In Pro-Sys, a majority of the British Columbia Court of Appeal set aside an earlier Supreme Court of British Columbia decision granting certification and dismissed the action on the basis that the representative plaintiffs, as indirect purchasers, had no cause of action maintainable in law.

In Sun-Rype, the British Columbia Court of Appeal similarly set aside an earlier Supreme Court of British Columbia decision granting certification for indirect purchaser plaintiffs, holding that they had no cause of action (and remitted the application to the trial court for consideration with respect to the direct purchaser plaintiffs).

These companion decisions by the British Columbia Court of Appeal were in contrast and conflict to a recent Quebec Court of Appeal decision in Option Consommateurs v. Infineon Technologies AG, which unanimously overturned a 2008 Quebec Superior Court decision denying a motion to commence indirect purchaser class action proceedings.

Presumably based on the uncertainty of indirect purchasers’ ability to commence price-fixing class actions in Canada (the Supreme Court does not issue reasons in leave applications), and the conflicting existing case law including these recent British Columbia and Quebec appellate decisions, the Supreme Court granted leave to appeal on December 1, 2011 (see: Canadian Supreme Court Grants Leave in Pro-Sys/Microsoft and Sun-Rype Indirect Purchaser Competition/Antitrust Class Actions).

After some years of unsettled law and conflicting decisions, it looks as though after June plaintiff and defense counsel, and their clients, will receive some long-awaited certainty regarding the ability of indirect purchasers to commence price-fixing class actions and the status of the passing-on defense in Canada.

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For more see: Canadian Supreme Court Grants Leave in Pro-Sys/Microsoft and Sun-Rype Indirect Purchaser Competition/Antitrust Class Actions, Quebec Court of Appeal Rejects BC Court of Appeal Passing-on Defence Decisions in Pro-Sys and Sun-Rype, British Columbia Court of Appeal Allows Microsoft Appeal in Pro-Sys v. Microsoft – Creates de facto Passing-On Defence

For more about our firm and our practices see:

 Hakemi & Company

Conservative Justice and Public Safety Ministers Rob Nicholson and Vic Toews are asking Senators to “expeditiously” approve the Bill.

Bill C-10, which completed second reading in the Senate in December, would, among other things, eliminate conditional sentences of two years or less (i.e., sentences served in the community rather than a correctional facility) from being ordered by courts for violation of two of the core criminal offences under the Competition Act: criminal conspiracy agreements (section 45) and bid-rigging agreements (section 47).

This would be achieved by amending section 742.1 of the Criminal Code to restrict the availability of conditional sentences for all offences for which the maximum term of imprisonment is 14 years or life (and for specified offences, prosecuted by way of indictment, for which the maximum term of imprisonment is 10 years).

Both sections 45 (criminal conspiracy agreements, including price-fixing and market division/allocation agreements between competitors) and 47 (bid-rigging) of the Competition Act are indictable offences, subject to maximum terms of imprisonment of 14 years (increased as a result of recent amendments to the Competition Act in 2009 and 2010).

Given that the Competition Act has been amended to significantly increase the penalties for criminal conspiracy offences (and lower the enforcement bar by removing the former competitive effects test – see: Competition Act amendments), Bill C-10 will, if enacted, further increase the potential risk for individuals violating these key criminal offences under the Act.

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For more about the criminal conspiracy rules in Canada and our services see:

Conspiracy (Cartels)

Hakemi & Company

In making the announcement, the Bureau said:

“Two of the accused, Gary Neiderer and Fabien Chouinard are territorial managers employed by Sonic. They were sentenced today to fines of $3,000 and $4,000 respectively. The other five accused are service stations owners. Jacques Blais and Louis Blais operated under the Shell banner. Luc Fecteau, Yvan Grondin and Jacques Robert operated under the Esso banner. The five owners were each sentenced to fines of $5,000.

Charges were laid in June 2008 and July 2010 against 38 individuals and 14 companies for fixing the price of gas at pumps in Victoriaville, Thetford Mines, Magog and Sherbrooke, Quebec. As of today, 21 individuals and six companies have pleaded guilty in this case, with fines totalling over $2.8 million. Of the 21 individuals who have pleaded guilty, six have been sentenced to terms of imprisonment totalling 54 months.”

The Bureau has also significantly expanded its summary of investigations into gasoline pricing in Canada, presumably based on the number of complaints and inquiries the Bureau receives relating to gas prices – see: Investigating Cartels – Gas Prices.

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For more information about price-fixing laws in Canada see:

Conspiracy (Cartels)

Last Friday, Mr. Justice Kenneth L. Campbell of the Ontario Superior Court of Justice dismissed a motion by the defendants in Dale v. The Toronto Real Estate Board to dismiss Realtysellers (Ontario) Limited’s (“Realtysellers”) action against The Canadian Real Estate Board (“CREA”), The Toronto Real Estate Board (“TREB”) and 47 other defendants (for a copy of the decision see: Dale v. The Toronto Real Estate Board).

This case relates to an action commenced by Realtysellers against CREA, TREB and their directors and officers in relation to alleged anti-competitive MLS® access restrictions – or, as the Court stated:

“Essentially, the plaintiffs claim that the Toronto Real Estate Board (TREB) and its officers and directors … together with the Canadian Real Estate Association (CREA) and its officers and directors … breached the terms of an earlier settlement agreement, violated [the conspiracy provisions] of the Competition Act … unlawfully conspired together to injure the plaintiffs, and wrongfully interfered with the plaintiffs’ economic and contractual relations.”

and

“As to the specific nature of the plaintiffs’ allegations, the Fresh as Amended Statement of Claim alleges that, between 2005 and 2007, the 22 individual CREA defendants, in their personal capacity as real estate brokers, and for the purpose of harming the plaintiffs and removing them and their new business as a competitive threat, ‘acted and agreed unlawfully, maliciously, without justification and outside the scope of his or her authority within CREA’ to influence CREA, TREB, the other defendants and other real estate boards ‘to drive the plaintiffs out of the resale brokerage business’ by causing CREA to implement ‘new offer negotiation rules’ that all CREA member boards across Canada would have to follow.”

In particular, Realtysellers is arguing that following an earlier settlement, TREB in consultation with CREA enacted new MLS® rules that required listing brokers to be involved in the offer negotiation process in residential real estate transactions, which prevented flat fee service offerings by Realtysellers, eliminated its access to the MLS® system and forced them to suspend their business operations.

Realtysellers is pleading a number of statutory and common law causes of action including conspiracy under section 45 of the Competition Act, common law conspiracy, breach of the earlier settlement agreement in this matter, inducing breach of contract and interference with economic relations.

In dismissing the defendants’ motion to dismiss Realtysellers’ claim, Mr. Justice Campbell found, among other things, that Realtysellers claim adequately discloses causes of action for breach of contract, both types of common law conspiracy pleaded and conspiracy under section 45 of the Competition Act.

The Court also made a number of interesting findings and observations regarding the legal test for parties seeking to strike a claim, when directors and officers may be held personally liable and, perhaps most interestingly, the evidentiary burden in conspiracy cases and role of circumstantial evidence in establishing a conspiracy:

Legal test to strike a claim:

“The combined application of these principles creates a ‘stringent’ legal test for defendants moving to strike out a statement of claim.”

When directors and officers may be held to be personally liable:

“As the Court of Appeal for Ontario confirmed in Piedra v. Copper Mesa Mining Corp. … in the absence of allegations of fraud, deceit, dishonesty, or want of authority on the part of the officers, directors, or employees of the organization, such individuals are protected from personal liability ‘unless it can be shown that their actions are themselves tortious’ or ‘exhibit a separate identity or interest from that of the company’ so as to render the impugned conduct ‘their own’ … In the present case, however, the plaintiffs have clearly alleged that the individual defendants acted unlawfully and maliciously against them, without justification, entirely outside the scope of their lawful authority as officers and/or directors of TREB and/or CREA and for the advancement of their own personal and business interests.”

