Archive for the 'Competition Bureau' Category
On August 7, 2012, hearings in the landmark Canadian misleading advertising case Commissioner of Competition v. Rogers Communications Inc. began.
The case, the first constitutional test of increased “administrative monetary penalties” or “AMPs” under the Competition Act (the “Act”) for misleading advertising, promises to be a bit of a battle between the Competition Bureau (the “Bureau”) and Rogers in relation to a few key aspects of Canadian advertising law.
The case relates to certain performance claims made by Rogers in connection with its new cell phone brand Chatr, the effectiveness of disclaimers (like other recent high-profile Canadian advertising cases) and, perhaps the issue most likely to capture public attention, whether the potentially significant civil penalties now possible for misleading advertising are constitutional.
The Bureau is principally taking aim at two claims made by Rogers: that its (at the time) new Chatr cell phone brand had “fewer dropped calls than new wireless carriers” and that customers had “no worries about dropped calls”. According to the Bureau these claims, made to compete with new wireless entrants Mobilicity, Public Mobile and Wind Mobile, were either literally false in some cases (in markets where new entrant cell phone companies’ dropped call rates were superior to Rogers) or, where true, misleading (by conveying the general impression of appreciably lower dropped call rates, when any differences were in reality “imperceptible” to consumers).
The Bureau has also taken the position that certain disclaimers used by Rogers were ineffective in altering the general impression of its performance claims, including the view that some technical statements made by Rogers in disclaimers would be meaningless to the average consumer. For example, some Rogers disclaimers included statements such as: “Based on: cell site density; quality of indoor and underground reception; and seamless call transition when moving out of zone”.
Publications: OECD Policy Roundtable Report: Economic Evidence in Merger Analysis – Including Canada
The OECD has issued a new Policy Roundtable report entitled: Economic Evidence in Merger Analysis, which includes a discussion of Canada.
Abstract:
“The OECD Competition Committee debated economic evidence in merger analysis in February 2011. This document includes an executive summary of that debate and the documents from the meeting: a background note by Prof. Mike Walker for the OECD and written submissions: Austria, Brazil, Canada, Chile, China, Denmark, Finland, France, Germany, Greece, Hungary, Indonesia, Israel, Japan, Korea, Mexico, Netherlands, New Zealand, Portugal, Romania, Russian Federation, South Africa, Sweden, Switzerland, Chinese Taipei, Turkey, United Kingdom, United States, the European Union, and BIAC as well as an aide-memoire of the discussion.
On July 30, 2012, the Competition Bureau announced that the Corporate Research Group Ltd. (CRG) has pleaded guilty to a criminal charge of bid-rigging for federal government contracts in relation to real estate advisory services and was fined $125,000. In making the announcement the Bureau reflected its continuing focus on criminal competition law matters and reliance on its Immunity and Leniency Programs:
“The Bureau’s investigation benefited from cooperation under the Bureau’s Immunity and Leniency Programs, which create incentives for parties to address their criminal liability by cooperating with the Bureau in its ongoing investigation and prosecution of other alleged cartel participants.
Cracking down on cartels, including bid-rigging offences, is a top priority for the Bureau. Under the Competition Act, it is a criminal offence for two or more bidders, in response to a call or request for bids or tenders, to agree among themselves on the bids submitted, to agree that one party will refrain from bidding or to agree to withdraw a submitted bid, without informing the person calling for the bids of this agreement.”
Under section 45 of the Competition Act (the criminal conspiracy offences of the Act) three types of agreements between competitors are “per se” illegal (i.e., with no adverse competitive impacts required to be proven): (i) price-fixing agreements (agreements to fix, maintain, increase or control the price for the supply of a product or service), (ii) market allocation/division agreements (agreements to allocate sales, territories, customers or markets for the production or supply of a product) and (iii) output/supply restriction agreements (agreements to fix, maintain, control, prevent, lessen or eliminate the production or supply of a product). Other types of agreements between competitors are potentially subject to review under a second and separate non-criminal reviewable matters agreement provision (section 90.1).
I am pleased to be delivering the Competition Law and REALTORS course for the Real Estate Board of Greater Vancouver on August 29, 2012. This course has been designed by the Alliance for Canadian Real Estate Education (ACRE) in conjunction with The Canadian Real Estate Association (CREA).
From ACRE:
“Competition Law and REALTORS®: What You Say and Do Matters was designed by ACRE with the assistance of CREA to help Canadian REALTORS® understand and comply with Canadian competition law. While Canadian competition law applies to all real estate professionals, this course was designed specifically for REALTORS®. This course provides an overview in plain language of Canadian competition law and practical compliance guidelines to assist REALTORS® in complying with Canadian competition law and a number of illustrative case studies.”
