Archive for the 'Competition Bureau' Category
“Price-fixing agreements, like other forms of hard core cartel agreements, are analogous to fraud and theft. They represent nothing less than an assault on our open market economy. Buyers in free market societies are entitled to assume that the prices of the goods and services they purchase have been determined by the forces of competition. When they purchase products that have been the subject of such an agreement, they are effectively defrauded.”
(Chief Justice Crampton, R. v. Maxzone Auto Parts
(Canada) Corp., 2012 FC 1117)
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In detailed though critical reasons issued this week by the Federal Court in the auto parts price-fixing case, Chief Justice Crampton set the stage for the Court’s approach to joint sentencing submissions for future Canadian cartel cases (R. v. Maxzone Auto Parts (Canada) Corp., 2012 FC 1117).
Crampton C.J.’s reasons relate specifically to his (reluctant) decision last Spring to accept joint sentencing submissions and impose a fine of $1.5 million on Maxzone Canada for its role in the ongoing global aftermarket auto parts price-fixing investigation.
In this regard, on May 3, 2012, Maxzone Auto Parts (Canada) Corp. pleaded guilty under Canadian competition law to one count of contravening Canada’s foreign directed conspiracy offence under section 46 of the Competition Act. Chief Justice Crampton’s reasons also set out what the Court expects from future sentencing submissions.
Some of the key (if related) points from this interesting recent decision include:
Mathematical approach to sentencing. First, parties making sentencing submissions must do more than adopt the mathematical approach to fines set out in the Competition Bureau’s Leniency Bulletin (the “Leniency Bulletin”). The Leniency Bulletin sets out 20% of a cartel participant’s affected volume of commerce in Canada as a starting point for negotiations, which may be reduced by 50% for the first party that complies with all requirements of the Bureau’s Program.
The Bureau’s Leniency Bulletin can be an appropriate framework. Second, while the Bureau’s Leniency Bulletin can be an appropriate framework for sentencing submissions, it must be followed in both “letter and spirit” with regard to: (i) the fundamental purpose of sentencing and objectives set out in section 718 of the Criminal Code (the “Code”); (ii) the principal of proportionality in section 718.1; (iii) aggravating and mitigating factors in sections 718.2 and 718.21 (and related case law); and (iv) the other principles in section 718.2 (and case law). In this regard, Crampton C.J. held that “cooperation [under the Bureau’s Leniency Program] cannot so dominate the approach to sentencing as to leave virtually no meaningful role for relevant aggravating factors, other mitigating factors, and the principles of sentencing [under the Code].”
More detailed evidentiary records and submissions will be required. Third, the court held that significantly more fulsome evidentiary records and more detailed submissions would be required for the Court to be satisfied that a recommended sentence would not be contrary to the public interest or bring the administration of justice into disrepute.
The Canadian Society of Association Executives (CSAE) will be holding its annual National Conference in Ottawa on November 1-3, 2012.
I am pleased to be co-presenting a seminar on Practical Competition Law and Compliance Case Studies for Trade and Professional Associations with the co-author (Mark Katz) of our new associations book (The Competition Law Guide for Trade Associations in Canada):
“Although most association activities are benign from a competition law perspective, they can raise serious issues in a variety of circumstances that occur on a regular basis. This presentation will review the key provisions of Canada’s Competition Act relevant to trade and professional associations and offer practical guidance on how to reduce risk based on a series of practical and interactive case studies derived from actual Canadian and international examples.
The focus of the case studies will be on real-life association activities that can attract liability if not conducted in an appropriate fashion. Issues to be covered include: (i) when will a purely voluntary or suggested fee tariff/schedule become problematic; (ii) ways associations can engage in joint negotiations or advocacy initiatives on behalf of members without raising competition issues; (iii) how associations can reduce the risk of engaging in information exchanges (e.g., research or benchmarking exercises); (iv) how to structure association membership restrictions and discipline procedures; and (v) what to do to distinguish pro-competitive standard-setting from conduct that can raise competition concerns.
The Competition Bureau has updated its organizational chart with John Pecman (formerly head of the Criminal Matters Branch) as Acting Commissioner of Competition. From the Bureau:
“John Pecman is Acting Commissioner of Competition.
