Archive for the 'Competition Bureau' Category
Earlier today, the European Commission published a summary decision announcing the parties and imposing more than 82 million Euros in penalties against nine firms involved in a price-fixing cartel for mountings for windows and window doors.
According to the EC, the parties operated a cartel spanning the whole of the EEA in which they agreed on common price increases for mountings for windows and window doors, which was in place from late 1999 until mid-2007. Also according to the EC, the cartel involved coordination through trade association activities:
“At the occasion of meetings of associations in Germany in November of each year the parties regularly agreed to increase prices by coordinating the amount (percentage or percentage range) and date of the envisaged price increase. There was a common understanding that the price increase agreed for Germany at these meetings was to be applied in the entire EEA, with adaptations to the specific situation of each country to the extent necessary. In addition to the main meetings in Germany in November, regional representatives met to discuss the application of the agreed price increase to their respective territory.”
The vast majority of trade and professional associations (and their activities) serve many legitimate purposes, including promoting common interests to the public, lobbying and advocacy, research, member education and the promotion and improvement of product standards. However, because association activities by definition involve the interaction of direct competitors, they can in some cases raise serious competition law concerns under competition laws, including the Competition Act.
I have been updating my Canadian advertising and marketing law blog a bit recently, and have added a short overview of the Competition Bureau’s views about consumer rebate programs in Canada. As such, I thought this would be a good opportunity to post a short note on consumer rebates in Canada.
In September, 2009, the Competition Bureau issued Enforcement Guidelines on Consumer Rebate Promotions (the “Rebate Guidelines”). The Rebate Guidelines, which originated, in part, from the Bureau’s concern with the use of deceptive mail-in rebates (see e.g.: here), set out the Bureau’s approach to interpreting the false or misleading representations provisions of the Competition Act, Consumer Packaging and Labelling Act and Textile Labelling Act in the area of consumer rebate promotions. The Guidelines define consumer rebates as:
“Consumer rebate promotions include any type of promotion that involves a partial refund or discount from a manufacturer or retailer to consumers upon the purchase of a product. Refunds are normally paid in the form of cash or a cheque. For the purposes of this publication, ‘rebate’ is defined as excluding gift cards and other forms of credit on future purchases, given that the term ‘rebate’ can create the general impression in the minds of consumers that a portion of the price of the product will be returned to them.”
The Rebate Guidelines set out five examples of when consumer rebate promotions may violate the criminal or civil misleading advertising provisions of the Competition Act (sections 52 or 74.01) as follows:
1. Inadequate disclosure of rebate conditions, limitations or exclusions.
2. Rebates disguised as the sale price or regular price.
3. Mail-in rebates disguised as instant rebates (i.e., available at the time of purchase).
In an interesting case earlier this week, the CRTC announced that it had taken enforcement action against two India-based firms for breaching Canadian telemarketing laws under the National Do Not Call List (DNCL).
The CRTC ordered Pecon Software Ltd. and Avaneesh Software Private Limited to stop their current telemarketing practices and pay $507,000 in penalties. A parallel investigation in the United States by the Federal Trade Commission (FTC) has targeted 14 corporate defendants and 17 individuals in 6 legal filings (Pecon Software Ltd., Finmaestros LLC, Zeal IT Solutions Pvt. Ltd., Virtual PC Solutions, Lakshmi Infosoul Services Pvt. Ltd. and PCCare247 Inc., as well as a number of individual defendants).
According to the CRTC, in this scam dubbed the “Microsoft imposter” scam, telemarketers from the Indian firms would typically warn consumers that their personal computers were infected with viruses attempting to sell anti-virus software or technical support. The telemarketers allegedly claimed they were affiliated with legitimate companies, including Microsoft, Dell, McAfee and Norton, telling consumers that they had detected malware that posed an imminent threat to their computers, falsely demonstrating an infection then offering to remove the malware for fees that ranged from $49 to $450.
In making the announcement, the CRTC said:
“Foreign-based telemarketers have been put on notice that they must comply with our rules when calling Canadians,” said Andrea Rosen, the CRTC’s Chief Compliance and Enforcement Officer. “Canadians who receive these types of unsolicited calls are encouraged to file a complaint and should never give an unsolicited caller access to their computers or personal information.”
International Cooperation
According to the CRTC, it also conducted inspections as part of its investigation and worked with other international agencies including the U.S. Federal Trade Commission (see: FTC Halts Massive Tech Support Scams) and Australian Communications and Media Authority (ACMA) (see: Global action busts scammers posing as Microsoft).
The ACMA said that this scam, which targeted consumers in Canada, the United States, Australia, Ireland, New Zealand and the U.K., generated almost 10,000 calls to its Do Not Call complaint line over the past two years (and at its peak representing about 50% of all complaints it received). The FTC obtained court orders to stop six alleged tech support scams and has frozen the target firms’ assets.
The enforcement agencies involved in this case are also saying that, in an attempt to avoid detection, the telemarketers used some 80 different domain names and 130 phone numbers.
Regulation of Telemarketing in Canada
Canada’s DNCL is part of the CRTC’s Unsolicited Telecommunications Rules, which include the Telemarketing Rules, DNCL Rules and Automatic Dialing and Announcing Device Rules.
Ok I concede that lawyers are great at making (or at least trying) to make their clients and others believe that the sky is falling, so that you better retain them to advise you or else the world (and their businesses) will surely end. We have all heard many, many warnings by surely very smart, but possibly self-interested counsel, of the risks of not doing X, Y or Z.
Having said that, I came across a rather good recently published note today by David Balto talking about the “Dozen Times to Call Your Antitrust Lawyer” [subtitle: competition/antitrust and IP law issues to watch out for – my phrase]. While clearly also a call to drum up business, this note I thought was really rather good.
