Archive for the 'Competition Bureau' Category
March 13, 2013
Earlier today, the C.D. Howe Institute published a new report on the Canadian dairy industry, dairy regulation and competition entitled: Putting the Market Back in Dairy Marketing. This new report, authored by Colin Busby and Daniel Schwanen, makes recommendations for reform of Canada’s dairy supply management system. Abstract:
“Canada’s controversial but politically untouchable dairy supply management system can be reformed, while addressing the concerns of wary politicians, consumers tired of overpaying for milk and cheese, and farmers worried about their future. In ‘Putting the Market Back in Dairy Marketing,’ authors Colin Busby and Daniel Schwanen call for better representation of consumer interests in milk marketing decisions, a cap on milk prices, and steps to measure efficiency and open new markets for dairy farmers.”
The overall conclusion of this new report is that achieving the Canadian Dairy Commission’s legislated objectives requires fewer constraints on the production and trade of milk and dairy products, which the authors argue impose significant and unnecessary costs on Canadian consumers (and also raise potential longer-term viability issues for the industry).
Based on this conclusion, the report makes the following recommendations: (i) changing the membership of the CDC board of directors to ensure consumer and industrial users’ interests are represented in decision-making, consistent with the regulatory set-up in many other industries; (ii) capping prices for milk set by the CDC, until a reasonable benchmark is reached for an “efficient farm,” using national and international comparisons; and (iii) restoring to the federal government the powers over export and interprovincial trade that it delegated to the provinces so that interprovincial trade can expand, and efficient farmers who wish to operate entirely outside of the quota system may export outside of Canada.
This report comes also as the Canadian Competition Bureau appears to also be renewing its interest in advocacy in regulated sectors (i.e., areas in which the Bureau may not have direct enforcement powers).
For example, in one recent speech by the Interim Commissioner of Competition John Pecman, the Interim Commissioner confirmed that the Bureau is interested in “incrementally increasing” its competition advocacy efforts (in addition to enforcement) in key industries including the digital economy and retail and health sectors. The Interim Commissioner also set out the following four factors the Bureau would consider in deciding whether to initiate regulatory interventions in particular sectors: (i) whether a forum exists and there is a high level of public interest, (ii) whether the Bureau would be contributing in a useful way (e.g., bringing forward unique arguments), (iii) being able to gauge the impact of advocacy efforts, and (iv) clear, tangible benefits for Canadians.
De-regulation, and increased clarity on competition law safe harbours from enforcement, such as the “regulated conduct defence”, have also been topics of increased recent debate and other reports – for example, the C.D. Howe’s November 2012 report: Closing the Back Door Route to Cartels: The Need to Clarify the Regulated Conduct Doctrine.
For a copy of this new C.D. Howe report on the dairy industry see: Putting the Market Back in Dairy Marketing.
March 12, 2013
Earlier today, the U.S. Federal Trade Commission (FTC) issued revised Dom Com Disclosure guidelines (see: FTC Staff Revises Online Advertising Disclosure Guidelines). From the FTC:
“… the new FTC staff guidance, .com Disclosures: How to Make Effective Disclosures in Digital Advertising takes into account the expanding use of smartphones with small screens and the rise of social media marketing. It also contains mock ads that illustrate the updated principles. Like the original, the updated guidance emphasizes that consumer protection laws apply equally to marketers across all mediums, whether delivered on a desktop computer, a mobile device, or more traditional media such as television, radio or print. If a disclosure is needed to prevent an online ad claim from being deceptive or unfair, it must be clear and conspicuous. Under the new guidance, this means advertisers should ensure that the disclosure is clear and conspicuous on all devices and platforms that consumers may use to view the ad. The new guidance also explains that if an advertisement without a disclosure would be deceptive or unfair, or would otherwise violate a Commission rule, and the disclosure cannot be made clearly and conspicuously on a device or platform, then that device or platform should not be used.”
Some of the specific topics addressed by the FTC’s new guidelines (the Canadian parallel of which are the Competition Bureau’s “Internet Advertising Guidelines” – i.e., Application of the Competition Act to Representations on the Internet – which have not been substantively updated in a few years) include: proximity and placement of disclosure; use of hyperlinks; effective disclosure before purchase; disclosure in new media (i.e., where there are space constraints); distracting elements and the overall context of advertising; multi-media; and understandable disclosure for consumers.
