November 21, 2013
Canada’s (relatively new now) Commissioner of Competition is on the road at the moment, having delivered remarks yesterday in India. In a short but focused speech in Kashipur India, the Commissioner focused quite a bit on the history of Canadian competition law, the importance of competition to an effective economy and compliance.
A concept called “shared compliance” (i.e., between the Competition Bureau, legal community and marketplace participants) has been one of the new Commissioner’s recent turns of phrases, and it was central again in his remarks yesterday in India. In emphasizing the benefits of competition compliance and the obligation for companies and other organizations to adopt credible and effective competition law compliance programs, the Commissioner said:
“Getting back to compliance — by now, companies should be well aware of the potential for loss of reputation and damage to carefully cultivated brands that can result from the failure to comply with competition laws. In order to ensure compliance, companies must be aware of the competition legislation and regulations that apply to them and also of the approach that their competition authority undertakes to apply these laws.
It is incumbent on companies to keep abreast of what their competition authority is doing. As the saying goes, ignorance of the law is no excuse. The most effective way for a company to protect its business and its brand is to be aware of its respective competition authority’s practices, procedures and policies.”
In Canada, competition law compliance programs are not mandated by the federal Competition Act but the adoption of a “credible and effective” compliance program tailored to a particular company’s or other organization’s activities is a mainstay Competition Bureau and counsel recommendation.
Options for companies, associations and other organizations range from a full competition law compliance program (reflecting the Bureau’s five recommended elements in its Corporate Compliance Programs Bulletin – in the process of being updated) to more streamlined approaches, such as adopting guidelines, “do’s and don’ts” or other practical tools for company/association personnel and specific activities.
November 20, 2013
The U.S. CLE provider Strafford is hosting what I think looks like quite an interesting upcoming associations and information exchange related webinar entitled: Antitrust Risks of Association-Sponsored Market Research. “Information exchanges” (via surveys, member interaction, meetings, conventions, social media, other online fora, etc.) are of course a common and ubiquitous activity for most trade and professional associations, both in Canada and internationally. Given that they can also raise competition/antitrust law risk, however, with the potential issues in Canada and the U.S. being largely the same, this upcoming webinar caught my eye.
“Members rely on their associations to provide up-to-date market research data to help them and their companies remain competitive. Association market reports and surveys are often more comprehensive, accurate, and valuable than industry consultant reports or publicly available information.
While association market research programs provide a significant benefit to members, associations and their counsel must be mindful of the antitrust risks inherent in these information exchanges, including the potential for claims that the exchanges are used to coordinate member competitive decision-making.
Antitrust counsel should advise their association clients of the potential pitfalls with market research programs and guide them in developing information exchanges and survey procedures that comply with the antitrust laws and are likely to withstand government or private scrutiny.
Listen as our authoritative panel of attorneys, including a leading nonprofit lawyer and an antitrust attorney, reviews the key benefits of market research programs to associations, discusses recent developments in the antitrust laws applicable to information exchanges and benchmarking, and explains best practices to comply with antitrust laws.
Outline: Benefits of market research programs to associations; applicable antitrust laws; practical application of antitrust laws to market research programs; best practices to minimize antitrust liability.”
For more about associations and competition law, see: Associations and Competition Law.
For more about competition law and information exchanges, see: Information Exchanges.
U.S. Federal Trade Commission Gets Court Order to Stop Allegedly Canada-based Fraudulent “Yellow Pages” Directory Scheme
November 19, 2013
The U.S. Federal Trade Commission (FTC) announced that it has obtained a federal court order to temporarily halt the operations and freeze the assets of an alleged fraudulent Montreal-based “Yellow Pages” business directory scheme. In making the announcement, the FTC said:
“Hiding behind borders to scam churches and small businesses is a tactic that we’ve seen before. … Scammers need to know that we have great relationships with our law enforcement partners in Canada and, as this case shows, we can and will work together to protect our consumers.”
According to the FTC, this “Yellow Pages” business directory scheme called churches and small businesses pretending they were verifying or updating existing contact information and billed consumers $499.99 for directories never ordered. Some consumers paid thinking others in the organization had ordered a directory or based on pressure that they had entered into oral contracts. Consumers who ignored bills or refused to pay received collection calls, were charged interest or late fees and received threats of collection agency referral, credit card rating damage or legal action.
Like the earlier Canadian 2012 Yellow Page Marketing case (for my posts on that case see: here and here), the operators in this case may have been using a fairly common and tried and tested directory scam strategy (see: here, here, here and here for some descriptions). Some common elements from past fraudulent business directory cases include targeting small and medium sized businesses just large enough to not be certain whether other personnel have ordered a directory, seeking a relatively small amount from each target (though relying on volume to achieve significant returns), and making false or misleading claims that directories had been ordered, a prior business relationship existed or being associated with the legitimate Yellow Pages Group.
Despite the astonishing simplicity of this type of phony invoice scheme, they persist and in past cases have been remarkably effective in achieving significant revenues (in the Yellow Pages Marketing case for example, revenues of at least $5-7 million according to testimony before the Ontario Superior Court).