Evidentiary burden in conspiracy cases and role of circumstantial evidence in establishing a conspiracy:

“Accordingly, it is not plain and obvious that the plaintiffs’ claim fails to disclose a reasonable cause of action regarding the tort of conspiracy.  Indeed, in my view the plaintiffs have alleged that the defendants engaged in a classic type of conspiracy, namely, combining together to drive a business competitor and their novel business model out of the marketplace.

While the plaintiffs candidly admit a lack of detailed knowledge as to all of the factual nuances of the conspiracy, this is hardly surprising given the nature of the allegation.  As Cumming J. aptly stated, when faced with similar circumstances in North York Branson Hospital v. Praxair Canada Inc., [1998] O.J. No. 5993 (S.C.J.), at para. 22:

‘In truth, the very nature of a claim of conspiracy is that the tort resists detailed particularization at early stages.  The relevant evidence will likely be in the hands and minds of the alleged conspirators.  Part of the character of a conspiracy is the secrecy and the withholding of information from alleged victims.  The existence of an underlying agreement bringing the conspirators together, proof of which is a requirement borne by a plaintiff, often must be proven by indirect or circumstantial evidence.  A conspiracy is more likely to be proven by evidence of overt acts and statement by the conspirators from which the prior agreement can be logically inferred.  Such details would not usually be available to a plaintiff until discoveries.  These considerations and the general theme of Hunt, instructing courts not to shy away from difficult litigation, also militate against holding pleadings in civil conspiracy cases to an extraordinary standard.’”

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For more information about our litigation and regulatory law services see our firm’s home page:

Hakemi & Company

The Antitrust Law Section of the American Bar Association and the International Bar Association (IBA) will be holding their bi-annual International Cartel Workshop in Vancouver from February 1-3, 2012 at the Fairmont Hotel Vancouver.

From the American Bar Association:

“The International Cartel Workshop, recognized globally as the premier international cartel program offered anywhere, is presented only once every two years. The next Workshop, which will have many new features, will be held in Vancouver, Canada during February 1-3, 2012.  The 2012 program will continue the Workshop’s tradition of instruction by demonstration, with experienced faculty from around the globe taking you inside a hypothetical international cartel matter — from detection by government enforcers to the disposition of government prosecutions and private damage claims.  The Workshop will also highlight new developments in the law and leniency practices around the world, with leading enforcers and experienced private practitioners demonstrating how critical decisions are made on both sides of the table and providing examples of important interactions between counsel and enforcers.  The 2012 Workshop’s international faculty includes many of the most accomplished cartel attorneys in the world, as well as the most senior cartel enforcement officials from a variety of jurisdictions.”

For more information about the joint ABA/IBA Cartel Workshop see:

American Bar Association – Antitrust International Cartel Workshop

From Gibson Dunn:

“The Department of Justice obtained more than $1 billion in FY 2011 from criminal antitrust offenders, the second-highest amount in its history.  The total payments consist of an estimated $523 million in criminal fines and more than $500 million in restitution, penalties, and disgorgement paid to state and federal agencies.  This staggering amount represents an increase of more than 78% from FY 2010 and sends a clear message to the corporate world that DOJ’s zealous pursuit of large fines for collusive conduct continues unabated.

Another important measure of success for the Department of Justice, Antitrust Division also significantly advanced in FY 2011; the number of criminal cases filed increased 50% to 90 cases, which included 27 corporations and 82 individuals–each category significantly higher than in FY 2010.

Despite these achievements for the Antitrust Division, other metrics revealed significant year-over-year declines in FY 2011.  Most notably, several statistics relating to incarceration of antitrust defendants reached multi-year lows: the number of individuals sentenced to prison decreased 28% to just 21 defendants, the length of the average prison sentence fell 44% to 17 months, and the total prison time imposed on defendants dropped 60% to 10,544 days.  …

Given the Antitrust Division’s numerous ongoing investigations–a number of which involve large, complex, international cartel matters that have not yet been announced publicly–we expect 2012 to be another banner year in criminal antitrust enforcement. …”

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For the complete publication see:

2011 Year-End Criminal Antitrust Update

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Happy New Year! Welcome to our refreshed Competition Review 2012, which presents an overview of developments in competition laws from around the world in the past few months, with a focus on ASEAN and Asia.  This issue covers developments, which have occurred in the second half of 2011 that may interest you.

Each of the decisions and studies discussed below is intended to give you a flavor of the issues in the competition and anti-trust scene so that, when you review your business activities, structure new deals or make acquisitions, you have these issues at the back of your mind and provide for them.  For ease of convenience we have organized our Competition Review into three sections – anti-competitive agreements, abuse of dominance and mergers.

We set out below some of the key principles that emerge from the cases discussed below:

(a)     co-operating with competition authorities for a speedy resolution may help reduce penalties (see EU: European Commission (‘Commission’) Fines Producers Of CRT Glass €128 Million In Cartel Settlement);

(b)     a competition authority may recommend shareholders to replace their directors or officers if they do not fully cooperate with investigations (see Indonesia: Indonesian Competition Authority KPPU Recommends President Director Be Replaced);

(c)     even though a competition authority may not have powers to review mergers, it may investigate         the       transaction       for        other    anti-competitive         aspects       (see   Malaysia: Malaysia Competition Commission (‘MYCC’) To Investigate Air Asia-Malaysian Airlines (‘MAS’), Share Swap And Collaborative Agreement);

(d)     exchanging information between competitors through a third party, such as software service providers, may lead to a violation of competition laws if the exchange is of sensitive information (see UK: Motor Insurers Agree To Limit Data Exchange And Provide Commitments to the Office Of Fair Trading (‘OFT’)); and

(e)     not all jurisdictions, where merging parties have presence, will require merger notification. Undertakings with large presence in one jurisdiction may not have sufficiently significant presence in other jurisdictions that crosses notification triggers (see Indonesia: Microsoft’s Acquisition Of Skype Does Not Need Notification).

Trade associations are an evergreen target and there are a number of recent competition decisions on this.  For instance, the Competition Commission of Singapore has recently penalized members of the Association of Modeling Industry Professionals for fixing the rates of modeling services in Singapore. On a global level, the price fixing agreement between airlines, which was established during meetings at the International Air Transport Association, continues with more decisions coming out of Australia, United States, UK as well as New Zealand. Additionally, various competition authorities are investigating the activities of the British Bankers’ Association in their setting of LIBOR and TIBOR rates. Hence, if you are part of a trade association, please exercise extra caution and distance yourself from anti-competitive decisions the trade association makes.

Generally, competition authorities around the world have generally displayed heightened activity in recent times; Asia being at the forefront. For example, the Competition Commission of India fined the largest real estate firm a record INR6.3 billion, i.e., about S$155 million for abuse of dominance.  Within days of its implementation, the Malaysia Competition Commission announced that it will review a transaction between Malaysian Airlines and Air Asia for anti-competitive impact.  Singapore penalized two cartels while the competition authorities of Korea and Japan have placed heavy fines for cartel activity by oil refiners and abuse of dominance by an internet company.  European and US enforcement agencies have remained active and have opened probes into credit default swaps as well as other alleged cartel and abusive behaviors banks and financial institutions.

The increased activity in competition law enforcement in Asia could be a result of the ASEAN 2015 vision, which includes an endeavor to introduce competition laws in all ASEAN member countries by 2015. For readers who wish to get a better understanding of competition laws in ASEAN countries, please refer to our publication titled ASEAN Competition Law - a regularly updated loose-leaf volume that contains practical information on competition law in ASEAN member countries, written by the Rajah & Tann network of law firms across ASEAN.

Competition authorities across the various jurisdictions have close cooperation and information sharing, whether for capacity building or enforcement activity.  One example is the Japan Fair Trade Commission recently training members of the Malaysia Competition Commission (‘MyCC’) to provide an insight into Japan’s competition laws, enforcement and implementation.