The Commissioner is responsible for the administration and enforcement of the Competition Act and three labelling statutes, the Consumer Packaging and Labelling Act, the Precious Metals Marking Act and the Textile Labelling Act.
Under the Competition Act, the Commissioner can launch inquiries, challenge civil and merger matters before the Competition Tribunal, make recommendations on criminal matters to the Director of Public Prosecutions of Canada (DPP), and intervene as a competition advocate before federal and provincial bodies.
As head of the Canadian Competition Bureau, the Commissioner leads the Bureau’s participation in international fora such as the Organization for Economic Cooperation and Development (OECD) and the International Competition Network (ICN), to develop and promote coordinated competition laws and policies in an increasingly globalized marketplace.
CANADIAN CASL (ANTI-SPAM LAW) PRECEDENTS
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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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September 23, 2012
I’ve been seeing an increasing flutter of updates and newsletters recently discussing the status of Canada’s new (though still unclear when) anti-spam legislation (“CASL”). So I thought I would have a poke around the web, see what Industry Canada, the CRTC, the Competition Bureau and Privacy Commissioner’s office have been up to lately and post a few thoughts on the progress of the new law that is inching along, some recent developments and practical steps that can be taken before the law is in force.
Last week the Advertising Standards Canada released its fourth annual Compliance Report on the Canadian Children’s Food and Beverage Advertising Initiative (see: Advertising Standards Canada releases 2011 Compliance Report on Canadian Children’s Food and Beverage Advertising Initiative).
The Initiative was launched by members of Canada’s food and beverage industry in 2007 in an effort to shift the landscape of advertising directed to children under 12 to the promotion of “better-for-you products”.
Under this Initiative, which includes advertising in all major media (as well as children focused media such as video, computer games and DVDs), participants have committed to either not direct advertising primarily to children under 12 or shift advertising to promote products that are “consistent with the principles of sound nutrition guidance.” The Initiative includes specific nutrition criteria (e.g., foods that reflect the dietary guidelines of Canada’s Food Guide or nutrient content claims of the Canadian Food Inspection Agency’s Guide to Food Labelling and Advertising). Participants in this initiative have also agreed to certain other commitments, such as reducing the use of 3rd party licensed characters used to promote non-Initiative approved products, not advertising in elementary schools or paying for product placements in programs directed at children.
According to the ASC, some participants have stopped child-directed advertising altogether (the 19 food and beverage company participants include Burger King, Campbell’s, Coke, General Mills, Hershey, Kellogg, Kraft, Mars, McDonald’s, Nestle, Pepsi, Post, Unilever and Weston). Others have launched new “better-for-you” advertising initiatives. No product in the ASC’s Initiative is more than 200 calories and every meal is less than 600 calories.
The regulation and self-regulation of food and children’s advertising and labeling is governed in Canada by, among other things, the federal Competition Act, Food and Drugs Act and Consumer Packaging and Labelling Act, as well as the Canadian Food Inspection Agency’s Guide to Food Labelling and Advertising and the ASC’s Broadcast Code for Advertising to Children and Canadian Code of Advertising Standards (which contains specific rules relating to advertising for children).
For a copy of the ASC’s new report see: Canadian Children’s Food & Beverage Advertising Initiative.
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On September 20, 2012, the Competition Bureau issued new final Abuse of Dominance Guidelines (see: Competition Bureau Issues Abuse of Dominance Guidelines).
The Bureau’s new Guidelines replace its former 2001 Guidelines and are the result of some fairly significant public consultations, including comments from the Canadian and U.S. competition/antitrust law bars and criticism for, among other things, providing significantly less guidance than in the past (see: here).
The Bureau’s new Abuse of Dominance Guidelines also replace a number of final and draft sector and conduct specific guidelines and bulletins (the Draft Enforcement Guidelines on Abuse of Dominance in the Airline Industry, The Abuse of Dominance Provisions as Applied to the Grocery Sector, Information Bulletin on the Abuse of Dominance Provisions as Applied to the Telecommunications Industry and Predatory Pricing Enforcement Guidelines).
