Archive for the 'Competition Bureau' Category
In the most noteworthy Canadian competition/antitrust law development today, the Competition Bureau announced that a settlement (consent agreement) had been reached in this case, one of two contested mergers in the past few years in Canada (together with the recent CCS hazardous landfill case which was recently decided by the Competition Tribunal and is currently on appeal).
This case, which was to scheduled to be heard in early November before the Competition Tribunal (see: here and here) was noteworthy for being one of only two contested mergers currently underway in Canada and for representing the first challenge, if it had proceeded, of agreements (in this case joint venture agreements between Air Canada and Continental) under Canada’s recently enacted civil agreements provision of the Competition Act (section 90.1 – which, together with section 45, comprises Canada’s new two-track conspiracy/cartel regime).
The Bureau had been challenging three existing Air Canada / Continental “coordination agreements” under section 90.1 of the Competition Act, under which the Bureau can apply to the Competition Tribunal for remedial orders where agreements between competitors prevent or lessen (or are likely to prevent or lessen) competition substantially in one or more relevant markets.
There has not yet been a contested section 90.1 case since this new “civil agreements” provision came into force (which is thought may apply to a range of commercial agreements that, while they may not constitute “hard core” cartel type agreements under section 45 of the Act – i.e., price-fixing, market division/allocation and output restriction agreements – may nevertheless prevent or lessen competition substantially in some cases).
While it is thought that the new section 90.1 may apply, in some instances, to joint venture, franchise, licensing, information exchange and research and development agreements, among others, where competition is substantially impacted, the boundaries of section 90.1 now remain as yet unknown and untested.
“In the 2002 film Minority Report, Steven Spielberg imagined a world in which companies use biometric technology to identify us and serve us targeted ads. Ten years later, that vision is coming closer to reality. Having overcome the high costs and poor accuracy that once stunted its growth, one form of biometric technology – facial recognition – is quickly moving out of the realm of science fiction and into the commercial marketplace.
Today, companies are deploying facial recognition technologies in a wide array of contexts, reflecting a spectrum of increasing technological sophistication. At the simplest level, the technology can be used for facial detection; that is, merely to detect and locate a face in a photo. Current uses of facial detection include refining search engine results to include only those results that contain a face; locating faces in images in order to blur them; ensuring that the frame for a video chat feed actually includes a face; or developing virtual eyeglass fitting systems and virtual makeover tools that allow consumers to upload their photos online and “try on” a pair of glasses or a new hairstyle.”
(U.S. Federal Trade Commission, Report,
Facing Facts: Best Practices for Common Uses of Facial Recognition Technologies)
___________________
For those who have seen the Tom Cruise film Minority Report, you will surely remember the scene where Tom Cruise cruises through Gap and gets targeted ads directed at him. I can’t quite recall if this was an accelerated version of geo targeted advertising or facial recognition (or be sure that I could decode the technology in any event).
In any event, that was the first thing that came to mind when I saw that the U.S. Federal Trade Commission has just published a new staff report yesterday on advertising and privacy issues connected to facial recognition technologies – called: Facing Facts: Best Practices for Common Uses of Facial Recognition Technologies – and sure enough the lead-in to the report describes facial recognition technology, like that depicted in Minority Report, becoming a reality.
In issuing the new report, the FTC said:
“The Federal Trade Commission today released a staff report “Facing Facts: Best Practices for Common Uses of Facial Recognition Technologies” for the increasing number of companies using facial recognition technologies, to help them protect consumers’ privacy as they use the technologies to create innovative new commercial products and services.
Facial recognition technologies have been adopted in a variety of contexts, ranging from online social networks and mobile apps to digital signs, the FTC staff report states. They have a number of potential uses, such as determining an individual’s age range and gender in order to deliver targeted advertising; assessing viewers’ emotions to see if they are engaged in a video game or a movie; or matching faces and identifying anonymous individuals in images.
Facial recognition also has raised a variety of privacy concerns because – for example – it holds the prospect of identifying anonymous individuals in public, and because the data collected may be susceptible to security breaches and hacking.”
The FTC’s new report makes a number of recommendations for companies utilizing facial recognition technologies for advertising including designing services with consumer privacy in mind; developing reasonable security protections for information collected (and policies for determining what information to keep and discard); and evaluating the sensitivity of information when developing facial recognition related products (e.g., digital signs that use facial recognition technology is recommended not to be set up in places where children may be targeted).
The report also makes a number of other recommendations, including in relation to notice, disclosure (i.e., what data will be collected and how it will be used), choice to participate (or opt out) and affirmative consent in some cases.
The American Antitrust Institute (aai) has published a new working paper entitled “Private Recoveries in International Cartel Cases Worldwide: What do the Data Show”?, which includes data on private actions in Canada.