Finally, merger clearance is now required or encouraged in several countries across Asia.

Anti-Competitive Agreements

Australia: Korean Air Admits to Price Fixing on Freight out of Indonesia

On 30 November 2011, Australia’s Federal Court fined Korean Air A$5.5 million for price fixing, after it admitted to engaging in a cartel for fuel and security surcharges from May 2003 until February 2006.  Korean Air increased its rates for freight out of Indonesia and customs fees on cargo out of Australia to Indonesia. The Australian Competition and Consumer Commission (‘ACCC’) said the penalty may have been higher if Korean Air had failed to cooperate and make admissions.

EU: European Commission (‘Commission’) Fines Producers of CRT Glass €128 Million in Cartel Settlement

The Commission on 19 October 2011 settled a cartel investigation with four producers of cathode ray tube (‘CRT’) glass, used in televisions and computer screens. The cartel fixed the prices and exchanged sensitive market information on CRT glass in the European Economic Area (‘EEA’) from February 1999 to December 2004.  Three producers were fined a total of €128,736,000 after receiving a 10% reduction for admitting their role and assisting the Commission to reach a speedy conclusion.  The fourth producer (Samsung Corning Precision Materials) was granted full immunity under the EU Leniency Programme.

EU: Commission Imposes €8.9 Million Fine In Banana Cartel

In October 2011 the Commission found that Chiquita and Pacific Fruit groups breached competition laws by operating a price fixing cartel in Southern Europe.  The Commission found that during July 2004 and April 2005, they fixed weekly sales prices and exchanged price information in relation to their respective brands.  Pacific Fruit was fined €8,919,000.  However, Chiquita received full immunity from fines as it had furnished the Commission with information about the cartel.  Commission Vice-President in charge of competition policy Joaquín Almunia stated in the press release that he wished to remind companies that there are only two ways to avoid a fine with respect to cartel activities: either they do not join a cartel at all, or, if they are already engaging in one, the company should quickly inform the Commission about it.

EU: Commission Opens Formal Proceedings to Investigate E-Book Sales

On 6 December 2011, the Commission opened a formal proceeding against five international publishers including well-known publishers such as Simon & Schuster and Harper Collins.  The investigation is aimed at determining whether the publishers, with the help of Apple, engaged in agreements or concerted practices that have the object or effect of restricting competition for the sale of e-books in the EU.  Additionally, the Commission is also investigating agency agreements between publishers and retailers for potential breaches of competition law.  This proceeding started with unannounced raids of e-book companies in March 2011.  The Commission has not disclosed any further details of the investigation as yet.

India: Competition Commission of India (‘CCI’) Conducts a Suo Motu Investigation in the Sugar Industry

The CCI, on its own initiative, initiated an investigation into the sugar industry for identifying potential price fixing cartels.  The CCI reached a different conclusion from the report published by the Director General.  It held that since sugar is controlled, either through regulatory controls on price or though controls on supply, the industry was not functioning in a free market environment. The resulting price stability was, therefore, not due to collusion for fixing production and supply, but due to governmental restrictions.

Indonesia: Indonesian Competition Authority (‘KPPU’) Recommends Replacement of President

On 30 November 2011 the KPPU concluded its investigation in an alleged bid rigging exercise between PT Indonesia Asahan Aluminum (‘Inalum’) and PT Duet Pratama Ocean. The investigation centered on the tender process for loading and unloading raw materials such as Alumina, Coke and Coal Tar Pitch from ships at Batubara Regency, North Sumatera.  Although the KPPU did not find any anti-competitive practices between the two companies, it found that the President Director of Inalum, Mr Takasumi Gonda, had violated Article 40 and Article (3) of Law No. 5/1999 by refusing to cooperate with the investigation.  The KPPU recommended the parent company and shareholders of Inalum to replace Takasumi.  The KPPU also recommended that Inalum carry out tenders and procurement of goods or services using electronic procurement (e-procurement) to ‘uphold the values of fair business competition’.

Indonesia: KPPU Clears Parties Involved in Auctions of Medical Equipment

On 23 August 2011, KPPU issued a decision with respect to four parties allegedly involved in a conspiracy regarding the auction capital expenditure procurement of medical equipment for Hospital Professor Dr Margono Soekarjo.  It had been alleged that the certain actions relating to the expenditure, for example where products from Aerocom were favored over the other, amounted to a conspiracy between parties in a vertical relationship and hence were evidence that there were violations of Article 19(d) and Article 22 of Law No. 5 of 1999.  After its investigations, the KPPU stated that products from Aerocom were favored as they were compatible with the technical specifications of the products previously acquired in 2008.  The KPPU also held that the delay in sending and receiving a letter of support was due to carelessness on the part of the two parties not a form of discrimination to exclude them from the bidding process.  Hence, the KPPU held that there were no violations of Article 19(d) or 22.

Indonesia: KPPU Clears Parties Involved in Conspiracy Regarding Procurement of Patrol Vessels for Police Patrol

On 20 July 2011, KPPU issued a decision regarding an alleged violation of Article 22 of Law No. 5 of 1999 regarding Prohibition of Monopolistic Practices and Unfair Business Competition.  It was alleged that there was a conspiracy with respect to a tender for the procurement of C Class Patrol Vessels for the Indonesian National Police.  The parties that were allegedly involved in this conspiracy were PT. Creative Krida Tirtasarana, PT. Business Partner Logindo, and the Procurement Committee C Class Patrol Vessel Export Credit Program for Fiscal Year 2005 (‘Committee’). The subsequent investigation revealed that the Committee only executed commands on instructions from the Chief of Police and did not act on its own when implementing the tender bidding system. Therefore, it was held that the three parties were not proven to violate Article 22.

Japan: Japan Fair Trade Commission (‘JFTC’) Fines Taxi Businesses for Price Fixing

On 21 December 2011, the JFTC issued cease and desist orders and imposed a total fine of ¥231.75 million against 25 taxi businesses operating in Niigata City and its suburbs. The taxi companies were found to have collectively fixed their taxi fares to the Automatic Authorization Fares.  Automatic Authorization Fares, established by the Director-General of the District Transport Bureau of the Ministry of Land, Infrastructure, Transport and Tourism, are a range of approved fares for taxi businesses. The impugned taxi businesses had agreed on the precise levels of fares within this range.

Malaysia:   Malaysia Competition  Commission        (‘MyCC’)     to      Investigate Air Asia-Malaysian Airlines (‘MAS’), Share Swap and Collaborative Agreement

Under the share swap deal, AirAsia’s major shareholder Tune Air Sdn Bhd now holds a 20.5% stake in MAS while MAS’s major shareholder Khazanah Nasional Bhd holds a 10% stake in Air Asia.  Under this deal, the parties will cooperate on, amongst others, ground handling, training and engineering.  While the MyCC is not as yet empowered to examine mergers and acquisitions, it may initiate a probe to determine whether a completed merger or acquisition resulted in an abuse of dominant position or any other anti-competitive practices.

Singapore: Competition Commission of Singapore (‘CCS’) Fines 16 Maid Agencies for Price Fixing

On 30 September 2011, the CCS fined 16 employment agencies S$152,563 for collectively fixing the monthly salaries of new Indonesian maids.  The agencies were found to have infringed section 34 of the Singapore Competition Act, by agreeing to collectively fix the monthly salaries of new Indonesian maids in Singapore.  The agreement resulted from a meeting at Keppel Club that led to a pay increase for new Indonesian maids, from S$380 to S$450 a month.  The defense argued that the pay revision was aimed at easing a supply crunch for Indonesian maids, to make it more attractive for maids to work in Singapore.  However, this defense was unsuccessful.  The investigation started after various media reports were published in January 2011 on the agreement to collectively raise the monthly salaries of new Indonesian maids.

