Archive for the 'Competition Bureau' Category
January 28, 2013
In a decision in December, issued today (see: Green v. Tecumseh Products of Canada Limited, 2012 BCSC 2026), the BC Supreme Court approved a settlement with two defendants in a competition class action involving alleged price-fixing of cooling compressors.
The class proceedings in this case began in October, 2010 on behalf of BC residents that purchased cooling compressors and other products manufactured by the settling defendants and other defendants. According to the plaintiff, the defendants allegedly fixed cooling compressor prices or allocated markets and customers in Canada.
In October, 2010, the Bureau announced that Embraco North America Inc. plead guilty and was fined $1.5 for participating in fixing the price of cooling compressors (see: Embraco North America Inc. Pleads Guilty to Price-Fixing Conspiracy). In November, 2010, the Bureau made a similar announcement in relation to Panasonic Corporation (see: Panasonic Corporation Pleads Guilty to Price-Fixing Conspiracy).
As part of the settlement in the decision issued earlier today, the two settling defendants ACC USA LLC and ACC Sp.A, with a relatively small combined volume of commerce in Canada, entered into a settlement agreement with the plaintiff, agreed to pay $50,000 (and costs up to a further $50,000) and to cooperate with the plaintiff.
January 26, 2013
Steve Szentesi
Kevin Wright (Davis LLP)
(with contributions by Jonathan Gilhen – Davis LLP)
Extract from a chapter to be published in CLEBC’s
Annual Review of Law & Practice – 2013
____________________
2012 was a busy year for Canadian competition and foreign investment law, with significant developments in all major areas including misleading advertising, mergers, abuse of dominance, criminal matters (including cartels, bid-rigging and deceptive marketing) and private actions. The following is an overview of some of the key abuse of dominance, private action and other competition developments in 2012.
Abuse of Dominance
Commissioner of Competition v. The Toronto Real Estate Board
In Commissioner of Competition v. The Toronto Real Estate Board, the Competition Bureau (the “Bureau”) commenced an abuse of dominance application against The Toronto Real Estate Board (“TREB”), Canada’s largest real estate board. The Bureau is alleging that TREB is dominant in the residential real estate services market in the Greater Toronto Area (“GTA”), certain TREB membership rules governing the use of its multiple listing service or “MLS®” data are anti-competitive and that competition has been substantially lessened in the relevant market (residential real estate services in the GTA).
In particular, the Bureau’s challenge involves TREB membership rules governing the use of its MLS® data that the Bureau argues restrict or prevent members from offering various innovative new services over the Internet, such as “virtual office websites” or “VOWs” that would allow potential clients to conduct their own property searches on brokers’ password protected websites without the assistance or involvement of brokers. The Bureau is arguing that TREB’s restrictions on using its MLS® data for VOWs has prevented the development of more efficient and cost effective business models by forcing existing members to use traditional broker models and prevented members from joining TREB to launch new Internet based services.
TREB in turn has argued that the rules for the use of its MLS® system are a legitimate exercise of intellectual property rights, its policies do not substantially prevent or lessen competition, that some proposed uses of its data raise privacy concerns and that it cannot be dominant in a market in which it does not participate (as a trade association it does not itself provide any real estate services).
Like the Bureau’s 2009 abuse of dominance challenge against The Canadian Real Estate Association, this case also focuses on membership rules and access to the MLS® system, and more specifically TREB’s ability to exclude and discipline non-compliant members by foreclosing access to its MLS® data. This case was ongoing at the time of writing.
New Abuse of Dominance Enforcement Guidelines
In September 2012, the Bureau issued new Abuse of Dominance Guidelines (“Abuse Guidelines”) that set out its enforcement policy for the civil abuse of dominance provisions of the Competition Act (the “Act”) (sections 78 and 79). The Bureau’s new Abuse Guidelines replace its former 2001 guidelines and several sector- and conduct-specific guidelines and bulletins relating to the airline, grocery and telecommunications industries and predatory pricing.
