Canadian COMPETITION LAW

November 1, 2010

The Canadian Commissioner of Competition recently addressed the Canadian Bar Association Fall Competition Law Conference.

Her recent remarks, about a year and a half following the most significant amendments to the Competition Act since 1986 and in some cases since competition law was adopted in Canada, provide a bit of a road map to the Bureau’s enforcement priorities.  Her remarks also contain a few surprises.

The following are some of the highlights:

Mergers

Perhaps somewhat predictably, the Commissioner indicated satisfaction with Canada’s new U.S.-style two-stage merger control process, and in particular the Bureau’s increased ability to control the merger review process and timetable (as a result of Canada’s adoption of a second phase review process and supplementary information request powers for the Bureau).

The Commissioner also indicated that, with respect to mergers, the Bureau has a genuine interest in narrowing second requests for information by “refining” its practice of pre-issuance dialogue with merging parties.  Interestingly, the Commissioner said that since the 2009 Competition Act amendments, the Bureau has issued ten supplementary information requests to merging parties (out of more than 300 pre-merger notification filings).

The Commissioner also described the Bureau’s recently announced public consultations, with a view to updating its Merger Enforcement Guidelines (not updated since 2004).

Cartels

On the criminal side, the Commissioner focused on Canada’s new criminal conspiracy regime, saying that the Bureau was “seizing the opportunity” to begin work under the new criminal conspiracy rules (which have resulted in a lower enforcement burden and significantly increased penalties).  The Commissioner said: “… we are working to move from a jurisdiction often disproportionately focused on pleas – especially with respect to international cartels – to one that is appropriately aggressive in using our new tools to ensure that consumers and those who carry on business in Canada can be confident that the criminality of this activity is recognized.”  While the Commissioner’s enforcement remarks are not new, and accord with the Bureau’s longstanding view that cartels are a top enforcement priority, the Bureau’s work became significantly easier following the coming into force of Canada’s new conspiracy regime earlier this year.

The Commissioner also emphasized the Bureau’s increasing reliance on wiretaps and other powers in criminal investigations under the Competition Act, as well as its interest in promoting the Bureau’s formal Immunity and Leniency Programs.  In this regard, the Bureau recently issued its new Leniency Bulletin, which outlines the factors and principles the Bureau considers in making a leniency recommendation to the Public Prosecution Services for leniency from sentencing for criminal offences committed under the Act.

Perhaps most importantly, the Commissioner also referred to the Bureau’s recent issuance of its Competitor Collaboration Guidelines, which set out the Bureau’s enforcement approach to collaborations between actual and potential competitors.  While the Commissioner remarked that the Bureau could not simply “flick a switch” to interpret Canada’s new cartel regime in light of the new guidelines, there has been significant debate as to how the new conspiracy rules will be applied by Canadian courts and the Bureau in reality to a wide variety of commercial agreements including joint ventures, franchise and licensing arrangements, non-compete provisions in commercial agreements and collective purchasing arrangements.  Perhaps most challenging for Canadian courts and the Bureau under the new rules will be determining whether some forms of agreements and restraints that are not clearly harmful at the outset (i.e., without further analysis) should be reviewed under section 45 (criminal conspiracy offences) or 90.1 (the new civil agreements provision).  These include, for example, standard setting agreements (or agreements to fix product quality), group boycott arrangements and a variety of restrictions that can arise in common commercial activities (e.g., trade association activities).

Enforcement

With respect to enforcement, the Commissioner made several interesting points, including the fact that the Bureau currently has 42 ongoing criminal investigations underway and that it was investigating a number of cases under the new civil agreements provision of the Act (section 90.1).  The Commissioner also took a stronger stance than in the recent memory on abuse of dominance as an enforcement priority, saying that “pursuing abuse of dominance cases and seeking to provide clarity on [the Bureau’s] enforcement approach to section 90.1” were Bureau priorities.

The Commissioner also referred to recent enforcement efforts against retailers making unsupported environmental claims, and described the recent record $15 million fine against a Toronto business directory marketing company.

For a copy of the Commissioner’s speech, see: Remarks by Melanie L. Aitken, Commissioner of Competition, to CBA Annual Fall Competition Law Conference.

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

Comments are closed.