Some of the aspects of the Bureau’s new Guidelines that caught my eye include:
Length. The most striking feature of the new Guidelines is their length – they are substantially shorter and provide significantly less analysis and examples compared to the former Guidelines. Gone as well is the prior appendix summarizing Canadian abuse of dominance cases to date, which had included summaries of the relevant facts, markets, anti-competitive acts and remedies ordered (or negotiated) in abuse of dominance cases since Canada’s modern abuse of dominance provisions were introduced in 1986.
Absence of bright-line safe harbours. The new Guidelines provide little comfort around market share thresholds for single or joint dominance. In this regard, the Bureau takes the position, with respect to single firm dominance, that a market share of less than 35% will generally not prompt further examination; a market share between 35% and 50% will generally only prompt further examination if it appears that a firm is likely to increase its market share through the alleged anti-competitive conduct within a reasonable time; and a market share of more than 50% will generally prompt further examination. With respect to joint dominance, the Bureau takes the position in the new Guidelines that a combined market share of 65% or more will generally prompt further examination. While the Bureau has raised the threshold over which it will generally more closely examine conduct (from 35% to 50%), the new final Guidelines do not adopt recommendations made during the comment period to adopt bright-line safe harbours below which it would not commence enforcement. In this regard, the Bureau has essentially preserved its position from its previous 2001 Guidelines that it could conclude that market power exists below 35% (though it is difficult to see the circumstances where this would be so).
Potential for investigation in the absence of dominance. Despite criticism from some during the comment period, the Bureau has retained language in the final Guidelines that it may investigate abuse of dominance allegations even where a firm does not “presently appear to have market power.” The Bureau also states: “While the Bureau will not commence an application under section 79 of the Act where a firm does not presently appear to have market power, the Bureau will generally investigate allegations of abuse of dominance if it appears a firm is likely to obtain market power through an alleged practice of anti-competitive acts within a reasonable period of time.” As has been pointed out by some commentators, it is not clear where the authority for this approach originates given that the first element under section 79 requires that one or more firms substantially or completely control a market (or markets) – i.e., the requirement is current, not prospective, market power. It would also seem that at least one possible obvious result could be smaller firms (with shares under 35%) facing a Bureau investigation where the Bureau’s view was that alleged anti-competitive acts could lead to market power within a “reasonable period of time”. This aspect of the final Guidelines would both seem to markedly expand the circumstances in which the Bureau may take enforcement action and also provide significantly less comfort to smaller firms that, while they may not yet possess anywhere near the market presence to be reasonably considered dominant, may be engaged in vigorous competitive behavior that generates complaints or Bureau attention.
The Competition Tribunal has issued its decision in the TREB abuse of dominance case responding to TREB’s attempt to have a Notice of Constitutional Question heard by the Tribunal.
In refusing to “entertain” TREB’s Notice, which TREB attempted to file with the Tribunal on August 24th (and which the Tribunal refused to accept for filing – see: here), the Tribunal held that the constitutional issues raised by TREB should not be heard on the basis that it contravened the Tribunal’s scheduling order (made on consent), there was no justification for the delay (and that TREB had failed to offer any satisfactory explanation for a breach of the order) and that a disruption of the hearing was likely.
TREB’s Notice challenged the constitutionality of the order sought by the Commissioner of Competition under Canadian competition law, including based on the regulated conduct defence (i.e., that the regulated conduct defence should apply because real estate brokers and agents in Ontario are subject to the provisions of the Real Estate and Business Brokers Act).
The regulated conduct defence or “RCD”, which is now partially codified under section 45(7) of the Competition Act, is one of a number of defences and exceptions that, when met, can apply to provide immunity from the application of the Act. In particular, the RCD can apply where conduct that may otherwise be subject to the Competition Act is either mandated or authorized by validly enacted provincial or federal legislation (though does not provide immunity merely because an industry is regulated generally, or there is authorization for conduct that is not subject to challenge under the Act).
For a copy of the Tribunal’s decision see: Commissioner of Competition v. Toronto Real Estate Board.