The new Abuse Guidelines are substantially shorter with significantly less analysis and fewer examples than the Bureau’s previous guidelines. In general, they also provide less comfort for firms regarding several key concepts, notably potential investigation risk in the absence of market power or conduct that is not exclusionary. They also introduce some new and somewhat controversial positions by the Bureau. Some key aspects of the new Abuse Guidelines include:
Preserving market share thresholds with no bright line safe harbors. As before, the new Abuse Guidelines contain no bright-line market share safe harbours below which the Bureau may not commence enforcement (for single firm dominance, a market share of less than 35% will generally not prompt further examination; between 35% and 50% will prompt further examination if a firm appears likely to increase its share through anti-competitive acts; and more than 50% will generally prompt further examination).
Expanding when the Bureau may investigate allegations of abuse. The new Abuse Guidelines state that the Bureau may investigate allegations of abuse of dominance in some instances even where a firm does not currently possess market power.
Joint dominance. The Abuse Guidelines provide new guidance on the degree of coordination the Bureau considers necessary for joint dominance, adopting a new approach to assess joint dominance (considering the ability of existing and potential competition to restrain firms’ market power and competition between firms) and stating that similar or parallel conduct alone is insufficient to conclude that firms are jointly dominant.
Enforcement in the absence of exclusionary conduct. The Abuse Guidelines also indicate that the Bureau may take enforcement action in some cases where conduct is not exclusionary (i.e., not only where a dominant firm engages in conduct that is predatory, exclusionary or disciplinary toward a competitor, the test for an anti-competitive act established by the Tribunal and the Federal Court).
Valid business justification. The Abuse Guidelines discuss what may constitute a valid business justification for the second branch of the test for abuse of dominance under section 79 with some examples, including reducing costs or improvements in technology. While the Federal Court of Appeal held in the leading Canadian abuse of dominance case, Canada Pipe, that proof of a valid business justification for allegedly anti-competitive conduct can offset and provide an alternative explanation for conduct, Canadian courts and the Bureau have to date provided little guidance as to what may in fact constitute a valid business justification.
January 25, 2013
The National Competition Law Section of the CBA will be holding its annual Competition Law Spring Forum in Toronto on May 28, 2013. From the CBA:
“Competition law and enforcement in Canada are in a state of flux. The impact of the Competition Bureau’s recent leadership change on future enforcement activity remains to be seen. The Bureau’s leniency program is under scrutiny as a result of recent decisions in Maxzone and Couche-Tard. And a number of important decisions are pending, including: (1) the Supreme Court of Canada’s decision in Pro-Sys which will determine the fate of indirect purchaser class actions in Canada; (2) the Competition Tribunal’s decisions in the Visa/MasterCard and TREB cases; (3) the Federal Court of Appeal’s decision in the CCS merger challenge. We invite you to come and hear leading experts discuss and debate these and other important issues.”
January 25, 2013
Steve Szentesi
Kevin Wright (Davis LLP)
(with contributions by Jonathan Gilhen – Davis LLP)
Extract from a chapter to be published in CLEBC’s
Annual Review of Law & Practice – 2013
____________________
2012 was a busy year for Canadian competition and foreign investment law, with significant developments in all major areas including misleading advertising, mergers, abuse of dominance, criminal matters (including cartels, bid-rigging and deceptive marketing) and private actions. The following is an overview of some of the key criminal developments, with summaries of other significant developments in 2012 to come over the next few days.
Criminal Code
Sentencing Amendments
In March 2012, amendments to section 742.1 of the Criminal Code (the “Code”), which were part of the Federal Government’s omnibus crime bill (Bill C-10), received Royal Assent. The changes, which came into force in November 2012, restrict the availability of conditional sentences, including for some offences under the Competition Act (the “Act”). In particular, where a person is convicted of an offence and the court imposes a sentence of less than two years, the court may order a conditional sentence (i.e., served in the community), except in certain circumstances. Those now include where an offence is an indictable offence with a maximum term of imprisonment of 14 years or life, which includes sections 45 and 47 of the Act (conspiracy and bid-rigging). These changes to the Code will impact sentencing in competition law cases (i.e., eliminate the ability for courts to impose conditional sentences in some cases). They may also influence whether cases go to trial or settle and whether individuals who are not eligible under the Competition Bureau’s (the “Bureau”) Immunity Program will cooperate with the Bureau under its Leniency Program, which, unlike the Immunity Program, requires guilty pleas as one condition.
