Archive for the 'Competition Bureau' Category
January 15, 2013
In my inbox this morning, from one of the services I subscribe to, was a very good note on buying groups and U.S. antitrust law (Ten Practical Counseling Tips for Joint Purchasing Without Violating the Antitrust Laws) by Venable LLP.
This rather good and practical note discusses a recent DoJ business review letter for STARS Alliance LLC (an association of nuclear utility operators) and the application of U.S. antitrust law to joint purchasing activities by competitors. In addition to an overview of the potential application of section 1 of the Sherman Act to concerted purchasing activities, this note also includes a number of best practices for joint purchasing activities to mitigate potential competition/antitrust law risk.
In reading the note, I thought that many of these best practices were also good counsel for joint purchasing activities under Canadian competition law including: (1) consult with antitrust counsel prior to establishing a joint purchasing program and periodically throughout the process to ensure compliance with the antitrust laws; (2) for trade associations, participation in the joint purchasing arrangement should be available to all association members and should not be limited by the size, type, or location of a member; (3) the program should not impose minimum purchasing requirements on members; (4) joint purchasing should not be used to raise, lower, or stabilize prices (or boycott suppliers); (5) any meetings of a joint purchasing group should have an agenda and minutes; (6) all discussions should be limited to the purposes of the joint purchasing group; (7) antitrust counsel should be present at meetings where competitively sensitive information is discussed; and (8) members should not share competitively sensitive information or enter any agreement or understanding on prices or other competitive conduct in the downstream market.
In Canada, since the Competition Act was amended in 2009, section 45 of the Competition Act (Canada’s equivalent to section 1 of the Sherman Act which deals with hard-core conspiracy agreements among competitors) is now focused on price-fixing, market allocation and output restriction agreements among competing suppliers. As such, the principal competition law risks associated with buying groups in Canada are generally speaking three-fold:
1. That a buying group may possess sufficient buying power (i.e., monopsony power) to substantially lessen competition in the relevant upstream purchasing market (see e.g., the Competition Bureau’s discussion of buying groups in its Competitor Collaboration Guidelines), thereby raising issues under section 90.1 of the Competition Act (the civil agreements provision).
January 12, 2013
A recent settlement between the U.S. Department of Justice (DoJ) and an Oklahoma chiropractors association (the Oklahoma State Chiropractic Independent Physicians Association) shows the potential risk of association collective bargaining in the absence of competition law immunities/exceptions.
On January 10th, the DoJ announced that it had reached a settlement with this chiropractors association that will require the association to stop jointly determining prices and negotiating contracts with insurers on behalf of competing chiropractors in Oklahoma. According to the DoJ, the association, representing approximately 45% of the state market, and its executive director negotiated at least seven contracts between chiropractors and insurers that set prices for chiropractic services, with the effect of consumers having to paying higher fees in Oklahoma. The DoJ also took issue with collective steps by the association’s chiropractors to suspend pre-existing contracts with insurers and stop offering insurers incentives or rebates. In making the announcement, the DoJ said:
“By jointly negotiating fees on behalf of competing chiropractors, the association and its executive director increased the prices that consumers paid for chiropractic services in Oklahoma. … Today’s settlement promotes competition among Oklahoma chiropractors and prevents the association and its executive director from engaging in illegal conduct that caused consumers to pay more for their health care.”
Some of the specific allegations made by the DoJ in its civil section 1 Sherman Act complaint related to a membership requirement for association members to authorize the association to contract with 3rd party insurers, terminate existing contracts with insurers, stipulate a minimum reimbursement floor for chiropractors and agree not to pay incentives or rebates (e.g., waive deductibles or co-pays). For example, the association’s website stated: “[the association] concentrates the power of [its] state chiropractic physicians into one group. Through [the association], a chiropractor can maintain an individual practice while associating with other chiropractors to increase contract-negotiating power”. The DoJ also took the position that the defendants’ joint negotiation activities in this case were not ancillary to any pro-competitive purpose or reasonably necessary to achieve any efficiencies.
CANADIAN CASL (ANTI-SPAM LAW) PRECEDENTS
Do you need a precedent or checklist
to comply with CASL (Canadian anti-spam law)?
We offer Canadian anti-spam law (CASL) precedents and checklists to help electronic marketers comply with CASL. These include checklists and precedents for express consent requests (including on behalf of third parties), sender identification information, unsubscribe mechanisms, business related exemptions and types of implied consent and documenting consent and scrubbing distribution lists. We also offer a CASL corporate compliance program. For more information or to order, see: Anti-Spam (CASL) Precedents/Forms. If you would like to discuss CASL legal advice or for other advertising or marketing in Canada, including contests/sweepstakes, contact us: contact.
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January 9, 2013
Last Friday, Industry Canada released highly anticipated (well at least in Internet, advertising and competition law circles) new draft regulations relating to the impending new Canadian anti-spam legislation (CASL). The new draft regulations, among other things, expand on some key terms in the legislation, clarify some exceptions existing in the legislation and add several new exceptions. These include sending commercial electronic messages to enforce a legal right, an exception for some types of referrals and for electronic communications sent within a company (or between companies in an existing business relationship).
January 9, 2013
The Competition Bureau has announced that the pre-merger notification size of transaction threshold for 2013 has been increased to $80 million (increased from the previous $77 million). The new size of transaction threshold will come into effect on publication in the Canada Gazette.
Mergers are notifiable in Canada where they involve the acquisition of an operating business in Canada, are one of five specified types of transactions set out in the Competition Act, exceed the prescribed thresholds under the Act and do not fall within any exception. With respect to pre-merger notification thresholds, a transaction must exceed both the “size of parties” and “size of transaction” thresholds.
