Archive for the 'Compliance' Category
December 7, 2012
The Corporate Counsel and Unilateral Conduct/Reviewable Matters Committees of the Canadian Bar Association will be co-hosting the following upcoming teleconference on December 13th: Advising Amongst Uncertainty: Abuse of Dominance in Canada and the New Guidelines:
“Globally, enforcement of unilateral conduct laws has led to some of the most high profile matters in antitrust history, including Microsoft and Google in the US and EU. By comparison, unilateral conduct has seen much less enforcement in Canada in the last decade, which has arguably impacted the amount of attention it receives by businesses and their legal advisers. However, the Competition Bureau’s approach to enforcement appears to have changed since 2009 and has produced recent high profile cases including the Canadian Real Estate Association and Toronto Real Estate Board abuse of dominance cases. With the new Abuse of Dominance Guidelines released on September 20, 2012, both in-house counsel and private practitioners are revisiting this area with interest. But how helpful are the shortened Guidelines in providing meaningful guidance, and where else can counsel turn for information? Join us for lively discussion on the state of Abuse of Dominance in Canada, including hypothetical fact scenarios and practical insights on advising in this complex and evolving area.”
December 6, 2012
I am always interested in innovation and trends, both in marketing generally and in relation to my own practice. Lawyers can, well, be rather slow to embrace change. In this regard, I’ve been seeing a continued trend toward video, both on the web generally – for example in this interesting Globe note this morning: Need more proof of the power of video on the web? Here it is – as well as with my own clients, colleagues (well some of them at least) and more recently enforcement agencies in Canada and Internationally.
Following this trend, several enforcement agencies using video have caught my eye including this short (but good) Consumer Protection BC video on expiry dates and gift cards this morning: A Consumer Question About Gift Cards and a video contest being used by the RCMP to promote drug prevention awareness.
These Canadian examples of enforcers using video also reminded me of the recent excellent cartel compliance video by the Australian ACCC – The Marker – a short film produced by the ACC to illustrate the potentially significant effects that involvement in a cartel can have on individuals and businesses (see: ACCC gets on the front foot with cartels film ‘The Marker’) and this series of price-fixing videos uploaded to YouTube by the Singapore Competition Commission – see: here.
It seems to me this is a good trend for lawyers and enforcers and that we’ll probably see a lot more like them down the road.
For more on gift card, contest and cartel laws in Canada see: Gift Cards, Contests and Cartels.
December 5, 2012
In interesting and wide ranging comments given earlier today in Vancouver, as a prelude to published remarks, the Interim Commissioner of Competition John Pecman discussed current Bureau priorities, some key enforcement trends and gave some indication of future policy direction at the Bureau.
Perhaps appropriately, the Interim Commissioner began his remarks by noting that today, December 5th, has been designated by the Indian based NGO CUTS International as “world competition day” (with this year’s topic being designated by CUTS as the impact of cartels on the world’s poor).
Some highlights from the Interim Commissioner’s remarks included:
Enforcement. An overarching theme of today’s discussion in Vancouver was a continued focus on enforcement and an unwavering willingness by the Bureau to commence litigation (though underscored throughout the talk by a message that the Bureau continues to be interested in collaboration and dialogue). While the Interim Commissioner said that the Bureau’s default is generally to work collaboratively, the Bureau will continue not to hesitate to litigate. The Interim Commissioner also spoke about a desire to return to some of the “bread and butter” priorities of the Bureau in both the criminal and deceptive marketing areas. Interestingly, the Interim Commissioner indicated that despite recent Federal budgetary cuts, the Bureau was working toward enhancing its internal litigation capabilities.
Consultations & New Guidelines. The Interim Commissioner indicated that the Bureau would be commencing consultations with the competition bar in Canada in the new-year, as well as stakeholders, business groups and procurement groups to amplify and clarify several key areas, including the Bureau’s Immunity and Leniency Programs and electronic document production. The Interim Commissioner also indicated that the Bureau would be working towards issuing new price maintenance guidelines, FAQs for unilateral conduct and new general guidelines on Bureau enforcement. The Interim Commissioner also suggested a desire by the Bureau to move away from issuing advisory opinions in individual cases toward a focus on published materials (i.e., guidelines).