DomFoam
(First Amended Competition Act Conviction)
In January 2012, the Bureau announced the first conviction under the Act’s amended conspiracy provisions. Domfoam International Inc. and Valle Foam Industries Inc. pleaded guilty to conspiracy under section 45 of the Act and were fined a total of $12.5 million for participating in a price-fixing conspiracy for polyurethane foam. The Bureau relied on wiretaps and search warrants in its investigation, as well as companies that cooperated with the Bureau under its Immunity and Leniency Programs.
Maxzone
(Cartel Sentencing)
In an important Federal Court decision issued in September, 2012 in the ongoing global auto parts price-fixing investigation (R. v. Maxzone Auto Parts (Canada) Corp., 2012 FC 1117), Chief Justice Crampton set the stage for the Court’s future approach to joint sentencing submissions for cartel cases. The Court’s reasons relate to its earlier decision to accept joint sentencing submissions imposing a $1.5 million fine on Maxzone in this price-fixing case (Maxzone pleaded guilty to one count of contravening the foreign directed conspiracy provision of the Act).
Several key points come out of this decision. First, parties making sentencing submissions must do more than adopt the mathematical approach to fines set out in the Bureau’s Leniency Program Bulletin, which establishes 20% of the affected volume of commerce in Canada as a starting point for fine negotiations. Second, while the Bureau’s Leniency Bulletin can be an appropriate framework for sentencing submissions, it must be followed in “letter and spirit” relating to the Code’s sentencing principles (i.e., the fundamental purpose and objectives of sentencing, principle of proportionality and aggravating and mitigating factors). Third, the Court indicated that it will require significantly more detailed evidentiary records and submissions in the future to be satisfied that a recommended sentence will not be contrary to the public interest or bring the administration of justice into disrepute. These include either an estimate of the illegal profits gained (or evidence an accused has made restitution to victims). The Court will also require a good sense of any relevant aggravating and mitigating factors (and how they influenced the jointly recommended fine) and sufficient information to determine whether the recommended sentence appropriately reflects the sentencing principles set out in the Code.
The Court also discussed individual sentencing in cartel cases, recognizing that it may be in the public interest for the Crown to agree to refrain from seeking imprisonment in some cases (e.g., directors, officers or employees of the first company to seek leniency) while at the same time indicating that subsequent leniency applicants may be asked to justify why individual imprisonment is not appropriate. Overall, this recent decision signals an increasingly stern view of cartel sentencing by the Federal Court and a caution the Court will not rubber-stamp mathematically derived sentencing submissions.
Recent Bid-rigging Cases
There have been a number of high-profile bid-rigging cases brought recently by the Bureau and Director of Public Prosecutions, many in relation to the construction industry in Quebec. A few of these cases are summarized below.
Sewer Services in Quebec
In November 2011, the Bureau announced it launched an investigation into bid-rigging (under section 47 of the Act) for municipal and provincial specialized sewer services contracts in the greater Montreal region. As of December 20, 2012, seven companies and seven individuals have been charged, of which three companies and one individual have plead guilty and received a total fine of $140,000, for the three companies, and the individual was sentenced to perform 100 hours of community service.
January 24, 2013
Steve Szentesi
Kevin Wright (Davis LLP)
(with contributions by Jonathan Gilhen – Davis LLP)
Extract from a chapter to be published in CLEBC’s
Annual Review of Law & Practice – 2013
____________________
2012 was a busy year for Canadian competition and foreign investment law, with significant developments in all major areas including misleading advertising, mergers, abuse of dominance, criminal matters (including cartels, bid-rigging and deceptive marketing) and private actions. The following is an overview of some of the key merger and Investment Canada Act developments (with summaries of other significant developments in 2012 to come over the next few days).
MERGERS & INVESTMENT CANADA ACT
CCS
On May 29, 2012, the Competition Tribunal (the “Tribunal”) concluded that the acquisition by CCS Corporation (subsequently renamed Tervita Corporation) of the shares of Complete Environmental Inc. substantially prevented competition and ordered CCS to divest the shares or assets of Complete’s wholly-owned subsidiary Babkirk Land Services Inc. (“Babkirk”). The divestiture order was stayed pending Tervita’s appeal to the Federal Court of Appeal, which was heard on December 10 and 11, 2012.
CCS is the owner of the only two operating secure landfills in North-Eastern British Columbia (“NEBC”) permitted to accept solid hazardous waste. These landfills primarily service oil and gas industry operators seeking to dispose of materials generated through drilling activities. Babkirk had secured regulatory approvals for development of a secure hazardous waste landfill in NEBC.
