Archive for the 'Compliance' Category
I am pleased to be delivering the Competition Law and REALTORS compliance course for members of the Fraser Valley Real Estate Board on Thursday August 16th. From the Alliance for Canadian Real Estate Education (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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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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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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Conventional wisdom is that the Competition Bureau will pursue most misleading advertising cases civilly, under section 74.01 of the Competition Act, not criminally (the Act also contains a criminal misleading advertising provision, section 52, as well as a number of other criminal deceptive marketing offences).
For example, in the Bureau’s 1999 Bulletin on the choice of the criminal or civil track for misleading advertising, which remains its leading statement on the question, the Bureau states that the civil track will be pursued in most instances (though it may proceed criminally where there is both clear evidence of intent – for example, continuing conduct after complaints are made – and a criminal prosecution is in the public interest).
Despite this expressed restraint to proceed criminally, there have been a steady stream of deceptive advertising and marketing cases over the past few years where the Bureau has commenced criminal enforcement proceedings. Some recent cases have involved deceptive telemarketing (see: here, here and here), employment opportunity schemes (see: here and here), a GST refund fraud scheme (see: here) and the sale of counterfeit cancer drugs on the Internet (see: here). In terms of criminal misleading advertising cases, the Bureau has appeared to be most concerned with deceptive telemarketing and fraudulent business directory schemes (although its efforts have not been restricted to those two categories of cases).
While imprisonment is rather rare in Canada for competition law offences, several individuals in these cases were also sentenced to imprisonment, ranging from conditional sentences in the community to 3 years, in addition to paying monetary penalties.
In an interesting statement made yesterday, the Federal Government announced that it was extending the list of offences that will render companies and individuals ineligible from bidding on Government contracts to include money laundering, participating in criminal organization activities, tax evasion (income and excise tax), bribing foreign public officials and drug trafficking. These new additions have been added to an existing list, which includes certain Criminal Code fraud offences against the Government and a number of Competition Act offences (including conspiracy and bid-rigging).
In making the announcement, the Government said:
“Our Government continues to stand up for accountability by ensuring we do business with companies that respect the law and act with integrity,” said Minister Ambrose. “We are taking action to protect taxpayers from fraudulent companies who seek to do business with the Government of Canada.”
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The Malaysian Competition Commission (MCC) has set out its position on information exchanges in the association context, in relation to information exchanges involving the Malaysian Automotive Association (MAA).
According to the MCC, it had previously advised the MAA as to why and how the dissemination of disaggregated information to MAA members could infringe Malaysian competition law.
In her announcement, the MCC’s chief executive officer pointed to potential risks of the formation of horizontal or vertical agreements that may raise competition concerns, principally dampening competitive rivalry among them:
“The detailed information exchanged and shared by the MAA’s members may facilitate them to coordinate their prices and such information could facilitate members to plan their marketing strategy by allocating territories or adjusting their production. This indirectly has the consequence of discouraging members from competing fairly and more effectively against one another.”
The potential issues associated with information exchanges between competitors is not, of course, unique to Malaysia, nor are the types of commonsense precautions trade and professional associations can take to reduce competition/antitrust issues from arising.
In Canada, like many other jurisdictions, the potential risk of exchanging competitively sensitive information in un-aggregated form (e.g., price, cost, market, market share, customer or supplier information) is generally twofold: first, exchanging such information can lead to agreements that violate section 45 of the Competition Act (the criminal conspiracy provision, which prohibits price-fixing, market allocation/division and output/supply restriction agreements between competitors); and second, that information exchanges can be used as evidence by the Competition Bureau, a court or private plaintiff to infer the existence of an agreement.
Also, since the passing of Canada’s relatively new civil agreements provision (section 90.1), information exchanges can also now in theory be challenged on a stand-alone basis (i.e., apart from, for example, a price-fixing agreement) where they prevent or lessen competition substantially (or as well raise issues in relation to otherwise legitimate vertical agreements and arrangements).
For more information about information exchanges and competition law in Canada, and steps associations can take to minimize competition risk, see:
Associations and Competition Law
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Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