November 15, 2013
Canada’s new Commissioner of Competition, John Pecman, delivered remarks yesterday in Toronto centered around what he has been referring to recently as the “4Cs” (the Competition Bureau’s four current areas of focus: compliance; communication; collaboration; and Canadians). As part of his remarks, as he has been doing since last fall, he once again discussed trade associations, and in particular association compliance and the importance of adopting credible and effective competition law compliance programs. In this regard, the Commissioner said:
“The first thing I want to say is that the Bureau does not operate under the assumption that trade associations are inherently bad. We do, however, acknowledge that from time to time they engage in practices, which can significantly increase the risk of issues arising under the Act. Trade associations provide a forum that may encourage competitors to collaborate and because of this, they are exposed to greater risks of anti-competitive behaviour.
And so the second thing I want to say here is that for this reason, compliance programs are of the utmost importance to trade associations. Now, I know that on the whole, trade associations are aware of this and take action to mitigate risks arising under the Act. They are extra vigilant in managing and alleviating the risks associated with their work. However, it’s worth repeating that developing a credible and effective compliance program is the first and most important step. That culture of compliance I was just speaking about isn’t restricted to businesses.”
The Commissioner also reiterated trade association related compliance themes from other recent remarks including: the importance of developing a compliance program generally (including updates and periodic training and enforcement); “information exchanges” between competitors that may raise competition concerns (the exchange of competitively sensitive information between competing members); avoiding exclusionary or disciplinary standard setting; and to reach out for legal advice in the event a competition law issue arises. Trade associations do appear to be receiving some renewed attention from the Bureau, given that the Commissioner has addressed associations some five times in public remarks since late 2012.
In addition to revisiting competition compliance and associations, the Commissioner also discussed the Bureau’s plan to update its key competition compliance related guidelines (its Conformity Continuum and Corporate Compliance Programs Bulletins) and seek public consultations on an updated approach to competition law compliance; its recent “Action Plan” on increased transparency; the record $5 million and $30 million bid-rigging fines in the ongoing global auto parts cartel investigation; and recent public consultation for suggested areas of competition advocacy (without yet disclosing potential sectors for Bureau intervention).
The Commissioner also included a few high-level recent enforcement statistics, including the fact that the Bureau currently had twenty-two cases either before the courts or the Competition Tribunal and over eighty major active investigations.
Competition Law & Trade Associations
Trade and professional associations can serve many legitimate purposes. These include promoting common interests to the public, lobbying and advocacy, product and market research, member education and updates on industry developments, publishing trade journals and the promotion and improvement of products. However, because association activities by definition commonly involve the interaction of direct competitors, they can also raise serious Competition Act concerns.
November 15, 2013
A few upcoming Canadian Bar Association (CBA) Competition Law Section events caught my eye including the following on the recent Apple cartel case and MFN provisions, recent Canadian and international corruption law developments, Supreme Court’s recent indirect purchaser class action judgments and a roundup of recent important competition law developments:
The Economics of the Apple Decision: Does It Have Implications for the Use of MFNs (November 18):
“The most favored nations clauses in contracts between Apple and publishers were at the heart of the recent Apple decision. This panel will explore the economics of the MFNs and whether the decision will have implications for their use.”
Fighting Foreign Corruption: Complying with Tough New Laws in Canada and Around the World – II (November 19):
“Important amendments to Canada’s Corruption of Foreign Public Officials Act enacted in June 2013 expand the scope of Canada’s anti-bribery laws and increase penalties. Other countries, such as the United Kingdom, have enacted and are enforcing tough anti-bribery laws. Canadian businesses that operate abroad need to take steps to comply with an increasingly tough global anti-bribery regime. This series of two seminars (one in Toronto, one in Calgary), offered in person and via webcast, will provide a comprehensive overview of Canada’s foreign anti-bribery laws and guidance on the complex issues that clients will face doing business abroad.”
Supreme Court Holds Time is Rype for Indirect Purchasers in Canada (November 27):
“The Supreme Court of Canada has handed down three decisions affirming the right of indirect purchasers to sue for criminal anti-competitive activity and affirming the importance of class actions in competition law enforcement. Now come the tough questions. How to trace pass-through of the overcharge from cartel through to end consumer? How to prove unlawful overcharge on fungible or interchangeable goods in light of the Sun-Rype dismissal? How to manage conflicts among different strata of purchasers? Hear a superb panel of lawyers and economists go beyond the basics in answering these questions and more in a jam-packed session you won’t want to miss.”
Seismic Shifts in Competition Law: The Year in Review and the Year Ahead (December 4):
“Join the Corporate Counsel Committee for a whirlwind review of major developments in competition law over the last year and a glimpse of some of the hot issues likely to be at the forefront during the year ahead.”
For more information and registration details, see: here.