On January 7, 2011, CCS acquired the shares of Complete from five individuals for just over $6 million. The acquisition fell well below the financial thresholds for mandatory pre-closing notification to the Competition Bureau (the “Bureau”). On January 24, 2011, the Commissioner of Competition (the “Commissioner”) filed an application with the Tribunal seeking a remedy under the merger provisions of the Act. Although Babkirk had not yet constructed a landfill, the Commissioner contended that the acquisition was a merger that prevented, or was likely to prevent, competition substantially by eliminating the only likely imminent competitor for secure landfill services in NEBC. The vendors were also named as respondents since the Commissioner sought an order to dissolve the acquisition. Normally the Bureau’s preferred merger remedy is divestiture by the purchaser.
Following a hearing in late 2011, the Tribunal concluded that the acquisition was a “merger” that “… was more likely than not to maintain the ability of CCS to exercise materially greater market power” and which was “likely to prevent competition substantially.” The Tribunal rejected CCS’s defence that the merger was likely to achieve efficiencies that outweighed any anti-competitive effects. However, the Tribunal held that the Commissioner’s proposed dissolution remedy would be overbroad, intrusive and less effective and ordered divestiture instead.
The Commissioner is normally selective in bringing contested merger cases, with the CCS case being only the 6th contested merger decided by the Tribunal since 1986. The case reinforces that the Commissioner may pursue any merger, including one that is localized or is relatively small in terms of deal size, for up to one year after closing. The case provided an opportunity for the Tribunal to articulate its approach to an alleged prevention (as opposed to a lessening) of competition and for the application of the efficiencies defence under section 96 of the Act.
The decision illustrates that in a prevent case, an order can issue even where the parties did not expect to compete but for the merger. Here, the Tribunal found that although the vendors had intended to operate the Babkirk site as a bioremediation facility primarily, eventually they would have abandoned that plan and they (or new owners) would have competed with CCS directly by landfilling. The Tribunal also ruled that the concept of “merger” is broad and includes the acquisition of non-operational assets obtained in the development of a business.
Investment Canada Act
In January 2013, Industry Canada announced that the threshold under the Investment Canada Act for required advance review of most direct foreign acquisitions (involving investors or purchasers from WTO-member states) of control of Canadian businesses increased from $330 million to $344 million.
New SOE Guidelines
On December 7, 2012, the Minister of Industry announced that the $15.1 billion acquisition of Nexen Inc. by China National Offshore Oil Co. (“CNOOC”) and the $6 billion acquisition of Progress Energy Resources Corp. (“Progress”) by Malaysia’s Petronas had been approved under the Investment Canada Act. The approvals of these takeover bids come after the Canadian government’s rejection in 2010 of the proposed acquisition by BHP Billiton PLC of PotashCorp, which had left some observers with the impression that Canada was growing increasingly hostile to foreign investment.
Concurrently with announcing the approval of the Nexen/CNOOC and Progress/Petronas transactions, the Canadian government announced revisions to Canada’s foreign investment guidelines, which are intended to clarify the review process for investments by foreign state-owned enterprises (“SOEs”).
Under the Investment Canada Act, certain large foreign investments to acquire control of a Canadian business that exceed specified financial thresholds are subject to a review by the Minister to determine whether the transaction is likely to be of “net benefit to Canada” based on six, largely economic, factors (“net benefit to Canada” test) In addition to the review factors enumerated in the Investment Canada Act, the new SOE Guidelines outline key considerations in determining whether a proposed investment by an SOE will be of net benefit to Canada. While the “net benefit to Canada” test will still apply, the government will look at such factors as the governance and commercial orientation of the acquirer, the degree of foreign state control or influence over the acquirer, the extent to which the acquirer conforms to Canadian standards of corporate governance (such as transparency and disclosure), adherence to free market principles, and the likelihood that the new enterprise will operate on a commercial basis.
In the new SOE Guidelines, the definition of an SOE has been expanded to include not only entities owned by a foreign state, but also entities that are directly or indirectly owned, controlled, or influenced by a foreign government, potentially creating uncertainty as to when the new SOE policy regime applies.