For a copy of the FTC’s new guidelines see: .com Disclosures.
March 12, 2013
Earlier today, as part of its Fraud Prevention Month efforts in March, the Competition Bureau announced its Top 2 on “2 Good 2 B True Day” scams: false online testimonials; and mobile “subscription traps”.
With respect to false testimonials, the Bureau highlighted concerns with testimonials that appear to be from unbiased individuals, but in fact are paid-for endorsements (or malicious or fraudulent).
Under the Competition Act, false testimonials can be challenged where they are either literally false or misleading (under the general civil or criminal misleading advertising provisions of the Act). The Competition Act also includes a standalone testimonials section that makes it reviewable conduct to publish a testimonial for a product unless the person publishing it can establish that: the testimonial was previously made or published; or was approved with permission to make/publish it.
The Bureau has also raised concerns in the past with false or misleading testimonials. For example, in its pamphlet False or Misleading Representations and Deceptive Marketing Practices the Bureau says: “[u]nder the civil regime, the general provision prohibits all materially false or misleading representations. [and] “other provisions specifically prohibit … untrue, misleading or unauthorized use of tests and testimonials …” These guidelines also offer the following testimonial-related guidance for advertisers: “[d]on’t use the results of product performance tests and/or testimonials in your advertising unless you are authorized to use them; or if you are authorized to use them, don’t distort test results or the scope of testimonials”.
As for “subscription traps” – which the Bureau defines as “techniques designed to make consumers register for recurring fees for goods” – the Bureau emphasizes situations where products appear to be free (when charges apply) or where there are hidden or difficult to understand conditions (or refunds subject to conditions). This particular scheme has been an issue, among others, in a number of traditional marketing fraudulent directory scams in recent years (e.g., deceptive fax spam).
The Bureau’s Backgrounder issued with its announcement also includes other tips for consumers to avoid these scams.
Both of these fraud techniques discussed by the Bureau are consistent with its recent and ongoing enforcement priorities in the advertising and deceptive marketing areas, which include a focus on the web and new technology (particularly mobile), increased pressure to clearly disclose the total price of products, heightened scrutiny of disclaimers and hidden conditions and as well consistent enforcement based not only on the literal meaning of claims but also the overall “general impression”.
For copies of the Bureau’s announcement and Backgrounder, see: here and here.
March 10, 2013
Readers of this blog will know that two of my main interests are competition/antitrust compliance and cartels. Despite the continually escalating fines and persuasive reasons cartels should be aggressively punished, they seem to chug on in the corporate world unabated. Perhaps it’s the game theory of cartels that I find fascinating. At any rate, in this vein this new paper on cartels and compliance caught my eye by D. Daniel Sokol: “Policing the Firm” (see: here). Abstract:
“Criminal price fixing cartels are a serious problem for consumers. Cartels are hard to both find and punish. Research into other kinds of corporate wrongdoing suggests that enforcers should pay increased attention to incentives within the firm to deter wrongdoing. Thus far, antitrust scholarship and policy have ignored this insight. This article suggests how to improve antitrust enforcement by focusing its efforts on changing the incentives of internal firm compliance.”
March 9, 2013
In a very interesting case released on March 1st (R. v. J.F., 2013 SCC 12), the Supreme Court of Canada settled a debate between previously rival authorities for establishing party liability in criminal conspiracy cases.
While this case involved rather grisly criminal conspiracy-related facts, involving allegations of a conspiracy to commit murder (an agreement between youths to ply their mother with alcohol and drugs, drown her in the bathtub and make it appear an accident), it has potential implications for other types of conspiracy agreements including conspiracy and bid-rigging agreements under the federal Competition Act (sections 45 and 47).
The issues in this case were: (i) whether a person can be found liable as a party to an offence of conspiracy under section 21 of the Criminal Code (which includes liability to an offence for aiding or abetting the offence, in addition to actually committing it); and (ii) if so, under what circumstances, with the Court referring to the latter, quite rightly given the uncertainty of the law to date, as “the more perplexing issue” and “centerpiece of the appeal”.
The aiding and abetting provisions of the Criminal Code also apply to competition law offences in Canada – for example, in a 1966 Supreme Court case – R. v. Campbell – it was held that while the former Combines Investigation Act did not refer to aiding or abetting, it did not exclude the application of section 21 of the Criminal Code.
