAQs, Private Actions, Promotional Contests, Publications, Refusal to Deal, Team, Trade Associations or Trade Association Cases pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law and consulting services to Canadian and international clients.  For more information about our services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us on +1 604 687 0555 or +1 778 867 5558.  Visit us on the web in Toronto at www.torontocompetitionlawyer.com or www.torontocompetitionlaw.com.

We are pleased to provide this global competition law update (China) from our friends at Grandall Legal Group in Beijing.

On August 12th 2010, the Ministry of Commerce held a press conference regarding the development of the antimonopoly practice in China.  The Chief of the Antimonopoly Bureau, Mr. Shang Ming, answered questions raised by the journalists.  For the first time in 2 years since the China Anti-Monopoly Law (“AML”) came into effect that some of the most controversial questions were clarified directly by the official from the enforcement institution.

1.  The situation of the acceptance of the concentration filings.

By the end of June 2010, the Antimonopoly Bureau has received more than 140 filings. Except 4 filings that were withdrawn by the applicants, more than 90% of the cases have been closed.

In summary, we can see several features in these filings.

(1). Most of the filings were closed in the preliminary review phase, namely the first 30 days review period.  Nearly 80 filings were closed within such period, which accounts for 60% of all the filings.  50 filings needed to undergo further reviewed, which accounts for 30% of all the filings.  Only 3% of all the filings were closed in the extended period of 60 days.

(2). Most of the filings, more than 95%, were approved without any conditions.  5 filings were approved with conditions (the Novartis filing was approved with conditions in August, which makes the number of this category to 6) and 1 was prohibited.

(3) Most filings concerned horizontal concentration, in which two or more competitors are the parties.  The number of such horizontal concentration forms 62% of all the filings.  There are also vertical concentration and conglomerate concentration.

(4). In all the filings, over 80% of the concentrations were undertaken in the manufactory industry.  The large part of the filings involved public listed companies.

2.  The impression of discrimination against foreign companies.

One criticism to the filing process is that there appears to be discrimination against foreign companies, because from the evidence per se, the 5 cases that were cleared but with conditions imposed and 1 prohibited case all involved foreign companies.  However, that does not necessarily mean that AML and Chinese antimonopoly enforcement institution has discrimination towards foreign companies.

Several reasons may explain the said figures.

(1). Generally speaking, foreign companies have abundant capitals, which make them easy to reach the threshold for concentration filings.

(2). Although the financial crisis exerts some negative impact on the M&A market, it remains active as always and the most active players in this market are foreign companies.  That is why they are easily exposed to the competition issue.  What is more, in order not to interfere too much with the M&A market, the enforcement institutions are more incline to impose some conditions to relieve the negative effect on competition, but approve the transaction. To some extend, the approval with conditions is one way to smooth out, rather than hinder the transaction.

3. Exemptions to the agricultural industry.

In the recent years, lots of mergers and acquisitions through stock finance take place in the agriculture industry.  The concentrations occurring in the industry cause people to want to know whether the industry is also subject to AML.

Article 56 of the AML stipulates: this law does not govern the concerted actions of agricultural producers and rural economic organizations in economic activities such as production, processing, sales, transportation and storage of agricultural product.

However, this article cannot be interpreted as the exemption of the entire agricultural industry from antimonopoly review and regulation.  Concentration in the agriculture industry shall file to the Ministry of Commerce in accordance with the antimonopoly laws and regulations.

4. No exemptions to state-owned companies.

There are no exemptions for state-owned companies, they are also subject to the AML and regulations.

The current situation in China is that there are some state-owned companies who already have monopoly status in some areas.  The purpose of AML is to supervise more aggressively on these companies, but such purpose will be achieved through the regulation of the activities of the companies, such as entering into monopoly agreement or abuse of dominance.  Concentration review is not the only way to regulate state-owned companies who are already in position of dominance.

5. The requirements of the materials.

It is true that for some cases, the period between the applicant submits the materials and the official filing of the case is quite long.  However, the time limit was not at the discretion of the enforcement institutions, but pursuant to the AML and regulations.

According to Article 23 of AML, the applicant shall submit: declaration paper, explanations on the effect of the concentration on the relevant market competition, the agreement of concentration, the financial reports and accounting reports of the proceeding accounting year, and other required documents and materials.  The filing will not be reviewed before all the necessary materials required in Article 23 are submitted and the contents are in compliance with the laws and regulations. There is no limitation on the time for such submission of materials.  If the applicant cannot submit the required materials, or the submission is not in compliance with the laws and regulations, the applicant will be asked to provide further information and the review will not start before all the necessary information are submitted.

