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January 6, 2016

On December 30, 2015, Telus agreed to a $7.3 million settlement with the Competition Bureau (“Bureau”) as part of the Bureau’s ongoing case against major Canadian telecoms for allegedly misleading advertisements for premium text messages in pop-up ads, apps and in social media. See: Telus customers to receive $7.34 million in rebates as part of Competition Bureau agreement. For a copy of the consent agreement see: here.

The Bureau alleged that Telus and Canada’s other major wireless providers facilitated charges to customers by third parties that were not adequately disclosed or agreed to, such as trivia questions and ringtones (so called “cramming” – i.e., billing for unwanted services).  This case has raised issues that include, among other things, what constitutes adequate disclosure for additional mobile services and liability as among a telecom and affiliates involved in marketing add-on services.

This settlement is part of a wider ongoing case, which originally included Rogers, Bell, Telus and the Canadian Wireless Telecommunications Association (CWTA). Rogers settled last March for $5.42 million (see: Rogers agreement with Competition Bureau nets record refunds for wireless consumers). The Bureau’s case against Bell and the CWTA continues.

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January 5, 2016

I am pleased to be a guest speaker at the CSAE (Canadian Society of Association Executives) Trillium Chapter’s 2016 Winter Summit in Burlington on February 4th.

I will be co-presenting an interactive seminar on the Competition Bureau’s new approach to competition compliance for associations together with Mark Katz (Davies Ward Phillips & Vineberg LLP) and Nadia Brault, Director of Compliance at the Competition Bureau’s Competition Promotion Branch.

Overview

Last June, the Competition Bureau finalized its new approach to Canadian competition law compliance and issued a new Corporate Compliance Programs Bulletin.  The Bureau’s new approach includes some major changes including for associations.  Some of the Bureau’s key association related recommendations include that associations adopt credible and effective compliance programs and that companies consider compliance training for personnel attending association events.  The Bureau’s new compliance materials also include specific compliance guidelines for associations.  This presentation will tell you what you need to know about the Bureau’s new approach to competition compliance for associations, through an interactive format, as well as practical and efficient options to comply with the Bureau’s new compliance guidelines.

For more information and registration details see: 2016 Winter Summit.

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SERVICES AND CONTACT

I offer business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law.  I also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.

My experience includes counseling clients on the application of Canadian competition and regulatory laws and I have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal, pricing and distribution, Investment Canada Act and merger matters. For more information about my competition law services see: competition law services.

To contact me about a potential legal matter see: contact

For more regulatory law updates follow me on Twitter: @CanadaAttorney

September 9, 2015

Municipal regulators in Toronto, like those around the world, have been grappling with the entrance of ride-sharing firms and attempting to determine whether (and the extent to which) they should be regulated.

The City of Toronto has released a much anticipated staff report that will be considered at an upcoming Toronto City Council meeting on September 30th (see: 2015 Ground Transportation Review: Taxis, Limos and Uber). The report is the result of a Toronto City Council directive in July for City staffers to undertake a review of Uber and similar technology related companies, including a review of safety and competition issues.

The report makes a number of recommendations for changes to the City’s licensed taxicab and limousine regulatory regimes. In reading the new report, I was cheered to see that it is, from a competition perspective, reasonably balanced. While hardly an open market recommendation, it is progress.

That is, it does not, for example, recommend that the door be closed to ride-sharing applications (or as the report refers to them “Transportation Network Companies”), that the current fee/tariff line be maintained or that existing numbers of taxi licenses be limited. On the barrier side, however, it does recommend that the City continue to regulate (or as some would say limit) taxi fees, license numbers and other key aspects of taxi and limousine competition in the City.

In reading the new report, it seemed to me that several specific recommendations represented progress (i.e., competitive “pros”). These include: to reduce the “drop fee” for taxis in Toronto from $4.25 to $3.25; that 100 new taxi licenses be issued; and that the City further review taxis and competition and make recommendations to “lessen regulatory burden and enhance competitiveness in the municipally-licensed taxicab industry” (e.g., fares, vehicle requirements, training, etc.). Hopefully, a further regulatory review lowers barriers for taxis and ride-sharing firms alike to compete.