A number of recent Canadian cartel cases have also involved allegations or admissions of liability based on aiding and abetting conduct. These include a case involving Mitsubishi Corporation in 2005 (in which Mitsubishi was fined for aiding and abetting the implementation of a foreign-directed conspiracy in Canada); a case in 2005 involving Nippon Carbon Ltd. (which pleaded guilty and was fined $100,000 for aiding and abetting an international conspiracy to fix the price of graphite electrodes used in steel production); and a case involving Ibiden Co. Ltd. (which was fined for aiding and abetting a conspiracy to fix the price of isostatic graphite’s, a fine grain carbon product).
In answering the questions set out above, and in a concurring decision, the Court reviewed two conflicting lines of authorities that had been adopted by courts in different provinces with divergent approaches to party liability for conspiracy cases.
One broad approach, referred to the “McNamara model”, after the decision in R. v. McNamara (No. 1) (1981), 56 C.C.C. (2d) 193 (Ont. C.A.), extended party liability in conspiracy cases where an accused aided or abetted the furtherance of a criminal conspiracy’s unlawful object (a broad basis, which would potentially lead to liability in more instances).
Another and narrower approach referred to as the “Trieu model”, after the decision in R. v. Trieu, 2008 ABCA 143, limited party liability in conspiracy cases to situations where an accused aided or abetted the formation of a conspiracy agreement (thus a narrower basis of liability, and one more clearly linked to the elements of the offence of conspiracy – i.e., an agreement).
On the more orthodox point (being a party to an offence of conspiracy), the Court held that being a party to a conspiracy is an offence known to law.
On the less clear and more challenging and interesting question, namely the required linkage of an accused to a conspiracy agreement (framed by the Court as: “how and under what circumstances a person [can] be found liable as a party to the offence of conspiracy”), the Court held that the correct approach was based on the narrower Trieu model. In other words, party liability in conspiracy cases is to be limited to cases where an accused aids or abets the initial formation of an agreement or, alternatively, aids or abets a new member to join a pre-existing agreement.
The Court’s primary rationale for adopting this narrower approach related to the nature of conspiracy offences – i.e., the central actus reus (i.e., act element) of a conspiracy is the conspirators’ act of agreeing. In this regard, the Court held:
“The Trieu model is a legitimate basis for party liability to a conspiracy. A person becomes party to an offence if he aids or abets a principal in the commission of the offence. It follows that party liability to a conspiracy is made out where the accused aids or abets the actus reus of conspiracy, namely the conspirators’ act of agreeing.”
The Court also confirmed more than a century of Canadian jurisprudence that the “essence of the crime of conspiracy” (whether under the Criminal Code or Competition Act offences) is an agreement and, therefore, that liability should be founded on either committing the offence or aiding or abetting the offence (i.e., an illegal agreement).
The Court reasoned that, since acts that further the unlawful object of a conspiracy are not elements of the offence of conspiracy, aiding or abetting such acts should not expose a criminal accused to liability.
Having said that, the Court did also hold that where a person, with knowledge of a conspiracy, does or omits to do something for the purpose of furthering the mere (or perhaps more accurately, more mere) unlawful object, with the knowledge and consent of one or more of the existing conspirators, this may “provide powerful circumstantial evidence from which membership in the conspiracy can be inferred.”
In other words, where there is evidence of an accused supporting a conspiracy’s object, but not the agreement itself, this may be, depending on the facts, a sufficient ground on which to base criminal liability. This is a logical conclusion and extension of the Court’s holding and consistent as well with Canadian conspiracy authorities generally that an agreement may be established based on mere circumstantial evidence (although still with the necessity to be proven on the criminal burden of proof – i.e., beyond a reasonable doubt).
On the particular facts of this case, while the Court found that party liability should not have been put to the jury (given that there was no evidence that the accused aided or abetted the initial formation of the agreement or aided or encouraged a new member to join the conspiracy), the Court nevertheless found that the trial judge’s error could not have affected the verdict given that the evidence implicating the accused as a member of the conspiracy was “overwhelming”.
This interesting decision is important for several reasons, including for clarifying (and potentially narrowing) the circumstances in which criminal accused under the Competition Act may face liability for agreement related offences (including conspiracy, foreign directed conspiracies and bid-rigging).