The Minister will monitor SOE transactions throughout the Canadian economy, with a specific focus on three factors: (a) the degree of control or influence a state-owned enterprise would likely exert on the Canadian business that is being acquired; (b) the degree of control or influence a state-owned enterprise would likely exert on the industry in which the Canadian business operates; and (c) the extent to which a foreign state is likely to exercise control or influence over the state-owned enterprise acquiring the Canadian business.
The new SOE Guidelines will also target investments in the Canadian oil sands. In the future, acquisitions by foreign SOEs of Canadian oil sands companies will only be found to be of net benefit to Canada on an “exceptional basis”. This approach marks a departure from the former SOE Guidelines, which did not identify specific industries or assets that are considered more sensitive than others.
Finally, the previously announced amendments (that had yet to be implemented) to the Investment Canada Act to increase progressively the financial thresholds for a review of investments by WTO non-SOE foreign investors from $330 million (in 2012) to $1 billion in enterprise value will not apply to proposed takeovers by SOEs, which will remain at $330 million, adjusted annually, based on the book value of assets (not enterprise value).
Monthly Merger Reports
In an effort to increase transparency in its merger review process, in February 2012 the Bureau announced that it would begin publishing on its website a monthly list of completed merger reviews (“Merger List”). The Merger List will list all mergers for which a pre-merger notification was made under section 114 of the Act, a request was made for an advance ruling certificate under section 102, or both, and will also set out the names of the parties to the merger, the industry sector involved and the result of the review by the Bureau, being: (i) “ARC”, signifying issuance of an advance ruling certificate; (ii) “NAL”, signifying the issuance of a “no action letter”, which is a letter from the Commissioner confirming that he does not, at that time, intend to make an application under section 92 of the Act in respect of the merger (or proposed merger); (iii) “CA”, signifying the registration of a consent agreement with the Tribunal; and (iv) “JD”, signifying a judicial decision in respect of the merger (or proposed merger).
Prior to the Bureau’s official announcement, some stakeholders raised concerns with the publication of the Merger List, primarily on the basis that information provided by parties to the Bureau pursuant to the Act is subject to statutory confidentiality obligations under section 29, which does not have an express exception to permit such publication. Notwithstanding the concerns raised by stakeholders, the Bureau commenced publication of the Merger List in February 2012.
January 23, 2013
Steve Szentesi & Kevin Wright (Davis LLP)
Extract from a chapter to be published in CLEBC’s
Annual Review of Law & Practice – 2013
____________________
2012 was a busy year for Canadian competition and foreign investment law, with significant developments in all major areas including misleading advertising, mergers, abuse of dominance, criminal matters (including cartels, bid-rigging and deceptive marketing) and private actions. The following is an overview of some of the key misleading advertising developments (with summaries of other significant developments in 2012 to come over the next few days).
Richard v. Time
(“General Impression” Test & Disclaimers)
In Richard v. Time Inc. (2012 SCC 8), a Quebec resident received a prize mail-out relating to magazine subscription marketing leading him to believe he had won more than $800,000 (the mail-out stated he “WON $833,337.00!” when small print disclaimers disclosed that only a chance to win was being offered). He returned the mail-out, subscribed to the magazine and then requested his prize. When told he had not won, but was merely eligible to participate in a sweepstakes, he sued under the Quebec Consumer Protection Act (“QCPA”). While successful at trial, the Court of Appeal reversed and the recipient appealed to the Supreme Court.
On appeal, the Supreme Court considered the standard for the “general impression” test for misleading advertising under the QCPA. In this regard, advertising can be false or misleading, under some consumer protection legislation as well as the Competition Act (the “Act”), where a claim is literally false or the “general impression” is misleading. This “general impression” test can apply where, for example, a disclaimer fails to alter the overall misleading impression of a “headline” claim, two true claims are made but, when associated, they create a misleading general impression or material information is omitted (e.g., additional pricing, key limitations/conditions, etc.).
The Supreme Court held that the relevant consumer for the QCPA’s general impression test was a “credulous and inexperienced” consumer. Accordingly, courts should view the average consumer as “someone … not particularly experienced at detecting the falsehoods or subtleties found in commercial representations” (both a lower standard than held by the Court of Appeal in this case as well as other cases decided under the Act, where courts have generally held the relevant consumer to be an “average consumer”).