On the other hand, City staffers continue to appear to be intent on continuing to control the taxicab and limousine markets in Toronto. This continuation in regulation is reflected in several recommendations (i.e., competitive “cons”), including bringing ride-sharing applications within the existing regulatory regime; and reducing, but not eliminating, the “drop fee” for taxis in Toronto.

With respect to the first recommendation, the City could have recommended that, for example, ride-sharing applications represented a different market or, for example, should be subject to different (or less) regulation, as has been the case in some other international markets. This recommendation includes a requirement that only taxi brokers or limousine service companies, as defined by a proposed amended Municipal Code, be permitted to contract or “connect” with passengers.

As for the second recommendation, while a slight competitive “pro”, in an open market firms are able to set whatever rates they determine make economic sense according to the market, whether minimum, maximum or “surge pricing” based on demand.

In addition to these competition related recommendations, the City staffers also make a number of common sense suggestions relating to insurance, safety and criminal record check requirements. It is difficult to argue that safety is not a key and valid regulatory consideration. Lets just hope that the City can keep competition and safety separate and not, for example, impede more competition in the taxi sector in Toronto in the name of “safety”.

Also interesting in the City’s new staff report is the Summary, which does strike a reasonably balanced approach to competition in the Toronto taxi sector. Among the staffer comments that caught my eye were statements that while the taxi industry was concerned with increased competition (no surprise there), Toronto residents strongly supported more choice and innovation; that Uber and similar firms were causing “wide-scale disruption of established ground transportation industries” (again, pretty obvious, but in competitive terms, this is a good thing); and comments, which reflect the specific recommendations, that there is a need to reduce regulatory burdens, increase competition and lower barriers for new entrants.

In sum, while this new report takes a fairly Canadian “balanced” approach to competition, it seemed to me in reading it to be a step in the right direction. Lets now hope that Toronto City Council agrees that more competition in the Toronto taxi sector (and less barriers) is indeed a good thing.

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SERVICES AND CONTACT

I offer business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law.  I also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.

My experience includes counseling clients on the application of Canadian competition and regulatory laws and I have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal, pricing and distribution, Investment Canada Act and merger matters. For more information about my competition law services see: competition law services.

To contact me about a potential legal matter see: contact

For more regulatory law updates follow me on Twitter: @CanadaAttorney

July 6, 2015

Last week the Canadian federal government announced a new and less strict Integrity Regime for suppliers doing business with federal government departments and agencies. Public Works and Government Services Canada (PWGSC) initially introduced an Integrity Framework in 2012.

The changes announced on July 3, 2015, which are the result of significant industry pressure and precede a fall federal election, will give the federal government more flexibility in determining which suppliers to do business with. It will also give suppliers, even those convicted of specified offences in some cases, more access to federal government contracts.

In general, suppliers that have been convicted of listed offences (including conspiracy, bid-rigging or criminal misleading advertising under the Competition Act) in the last three years are ineligible for bidding on federal contracts for ten years. Certain offences, however, can result in permanent ineligibility unless a record suspension is obtained.

Key Integrity Policy Changes

Some of the key changes and features of the new Integrity Regime announced last week include:

1. The general ten-year disbarment period can be reduced. Under the new Integrity Regime, the general ten-year disbarment can be reduced to five years where a supplier has either: (i) cooperated with law enforcement authorities; or (ii) taken remedial actions to address the wrongdoing. The former ten-year supplier suspension had been criticized as unnecessarily harsh and rigid.