The decision also gives persons that are being challenged by the Competition Bureau a clearer indication of when, and under what circumstances, allegations of aiding or abetting a criminal offence may be established, given that it is not uncommon for the Bureau to rely on aiding or abetting theories of liability in criminal cartel cases in Canada in addition to theories that an accused actually committed the offence.
For example, in the Bureau’s Competitor Collaboration Guidelines, the Bureau states that it may seek criminal conspiracy (cartel) liability under section 45 of the Competition Act based on aiding or abetting theories, including for trade association conduct:
“Where an agreement involves competing and non-competing parties, the fact that some parties are not competitors does not insulate the non-competing parties from prosecution under section 45. [criminal conspiracy agreements] Parties that are not competitors may also be prosecuted under section 45 through the aiding and abetting provisions in section 21 or the counseling provisions in section 22 of the Criminal Code … Agreements between members of a trade or other industry association may also constitute agreements between competitors for the purpose of section 45. … In the event that such an agreement contravenes section 45, the trade association may be considered as a principal party to the offence or may be subject to prosecution through the aiding and abetting provisions in section 21 of the Code.”
For a copy of the decision see: R. v. J.F., 2013 SCC 12.
March 8, 2013
Earlier today, the Competition Bureau launched a Twitter account: @CompBureau. 1 Tweet so far (“The Competition Bureau is now on Twitter”), following 1 other (the French version of its account: @Burconcurrence) and with 77 followers and rising quickly. For the Bureau’s announcement of its first steps into the Twitterverse see: Competition Bureau Launches Twitter Account.
March 7, 2013
The old adage is that “the life of a monopolist is a quiet life”. In light of mounting consumer criticism of poor service from a concentrated Canadian wireless market, earlier today the Canadian federal government announced new measures to increase competition in the wireless sector.
In making the announcement, Canada’s Industry Minister said:
“Canadian families work hard for their money. Our government is ensuring that they have access to the wireless services they need for their BlackBerrys and iPhones at a price they can afford. Simply put, since coming to office, we have made a stronger, more competitive wireless sector a priority. And the results speak for themselves. Consumers have more choice in the wireless market than ever before. Prices have dropped, and most Canadians now have access to faster mobile speeds and the most sophisticated tablets and smartphones.”
According to the Industry Minister, the new measures, which impose limits (caps) on the acquisition of spectrum by Canada’s large carriers and introduce new measures to facilitate roaming and encourage tower sharing, are meant to provide more choice, better access and more competitive pricing for Canadian wireless consumers.
The measures announced today include: expanding and extending the requirement for wireless companies to provide roaming on their networks to competitors, to ensure that all Canadians, even when traveling, have service regardless of their provider; tightening existing rules to increase cell-phone tower sharing, helping limit the construction of new cell towers (which can operate as a barrier to entry and has been an environmental concern for Canadians); using upcoming spectrum auctions to promote four competitors in each region of the country, from the current “big 3” (the first of which of these new auctions, a 700 MHz auction, will take place in November, 2013); and reviewing the policy on spectrum license transfers in advance of the upcoming auction.
The new measures, meant to promote increased wireless competition, come on the same day that a non-profit study was released arguing that a majority of Canadians are forced to accept poor wireless service (see: Open Media: Time for an Upgrade). The apparent horror experienced by some Canadian wireless customers was also widely recounted by media today – see e.g., the HuffPost’s note: Canada Cellphone Contracts: Horror Stories Ring Through Consumers Troubles With Serice Providers.
The Government’s announced new wireless measures also come of course in the midst of the ongoing CRTC wireless code consultations and also follow the earlier lifting of investment restrictions on small carriers with less than a 10% market share.
March 6, 2013
In addition to my contest law services, I offer Canadian contest forms and precedents for random draw and skill contests in Canada (excluding Quebec).
These Canadian contest forms are intended to bridge the gap between legal advice and forms on the web, which may not be current, accurate, reviewed by counsel or even intended for Canadian promotions (i.e., U.S. or international forms that do not include the key requirements to effectively operate a contest in Canada).
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CANADIAN CONTEST RULES & FORMS
Need contest rules and forms for a Canadian Contest? I offer a selection of Canadian contest rules and forms for common types of Canadian contests. For more information see: Contest Forms.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