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our: Abuse of Dominance, Advertising and Marketing Law, Bid Rigging, Canadian Competition Law, Canadian Competition Law Compliance, Canadian Competition Law Home, Competition Act Amendments, Competition Bureau Investigations, Competition Law Courses and Conferences, Competition Law Litigation, Competition Law Publications, Competition Law Resources, Competition Law Services, Conferences, Conspiracy and Competitor Collaborations, Conspiracy – FAQs, Global Competition / Antitrust Law Resources, Global Competition Law Updates, Investment Canada Act, Merger Control, Merger Control FAQs, Private Actions, Promotional Contests, Publications, Refusal to Deal, Team, Trade Associations or Trade Association Cases pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law and consulting services to Canadian and international clients.  For more information about our services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us on +1 604 687 0555 or +1 778 867 5558.  Visit us on the web in Toronto at www.torontocompetitionlawyer.com or www.torontocompetitionlaw.com.

On September 2, 2010, the U.S. Department of Justice announced that Polar Air Cargo LLC had agreed to plead guilty to price-fixing on air cargo shipments and agreed to pay a USD $17.4 million criminal fine.

In making its announcement, the DOJ stated:

“According to a one-count felony charge filed today in U.S. District Court for the District of Columbia, Polar Air Cargo LLC’s co-conspirators engaged in a conspiracy to fix the cargo rates charged to certain customers for international air cargo shipments between the United States and Australia from at least as early as Jan. 1, 2000, and continuing until at least Feb. 14, 2006. Polar Air Cargo LLC, an American airline based in Long Beach, Calif., joined and participated in the conspiracy from at least as early as Jan. 1, 2000, until April 30, 2003. Under the plea agreement, which is subject to court approval, Polar Air Cargo LLC has agreed to cooperate with the department’s ongoing antitrust investigation.

Air cargo carriers transport a variety of cargo shipments, such as heavy equipment, perishable commodities and consumer goods, on scheduled international flights.

According to the charge, Polar Air Cargo LLC carried out the conspiracy by agreeing during meetings, conversations and communications on certain components of cargo rates for shipments between the United States and Australia and by levying cargo rates in accordance with the agreements reached. As a part of the conspiracy, Polar Air Cargo LLC monitored and enforced adherence to the agreed-upon rates.”

Polar Air was charged with price fixing in violation of the Sherman Act, under which the maximum fine is USD $10 million for corporations (where offences were committed before 2004).  In Canada, as a result of recent amendments to the Competition Act, the maximum penalties for contravening the criminal conspiracy provisions under section 45 are a fine of up to CDN $25 million (per count), imprisonment for up to 14 years, or both (increased from the former $10 million and 5 years).

According to the DOJ, as a result of its investigation, 17 airlines have been charged in its ongoing price-fixing investigation in the air transportation industry, more than $1.6 billion in criminal fines have been imposed and four airline executives have been sentenced to imprisonment.  Airlines that have pleaded guilty in this case include British Airways Plc, Korean Air Lines Co. Ltd., Qantas Airways Limited, Japan Airlines International Co. Ltd., Cathay Pacific Airways Limited and Air France, among others.

For more, see the DOJ’s news release: Polar Air Cargo LLC Agrees to Plead Guilty to Price Fixing on Air Cargo Shipments.

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our: Abuse of Dominance, Advertising and Marketing Law, Bid Rigging, Canadian Competition Law, Canadian Competition Law Compliance, Canadian Competition Law Home, Competition Act Amendments, Competition Bureau Investigations, Competition Law Courses and Conferences, Competition Law Litigation, Competition Law Publications, Competition Law Resources, Competition Law Services, Conferences, Conspiracy and Competitor Collaborations, Conspiracy – FAQs, Global Competition / Antitrust Law Resources, Global Competition Law Updates, Investment Canada Act, Merger Control, Merger Control FAQs, Private Actions, Promotional Contests, Publications, Refusal to Deal, Team, Trade Associations or Trade Association Cases pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law and consulting services to Canadian and international clients.  For more information about our services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us on +1 604 687 0555 or +1 778 867 5558.  Visit us on the web in Toronto at www.torontocompetitionlawyer.com or www.torontocompetitionlaw.com.