The Supreme Court in this case held that the general impression of the prize mail-out was that the grand prize had been won, which was misleading, and awarded compensatory and punitive damages. The Court also confirmed that in considering whether an advertisement is misleading the entire context, including layout and arrangement of text, must be considered and that fine print disclaimers (in this case “riddled with misleading representations”) failed to cure the otherwise misleading prize claim. Though decided under Quebec law, this case is important in that it has started a debate as to whether Canadian courts will lower the bar for the general impression test for competition law advertising cases.
Yellow Page Marketing
(Misleading Business Claims & Disclaimers)
In Commissioner of Competition v. Yellow Page Marketing, 2012 ONSC 927 (Sup. Ct.), a group of companies and individuals sent faxes designed to lead recipients to believe they were confirming online directory information for the Yellow Pages Group (“YPG”). In fact the companies, which used names and logos resembling YPG, were unrelated to YPG and used fine print disclaimers to sign-up recipients to new two-year online directory contracts with significant fees. The Ontario Superior Court reviewed the relevant law under the general civil misleading advertising provision of the Act (s. 74.01), finding that the faxes were misleading, material and that the fine print disclaimers failed to cure otherwise misleading claims. The penalties ordered by the Court included a ten-year prohibition order, compensating consumers and more than $9 million in AMPs (including more than $1 million against three individuals). This was the highest award to date in contested proceedings for a Canadian misleading advertising case.
Rogers and Rogers/Bell/TELUS Advertising Cases
(Performance Claims and Mobile Advertising)
In two of the most important advertising law developments in 2012, the Competition Bureau (the “Bureau”) challenged Rogers, Bell and TELUS in cases involving performance claims (Commissioner of Competition v. Chatr Wireless Inc., CV-10-8993-00CL (Ont. Sup. Ct.)) (“Rogers”) and price claims for “premium texting” wireless services (Commissioner of Competition v. Rogers Communications Inc., 12-55497 (Ont. Sup. Ct.)) (“Rogers/Bell/TELUS”).
In the Rogers case, the Bureau is challenging two performance claims made by Rogers in relation to its cell phone brand Chatr: that its service had “fewer dropped calls than new wireless carriers” and that customers had “no worries about dropped calls”. The Bureau argues that these claims, made to compete with new wireless entrants, were literally false in some cases (in markets where new entrants’ dropped call rates were superior) and where true, were nevertheless misleading because while giving the general impression of appreciably lower dropped call rates, any differences in performance were in reality “inconsequential and imperceptible”. The Bureau is also arguing that disclaimers used by Rogers, which included language that in the Bureau’s view would be “meaningless” to an average consumer, failed to cure the otherwise misleading general impression of the performance claims. Rogers in turn is challenging the appropriate data and methodology for performance claims made and is also making constitutional challenges to the performance claim provision of the Act (based on Charter freedom of expression arguments) and to the $10 million AMPs that may now be imposed under the Act for misleading advertising (arguing they are criminal in nature, constitute penal consequences and should be given the same procedural safeguards as criminal offences).
In the Rogers/Bell/TELUS case, the Bureau commenced additional proceedings in Ontario against Bell Canada, Rogers Communications, TELUS Corporation (the “Telecoms”) and the Canadian Wireless Telecommunications Association (“CWTA”) for alleged misleading advertising in relation to “premium texting services” (see: Competition Bureau, News Release, “Competition Bureau Sues Bell, Rogers and Telus for Misleading Consumers” (September 14, 2012)). In this second case, the Bureau is alleging that the Telecoms and CWTA facilitated the sale of 3rd party premium-rate digital content (e.g., news, advice, trivia, horoscopes, ringtones, etc.) without adequately disclosing their fees and suggested that some services were free and is seeking $31 million in AMPS and restitution for consumers. The essence of the Bureau’s claim is twofold: first, that the wireless companies made false or misleading representations to the public the general impression of which was that consumers could receive premium text messaging and other services for free (when they were in fact charged for content); and second, that claims were made that consumers were safeguarded from receiving and having to pay unauthorized charges, when the Telecoms collected and facilitated such charges keeping a percentage. The Bureau also argues that the recent lower general impression test from the Supreme Court of Canada’s decision in Richard v. Time (discussed above) should apply, alleging that the Telecoms’ claims were targeted at wireless users including “credulous, inexperienced, and vulnerable” persons, such as children.