Maxzone. With respect to the recent decision by Chief Justice Crampton in the Maxzone case, the Interim Commissioner indicated that the decision both sends a strong message that serious white-collar crime conduct akin to fraud should be appropriately punished (including by increasing recommendations for prison sentences) while other aspects of the decision were less workable practically, for example Chief Justice Crampton’s suggestion that defendants should work to achieve restitution with plaintiffs prior to plea agreements (which can delay criminal investigations). In this regard, the Interim Commissioner commented on the existing partition between private actions and criminal enforcement, saying there already existed a mechanism for restitution (section 36 of the Competition Act – the provision under which private civil actions in Canada are commenced). Overall, however, Mr. Pecman described the ongoing shift of Canadian courts toward sterner sentencing and recent Criminal Code sentencing amendments eliminating conditional sentences for cartel and bid-rigging offences as a “sea change” to how competition law offences are treated in Canada.
November 28, 2012
In an interesting Ontario class action decision issued on November 16th, the Ontario Superior Court of Justice found George Brown College liable, among other things, for violating the Ontario Consumer Protection Act (“CPA”) in relation to representations in a college course calendar about a graduate business program (George Brown’s International Business Management Program).
The student plaintiffs in this case alleged that George Brown failed to deliver what was promised for their program: the ability to obtain three particular industry designations in addition to the college’s certificate. The program stated that students could “complete three industrial designations/certifications in addition to the George Brown College Graduate Certificate” which were in fact not available without additional courses and fees.
George Brown took the position that students received what promised – a George Brown graduate certificate and opportunity to complete the industry accreditations in the future – insisting “there was nothing inaccurate” in its program description and denied liability. The school’s view was also that reasonable students that diligently researched industry websites would have understood that George Brown was only offering a preparatory platform for the future completion of the three listed designations.
The plaintiff students initially filed a complaint to their program advisor after which, when unsuccessful, they commenced a class action founded on negligent misrepresentation, breach of contract and violations of the CPA.
In assessing the students’ claim, the Court found that the students’ interpretation of the course description was reasonable, and that they were right to assume that they would graduate not only with the George Brown graduate certificate but also the three stated industry designations/certifications (or on a more nuanced interpretation, at least the required courses for the designations).
The Court held that on a plain reading of the description, the reasonable interpretation was that students could complete courses to obtain the designations, not merely an “opportunity to advance to complete”. The Court also found that if qualifications were necessary, such as the fact that the program only provided “preparation” for future accreditations, it could easily have said so.
November 20, 2012
The C.D. Howe Institute published a new competition/antitrust related report today entitled “Closing the Back Door Route to Cartels: The Need to Clarify the Regulated Conduct Doctrine” that calls for the Competition Bureau to clarify how the regulated conduct defence applies and how the Bureau may act as an advocate of competition in regulated sectors.
I found this new report somewhat curious, in that it harkens back to the significantly more advocacy focused efforts of Canada’s former Commissioner of Competition (Sheridan Scott), who was highly engaged, among things, in efforts to deregulate segments of the health care sector (uncoupling dental hygienists from dentist oversight for example) and producing a significant report on competition in the professions (Self-regulated Professions Report). It is also not clear that the Bureau has an appetite to expand its guidance of its approach to the RCD (or amplify its advocacy efforts) given that in the past few years it has been moving in the opposite direction – i.e., narrowing some guidelines (e.g., its recently updated Abuse of Dominance Guidelines) and showing an increased focus on enforcement (not advocacy) and a desire to expand Canadian competition law through the courts (not through more guidelines).
Having said that, some increased clarity and certainty in relation to mergers in regulated sectors, including as recommended in this new report those regulated by the CRTC and the Bureau, would certainly be welcome.
Overview:
“The Competition Bureau should actively engage in competition matters in regulated sectors of the economy, where anti-competitive conduct may be protected by government legislation or authority. This is the consensus view of the C.D. Howe Institute’s Competition Policy Council, which held its fourth meeting on November 8, 2012.
Members of the Council held that the Bureau should more clearly delineate the scope of anti- competitive practices that it sees as protected by provincial or federal legislation or delegated authority; and it should be directly engaged in regulatory decisions that potentially impair competition. As well, the Bureau should contribute independent analysis in merger reviews in regulated sectors. …
At Issue: The Regulated Conduct Doctrine (RCD) protects cartels, and potentially other forms of anti-competitive conduct, that would otherwise be subject to scrutiny under the Competition Act if, according to the Competition Bureau’s interpretation, the conduct is authorized by provincial or federal legislation or authority. Although the RCD is prominent in provincially regulated sectors – such as agriculture marketing boards, professional services, energy and alcohol retailing – conduct in federally regulated sectors – such as transportation, telecommunications and broadcasting – may also potentially be protected under the RCD.
