I have been doing quite a bit of compliance work lately, and have been seeing a wide range of compliance by companies and associations, ranging from no compliance or guidelines whatsoever to full competition law compliance programs that follow the Competition Bureau’s recommended elements in its Corporate Compliance Programs Bulletin.
Given that the Competition Bureau continues to aggressively enforce the Competition Act in key areas (conspiracy, abuse of dominance, bid-rigging and misleading advertising), I thought that I would post a “top 10” competition compliance list (or as it happened to work out a top 15).
While by no means exhaustive, this list covers much of what companies and associations need to think about to reduce the likelihood that Competition Act issues will arise.
Key Competition & Advertising Compliance Rules
for Companies & Associations
DO NOT agree to fix prices, divide markets (geographic markets, customers or product/service lines) or restrict output with competitors.
DO NOT discuss competitively sensitive topics with competitors (e.g., prices, margins, costs, markets, market shares, marketing or strategic plans, etc.). Exceptions can include discussions in the context of mergers, joint ventures and some other legitimate pro-competitive competitor-competitor activities, but advice should be sought prior to doing so.
DO NOT make decisions with competitors to refuse to deal with or supply to competitors, customers, suppliers or other marketplace participants without obtaining legal advice. Some concerted refusals to deal (i.e., “boycotts”) can raise significant competition law issues, while others may be justified depending on the circumstances – for example, some membership decisions in the association context.
DO NOT agree with competing bidders or tenderers to fix the terms of a bid/tender, not bid/tender or withdraw a bid/tender that has already been made. Also avoid discussing the terms of bids/tenders, or whether your company intends to bid, with competing bidders/tenderers (e.g., at association events or in other forums). Some types of joint bids can be made (e.g., in the context of legitimate bid consortia that meet the requirements of the Competition Act), but legal advice should be sought prior to the preparation and submission of joint bids.
DO NOT incorrectly suggest, in internal documents or correspondence, that anti-competitive activities are occurring (e.g., language that suggests coordination with competitors in relation to pricing, customers or output – e.g., it would “be easier to cooperate than compete”; that decisions are being made for anti-competitive purposes – e.g., to “drive out” a competitor; or “loaded” language – e.g., “dominate”, “squash”, “eliminate”, “stabilize” competition, “us and them”, they’re “not following the rules”, etc.).
DO NOT attempt to interfere with competitors’ suppliers without consulting management or obtaining legal advice.
DO consult management or obtain legal advice before attempting to influence a customer’s or reseller’s prices (or refusing to supply or discriminating against a person where the refusal/discrimination may be related to the person’s low pricing policy).
DO, if your company or association has a significant market presence, obtain legal advice before refusing to supply, entering into exclusive purchasing or supply arrangements, engaging in below cost pricing, requiring the purchase of one product as a condition for supplying another, adopting loyalty/fidelity programs or refusing to grant access to facilities or assets (or on discriminatory terms) that may be considered “essential” to compete effectively.
DO make every effort to make key business decisions (e.g., relating to pricing, terms of sale/supply, customers and markets, suppliers, tender terms and marketing and business plans) independently and unilaterally. It is also prudent to document the legitimate business reasons for key competitive decisions.
DO, if contemplating terminating a customer, distributor or reseller, consult management or seek legal advice.
DO review the relevant competition law rules (or obtain legal advice) before engaging in some types of advertising and marketing – e.g., marketing involving pricing and performance claims, sales or regular price claims, promotional contests and telemarketing. These are some of the key areas that have either been the subject of enhanced recent litigation, Competition Bureau enforcement and/or are regulated by the Competition Act.
DO, if preparing for a transaction, joint venture or other significant initiative that may raise competition law issues, take practical steps to ensure that internal documentation reflects the legitimate business justifications, efficiency rationales, etc. of the matter (as the Competition Bureau is increasingly relying on, and has enhanced powers to obtain, internal documentation).
DO, if engaging in special projects that may potentially raise competition concerns, consider obtaining legal advice (e.g., competitor collaborations, joint ventures, strategic alliances, some trade association activities, joint purchasing or buying groups, etc.).
DO, if your company personnel will be participating in trade association activities, confirm whether the association has a compliance program and guidelines for key association activities (e.g., board and committee meetings, data collection and information exchanges, membership and admission criteria, etc.) and consider association compliance as a condition for personnel to participate.
DO consider periodic reviews or audits of company or association activities (and compliance orientation for new senior management, board members and marketing and sales personnel).
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