November 15, 2013
The Americans are not ones to pussy foot around when it comes to economic crime. Yesterday, the U.S. Senate’s Subcommittee on Antitrust, Competition Policy and Consumer Rights held cartel related hearings bluntly entitled “Time Change: Cartel Prosecution: Stopping Price Fixers and Protecting Consumers”. Testimony included remarks by William Baer (Assistant A.G. in the DoJ’s Antitrust Division), Ronald Hosko (Assistant Director in the FBI’s Criminal Investigative Division) and several academics and private antitrust practitioners. Witness testimony has now been posted along with a webcast – see: here.
Bill Baer’s statement includes summaries of the Antitrust Division’s current and recent cases (including auto parts, LCD panels, air cargo and municipal bonds), recent fines (including the recent $740 million in auto parts, $1.3 billion in LCD panels and $1.9 billion in air transportation and freight forwarding) and the DoJ’s strategies to more effectively detect and prosecute antitrust cartels.
Yesterday’s testimony was followed by more today, with testimony by Bill Baer and Edith Ramirez (Chairwoman of the U.S. FTC) before a House of Representatives Regulatory Subcommittee on Oversight of the Antitrust Enforcement Agencies. Some highlights from today’s testimony by Bill Baer includes:
Fines. Recent high-level enforcement statistics: 50 criminal cases in 2013; 21 corporations charged; 34 individuals charged; fines over USD $1 billion; and jail sentences for 28 individuals, with an average of two years per defendant.
Auto parts cartel. More information and updates relating to the ongoing global auto parts cartel. According to the DoJ, the tally of key facts so far in this case is: 21 companies and 21 executives charged; USD $1.6 billion in criminal fines; and 17 executives sentenced to serve prison time. Also included is a nifty diagram illustrating the various cartelized auto parts in the ongoing case.
e-books. A discussion of the effects of the Apple e-books decision, including reduced e-book prices (according to the DoJ a drop in average prices from about $11 to $6) and overview of the court appointed external Apple monitor.
MFN provisions in health insurance contracts. Interesting comments regarding the DoJ’s view on MFN clauses in health care contracts, the DoJ’s challenge of Blue Cross Blue Shield of Michigan’s use of MFN provisions in hospital supply contracts and Michigan’s move to pass legislation banning the use of MFN provisions in health care provider contracts (joining more than a dozen other states that have passed similar legislation).
November 13, 2013
Given the recently increased focus on criminal competition law matters (e.g., cartels) and whistleblowing, the latter in the competition law world and corporate crime area generally, I thought I would launch a new whistleblowing page on the blog. A kind of rolling compilation of Canadian competition law whistleblowing information. For my first go at a few key recent Canadian competition law whistleblowing sources see: whistleblowers or below. As usual for my competition law overviews, I’ve endeavoured to include a few quotes that I’ve come across and thought were really rather good, including Ralph Nadar’s inaugural definition of “whistleblower” from the 1970s.
“There is no law, no system, no set of regulations which can more effectively hold governments to account than the conscience of man. Opposition parties, the public and the press rely on individuals, not systems, to tell us what those who rule over us would like us not to know. We call them ‘whistleblowers’ because, like referees, they seek to keep the players in our political system in check.”
Editorial, The Independent of London, on arrest of Tory M.P. Damian Green
for suspicion of leaking documents (November 29, 2008)
“[Whistleblowing is] an act of a man or a woman who, believing in the public interest overrides the interest of the organization he serves, publicly blows the whistle if the organization is involved in corrupt, illegal, fraudulent or harmful activity”
(Ralph Nadar, who coined the phrase)
“A whistleblower is a person who voluntarily provides information to the Bureau about a possible violation of the Act that has occurred, is occurring or is about to occur. Section 66.1 of the [Competition Act] includes specific provisions protecting the identity of a whistleblower.”
(Competition Bureau, Whistleblowing Initiative)
OVERVIEW OF COMPETITION ACT
In addition to the Competition Bureau’s (the “Bureau”) Immunity and Leniency Programs (see tabs to the left for more information on those Programs), the Canadian federal Competition Act also includes “whistleblower” protections for those who report potential competition law violations to the Bureau (sections 66.1 and 66.2 of the Competition Act).
In general, the whistleblower provisions of the Competition Act provide that any person with “reasonable grounds” to believe that a person has committed (or intends to commit) an offence under the Competition Act may notify the Commissioner of Competition and request that his/her identity be kept confidential.
November 12, 2013
Earlier today the OECD announced that it was launching a multi-part competition policy paper competition, open to young researchers and PhD-level students, starting with the first call for papers on topics relating to the first competition policy related topic:
“CHALLENGE NO.1 Competition policy is about making business more competitive, whether through reforming government policies that restrict competition, or applying competition law against cartels and other abuses. How could competition policy affect the quality of life as measured by the OECD’s Better Life Initiative? How can competition policy help make the lives of citizens better?”
Winning papers from each of five upcoming consecutive competition policy related challenges will be published by the OECD, distributed and promoted on the OECD online platforms and an overall winning paper selected and an OECD internship offered in the OECD Directorate for Financial and Enterprise Affairs.
For more information and application details see: OECD Finance and Enterprise Affairs: Call for Papers.