Singapore: CCS Fines 10 Modeling Agencies for Price Fixing

On 23 November 2011, The CCS issued an Infringement Decision against 11 modeling agencies in Singapore for breaching the Competition Act.  The agencies were found to have agreed to fix the rates of modeling services in Singapore over the period of 2005 to 2009.  Investigations commenced in 2009 and revealed that the modeling agencies used the Association of Modeling Industry Professionals (‘AMIP’) as a medium to meet, discuss and agree on the rates.  Out of the eleven agencies that participated in the cartel, only ten agencies were fined (a total of S$361,596).

UK: Motor Insurers Agree to Limit Data Exchange and Provide Commitments to the Office of Fair Trading (‘OFT’)

On 2 December 2011, the OFT accepted formal commitments from six insurance companies, which included Aviva Insurance UK Ltd and AXA Insurance UK plc, and two IT software and service providers, to limit the information exchanged between them.  The OFT investigation identified an increased risk of price coordination among motor insurers using a specialist market analysis tool ‘Whatif? Private Motor’ provided by Experian.  This market tool allowed insurers access to each other’s pricing information, which led to a concern that such exchanges may be used to coordinate prices.  The commitments ensure that the information exchanged, if less than six months old, will be anonymized, aggregated across at least five insurers and already ‘live’, i.e., currently implemented, in broker-sold policies.

United States: Department of Justice Investigates BBA for LIBOR Rates

The Department of Justice has initiated investigations into activities by the British Bankers’ Association for their alleged manipulation of the London Interbank Borrowing Rate (‘LIBOR’).  The LIBOR applies to approximately US$350 trillion worth of transactions globally and any anti- competitive activity is likely to have a global impact.  UBS AG has stated that it has received conditional immunity from the DOJ for agreeing to provide information on the alleged manipulation.  Details of the investigation and the number of undertakings implicated has not yet been disclosed.

US: CDR Products and its Owner Plead Guilty to Bid-Rigging and Fraudulent Practices

A California based company and its owner have pleaded guilty to charges by the Department of Justice of bid-rigging and fraudulent practices regarding the investment of municipal bond proceeds.  Mr. Rubin, and his company, CDR Products, were appointed as the broker for conducting a competitive bidding process for investment contracts.  Instead, Rubin entered into various agreements with insurers and financial institutions on the investment agreements and orchestrated a bid-rigging conspiracy.  The penalty payable by Rubin and CDR Products is yet to be determined.

Abuse Of Dominance

China: Two Chinese Telecom Companies Seek to Stop Antitrust Probe by Offering Commitments

On 2 December 2011, China Telecom and China Unicom, which are the two largest backbone network operators in China, announced that they have applied to the National Development and Reform Commission (‘NDRC’) offering commitments to adjust the internet access prices and overhaul their broadband services so that the NDRC will suspend its antitrust investigation into their internet access pricing practices.  Previously, on 9 November 2011, the NDRC had launched investigations into the two companies’ broadband access businesses. The NDRC had commented that by charging their competitors higher prices than non-competitors, these actions could constitute ‘price discrimination’ under China’s Anti-Monopoly Law.  These commitments involve improving the internet interconnection quality, adjusting the pricing management of internet dedicated leased line access service and continuing to invest and upgrade construction of broadband network in China.  The NDRC has yet to decide whether to accept the companies’ commitments and stop its antitrust investigation.

India: CCI Clears SAIL in a Complaint Filed by Jindal Steel

On 20 December 2011 the CCI dismissed the complaint filed by Jindal Steel, which had alleged an abuse of dominance by the Steel Authority of India (‘SAIL’).  The complaint stated that SAIL foreclosed the market for the supply of rail tracks by entering into an open-ended contract with Indian Railways (‘IR’), which lacked a review clause and an exit clause.  The CCI held that a review of rail procurement is conducted once a year when the Parliament passes the railway budget and that the lack of an exit clause does not necessarily lead to market foreclosure.  This is because, first, Jindal’s own steel rails were undergoing tests by IR and, more importantly, the market for steel rails was growing due to expansion of port structures and freight transports.

India: CCI Fines DLF INR6.3 Billion for Abuse of Dominance

The CCI held that DLF Enterprises has a dominant position in the market for services of developer and/or builder for high-end residential properties in Gurgaon, which is part of the National Capital Region of India.  The CCI concluded that DLF abused its dominant position by imposing unfair conditions on the sale of its services to consumers.  This includes having sole authority to make additions/alterations to buildings with all benefits flowing to DLF as well as an exit clause giving DLF full discretion to abandon a project without any penalties.  In calculating the penalty of approximately INR6.3 Billion, the CCI factored in 7% of the average turnover of DLF for the previous three years and rounded it to the nearest figure. DLF is appealing this decision.

Indonesia: New Guidelines Released by KPPU

In 2011, the KPPU issued new guidelines on predatory pricing, share ownership, resale price maintenance and exclusion of business actors of the small-scale group.  These guidelines help clarify the various articles in Indonesia’s competition laws and to provide a comprehensive explanation to various stakeholders.  For instance, the guidelines on resale price maintenance divide resale price maintenance into three specific types: maximum, specified and minimum.

Japan: JFTC Fined Toys“R”Us Japan for Abuse of its Superior Bargaining Position

On 13 December 2011, the JFTC issued a cease and desist order and imposed a penalty of ¥369,080,000 on Toys“R”Us Japan for abusing its superior bargaining position vis-à-vis its suppliers.  In particular, the JFTC held that Toys“R”Us Japan unjustly required its suppliers to accept unsold goods without any contractual provision permitting this.  Further, Toys“R”Us Japan reduced the consideration due to the suppliers, for the returned goods, in an amount equivalent to the discount that Toys“R”Us Japan offered on those goods.

EU: European Commission Fines Polish Telecommunications Operator for Abuse of Dominance

On 22 June 2011, the European Commission fined the Polish Telecommunications company Telekomunikacja Polska S.A (‘TP’) €127 million for abusing its dominance in Poland.  Upon investigation, the European Commission found that the dominance of TP in the broadband sectors meant that new entrants were required to use TP’s wholesale broadband access and local loop unbundling for providing competing services.  This is because setting up a second network was not feasible.  TP, however, delayed the negotiation processes, rejected orders in an unjustifiable manner and refused to provide reliable and accurate information to alternative operators.  The European Commission found such conduct to be an abuse of TP’s dominance and placed a monetary fine.  It should be noted that any firm that has suffered damages due to TP’s conduct may file a private action suit.

Mergers

Singapore: CCS Issues Grounds of Decision Regarding 13 January 2011 Clearance of Joint Venture Between ANA, Continental and United

On 4 July 2011 the CCS issued a clearance decision for the JV Agreement under which the three airlines agreed to jointly set capacity, schedules and fares for certain transpacific routes.  The JV Agreement aims to establish ‘metal-neutrality’ between the three airlines, i.e., where each party is indifferent as to which airline operates the underlying metal (i.e., the aircraft) for each route.  The CCS noted that this agreement helped to establish better connectivity and greater scheduling of long haul flights and found that there were net economic benefits arising from the JV Agreement.

Singapore: CCS Clears Proposed Agreement SIA/Virgin Agreement

On 19 October 2011, the CCS cleared a proposed agreement between Singapore Airlines Limited (‘SIA’) and Virgin Airlines Pty Ltd (‘Virgin’).  This agreement will allow SIA and Virgin to code share each other’s international and domestic flights; offer reciprocal frequent-flyer program benefits and lounge access; co-ordinate schedules between Singapore and Australia and beyond to provide seamless connections; and engage in joint sales, marketing and distribution activities.

Indonesia: KPPU Clears Indosiar Acquisition

The proposed takeover by Crown Eagle Technology Tbk PT (Emtek) of shares in PT Indosiar Karya Media Tbk. (‘Indosiar’) was cleared by the KPPU, i.e., Indonesian competition authority. Although the transaction will increase market concentration, the KPPU concluded that the acquisition will not prohibit new entrants as the barriers to entry were regulated by the government.  The KPPU also found efficiencies from the acquisition that will allow the Emtek Group and Indosiar to compete with other broadcasters.