January 6, 2013
The ABA’s Section of International Law has published its December, 2012 edition of “Hot Topics” in International Antitrust Law, with a short but very interesting discussion of the ongoing auto parts price-fixing investigation: “Lessons to Be Learned from the Antitrust Division’s Criminal Investigation of the Auto Parts Industry” (by J.M. Driscoll-Chippendale of Sheppard Mullin).
Overview:
“The U.S. Department of Justice, Antitrust Division closed another record- breaking year of criminal enforcement in 2011-2012 based in part on its success in prosecuting both companies and individuals in what is known as the “auto parts investigation.”
The origins of the investigation were not particularly exceptional. On February 24, 2010, as most of the automotive industry focused on Toyota President Akio Toyoda’s congressional testimony about safety and recall issues, the FBI and the Division executed search warrants on the U.S. subsidiaries of three auto parts manufacturers—Denso, Yazaki International and Tokai Rika—for allegedly violating Section One of the Sherman Act. But these three raids spawned what has become the largest cartel investigation in the Division’s history with a rumored 64 parts currently under investigation.
The auto parts investigation has exposed a decade-old “keiretsu” of price-fixing and project allocation among some of the most venerable suppliers in Japan. To date, the Division has collected nearly $800 million in fines from its investigation with Yazaki alone paying $470 million. In addition to the corporate penalties, 11 individuals have been prosecuted and received sentences ranging from a year and a day to two years for their respective roles in the cartel.”
December 28, 2012
I am pleased to be a panelist for an upcoming Canadian/U.S. advertising law webinar hosted by Strafford on January 8, 2013: Key Canadian Advertising and Competition Law Compliance Strategies.
Description
The Canadian Competition Act contains civil and criminal prohibitions on misleading representations and regulates specific types of advertising and marketing practices. Violations can lead to “administrative monetary penalties” of up to $10 million and court orders to cease conduct and compensate consumers (restitution).
The Competition Bureau has ramped up enforcement efforts. Recent Bureau and private litigation challenges include price and performance claims, use of disclaimers and the application and scope of the “general impression test”. Developments include increased sectoral regulation and federal anti-spam legislation.
To effectively minimize legal risk, marketers and advertisers in Canada need to know the basic rules that apply to price and performance claims, sales and other promotions (including contests), disclaimers, electronic marketing and the enforcement agencies’ evolving approach to new technologies.
Listen as our panel of Canadian and U.S. attorneys provide a guide to important competition compliance rules for counsel to companies and associations conducting advertising and marketing operations in Canada. Panelists will review current litigation and Competition Bureau enforcement developments and provide practical compliance guidelines to avoid triggering allegations of misleading representations.
The panel will review these and other key questions: what types of representations are currently under heavy scrutiny by the Competition Bureau?; how should marketers prepare for the federal anti-spam legislation expected in 2013?; what kinds of safeguards are needed to ensure that price, performance or comparative claims or the use of disclaimers do not violate the Competition Act?
December 27, 2012
I’ve been thinking lately about writing a short note on Competition Act remedies and how the Act can be used as a strategic tool, partly from working on a few recent files with general commercial counsel who tend to ask: “what will we get and how do we get there using competition law”?
I’ve also grown to think of the Competition Act over the past few years as a collection of tools that can be used for strategic purposes (e.g., in settlement negotiations) or in an effort to achieve certain types of remedies for clients. In other words, thinking about remedies first and the best types of competition law tools to get there.
So, with that said, the following is a short overview of Competition Act penalties and remedies (and a few of the ways the Act can be used as a strategic tool, either on its own or with other proceedings or strategies):
1. As a general matter, the Competition Act contains both civil provisions and criminal offences, and so the potential penalties/remedies vary considerably depending on the particular provision and whether a criminal offence or civil reviewable matter.
2. Competition Bureau complaints are possible under all of the provisions of the Act, by consumers or competitors (and may be filed in a number of ways).
3. Under the criminal offences of the Act (e.g., criminal conspiracy agreements, bid-rigging, deceptive telemarketing, etc.), potential penalties include fines and/or imprisonment. The Bureau also sometimes seeks so-called “prohibition orders” for conduct to stop, which is one peculiar feature and remedy available to the Bureau.
December 21, 2012
The National Centre for Business Law will be hosting an upcoming seminar on Libor on January 8th entitled: “The World’s Most Important Number: How a Web of Incentives, Hierarchies and Legal Compliance Cultures Conspired to Undermine Libor”, with guest speaker Eric Talley, Rosalinde and Arthur Gilbert Professor of Law and Faculty Director, Berkeley Center for Law, Business and the Economy.
From the National Centre for Business Law:
“To many observers, the recent scandal surrounding manipulations of the London Interbank Offering Rate (LIBOR) may go down as one of the most significant and far reaching events associated with the global financial crisis. Literally hundreds of trillions of dollars’ worth of global financial contracts – ranging from mortgages to credit cards to corporate debt securities to financial derivatives – hinge critically upon LIBOR to peg the financial obligations of the parties. This essay offers some preliminary thoughts on how best to reorganize and design benchmark financial measures in the presence of self-interested and often short-sighted regulators, participating banks, and general market participants. Given these constraints, should we impose further top-down regulation on the rate-setting process at all, and if so, how? Should we instead depend on ex post liability to provide incentives, and if so, how would such a liability system work? Or, should we limit intervention to identifying more reliable market-mediated alternatives to LIBOR — ones that would be less susceptible to manipulation, but also less responsive-to-government-regulatory-policies?”
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
