Archive for the 'Competition Bureau' Category
Advertising Standards Canada (ASC) will be hosting an upcoming seminar on the rather hot topic (if only to advertising law geeks) of disclaimers in Toronto on June 12, 2012.
From the ASC:
“Disclaimers are not an afterthought. In today’s climate they must be top of mind for advertiser and agency professionals – not just their legal counsel.
The Competition Bureau’s recent enforcement actions regarding misleading advertising and the Supreme Court of Canada’s recent guidance on the ‘general impression’ test in its judgment against an advertiser of a contest promotion have made this patently clear. Learn what these recent legal developments mean for the appropriate use, content and placement of disclaimers in advertising. The Supreme Court Case also has implications for how advertisers define the average consumer – this will be a critical factor going forward.
Join ASC and our distinguished panel to learn how you can help ensure your advertising meets regulatory requirements as well as the provisions of Canadian Code of Advertising Standards.”
In a bit of a setback to the defendants in the ongoing e-books cartel case, the New York District Court for the Southern District of New York recently dismissed a motion by the defendants to have the plaintiffs’ class action dismissed.
In a detailed judgment, justice Denise Cote provides a rather thorough restatement of pleading rules in federal antitrust cases and evidence required to establish a violation of Section 1 of the Sherman Act (the U.S. federal parallel to section 45 of Canada’s Competition Act), which prohibits unreasonable restraints of trade (including horizontal price-fixing agreements, market allocation agreements and in some instances group boycotts).
Some of the interesting aspects of this recent judgment that stood out to me, and there are a number of others, include:
1. Rather strong language that the Court accepted, at least at this preliminary stage, the plaintiffs’ arguments of a horizontal price-fixing conspiracy. For example, the Court held that the alleged agreement is “fundamentally horizontal”.
2. An acceptance of the plaintiffs’ argument that the relevant standard should be a per se (not rule of reason) review, holding that the alleged agreement is “at root, a horizontal price restraint”. In Canada, section 45 of the Competition Act makes price-fixing, market allocation and supply/output restriction agreements per se illegal, although it largely remains to be seen what types of cases will be challenged by the Competition Bureau under section 90.1 of the Act (which has parallels to the rule of reason standard in the U.S.).
3. A recap of recent U.S. jurisprudence on hub-and-spoke cartels, including discussions of the Interstate Circuit and Toys “R” Us cases.
4. A restatement of the types of indirect (i.e., circumstantial) evidence sufficient to establish a cartel, including simultaneous price changes. In Canada, like the U.S., a number of different types of indirect or circumstantial evidence (sometimes also referred to as “facilitating factors”) can be relied upon to establish a conspiracy, including evidence of meetings, simultaneous price increases and language or conduct that can only be explained by the existence of an agreement.
5. Distinguishing recent U.S. vertical price maintenance decisions, notably the U.S. Supreme Court’s decision in Leegin Creative, from horizontal arrangements between competitors.
6. A general review of the necessary elements to establish a violation of section 1 of the Sherman Act (many of which being the same or paralleling Canadian requirements).
Given that class actions have now also been commenced in Canada (in British Columbia, Ontario and Quebec), it will be interesting to see what arguments, if any, may be made by the defendants in Canada in response to the Canadian plaintiffs’ claims.
For a copy of the Court’s Opinion see:
CANADIAN CONTEST RULES/PRECEDENTS
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The Canadian Institute is hosting an upcoming contest conference entitled “Managing Legal Risks in Running Online Contests” on June 21-22 2012 in Toronto. Their conference will include discussions on topics that include minimizing the risks of operating online contests, online voting contests, operating Facebook and Twitter contests, mobile contests and mitigating risk when online contests go wrong.
In March, 2009, sweeping amendments to the Competition Act came into force that included, among many other things, the introduction for the first time in Canada of monetary penalties for abuse of dominance (“administrative monetary penalties” or “AMPs”). Under Canada’s amended section 79, the Competition Tribunal may now order AMPs of up to $10 million ($15 million for subsequent orders).
Since that time, one contested abuse case has proceeded to the Competition Tribunal (the Bureau’s ongoing challenge against The Toronto Real Estate Board, in which the Bureau is seeking only remedial remedies not AMPs) and two new versions of the Bureau’s Abuse of Dominance Enforcement Guidelines have been issued for comment (the current draft version of which, while setting out when the Tribunal may order AMPs in abuse cases, provides no guidance as to when the Bureau will seek them).
On May 15, 2012, the C.D. Howe Institute’s Competition Policy Council issued a report, the result of its third meeting on May 7, 2012, calling for the Bureau to clarify its position as to when it will seek AMPs in abuse cases. (Unlike some provisions of the Act, in Canada the Bureau has exclusive jurisdiction to bring and prosecute abuse cases, which are heard before the federal Competition Tribunal.)
In issuing the Report, the C.D. Howe Institute’s Council said:
“The Competition Bureau should clarify how it will apply its powers under the Competition Act in seeking administrative monetary penalties for abuse of dominance, according to a consensus of the C.D. Howe Institute’s Competition Policy Council, which held its third meeting on May 7, 2012. …
There was a range of views among the Council members about whether AMPs for abuse of dominance are ever appropriate. Some members contended that AMPs are appropriate as a deterrence mechanism. Others expressed the view that the possibility of a firm’s being subject to AMPs would chill efficient arrangements. There was unanimity, however, on the point that the risks of over-deterrence associated with AMPs are real, and that it would be appropriate to know how the Bureau plans to approach the issue of AMPs in particular cases. Accordingly, the Council’s key recommendation is that the Competition Bureau issue guidance and explain the basis on which it will assess the AMPs it seeks.”