Indonesia: Microsoft’s Acquisition of Skype Does Not Require Notification

Under Indonesia’s competition laws, takeovers that concern accumulated assets in Indonesia in excess of IDR2.5 trillion need to be notified to KPPU within 30 working days.  As Microsoft and Skype were found to have less than IDR2.5 trillion in accumulated Indonesian assets, there was no need for mandatory notification.  This threshold applies to foreign acquisitions made outside Indonesia if any of the following conditions are met: (i) both companies have an affiliate business in Indonesia; or (ii) one company has affiliates in Indonesia while the other has products sold in Indonesia; or (iii) the acquisition has direct impact on the Indonesian Market.

UK: OFT Clears Amazon Acquisition of the Book Depository

On 26 October 2011 the OFT cleared the proposed acquisition by Amazon.com Inc. (‘Amazon’) of The Book Depository International Limited (‘The Book Depository’), an online retailer of books with sales in the UK and in a number of international markets.  The OFT concluded that acquisition of The Book Depository would only be a small increment to Amazon’s position and that The Book Depository had limited competitive constraint over Amazon.  In light of these findings and the fact that Amazon will still face strong competition post merger from other online retailers and traditional brick-and-mortar shops, the OFT cleared the acquisition.

Vietnam: Hanoi Telecom Corp Objects to Viettel’s Proposed Acquisition of EVN Telecom

On 21 October 2011 Hanoi Telecom Corp filed a letter with the Vietnam Competition Authority arguing that Viettel’s proposed acquisition of EVN Telecom would breach Vietnamese competition laws.  EVN, a mobile telecommunications company, is an affiliate of Vietnam Electricity Group and is currently facing financial difficulties.  It was previously reported that Vietnam’s Ministry of Information and Communications had stated it wanted a merger between EVN and another state owned entity to happen.  Hence, a list of possible acquirers for EVN was drawn up which included Viettel and Hanoi Telecom.  The basis of Hanoi Telecom Corp’s complaint was that a proposed acquisition by Viettel would lead to dominance, and its potential abuse, on the market for 3G services.

In making the announcement, 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.”

Canada’s amended criminal conspiracy provision (section 45 of the Competition Act) makes price-fixing, market division/allocation and output/supply restriction agreements between competitors illegal and subject to penalties of up to $25 million (per count), imprisonment for up to 14 years, or both.

In recent public remarks, the Commissioner has indicated a desire to bring new cases under the amended conspiracy offence provisions of the Act – see for example Commissioner of Competition, Keynote Speech at the Canadian Bar Association 2011 Fall Conference, where the Commissioner said:

“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.

For cartels, while it will necessarily take some time before we bring our first case under the new section 45, we do have a number of ‘hybrid’ cases underway that will give us experience with the new provisions.”

See also: Commissioner of Competition Addresses Current Enforcement Priorities in Two Wide-ranging Talks.

Whereas before March, 2010 Canada’s conspiracy offences required a competitive effects test to be proven (i.e., that an agreement prevented or lessened competition “unduly”), this is no longer required and proof of an agreement between competitors alone is sufficient to establish a conspiracy under section 45 (see: Conspiracy (Cartels) and Competition Act amendments).

According to the Bureau, it relied on both its formal Immunity and Leniency Programs in this case, under which applicants may obtain full immunity from prosecution (or reductions in penalties) where they satisfy all elements of the Bureau’s Programs (see: Competition Bureau Immunity Program, Competition Bureau Leniency Program and Immunity & Leniency).  The Bureau also relied on wiretaps, search warrants and cooperation with international enforcement agencies as part of its investigation.

The Bureau also indicates that the price-fixing agreement in this case may have involved both identical pricing and price increase ranges for the supply of polyurethane foam.  In this regard, the definition of “price” under section 45 of the Competition Act is very broad and includes discounts, rebates, allowances or price concessions.  The Bureau has also taken the position in its Competitor Collaboration Guidelines that price-fixing agreements include all “agreements between competitors to fix or control the price, or any component of the price, to be charged by competitors”:

“In the Bureau’s view, [price-fixing agreements include] agreements to fix prices at a predetermined level, to eliminate or reduce discounts, to increase prices, to reduce the rate or amount by which prices are lowered, to eliminate or reduce promotional allowances and to eliminate or reduce price concessions or other price-related advantages provided to customers. For paragraph 45(1)(a) to apply, the agreement need not establish an actual price for the relevant product; rather, this section also prohibits agreements between competitors on methods of establishing prices or other indirect forms of agreements to fix or increase the price paid by customers. Such price-fixing agreements could include agreements between competitors to use a common price list in their negotiations with customers, agreements to apply specific price differentials between grades of products, agreements to apply a pricing formula or scale and agreements not to sell products below cost. In addition, the Bureau interprets paragraph 45(1)(a) as applying to agreements between competitors on a component of a price, such as a surcharge or credit terms.”

The Bureau’s investigation is ongoing.

____________________

For more see:

Conspiracy (Cartels)

Competition Bureau Sends Signal to Price-Fixers with $12.5 Million Fine

Competition Bureau Backgrounder – Polyurethane Foam

The FTC is also alleging that parties used a trade association (the Ductile Iron Fittings Research Association) to exchange information and monitor adherence to the cartel agreement.

See: FTC Action Protects Competition in Market for Iron Pipe Fittings Used in Municipal Water Systems

In making the announcement, the FTC said:

“The complaints allege a broad range of collusive and exclusionary conduct calculated to raise the price of ductile iron pipe fittings, an essential component of the nation’s water infrastructure. … The FTC will act aggressively to protect cash-strapped municipalities and the consumers they serve from anticompetitive conduct.

Ductile iron pipe fittings, known as DIPF, are used by municipal water systems to change the diameter and direction of pipelines carrying drinking and wastewater, and are sold by suppliers such as McWane, Star, and Sigma through specialty wholesale distributors. McWane and its largest competitors in the DIPF market, Sigma and Star, all sell imported DIPF. In addition, McWane was the only domestic producer of a full line of small and medium-sized DIPF until Star entered the market for U.S.-made DIPF in 2009.

…

The FTC alleges that beginning in 2008, McWane, Sigma, and Star participated in an illegal conspiracy to fix the price at which imported DIPF are sold in the United States.

According to the FTC, McWane invited Sigma and Star to collude with it beginning in early 2008, when it communicated to Sigma and Star a plan to raise and fix prices for imported DIPF. The FTC alleges that Sigma and Star accepted McWane’s invitation to collude and, to further the conspiracy, each raised its prices for imported DIPF in January 2008 and again in June 2008. Between June 2008 and January 2009, according to the FTC, the three firms exchanged information documenting the volume of their monthly sales through a trade association called the Ductile Iron Fittings Research Association (DIFRA), and each company used this information to monitor whether the other co-conspirators were adhering to the terms of their collusive arrangement.”

In Canada, section 45 of the Competition Act makes it a criminal offence for actual or potential competitors to fix prices, divide markets (e.g., geographic markets or customers) or restrict output.  The potential penalties for non-compliance with section 45 include fines of up to $25 million (per count), imprisonment for up to 14 years, or both.

In addition, “information exchanges” (i.e., the exchange of competitively sensitive information) is one of the primary risk areas for trade and professional associations, which may include the exchange of information relating to current/future pricing, market shares, costs, customers, current/future business plans and strategic plans and markets.

This is because, when shared with competitors, competitively sensitive information can lead to either the formation of an anti-competitive agreement (e.g., a price-fixing agreement) or support the inference of an anti-competitive agreement (e.g., the exchange of pricing information followed by a stabilization of price can indicate that an agreement contravening the Competition Act exists).