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With the Maple/TMX and Glencore/Viterra deals beginning to quiet down now, the next Competition Act / Investment Canada Act approval dance began earlier today with announcements that China National Offshore Oil Corporation (“CNOOC”) was proposing to acquire Nexen Inc. in a friendly $15.1 billion all cash transaction ($27.50 per Nexen share). Nexen has assets in Western Canada, the U.K. North Sea, Gulf of Mexico and offshore Nigeria, including oil and gas, oil sands and shale gas production.
Canada’s Industry Minister, the Honourable Christian Paradis, confirmed that the transaction would be subject to Investment Canada Act (“ICA”) review (see: Minister Paradis Confirms China National Offshore Oil Corporation and Nexen Inc. Transaction is Subject to Review under the Investment Canada Act) and made a number of rather pro forma statements, including confirming that the transaction exceeded the WTO review threshold and setting out the net benefit to Canada criteria under the ICA. The Minister also confirmed that the Competition Bureau would be reviewing the proposed transaction.
CNOOC, in reply, in this newest ICA approval dance, began to indicate the types of commitments it may be prepared to offer to secure ICA approval, including significant capital investment, listing CNOOC Limited’s common shares on the TSX, making Calgary its head office for North and Central American operations, vowing to maintain existing management and employees (as well as increasing jobs) and accelerating resource development. According to Nexen’s press release, CNOOC also intends to continue to support oil sands research at Alberta universities and participate in the Oil Sands Innovation Alliance (COSIA) (see: CNOOC Limited Enters Into Definitive Agreement to Acquire Nexen Inc.).
On July 19, 2012 the Competition Bureau announced that Korean Air Lines Co., Ltd. pleaded guilty in the ongoing air cargo cartel case and was fined $5.5 million for its involvement from 2002 to 2006.
The Bureau’s investigation has led to seven convictions to date and fines of approximately $22 million (other airlines that have pleaded guilty in this case to fixing air cargo surcharges for shipments on some routes from Canada include Air France, Martinair, KLM, British Airways and Qantas).
For the Bureau’s earlier announcements in this case see: Air Carriers Plead Guilty to Price-Fixing Conspiracy (the initial round of fines was as follows: Air France – $4 million; KLM – $5 million; and Martinair – $1 million), Fourth Guilty Plea in Air Cargo Price-Fixing Conspiracy (Qantas was fined $155,000) and Cargolux Pleads Guilty in Air Cargo Price-fixing Conspiracy (Cargolux was fined $2.5 million).
The Bureau generally bases fine negotiations on the affected volume of commerce in Canada (see e.g.: Leniency Program – FAQs). In this respect, the Bureau will often begin with a “proxy” for a cartel party’s volume of commerce in Canada of 20% (i.e., based on the party’s volume of Canadian sales during the cartel period).
Under the Bureau’s Immunity and Leniency Programs a party that fulfills all requirements of the Bureau’s Immunity Program is entitled to full immunity from prosecution, while subsequent applicants may be entitled to 50% (for the “second in”), 35% (for the “third in”) and subsequent lesser reductions in penalties under its Leniency Program (although a critical distinction between the two programs is the latter requires applicants to plead guilty). Speed is, therefore, of the essence in evaluating whether to apply for immunity or leniency, as both of the Bureau’s programs involve a “race”.
For more about Canada’s conspiracy rules see:
For more about the Bureau’s Immunity and Leniency Programs see:
Immunity and Leniency Programs
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I am pleased to be participating in the Canadian Bar Association’s upcoming CBA Canadian Legal Conference in Vancouver on a panel on August 13th, part of which is still to be announced, discussing recent competition law developments for in-house counsel:
“Canada’s competition and foreign investment laws are being enforced more vigorously than ever. The Competition Bureau has wide powers allowing them to investigate conduct that might have an anti-competitive impact on the Canadian marketplace, and investigations often involve high-stakes consequences for companies including public stigma, criminal penalties, or unneeded complications arising in the middle of a strategic merger. Learn how to minimize your risk and limit liability with practical guidance from our experienced panel on how to ensure regulatory approval for mergers, strategic alliances and joint ventures. (90 min)”
For more information about the CBA’s conference or this panel see:
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The Competition Bureau has published its June Monthly Report of Concluded Merger Reviews. Advance Ruling Certificates were issued in five transactions with No Action Letters having been issued in eight transactions. Notified mergers included Glencore International plc / Xstrata plc and it appears at least one Chinese acquisition (Aluminum Corporation of China / Winsway Coking Coal).
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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)