Implications of Recent Advertising Cases
While the two telecom cases discussed above were ongoing at the time of writing, several of these cases have established new law, including lowering the bar for the “general impression” test in Quebec (which may be adopted by courts in other provinces), clarifying the meaning of “business interest” in misleading advertising cases, adding to the case law on disclaimers and illustrating some of the factors Canadian courts will consider in imposing the now more significant penalties possible for misleading advertising.
They are also a reminder of some established advertising law principles, including that courts will consider the overall context and impression of challenged advertising, that fine print or overly legalistic disclaimers may not cure otherwise false or misleading headline claims, that the misleading advertising provisions of the Act apply to product and business claims, and that a claim may violate the misleading advertising provisions of the Act where it is either literally false or the general impression is false or misleading.
Finally, these cases illustrate several important enforcement trends, including increased scrutiny of price and performance claims, challenges of fine print disclaimers, a focus on mobile devices and other new technologies, and a willingness by the Bureau to regularly seek the maximum statutory penalties for misleading advertising.
January 17, 2013
For anyone following the unusual, to say the least, story of Manti Te’o and apparent online romance fraud played on him, this may be of interest.
The Competition Bureau, together with a number of other Canadian consumer protection agencies including Consumer Protection BC, the Better Business Bureau and RCMP have published a Top Ten Scams 2013 list describing the “Scam of the Year” together with nine other types of fraud the agencies have been combatting.
Online scams described, along with warning signs, include the following entertaining medley of online ways one can get duped: advertising trolls, online romance scams, affinity fraud, curbers, computer virus fixing schemes, twisted text prizes and pretender invoices.
If nothing else, a very entertaining (if slightly disturbing) read.
For the news release and blog post see: Consumer Protection BC – Top Ten Scams 2013 – Just in case a scam is around the corner and We’re counting down the Top 10 Scams.
January 17, 2013
Yesterday the U.S. Department of Justice (DoJ) issued a business review letter concluding that it would not challenge a proposed “gainsharing” program by a New York State hospital association (the Greater New York Hospital Association).
The DoJ’s business review letter (the Canadian parallel being advisory opinions available for proposed conduct under section 124.1 of the Competition Act) is interesting in that it shows the importance of minimizing the exchange of competitively sensitive information in the context of association activities.
In this case, the hospital association sought assurance from the DoJ that its proposed program to have physicians take into account their use of hospital resources (and rewards based on shares of achieved savings) would lead to improvements in quality and efficiency and would not violate federal antitrust laws.
The specifics of the particular program in this case aside (the so-called “gainsharing” program involving some 100 hospitals), the aspect of the review letter I found interesting was the DoJ’s analysis of information exchanges. In this regard, the DoJ considered whether the proposed program would constitute a horizontal agreement among competing hospitals relating to physicians’ compensation or an information exchange between hospitals that would facilitate anticompetitive coordination to limit physician compensation (concluding that the proposed program would be unlikely to facilitate collusion or otherwise raise competitive concerns).
In making this determination, the DoJ considered the fact that the program would not involve the exchange of competitively sensitive information between participating hospitals (and would be limited to non-competitively sensitive cost and benchmark data) and would follow the DoJ/FTC antitrust safety-zone requirements set out in their Statements of Antitrust Enforcement Policy in Health Care (the “Health Care Policy Statements”), namely that the data would be at least three months old, supplied by at least five providers and appropriately aggregated.
In Canada, as in the U.S., the exchange of competitively sensitive information between competitors, such as price, cost, market, supplier or output information, particularly in the context of trade and professional associations, can raise competition law concerns (see e.g.: here).
Generally speaking, there are two potential issues that can arise from the exchange of this type of information without adequate precautions: first, that the exchange results in an agreement that violates the criminal conspiracy provisions of the Competition Act (or raises concerns under the civil agreements provision – section 90.1); and second, that an exchange may allow the Competition Bureau, a court or private plaintiff to infer the existence of illegal or problematic agreement among competitors.
In this regard, in his first public remarks, the Interim Commissioner of Competition specifically highlighted information sharing agreements among association members as a potential concern:
“… we are concerned with conduct that reduces incentives to compete vigorously. Information sharing agreements are an example of this. Competitively sensitive information exchanged among competitors who can have serious negative effects on competition, especially if these are in highly concentrated markets with relatively homogeneous product offerings. Clearly, Trade/Industry Associations must be extra vigilant in their efforts to manage and alleviate risk with respect to their activities.”
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