2. No automatic ineligibility for affiliate conduct. Suppliers are no longer necessarily ineligible for the actions of affiliates (including a parent) unless the supplier had a degree of control over the convicted affiliate. The automatic disqualification of suppliers for affiliates’ activities (including global affiliates) had been another major industry criticism of the government’s former integrity policy. The PWGSC’s new Integrity Regime FAQs sets out factors that may be considered in determining control over an affiliate. These include whether a supplier directed, influenced, authorized, acquiesced in or participated in an offence. The new Integrity Regime, however, requires suppliers to engage independent third parties to assess their potential involvement in actions of convicted affiliates.

3. Suppliers may be suspended for up to 18 months in some cases. Under the new Integrity Regime, suppliers that are charged or admit guilt to a listed or similar foreign offence may be disbarred for up to 18 months.  This may be extended if legal proceedings are underway.

4. Advance determinations are available. Suppliers may request advance determinations.  According to the PWGSC, one advantage for a supplier in obtaining an advance determination is that their ineligibility period would begin immediately (i.e., this mechanism is intended as an incentive for proactive disclosure by suppliers). Under the former integrity policy, some industry commentators had highlighted the difficulty of determining potential eligibility in some circumstances – for example, in the case of extensive/complex corporate groups or where it was not clear whether some entities were in fact affiliates.  Certification requirements around affiliates also caused concerns previously.

5. A Public Interest Exception may be available. In some cases, including where no other supplier is capable of performing a contract, emergencies or national security situations, the government may determine that it will do business with a supplier convicted of a specified offence. This exception will be applied on a case-by-case basis and determined by the government department issuing a contract.  This exception has developed based on a concern that in some cases there may be no realistic alternative suppliers.

6. Suppliers may be disbarred for subcontracting with other ineligible suppliers. A supplier that intentionally contracts with an ineligible supplier faces potential disbarment for five years.  The PWGSC will publish a list of ineligible suppliers that can be used by prime contractors to determine sub-contractor eligibility.  This published list will also presumably potentially act as further incentive to comply with Canadian corruption, fraud and competition laws.

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SERVICES AND CONTACT

I offer business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law.  I also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.

My experience includes counseling clients on the application of Canadian competition and regulatory laws and I have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal, pricing and distribution, Investment Canada Act and merger matters. For more information about my competition law services see: competition law services.

To contact me about a potential legal matter see: contact

For more regulatory law updates follow me on Twitter: @CanadaAttorney

July 5, 2015

I currently have no dog in the ongoing local (and growing global) cab and ride-sharing application competition fight. I don’t act for any taxi company or ride-sharing firm. I do, however, as a competition lawyer and citizen, strongly support competition and undistorted markets.

It remains clear to me that Canadian consumers benefit from as open and unregulated markets as possible. It is not clear to me, however, what principled distinction local regulators may rely on to protect, for example, the conventional taxi industry when other industries are subject to little or no such similar insulation from market forces.

To take some obvious (but I think illustrative) examples – why impose quotas on the number of taxis and artificially set fee tariffs but not Chinese food restaurants? Or supermarkets? Or any of hundreds or thousands of other retail sectors? (Yes I recognize that Canada is still criticized for its restrictions in some major sectors, including supply management, banking and telecom.)

In this regard, I was cheered (but only cautiously optimistic at the moment) to see two major recent developments in the ongoing taxi/ride-sharing competition tussle in Toronto.

First, an Ontario Superior Court judge dismissed the City of Toronto’s attempt to restrict ride-sharing company Uber (see: here), finding that Uber had not broken any bylaws or operated an illegal taxi company. Second, Toronto’s (relatively new) mayor John Tory has now said that new Toronto laws are needed to regulate both ride-sharing technologies and taxis to level the playing field (see: here).

From a competitive market perspective, the second development is potentially more worrying – particularly given that a decision by Toronto City Council to review the city’s taxi related bylaws was also accompanied by a nearly unanimous motion calling for greater enforcement in the meantime (see: here).

In this respect, I hope that “level the playing field” in the Toronto taxi sector means lowering barriers and is not code for imposing more obstacles to new entrants.  Or, worse, imposing restrictions on ride-sharing firms that do not apply to incumbent taxi companies.