Based on the potential risk, associations should adopt basic compliance guidelines for information exchanges between members (e.g., in relation to benchmarking, research, lobbying or other joint activities among members).

Some other practical steps associations can take to reduce potential competition law risk include:

Adopt and maintain an effective compliance program.  According to the Competition Bureau, an effective compliance program “plays a crucial role for trade associations.”  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 for associations range from formal compliance programs encompassing all association activities to compliance guidelines for key activities (e.g., meetings, information exchanges and specific initiatives such as benchmarking, research and development initiatives and joint negotiations).

Adopt agendas and minutes for all association meetings.  Associations should prepare written agendas and keep minutes for all meetings.  Discussions at meetings should also stay within the boundaries of legitimate agenda items and discussions (or exchanges) of competitively sensitive information should be avoided.  These include discussions of pricing, costs, individual customers, markets, business or strategic plans and related “competitively sensitive” topics.

While the exchange of competitively sensitive information itself cannot violate the criminal conspiracy provisions of the Competition Act (section 45, although may now fall within the scope of the new civil agreement provision of the Act, section 90.1), discussions or exchanges of competitively sensitive information between competitors is considered to be a potentially high risk area given that they can be used as evidence by the Bureau, a court or private plaintiff to infer the existence of an agreement that may violate section 45.

Adopt and follow conduct of meeting guidelines.  One of the most practical steps a trade or professional association can take to reduce potential competition law risk is to adopt and strictly follow conduct of meeting guidelines.  Such guidelines commonly include restrictions on the exchange of competitively sensitive information (of the types discussed above) and on discussions of topics that may lead to conspiracy risk under section 45 of the Competition Act (e.g., discussions relating to pricing, markets, concerted refusals to deal or limiting production or supply of goods or services – in large part, discussions around the three categories of offences under section 45: price-fixing, market division/allocation and output restriction agreements).

Such guidelines also commonly include guidance on steps to take if inappropriate discussions or activities arise during association board, committee, task force or other meetings or events.

Perform periodic compliance audits.  Having a compliance program or policy in place that is not followed can, in some circumstances, be more harmful than not having a program or policy at all (particularly if association staff understand the competition law guidelines and elect not to follow them).  As such, a practical way for associations to monitor compliance with compliance programs and policies is to conduct periodic audits.  These can be performed on an association wide, activity-specific or spot basis.

Competition law compliance orientations for new association executives and staff.  Another practical step that associations can take to ensure competition law compliance is to conduct compliance orientations for new board and executive members.  In this regard, the Competition Bureau’s view in its Corporate Compliance Programs Bulletin is that “senior management’s clear and unequivocal support is the foundation of a credible and effective corporate compliance program.”  The Bureau in general views senior management support as one of five key elements of an effective compliance program.

Obtain legal advice for key association initiatives.  Many associations do not have the budget for extensive legal advice or compliance for every aspect of association activities.  Recognizing that, it is prudent for associations to obtain advice for key activities and initiatives – these may include specific projects, such as benchmarking, research or joint member initiatives (e.g., joint marketing, purchasing or negotiations with significant purchasers).

Avoid informal or “off the record” meetings.  Association leadership should discourage informal or “off the record” meetings between members, particularly on the “fringes” of association meetings or using association facilities.

This is not to say that members of an association cannot meet informally for social purposes, but in a number of past association cases members either met informally, or in several cases actually established “sham” associations, to form and maintain criminal cartel arrangements.

Association members should also be aware that merely because a meeting is held “off the record” or in camera (i.e., not reflected in association meeting minutes) does not mean that discussions during such meetings, or the fact of the meeting itself, cannot be used as evidence of alleged anti-competitive conduct.

Generally review all association activities through a “competition lens”.  Finally, it is useful for association executives and personnel to review association initiatives and activities generally through a “competition lens”.

For example, if particular association activities may result in higher prices, less quality or choice, make it more difficult for particular members or competitors to compete, or will generally reduce competition, such activities may be more likely to raise competition law concerns (or at minimum mean that legal advice should be sought).

__________________

For more information about Canada’s conspiracy rules and associations and competition law see:

Conspiracy (Cartels)

Associations

Associations News

Developments in 2011 include new cases, enforcement and legislation in most key areas including abuse of dominance (the Competition Bureau’s ongoing challenge of The Toronto Real Estate Board and CREA settlement in late 2010), criminal conspiracy (developments in price-fixing class action litigation and some Bureau enforcement), refusal to deal (several important private access section 75 cases, including a decision of the Federal Court of Appeal), contested mergers (in the waste and airline markets), price maintenance (the merchant fees case involving Visa and MasterCard) and misleading advertising (involving Bell Canada, Rogers and others).

The Competition Bureau is testing the new rules under Canada’s Competition Act, which came into force in 2009 and 2010, and private plaintiffs are creating new law in a number of ongoing competition/antitrust class actions in Canada (principally indirect purchaser price-fixing cases relating to the sale and supply of dynamic random access, or “DRAMs”, high fructose corn syrup and computer operating systems).

At the same time, several new pieces of legislation have been introduced including a federal omnibus crime bill, which will eliminate conditional sentences for some competition law offences, and sweeping new anti-spam legislation (Bill C-28 or “FISA“) that once in force will be among the strictest anti-spam regimes in the world.

The Commissioner of Competition, and other federal enforcement officials including the RCMP, have also expressed intentions to adopt tougher enforcement stances in relation to competition law and other white collar crime.

In general, these developments mean that it remains important for Canadian companies, organizations and their executives to maintain a practical awareness of Canadian competition law.

Some of the key competition law and related developments of 2011 include:

New RCMP Commissioner Announces New “Tough Line” on White-collar Crime

The new head of the RCMP, Bob Paulson, who was named new RCMP Commissioner in November, has vowed to take a new “tough line on white-collar crime” (See: New RCMP head takes tough line on white-collar crime), particularly in relation to major fraud and securities law investigations.

This announcement follows a recent law enforcement trend by the Conservative government generally and key Canadian regulatory officials.  For example, an extensive federal omnibus crime bill was recently passed that will, among other things, significantly restrict conditional sentences (e.g., sentences served in the community for criminal offences) including for some criminal offences under the Competition Act.

Supreme Court of Canada Denies Leave in Refusal to Deal Case: Nadeau Poultry Farm v. Groupe Westco Inc.

On December 22, 2011, the Supreme Court of Canada, per Justices McLachlin, Rothstein and Moldaver, denied leave to appeal in Nadeau Poultry Farm Limited v. Groupe Westco Inc. (see: Supreme Court of Canada denies leave in Nadeau Poultry Farm v. Groupe Westco Inc. (December 22 2011)).  The applicant in this section 75 refusal to deal case under the Competition Act, Nadeau Poultry Farm, was seeking leave to appeal an earlier Federal Court of Appeal decision that affirmed a Competition Tribunal decision dismissing its application in 2009 (see: Federal Court of Appeal dismisses appeal in Nadeau Poultry Farm Ltd. v. Groupe Westco Inc.).

Federal Government Passes Omnibus Crime Bill (Bill C-10) – Eliminates Conditional Sentences for Cartel (Conspiracy) and Bid-rigging Offences

On December 5, 2011, a federal omnibus crime bill (Bill C-10) was passed that will, among other things, eliminate conditional sentences of two years or less from being ordered by courts for violation of two of the core criminal offences under the Competition Act: criminal conspiracy agreements (section 45) and bid-rigging (section 47).

Privacy Commissioner Issues New Online Behavioural Advertising (Tracking) Guidelines

On December 6, 2011, the federal Privacy Commissioner issued new online tracking guidelines for advertisers which, among other things, restrict the tracking of children and tracking technologies without an opt-out mechanism.