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In what can only be described as a growing war against telecom advertising in Canada, the Competition Bureau announced on September 14, 2012 that it began proceedings in Ontario Superior Court against Bell Canada (“Bell”), Rogers Communications (“Rogers”), TELUS Corporation (“TELUS”) and the Canadian Wireless Telecommunications Association (“CWTA”) for alleged misleading advertising in relation to “premium texting services” (see: Competition Bureau Sues Bell, Rogers and Telus for Misleading Consumers: Bureau Seeks Customer Refunds and $31 Million in Penalties).
The Bureau is seeking both the maximum civil penalties available under the Competition Act (the “Act”) against Bell, Rogers and TELUS, as well as full restitution for consumers (amendments to the Act in 2009 both significantly increased the monetary penalties for misleading advertising and introduced a new restitution penalty). The Bureau is seeking a $1 million AMP against the CWTA.
According to the Bureau’s allegations, Bell, Rogers and TELUS (together with the CWTA) facilitated the sale of 3rd party premium-rate digital content – for example, news, advice, alerts, trivia quotations, horoscopes and ringtones – without adequate disclosure of their fees and suggestions were made in advertising for these products that the services were free.
In making the announcement the Bureau said:
“’Our investigation revealed that consumers were under the false impression that certain texts and apps were free,’ said Melanie Aitken, Commissioner of Competition. ‘Unfortunately, in far too many cases, consumers only became aware of unexpected and unauthorized charges on their mobile phone bills.’ The premium-rate digital content in question can cost up to $10 per transaction, and up to $40 for a monthly subscription, rates over and above standard text messaging plans.”
The premium 3rd party content was marketed through free wireless apps and online, and have been the subject of previous consumer studies (see: Paying a Premium: Consumers and Mobile Premium Services, a Public Interest Advocacy Centre report) and critical commentary (see here). The 2011 PIAC report found, among other things, that consumer premium mobile service problems were under-detected and underreported, that the industry often dismisses complaints and no agency tracks or handles related complaints (leading to a recommendation for measures to improve consumer protection in relation to premium mobile services).
This is also the most recent case is the latest in a series of high profile advertising law challenges made by the Bureau against Bell (price claims and disclaimers; see here and here), Nivea (performance claims and the general impression test; see: Nivea), Yellow Page Marketing (misleading business claims and disclaimers; see: here, here and here) and the ongoing Rogers case (performance claims, the general impression test and disclaimers; see: here).
The Bureau’s Claim & General Impression Test
The thrust of the Bureau’s Statement of Claim under Canadian competition law is twofold: first, that the wireless companies made false or misleading representations to the public online and over their wireless networks the general impression of which was that consumers could receive premium text messaging and other services free (when they were in fact charged for the content); and second, that claims were made that consumers were safeguarded from receiving and having to pay unauthorized charges, when in fact the wireless companies collected and facilitated such charges keeping a portion.
In this regard, in Canada the general misleading advertising provisions of the Act can be violated where claims are either literally false or convey a false or misleading general impression.
Interestingly, the Bureau has also imported the recent (and lower) general impression test from the Supreme Court of Canada’s decision in Richard v. Time, alleging that the telecoms’ false or misleading representations were targeted at wireless users, including “credulous, inexperienced, and vulnerable” persons, such as children.
The CWTA’s News Release and Control
In the CWTA’s news release, it indicates that it had in fact contacted the Bureau last year to investigate potential remedies for non-compliant advertising by companies utilizing Common Short Codes (and offer assistance in pursuing potential remedies), the Bureau chose instead to pursue litigation against the CWTA and the defendant telecos, that wireless carriers do not in fact create or control text messaging services (but rather only manage the billing for 3rd party creators and operators) and that the Bureau’s actions could disrupt Canadians’ access to text messaging services.
The control point made by the CWTA is an interesting, if not entirely settled point (i.e., in Canada, the degree to which a party, such as an ISP, must be linked to a false or misleading claim in order to be liable remains subject to debate).
In its Claim, the Bureau emphasizes the wireless companies’ involvement and control of the delivery of text messaging services, through third parties, alleging that the defendants are “far from being passive conduits” for the distribution of text messaging services, but rather provide third party providers with “privileged access” to their networks and the necessary infrastructure to deliver services (while collecting related revenues). According to the Bureau, the entire model for delivery of text messaging services through Short Codes and third parties has been established and is administered by the defendants, relying on their active participation.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