Abstract:
“Despite being around for more than a century in the United States, the role played by ‘treble damages suits’ in cartel enforcement is controversial … Some think of them as exemplars of a hyper litigious society, while others perceive them as essential elements in a rational cartel-enforcement program. In the EU and other jurisdictions outside the United States, the desirability and ideal design of private rights of action are currently matters of intense debates … The purpose of this paper is to examine the size and role played by private damages recoveries in antitrust suits directed at contemporary hard-core international price-fixing cartels. After discussing the data source for this paper, I then describe the amounts and trends in U.S. settlements in private antitrust suits since 1990, the dominance of U.S. cases in the world, the extent to which private suits follow government investigations, and the severity of private recoveries relative to affected sales and to damages caused by the cartels. The last ratios can be used to judge the ex post deterrence power of current monetary cartel penalties. This paper elaborates and extends a book chapter by the author …”
Some of the Canadian data in this recent aai paper include statistics showing cartel damages between 1990 and 2012 of more than $436 million (second to the U.S.), that nearly all private competition/antitrust suits in Canada are follow on suits following U.S. actions (only 10 of the 130 sample Canadian recoveries were in relation to solely non-U.S. actions), the U.S. is the leader in nominal settlement and restitution amounts representing 93% worldwide (with Canada representing 1% and the rest of the world 6%), that Canada is relatively severe in penalties imposing a median amount of fines around 15% (median fines of about 17.5% for global cartels). This study, however, appears to confuse somewhat penalties imposed under the Competition Act (e.g., guilty pleas) with private civil action settlements under the Act. Nevertheless, it includes rather a lot of information and data.
Reading some of the recent coverage of the global LIBOR price-fixing investigation made me think about how this case illustrates the sometimes subtle distinction between legitimate and anti-competitive industry “regulation” by associations.
For example, in this particular case, the U.K. Treasury announced today that it had accepted all of the recommendations of an independent review of the LIBOR benchmark, which will include the removal of the British Bankers’ Association (the “BBA”) as the “operational LIBOR administrator” (see also: Libor to be regulated ‘without delay’). LIBOR regulation is, therefore, set to be shifted away from the BBA (a trade association comprised of UK banking and financial services firms) to a new legislatively authorized Financial Conduct Authority.
Specific changes are to include: bringing LIBOR activities within the scope of statutory regulation (Including the submission and administration of LIBOR); creating a new criminal offence for misleading statements in relation to benchmarks, including LIBOR (and amending the language for existing offences); and giving the new Financial Conduct Authority specific power to make rules requiring banks to submit to LIBOR (including a code of conduct).
While the conduct in this specific case, LIBOR and the resulting competitive effects (or potential effects) are all clearly complex, and any wrongdoing not established, the case seemed to me as I said to raise the issue of when an association may assume an industry “regulatory” role and when industry association coordination, rules or barriers may raise competition/antitrust concerns.
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).
The Brookings Institution has published a very interesting new article on the proposed acquisition by CNOOC (China National Offshore Oil Corporation) of Nexen in Canada, which discusses, among other things, some of the possible rationales for Chinese interest in unconventional oil assets in Alberta including increasing reserves and production (North America now being the “epicenter” of unconventional upstream oil and gas mergers), a desire to acquire technological and operational expertise to develop China’s own domestic shale gas reserves and to diversify political risk. I thought this was a rather good commentary on the proposed CNOOC/Nexen deal (the Investment Canada Act review for which was recently extended by another 30 days for a national security review). This recent Brookings article also discusses CNOOC’s failed bid for Unocal. For a copy of this Brookings Institution note authored by Erica Downs see: China, Iran and the Nexen Deal.
____________________
For more information about our regulatory law services contact us: contact
For more regulatory law updates follow us on Twitter: @CanadaAttorney
Upcoming Canadian Bar Association National Competition Law Section Events:
1. The Reviewable Matters/Unilateral Conduct Committee of the CBA’s National Competition Law Section and the The Pricing Conduct Committee of the International Committee of the ABA Section of Antitrust Law present: Canadian Pricing Law – Wednesday, October 24, 2012 – 12:00 – 1:30 pm ET – 9:00 – 10:30 am PT – Details and Registration.
2. The Economics & Law Committee of the CBA’s Competition Law Section and the ABA’s Economics Committee present: Recent Developments in Two-Sided Markets in US and Canada – Tuesday, October 30, 2012 – 12:00-1:15 pm ET – 9:00-10:15 PT – Details and Registration.
3. The Criminal Matters Committee of the CBA’s Competition Law Section and the ABA Section of International Law present: Cartel Enforcement in Smaller Jurisdictions – Issues and Challenges – November 6, 2012 (1 p.m. – 2:30 p.m.) – Details and Registration.
For more information see: National Competition Law Section.
The National Competition Law Section of the Canadian Bar Association has published a new issue of its Competition Law Review (which is now also available in a searchable format online).
This new issue includes articles on The Competition Act of 1986, Competitor Agreements: Interpreting Criminal Conspiracy in a Blended Criminal-Civil Regime, Section 36 of the Competition Act, Abuse of Dominance in Canada: Reflections on 25 Years of Section 79 Enforcement, The Treatment of Vertical Price Restraints under the Competition Act, The Evolution of Vertical Distribution Practices under the Competition Act, 25 Years of Merger Review in Canada, The Evolution of Canada’s Pre-Merger Notification Regime (1986-2012), Foreign Investment Screening under Canada’s Investment Canada Act, Misleading Advertising and Deceptive Marketing Practices under the Federal Competition Act, A Quarter Century of the Competition Tribunal and Economics and Canadian Competition Policy.
From the CBA:
“Volume 25, Issue 2 is a special edition devoted to a retrospective on 25+ years of the Competition Act and the Investment Canada Act. Leading members of the bar, including four former Commissioners, have authored high quality papers taking an in-depth look at the substantive and procedural development of those statutes. We trust that you will find them informative, thought-provoking and enjoyable.”
For a copy see: Canadian Competition Law Review (Fall 2012)
____________________
For more information about our regulatory law services contact us: contact
For more regulatory law updates follow us on Twitter: @CanadaAttorney
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