Federal Government Raises the Possibility of Amending Canada’s Foreign Investment Rules – Again

Bloomberg reported that the federal Minister of Industry has again raised the prospect of amending Canada’s Investment Canada Act in remarks made in New York (see: Canada Open to Changing Foreign-Takeover Law, Paradis Says).  The Industry Minister’s comments closely follow a recent C.D. Howe Institute report calling for fundamental changes to Canada’s foreign investment rules to stimulate foreign direct investment in Canada, including a change to the overarching test for foreign investment approval (replacing the current “net benefit to Canada” test with a national interest test) (see: New Publications – C.D. Howe Institute Report – Reforming the Investment Canada Act: Walk More Softly, Carry a Bigger Stick).

Canadian Supreme Court Grants Leave in Pro-Sys/Microsoft and Sun-Rype Indirect Purchaser Competition/Antitrust Class Actions

The Supreme Court of Canada, per Justices LeBel, Fish and Cromwell, granted leave to appeal in the Pro-Sys Consultants Ltd. v. Microsoft Corporation and Sun-Rype Products Ltd. v. Archer Daniels Midland Company cases.  These cases relate to conflicting indirect purchaser class action certification decisions in British Columbia (companion decisions of the British Columbia Court of Appeal) and Quebec (a recent decision of the Quebec Court of Appeal) (See: Quebec Court of Appeal rejects B.C. Court of Appeal passing-on defence decisions in Pro-Sys and Sun-Rype and British Columbia Court of Appeal allows Microsoft appeal in Pro-Sys v. Microsoft – creates de facto passing-on defence).

Commissioner of Competition Addresses Current Enforcement Priorities in Two Wide-ranging Talks

The Commissioner of Competition, Melanie Aitken, addressed current enforcement priorities in two engaging and wide-ranging talks recently in Vancouver: a keynote speech at a reception hosted by the University of British Columbia, National Centre for Business Law at the Four Seasons and a Vancouver Competition Policy Roundtable meeting organized by Professor Tom Ross of the Sauder School of Business.

Competition Bureau Has “Serious Concerns” About Potential Competitive Effects of TMX/Maple Transactions

The Bureau recently announced that it had “serious concerns” about the Maple Group’s bid to acquire the TMX Group:

“The Commissioner advised Maple and TMX Group that she has serious concerns about the likely competitive effects of the proposed transactions in the current environment, primarily in connection with equities trading and clearing and settlement services in Canada.

The Commissioner indicated that she has not reached a final conclusion and that her current views may be affected by further factual information and developments, which may include changes in the applicable securities regulatory regime, and any commitments or other remedial measures that Maple may be prepared to take to address her concerns.

Maple and TMX Group intend to continue to work closely with staff of the Competition Bureau to address the Commissioner’s concerns, including by identifying appropriate remedial measures. As Maple has stated previously, it is committed to working constructively with all of the relevant regulators, including Canadian securities regulators, to address any questions they may have so that the proposed transactions can proceed in the best interests of TMX Group, its shareholders and the Canadian capital markets. Maple and TMX Group continue to strongly believe that the proposed transactions will substantially benefit all capital market participants.”

(TMX News Release, November 29, 2011)

Madam Justice Simpson Proposes Reforms to the Competition Tribunal

In a short but interesting recent note, Madam Justice Sandra J. Simpson has proposed that changes be made to the federal Competition Tribunal, including wider powers for the Tribunal to decide references and award damages for abuse of dominance (monopolization).

Quebec Court of Appeal rejects BC Court of Appeal passing-on defence decisions in Pro-Sys and Sun-Rype

The Quebec Court of Appeal unanimously overturned the earlier 2008 Quebec Superior Court decision in Option Consommateurs v. Infineon Technologies AG, (the ongoing indirect purchaser “DRAMs” case) which had earlier denied a motion to commence class action proceedings.

Supreme Court of Canada Denies Leave in U.S. Steel Investment Canada Case

On November 24, 2011, the Supreme Court of Canada denied leave in United States Steel Corporation et al. v. Attorney General of Canada. See: Supreme Court of Canada Judgements. See also: National Post – Supreme Court Won’t Hear U.S. Steel Appeal.  This landmark Investment Canada Act dispute, between the Canadian Government attempting to enforce undertakings provided by U.S. Steel, has since been settled.

Competition Bureau Announces Quebec Sewer Services Bid-rigging Cartel

On November 22, 2011, the Competition Bureau announced that criminal charges had been laid against six companies and five individuals accused of rigging bids for provincial and municipal contracts for sewer services in Montreal (see: Competition Bureau Exposes Sewer Services Cartel in Quebec and Backgrounder – Competition Bureau Exposes Sewer Services Cartel in Quebec).  While the Bureau has yet to bring a section 45 conspiracy case under the amended conspiracy provisions of the Competition Act, it has been very active in bringing bid-rigging cases under section 47 of the Act.

C.D. Howe Institute Issues Report on Competition Bureau Enforcement and Strategic Alliances

On November 10, 2011, the C.D. Howe Institute issued a report reviewing the Competition Bureau’s enforcement of the criminal conspiracy offences of the Competition Act, enforcement efforts in relation to strategic alliances and policies regarding the issuance of binding advisory opinions.

Competition Tribunal Grants CREA Leave to Intervene in TREB Abuse of Dominance Case

On November 2, 2011, Madam Justice Simpson of the federal Competition Tribunal granted leave to Realtysellers and The Canadian Real Estate Association to intervene in the Bureau’s abuse of dominance (monopoly) case against The Toronto Real Estate Board.

CRTC and 12 International Enforcement Agencies Form International Do Not Call Network

The federal Canadian Radio-television and Telecommunications Commission announced that, together with the Australian Communications and Media Authority, it has assembled 12 international enforcement agencies to form an International Do Not Call Network.  See: CRTC announces creation of international network to facilitate cooperation on telemarketing enforcement.

Commissioner of Competition Speech Highlights Enhanced Competition Bureau Enforcement

On October 25, 2011, the Competition Bureau published the Commissioner’s speech given at the 2011 Canadian Bar Association’s Annual Competition Law Conference in Ottawa.  It is fair to say that the Commissioner’s recent speech presented a singular tone across the civil and criminal competition law areas: continued enhanced enforcement.

Ottawa Bid-rigging Case to Go to Trial

On October 5, 2011, the Ottawa Business Journal, Ottawa Citizen and Vancouver Sun reported that Ontario Justice Ann Alder ruled that an Ottawa bid-rigging case in the technology sector can go to trial.  In this case, the Competition Bureau alleged that a number of companies, including TGP Technology, Spearhead Management, The Devon Group, Brainhunter, Nortak Software and Tipacimowin Technology, rigged bids in relation to IT contracts totaling about $67 million issued by the Canada Border Services Agency, Department of Transport and Public Works (see: Competition Bureau Announces Charges Against Companies Accused of Rigging Bids for Government of Canada Contracts and Backgrounder).  Charges were also dismissed against several companies.

Competition Bureau Issues Updated Merger Enforcement Guidelines

On October 6, 2011, the Competition Bureau issued its updated Merger Enforcement Guidelines.  The Bureau’s new MEGs, which set out its approach to the substantive review of mergers in Canada, are the first update to the MEGs since 2004 and the result of public consultations in 2010 and 2011.

Telemarketer Receives Two-Year Prison Sentence

On October 3, 2011, the Competition Bureau announced that a deceptive telemarketer has been sentenced to two years in prison in relation to a deceptive telemarketing scheme relating to the sale of business directories (see: Deceptive Telemarketer Receives a 2-year Prison Sentence).

Competition Tribunal Grants Leave in Refusal to Supply Data Case

In a significant recent decision by the Competition Tribunal, the Tribunal granted leave to the Used Car Dealers Association of Ontario to make a section 75 refusal to deal application relating to a refusal by the Insurance Bureau of Canada to supply data to the UCDA.  This recent case, reasons for which were issued on September 9, 2011, is significant, in that the UCDA was seeking leave to make its application in light of a longstanding adverse decision – the Warner music case (which has stood as a barrier to invoking section 75 in relation to refusals to licence intellectual property).