At the outset I should also say that I am concerned that “safety” appears to be taking centre stage by taxi advocates as a justification for restricting new ride-sharing technologies.  This is a common strategy for incumbents that oppose increased competition.  In reality, safety and competition are usually two different questions.  To cite several examples, restaurants must adhere to certain safety requirements, but prices and numbers are not limited; lawyers are similarly required to adhere to certain practice standards to protect their clients, but again their rates or numbers are not regulated.  In sum, safety requirements can be imposed without limiting the number of players or pricing.

With that introduction, I thought I would make a few modest proposals for Toronto City Council to consider in their efforts to “level” the taxi/ride-sharing playing field.

These proposals may appear slightly radical in an industry that has not seen significant change in many years. However, I don’t think they are any more significant than the day-to-day competitive pressures faced by most other Canadian businesses:

1. Eliminate quotas. Eliminate quotas for cabs or ride-sharing companies in Toronto. Most Canadian businesses are not subject to quotas, which is in fact a criminal offence when entered into by competing companies under the Competition Act in unregulated sectors. As such, it is not clear why taxi firms should benefit from market protection when most other Canadian sectors do not.

2. Eliminate price regulation. Eliminate price regulation of cabs or ride sharing companies in Toronto. Again, price-fixing agreements between competing firms, when not regulated, are criminal offences under the Competition Act. So, like quotas (i.e., limits on the number of cabs), it is similarly not clear why taxi firms, and not other industries or professions, should benefit from price protections apart from ordinary market forces.  Or, to put it another and more blunt way: local governments fix the prices private companies can charge for their services?  Huh?

3. Eliminate other barriers. Eliminate any other artificial barriers to entry for both new taxi or ride-sharing firms. In other words, impose the least restrictions possible to protect other – i.e., non-competition – objectives (e.g., passenger safety, insurance, etc.).

4. Adopt a “technology neutral” approach to regulation.  Regulate both the taxi and ride-sharing application industries in a “technological neutral” fashion. In other words, equally apply the same regulatory requirements to firms that in substance carry local passengers regardless of the particular technological means for doing so (i.e., traditional car and dispatch service, ride-sharing app or other similar technology, etc.). In particular, avoid imposing regulatory restrictions that disadvantage one technology as compared to another. (The recent spatial restrictions on Toronto food trucks from traditional restaurants being one recent unfortunate example of handicapping one type of competitor from incumbents.)

5. Equalize insurance requirements. Require all cab or ride-sharing companies in Toronto to adhere to the same insurance requirements.

6. Equalize license fees and other legitimate objectives. Equalize license fees for traditional taxis and ride-sharing companies. Municipal revenues are a legitimate local objective. Also equalize other minimum protections for both taxi companies and ride-sharing firms to ensure other legitimate policy rationales to competition – for example, passenger safety, passenger complaint mechanisms or advertising standards, etc.

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SERVICES AND CONTACT

I offer business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law.  I also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.

My experience includes counseling clients on the application of Canadian competition and regulatory laws and I have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal, pricing and distribution, Investment Canada Act and merger matters. For more information about my competition law services see: competition law services.

To contact me about a potential legal matter see: contact

For more regulatory law updates follow me on Twitter: @CanadaAttorney

June 18, 2015

On June 3, 2015, the Canadian Competition Bureau (Bureau) finalized its new core competition law compliance materials. They are essential reading for corporate compliance officers, senior management and in-house counsel.

In announcing its new Corporate Compliance Programs Bulletin, the Commissioner of Competition said:

“This bulletin seeks to help businesses of all sizes in the development of a credible and effective compliance program, but the updated bulletin pays special attention to small and mediumsized businesses. It is designed to help businesses get the solid information they need to reduce their risk of contravening the law.

A compliance program benefits businesses in two ways: it helps them to identify areas of high risk of contravention of the Competition Act and other laws; and it allows them to determine circumstances where they may be the victim of anticompetitive conduct by other parties.”