The OECD has published a new report on global competition law compliance entitled Promoting Compliance with Competition Law. The OECD’s new report, which is the result of a roundtable in 2011 on competition law compliance, includes submissions from more than twenty competition/antitrust enforcement authorities including Canada, as well as Australia, the EU, France, Germany, Japan, Korea, Mexico, New Zealand, South Africa, the UK and United States. Introduction:
“Over the past 20 years, courts and competition authorities have imposed fines and, in some jurisdictions, imprisonment with sharply increasing severity, yet there does not seem to be solid evidence that anti-competitive conduct – particularly cartel conduct – is declining in response. Then again, it is impossible to observe the number of undetected cartels, so it is possible that deterrence has increased. The delegates identified and assessed numerous factors that influence compliance, such as competition advocacy, financial penalties, imprisonment, leniency programs and the establishment of a culture of competition. There was general agreement that authentic corporate competition compliance programs can be helpful, but substantial variation among the delegates on whether and how such programs should be rewarded.”
For a copy of the OECD’s new report see: Promoting Compliance with Competition Law
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The Conference Board of Canada has published a new briefing entitled “Who Dimmed the Lights? Canada’s Declining Global Competitiveness Ranking” that examines Canada’s current competitiveness in light of the recent World Economic Forum’s Global Competitiveness Report 2012-2013, which ranked Canada 14th globally. Canada dropped two positions this year in the WEF’s report, with some of the critical commentary in the report including:
“Canada falls two positions to 14th place in this year’s rankings. Although Canada continues to benefit from highly efficient markets (with its goods, labor, and financial markets ranked 13th, 4th, and 11th, respectively), well-functioning and transparent institutions (11th), and excellent infrastructure (13th), it is being dragged down by a less favorable assessment of the quality of its research institutions and the government’s role in promoting innovation through procurement practices. In a similar fashion, although Canada has been successful in nurturing its human resources compared with other advanced economies (it is ranked 7th for health and primary education and 15th for higher education and training), the data suggest a slight downward trend of its performance in higher education (ranking 8th place on higher education and training two years ago), driven by lower university enrollment rates and a decline in the extent to which staff is being trained at the workplace.”
Top 10 “most problematic factors for doing business in Canada” in the WEF’s report were: an inefficient government bureaucracy, insufficient capital to innovate, inadequate access to funding, inadequately educated workforce, tax rates, tax regulations, restrictive labor practices, inadequate infrastructure, a poor work ethic and policy instability.
On September 28, 2012, the Competition Bureau announced that Irving Oil and its Quebec manager have been charged (three charges against each of the corporation and manager) for allegedly fixing gasoline prices in certain local Quebec markets in the Bureau’s ongoing Quebec gas price-fixing investigation. In making the announcement, the Bureau said:
“’These charges highlight our continued and steadfast commitment to combating domestic price-fixing cartels,’ said John Pecman, Interim Commissioner of Competition. ‘Canadians are ultimately on the losing end of secret agreements that cheat them out of their money.’
By using a number of investigative tools, including wiretaps and searches, the Bureau found evidence that in certain local Quebec markets gas retailers, or their representatives, communicated with one another to agree on the price they would charge customers for gasoline.
Thirty-nine individuals and 15 companies have now been charged with criminal price-fixing in this case. To date, 27 individuals and seven companies have pleaded guilty with fines totalling over $3 million. Of the 27 individuals who have pleaded guilty, six have been sentenced to terms of imprisonment totaling 54 months.”
Under Canadian competition law, the federal Competition Act makes the following three categories of agreements between competitors (or potential competitors) per se illegal:
1. Price-fixing agreements. Agreements to fix, maintain, increase or control the price for the supply of a product.
2. Market allocation/division agreements. Agreements to allocate sales, territories, customers or markets for the production or supply of a product.
3. Output/supply restriction agreements. Agreements to fix, maintain, control, prevent, lessen or eliminate the production or supply of a product (which is broad enough to potentially include group boycotts).
According to Reuters reporting earlier today, Irving said it was not aware of the alleged price-fixing activities involving its personnel and took steps to stop the conduct:
“Our company was not aware of these activities and, when our company became aware of them, we took immediate steps to address the situation, including disciplinary action,” spokeswoman Carolyn Van der Veen said in an email. “Our company believes that we should not be held responsible for the actions of employees who knowingly violated company policy.”
The potential risk for individuals involved in criminal price-fixing and other activities under the Competition Act has also increased, given several key recent developments that include the elimination of conditional sentences (i.e., sentences served in the community) for price-fixing offences under the Act, an increased appetite by the Bureau to seek penalties against individuals and a recent decision by the Federal Court indicating that that Court will not necessarily automatically accept sentencing submissions carving out individuals in the context of pleas.
For a copy of the Bureau’s news release and backgrounder see: Irving Oil Charged in Gas Price-Fixing Cartel and Bureau Activities.
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On September 28, 2012, the Competition Bureau published its September In Brief newsletter, which includes recent announcements of the appointment of John Pecman as Interim Commissioner of Competition, publication of the Bureau’s final Abuse of Dominance Guidelines, commencement of its new misleading advertising suit against Bell, Rogers and TELUS and update on its abuse of dominance challenge against Canada’s largest real estate board, The Toronto Real Estate Board (TREB).
The Bureau also announced a joint Internet fraud sweep together with members of ICPEN (the International Consumer Protection and Enforcement Network), which targeted deceptive and fraudulent advertising in the “rapidly growing online and mobile markets.” In making the announcement, the Bureau indicated that it was focused on undisclosed fees and hidden terms (themes consistent with its recent challenge of Bell/Rogers/TELUS – see: here):
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