November 18, 2012
On Friday, the Ottawa Citizen reported that Public Works has toughened its integrity rules, with the result that CRG Consulting (which pleaded guilty to criminal bid-rigging in July) has been banned from bidding on future Public Works contracts. According to Public Works it “… will not enter into a contract or real property transaction, or accept bids from companies convicted of listed offences (such as bid-rigging) unless they have received a pardon.”
This recent public procurement development means that the risk of non-compliance for firms bidding for public sector contracts has now been raised further, in addition to other recent criminal competition law developments that include the elimination of conditional sentences (i.e., sentences served in the community) for some Competition Act offences, a recent Federal Court decision in the Maxzone case (see: here) indicating that the Federal Court will take a tougher stance on joint sentencing submissions in cartel cases, bid-rigging being an ongoing enforcement priority for the Competition Bureau and the continuing corruption/competition probe in the construction industry in Quebec. As such, the potential risk of engaging in bid-rigging or other criminal conduct under the Competition Act is now not only fines and/or imprisonment but also the possible loss of public sector clients.
November 16, 2012
The following are some of the more interesting competition, advertising and regulatory law developments that caught my eye over the past several days, at least to the extent they have a bearing on Canada or companies doing business in Canada:
BCE and Astral plan to work towards reworking their deal to obtain regulatory clearance (see: here and here), following a rejection of the deal by the federal CRTC.
The Malaysian state-owned oil company Petronas was reported to be revising undertakings to obtain Investment Canada Act clearance for its acquisition of Progress Energy (see: here).
The CRTC launched new web pages for their planned mandatory wireless code consultations that include the “top 100 liked” comments for a new wireless code (see: here).
Earlier today, Canada’s Finance Minister gave some further indications that the Federal Government may soon reveal new Investment Canada Act rules for FDI in Canada and that the new rules may include “limits” (see: here). Any such rules would replace and/or supplement existing Investment Canada Act provisions and guidelines under the ICA (e.g., those specifically relating to national security or state-owned-enterprises).
More testimony unfolded in the ongoing Quebec corruption and competition law probe relating to allegations of municipal bribes and bid-rigging in the construction sector in Quebec (Monique Muise at the Gazette in Montreal has the best feed going on this, plus she has a sense of humour and, if I may say, classic Quebecois ability to take things in stride – see: here).
November 14, 2012
When companies think about competition law compliance, the focus is often on senior management and board compliance – that is, ensuring that the board, and a firm’s directors and officers, have a clear understanding of competition law rules. That is not to say that it is not well known that managers, and in particular a company’s sales force, are often at the center of competition/antitrust issues. Practically, however, companies often approach compliance from the top down with an expectation that senior management will disseminate the compliance message down through an organization. Sometimes that is the case. In more cases, however, it seems that it is not – as is evidenced by the Competition Bureau’s perennial complaint that many companies have compliance programs, but fail to effectively implement them.
In this regard, a recent U.K. paper caught my eye on the role of marketing managers in global cartels entitled “The Role of Sales and Marketing Managers Within International Cartels” (J.K. Ashton & A.D. Pressey).
This study looked at 56 major international cartels investigated by the European Union with findings that include the fact that marketing and sales managers have been involved in a substantial percentage of cartels (42.9%), are seldom the most senior managers, tended to involve global cartels (in manufacturing more than distribution industries) and involved information exchanges in the context of predominantly market allocation and price-fixing arrangements.
Interestingly, this study also looks at some of the strategies cartels have used to avoid detection (including minimizing meetings, punishing “cheating” and more levels of organizational hierarchy – i.e., buffers between marketing personnel and senior management), marketing managers’ involvement in trade associations and statistics of U.S. incarceration of foreign nationals and the reliance of whistle blowers in investigations.
Abstract:
“Although the study of international cartels has a considerable lineage our understanding of their organization, operation and management remains limited. This study attends to this omission through examining the role of marketing and sales managers within international cartels using a content analysis of 56 major international price-fixing cartels over two decades (1990-2009). It is reported that marketing and sales managers are demonstrably involved in many international cartels (42.9% of all cartel cases), albeit often accompanied by more senior managers from other firm functions. Marketing and sales managers appear most frequently within worldwide and manufacturing industry cartels and where market allocation and customer-sharing practices occur. In light of these findings it is important to reassess both managerial attitudes towards inter-firm collaborations and enhance the position of antitrust concerns within business school syllabi.”
For a copy of the paper see: Who Manages Cartels? The Role of Sales and Marketing Managers within International Cartels.
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