The Bureau’s new compliance materials now consist of a competition compliance overview (see here), Corporate Compliance Programs Bulletin, Compliance Programs Pamphlet, three competition compliance fact sheets (see here) and a series of new and recently released compliance videos (see here and here).

Also as part of the Bureau’s new competition compliance approach, it has updated its template Corporate Compliance Program Framework (i.e., template compliance program) and Certification Letter and expanded its due diligence checklist (all as part of its new Corporate Compliance Programs Bulletin).

In addition to these, the Bureau has also updated and issued for comment its new framework enforcement document: Competition and Compliance Framework Bulletin which, once finalized, will replace its prior Conformity Continuum Bulletin.

Underscoring all of the Bureau’s new compliance materials is one message: companies, associations and other organizations need to consider adopting a credible and effective competition compliance program (with the Bureau increasing the incentives to do so).

There are several noteworthy aspects of the Bureau’s new competition compliance materials. These include:

A compliance program can be a mitigating factor in leniency applications: The Bureau will now treat a credible and effective compliance program in place at the time of an offence as a mitigating factor when making sentencing recommendations to the Public Prosecution Service of Canada in connection with a leniency application under its Leniency Program. The Bureau’s Immunity and Leniency Programs are its leading tools for detecting and enforcing criminal competition law violations. This expected shift is the most important aspect of the new compliance package and is rather novel compared to other major jurisdictions. Importantly, the Bureau has set out detailed criteria for evaluating whether a compliance program is credible and effective consistent with its new Compliance Bulletin.

Expanded compliance approach: They represent a significantly expanded approach to competition law compliance in Canada, including in a number of key areas including advertising and marketing, trade association participation and compliance with the merger control provisions of the Competition Act.

More essential elements of a credible and effective compliance program: Consistent with its expanded approach to compliance, the Bureau has now taken the position that there are seven essential elements of an effective competition law compliance program (increased from the former five). These are: (i) management commitment and support; (ii) risk-based corporate compliance assessment; (iii) corporate compliance policies and procedures; (iv) training and education; (v) monitoring, verification and reporting mechanisms; (vi) consistent disciplinary procedures and incentives for compliance; and (vii) compliance program evaluation. The Bureau’s new Corporate Compliance Programs Bulletin provides detailed guidelines to comply with each of these elements.

A more serious and systemic approach to compliance: They signal a more serious approach by the Bureau to competition compliance. This, in turn, emphasizes that companies and associations need to either review existing compliance programs or consider adopting compliance programs where they did not have them in place.

Expanded compliance tools: They provide a number of useful competition compliance tools for companies, associations and other organizations. These include: (i) detailed due diligence checklists in core competition law areas (e.g., in relation to advertising and marketing, cooperating with competitors and mergers); (ii) a new template compliance program; and (iii) employee certification letter.

Emphasis on key areas (e.g., advertising and trade associations): They include a significant amount of information relating to trade associations in particular, including recommendations that associations adopt credible and effective competition compliance programs, companies consider compliance training for personnel attending association events and/or requiring associations to have effective compliance programs as a condition of joining the association. While the Bureau has emphasized in the past the importance for associations to comply with competition law, associations now appear to be a consistent and ongoing priority for the Bureau.

In addition to these key changes, a number of core elements have remained largely the same – for example, the focus on senior management support, effective and ongoing training and education, discipline for employees or other personnel that violate a compliance program and periodic review and auditing of a program and competition compliance generally.

The Bureau has also confirmed that the type of competition compliance program adopted will vary between types of companies/associations, industry sectors and depend on the types of potential competition law risks faced. As such, any compliance program adopted by a company or association must be tailored.

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SERVICES AND CONTACT

I offer business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law.  I also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.

My experience includes counseling clients on the application of Canadian competition and regulatory laws and I have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal, pricing and distribution, Investment Canada Act and merger matters. For more information about my competition law services see: competition law services.

To contact me about a potential legal matter see: contact

For more regulatory law updates follow me on Twitter: @CanadaAttorney