Some of the issues discussed in the Council’s Report include the constitutionality of AMPs (as yet to be determined) and a more reticent Bureau in terms of its abuse of dominance enforcement positions.
With respect to the latter, the Commissioner of Competition has indicated in recent public remarks that the markedly shorter draft Abuse Guidelines currently subject to public comments is an effort to let the Competition Tribunal, not the Bureau, decide where the boundaries of section 79 lie (which provides little comfort to firms given that there have only been about ten contested abuse cases since the modern Competition Act was introduced in 1986).
For a copy of the C.D. Howe Institute’s news release and Report see:
The following are a few competition and regulatory law developments that caught my eye today:
The Saskatchewan Government issued a review report on the proposed Glencore/Viterra transaction calling for, among other things, conditions to ensure compliance with Glencore’s Investment Canada Act commitments and a review of potential competition concerns in the retail (i.e., crop input) markets: Government Releases Review of Glencore Acquisition of Viterra
The OECD issued a new Procedural Fairness and Transparency Report, which includes recent Competition Bureau transparency initiatives: Procedural Fairness and Transparency – Key Points 2012
The International Trade Minister delivered remarks to the Canadian Manufacturers & Exporters (BC) about the new Canada-EU trade agreement: International Trade Minister Ed Fast Highlights Benefits of Canada-EU Trade Agreement to Canadian Manufacturers & Exporters
The Canadian Council of Chief Executives has commented on competition and infrastructure in Canada to supply Chinese energy needs: Canada: Competing for China’s energy needs
The CRTC’s Executive Director of Broadcasting addressed innovation and competition in local radio and television markets in BC: Speech to the 65th annual conference of the British Columbia Association of Broadcasters
The Competition Bureau issued its April Monthly Merger Review Report: Merger Review Report
The OECD has published a new booklet (Procedural Fairness and Transparency – Key Points 2012) that summarizes three roundtable discussions on transparency and procedural fairness in 2010 and 2011, as part of the OECD’s Competition Committee’s Working Party No. 3. The OECD’s booklet summarizes 82 written submissions, eight presentations by various national delegations and commentary from competition law practitioners and experts.
The OECD’s booklet also includes discussions of recent transparency related initiatives by the Canadian Competition Bureau including new compliance, merger and Immunity Program related guidelines; the Bureau’s transparency self-assessment (began in 2010, which has resulted in, among other things, its new monthly Merger Registry and merger statements); areas of improvement with respect to transparency (including in relation to merger review and the review of the Bureau’s consent agreement process); and the Bureau’s policies relating to the exchange of confidential information with international agencies.
For a copy of the OECD booklet see:
On May 8, 2012, hearings began before the Competition Tribunal (Tribunal) in the Visa/MasterCard price maintenance case. The case, filed by the Competition Bureau in late 2010, is the first civil price maintenance case to be heard by the Tribunal following amendments to the Competition Act in 2009 that included the repeal of former criminal price maintenance offences.
In brief, the Bureau is alleging that Visa and MasterCard merchant agreements discourage consumers from using lower-cost methods of payment (e.g., cash, debit cards, etc.) and prevent retailers from declining certain higher fee cards, which has led to an increase in card service fees paid by retailers and corresponding higher retail prices for goods and services.
Section 76 of the Competition Act now makes it a reviewable civil practice for a supplier to influence a customer or reseller to raise prices (or discourage the reduction of prices), including by agreement, where the conduct has an adverse effect on competition. While formerly a “per se” criminal offence with no competitive effects requirement, price maintenance is now a civil reviewable practice that allows the Tribunal to make remedial orders – for example, for conduct to stop or in some cases for supply to be resumed – where it is shown that competition has been adversely affected. Private parties may now also make price maintenance applications for Tribunal orders (with leave from the Tribunal).
Some of the restraints being challenged by the Bureau in this case include restrictions on merchants promoting or encouraging the use of credit cards with lower fees, discouraging the use (or refusing to accept) cards with higher fees and requirements to accept all Visa/MasterCard credit cards.
The Commissioner is seeking an order prohibiting Visa and MasterCard from enforcing agreements preventing merchants from encouraging the use of lower-cost payment methods, including rules preventing retailers from discouraging the use of higher-cost credit cards or refusing to accept certain Visa/MasterCard cards.
For more information about the hearings, pleadings and parties’ cases see:
On May 4, 2012, Reuters, the Globe and Mail, the Wall Street Journal and others reported that Glencore International PLC received a no action letter from the Competition Bureau that the Bureau will not challenge Glencore’s $6 billion bid for Canada’s largest grain handler Viterra Inc.
No action letters are one of two forms of clearance available to merging parties under the Competition Act (along with advance ruling certificates) and state that the Commissioner does not intend when issued to challenge a transaction under the merger review provisions of the Act, although has the power to challenge a merger for up to one year post-completion).
The quick clearance by the Bureau is not very surprising given that, among other things, Glencore’s offer was not conditional on subsequent transactions involving the sale of Viterra port terminal, grain handling and retail assets to Agrium and Richardson and the absence of competitive overlap between Glencore and Viterra (indeed the transaction appears to be structured to achieve this relatively effortless first-stage clearance).
It will be interesting, however, to see how the Bureau will review and assess the subsequent second stage Glencore sales to Agrium and Richardson, particularly given that there appears there will be some Glencore/Agrium and Glencore/Richardson overlaps in the retail (crop protection products, fertilizer, seed, small equipment, etc.) and port terminal grain handling markets. Having said that, the parties have indicated in public statements that they have chosen to allocate the later sale of assets carefully to tiptoe through potential concentration issues and reduce possible competition concerns.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