Competition Bureau Negotiates Settlement with Canadian Distributor of Nivea Products over Allegedly Misleading Performance Claims

On September 7, 2011, the Competition Bureau announced that it had reached a settlement with Nivea’s Canadian distributor, Beiersdorf Canada Inc., relating to allegedly false or misleading performance claims in its advertising.  In particular, the Bureau took issue with claims that suggested that the use of skin cream could lead to weight loss.  Under the terms of the consent agreement negotiated with the Bureau, Beiersdorf has agreed to pay an “administrative monetary penalty” or “AMP” (essentially a civil fine) of Cdn. $300,000, refund Canadian customers and remove its products from Canadian shelves.

Competition Bureau Revisits its Self-regulated Professions Study After Four Years

On September 2, 2011, the Competition Bureau released its “ex-post assessment” of its 2007 Self-Regulated Professions Study (Self-regulated professions – Balancing competition and regulation (December, 2007)).  According to the Bureau, its new Study “surveys and assesses developments that have taken place relating to recommendations made in [its] 2007 Study” and “provides an overview of the progress made since 2007” to the earlier recommendations made by the Bureau.

Alberta Telemarketers Sentenced to Jail Time for Cross-border Deceptive Telemarketing Scheme

On August 30, 2011, the Competition Bureau announced that five individuals in Alberta were convicted and sentenced of deceptive telemarketing under the Competition Act.

Competition Bureau Issues New Merger Remedies Study

On August 11, 2011, the Competition Bureau issued a Merger Remedies Study, summarizing its review of the effectiveness of merger remedies negotiated in 23 Canadian merger cases between 1995 and 2005.  According to the Bureau, the results of its study will be used to revise its Information Bulletin on Merger Remedies in Canada first issued in 2006 (see: Information Bulletin on Merger Remedies in Canada) and its companion consent agreement outline template.

Ontario Used Car Dealers Association Attempts to Go Around Landmark Warner Decision in Data Refusal to Supply Case

In a very interesting refusal to supply case currently before the Competition Tribunal, the Used Car Dealers Association of Ontario sought leave from the Competition Tribunal for the re-supply by the Insurance Bureau of Canada of data used in one of the UCDA’s information products for members.

Montreal Company Pleads Guilty in Bid-rigging Case

On July 19^th 2011, the Competition Bureau announced that a Montreal company, Les Entreprises Promécanic Ltée, pleaded guilty to three charges of bid-rigging and was fined $425,000 for its alleged role in rigging bids in relation to residential highrise building ventilation contracts in Montreal.  According to the Bureau, the Montreal company admitted that it was involved in coordinating with competitors to pre-determine the outcome of bids. Interestingly, this case also included an internal compensation arrangement between the parties to the bid-rigging arrangement to ensure that contracts were awarded to the pre-arranged company.

The Competition Bureau’s Application to Block the Air Canada/United Continental Joint Venture – A Few Interesting Aspects

On June 27th 2011, the Competition Bureau announced that it would seek to block a proposed joint venture between Air Canada and United Continental which, according to the Bureau, would “monopolize ten important Canada/United States routes and substantially reduce competition on nine additional routes.”  This case is one of two contested merger cases recently brought by the Bureau, the first in six years, and will, among other things, test the new civil agreement provision of the Competition Act (section 90.1).

Bell Canada Agrees to Pay $10 Million Fine in Misleading Advertising Case

On June 28th, the Competition Bureau announced that Bell Canada has agreed to stop making allegedly misleading claims relating to the prices for its services and to pay an administrative monetary penalty or “AMP” (essentially a civil fine) of $10 million, the maximum penalty for misleading advertising under the Competition Act.

Maple Group Launches Cdn. $3.7 Billion Hostile Bid for TMX Group Inc.

On June 13, 2011, the Maple Group Acquisition Corp., a consortium of 13 Canadian financial institutions, launched a Cdn. $3.7 billion hostile bid to acquire 70% of the TMX Group Inc. for $48 per share.

Two More Individuals Plead Guilty in Quebec Price-fixing Case

On June 10, 2011, the Competition Bureau announced that two more individuals pleaded guilty in the Quebec gasoline price-fixing case to fix the price of gasoline at the pump in Quebec regional markets.

U.S. Federal Trade Commission Brings $450 Million Internet Fraud Case Against Alberta Online Operator

The U.S. Federal Trade Commission announced that it has filed a $450 million internet fraud civil suit against an Alberta online operator.

Competition Bureau Issues No Action Letter in TMX/LSE Deal

The Wall Street Journal reported that the Competition Bureau issued a no action letter in the proposed TMX Group Inc. / London Stock Exchange Group plc transaction.

Further Guilty Plea in Quebec Gasoline Price-fixing Cartel

The Competition Bureau announced that a further individual pleaded guilty and was fined in the Quebec gas price-fixing cartel.  In making the announcement, the Bureau said that Micheline Lapointe-Cabana, owner of a service station in Magog, Quebec operated under the Petro-Canada banner, was sentenced to personally pay a fine of $20,000.

Competition Bureau Files Abuse of Dominance Case Against the Toronto Real Estate Board

On May 27, 2011, the Competition Bureau commenced an abuse of dominance case against The Toronto Real Estate Board before the Competition Tribunal.

Competition Bureau Issues New Fee and Service Standards Handbook for Written Opinions

On May 18, 2011, the Competition Bureau issued its new Fee and Service Standards Handbook for Written Opinions to reflect the significant amendments to the Competition Act that came into force in 2009 and 2010 (see: Competition Bureau Updates Fee and Service Standards Handbook for Written Opinions).

Customer Allocation Conspiracy in the Refrigeration and Food Service Equipment Industry

The Competition Bureau announced that Kason Industries Inc. plead guilty for participating in a customer allocation conspiracy and was fined $250,000 by the Federal Court of Canada.

British Columbia Court of Appeal Allows Microsoft Appeal in Pro-Sys v. Microsoft

On April 15, 2011, the British Columbia Court of Appeal allowed Microsoft’s appeal in the Pro-Sys v. Microsoft class action case.  This important decision, in which the Court of Appeal dismissed the plaintiffs’ action and set aside the earlier class certification order, was issued concurrently with a second Court of Appeal judgment in Sun-Rype Products v. Archer Daniels.  These decisions are now subject to an appeal to the Supreme Court of Canada, based on the unsettled ability of indirect purchaser plaintiffs to commence competition/antitrust class actions in Canada.

Competition Bureau Announces New Size of Transaction Threshold for Mergers for 2011

The Competition Bureau announced that the pre-merger notification transaction-size threshold for 2011 will increase to $73 million (see: 2011 Pre-Merger Notification Transaction-Size Threshold).

Competition Bureau to Challenge Completed BC Landfill Merger

The Competition Bureau announced that it has applied to the Competition Tribunal for a Tribunal order to dissolve CCS Corporation’s acquisition of Complete Environmental Inc., owner of the proposed Babkirk Secure Landfill in Northeastern British Columbia (see: Competition Bureau Challenges BC Landfill Merger).  Final arguments were recently heard by the Tribunal in this merger to monopoly case which, together with the ongoing Air Canada / United Continental case, is one of two contested mergers, the first in Canada in six years.

Spa Retailers Out of Hot Water After Settlement with Bureau for Allegedly False Energy Savings Claims

The Competition Bureau announced that it reached a settlement with two spa retailers in relation to allegedly false energy savings claims (see: Spa Retailers Required to Stop Making False ENERGY Star Claims). According to the Bureau, the retailers made misleading representations incorrectly conveying the impression that their hot tubs or insulation met the criteria of the ENERGY STAR Program.

Canada Passes Federal Anti-Spam Legislation – Bill C-28 – the Fighting Internet and Wireless Spam Act

In late 2010, Canada passed new anti-spam legislation (Bill C-28) which will, once in force, be among the strictest anti-spam regimes in the world.