Archive for the 'Immunity Program' Category
January 28, 2013
In a decision in December, issued today (see: Green v. Tecumseh Products of Canada Limited, 2012 BCSC 2026), the BC Supreme Court approved a settlement with two defendants in a competition class action involving alleged price-fixing of cooling compressors.
The class proceedings in this case began in October, 2010 on behalf of BC residents that purchased cooling compressors and other products manufactured by the settling defendants and other defendants. According to the plaintiff, the defendants allegedly fixed cooling compressor prices or allocated markets and customers in Canada.
In October, 2010, the Bureau announced that Embraco North America Inc. plead guilty and was fined $1.5 for participating in fixing the price of cooling compressors (see: Embraco North America Inc. Pleads Guilty to Price-Fixing Conspiracy). In November, 2010, the Bureau made a similar announcement in relation to Panasonic Corporation (see: Panasonic Corporation Pleads Guilty to Price-Fixing Conspiracy).
As part of the settlement in the decision issued earlier today, the two settling defendants ACC USA LLC and ACC Sp.A, with a relatively small combined volume of commerce in Canada, entered into a settlement agreement with the plaintiff, agreed to pay $50,000 (and costs up to a further $50,000) and to cooperate with the plaintiff.
January 17, 2013
Yesterday the U.S. Department of Justice (DoJ) issued a business review letter concluding that it would not challenge a proposed “gainsharing” program by a New York State hospital association (the Greater New York Hospital Association).
The DoJ’s business review letter (the Canadian parallel being advisory opinions available for proposed conduct under section 124.1 of the Competition Act) is interesting in that it shows the importance of minimizing the exchange of competitively sensitive information in the context of association activities.
In this case, the hospital association sought assurance from the DoJ that its proposed program to have physicians take into account their use of hospital resources (and rewards based on shares of achieved savings) would lead to improvements in quality and efficiency and would not violate federal antitrust laws.
The specifics of the particular program in this case aside (the so-called “gainsharing” program involving some 100 hospitals), the aspect of the review letter I found interesting was the DoJ’s analysis of information exchanges. In this regard, the DoJ considered whether the proposed program would constitute a horizontal agreement among competing hospitals relating to physicians’ compensation or an information exchange between hospitals that would facilitate anticompetitive coordination to limit physician compensation (concluding that the proposed program would be unlikely to facilitate collusion or otherwise raise competitive concerns).
In making this determination, the DoJ considered the fact that the program would not involve the exchange of competitively sensitive information between participating hospitals (and would be limited to non-competitively sensitive cost and benchmark data) and would follow the DoJ/FTC antitrust safety-zone requirements set out in their Statements of Antitrust Enforcement Policy in Health Care (the “Health Care Policy Statements”), namely that the data would be at least three months old, supplied by at least five providers and appropriately aggregated.
In Canada, as in the U.S., the exchange of competitively sensitive information between competitors, such as price, cost, market, supplier or output information, particularly in the context of trade and professional associations, can raise competition law concerns (see e.g.: here).
Generally speaking, there are two potential issues that can arise from the exchange of this type of information without adequate precautions: first, that the exchange results in an agreement that violates the criminal conspiracy provisions of the Competition Act (or raises concerns under the civil agreements provision – section 90.1); and second, that an exchange may allow the Competition Bureau, a court or private plaintiff to infer the existence of illegal or problematic agreement among competitors.
In this regard, in his first public remarks, the Interim Commissioner of Competition specifically highlighted information sharing agreements among association members as a potential concern:
“… we are concerned with conduct that reduces incentives to compete vigorously. Information sharing agreements are an example of this. Competitively sensitive information exchanged among competitors who can have serious negative effects on competition, especially if these are in highly concentrated markets with relatively homogeneous product offerings. Clearly, Trade/Industry Associations must be extra vigilant in their efforts to manage and alleviate risk with respect to their activities.”
January 12, 2013
A recent settlement between the U.S. Department of Justice (DoJ) and an Oklahoma chiropractors association (the Oklahoma State Chiropractic Independent Physicians Association) shows the potential risk of association collective bargaining in the absence of competition law immunities/exceptions.
On January 10th, the DoJ announced that it had reached a settlement with this chiropractors association that will require the association to stop jointly determining prices and negotiating contracts with insurers on behalf of competing chiropractors in Oklahoma. According to the DoJ, the association, representing approximately 45% of the state market, and its executive director negotiated at least seven contracts between chiropractors and insurers that set prices for chiropractic services, with the effect of consumers having to paying higher fees in Oklahoma. The DoJ also took issue with collective steps by the association’s chiropractors to suspend pre-existing contracts with insurers and stop offering insurers incentives or rebates. In making the announcement, the DoJ said:
“By jointly negotiating fees on behalf of competing chiropractors, the association and its executive director increased the prices that consumers paid for chiropractic services in Oklahoma. … Today’s settlement promotes competition among Oklahoma chiropractors and prevents the association and its executive director from engaging in illegal conduct that caused consumers to pay more for their health care.”
Some of the specific allegations made by the DoJ in its civil section 1 Sherman Act complaint related to a membership requirement for association members to authorize the association to contract with 3rd party insurers, terminate existing contracts with insurers, stipulate a minimum reimbursement floor for chiropractors and agree not to pay incentives or rebates (e.g., waive deductibles or co-pays). For example, the association’s website stated: “[the association] concentrates the power of [its] state chiropractic physicians into one group. Through [the association], a chiropractor can maintain an individual practice while associating with other chiropractors to increase contract-negotiating power”. The DoJ also took the position that the defendants’ joint negotiation activities in this case were not ancillary to any pro-competitive purpose or reasonably necessary to achieve any efficiencies.
January 6, 2013
The ABA’s Section of International Law has published its December, 2012 edition of “Hot Topics” in International Antitrust Law, with a short but very interesting discussion of the ongoing auto parts price-fixing investigation: “Lessons to Be Learned from the Antitrust Division’s Criminal Investigation of the Auto Parts Industry” (by J.M. Driscoll-Chippendale of Sheppard Mullin).
Overview:
“The U.S. Department of Justice, Antitrust Division closed another record- breaking year of criminal enforcement in 2011-2012 based in part on its success in prosecuting both companies and individuals in what is known as the “auto parts investigation.”
The origins of the investigation were not particularly exceptional. On February 24, 2010, as most of the automotive industry focused on Toyota President Akio Toyoda’s congressional testimony about safety and recall issues, the FBI and the Division executed search warrants on the U.S. subsidiaries of three auto parts manufacturers—Denso, Yazaki International and Tokai Rika—for allegedly violating Section One of the Sherman Act. But these three raids spawned what has become the largest cartel investigation in the Division’s history with a rumored 64 parts currently under investigation.
The auto parts investigation has exposed a decade-old “keiretsu” of price-fixing and project allocation among some of the most venerable suppliers in Japan. To date, the Division has collected nearly $800 million in fines from its investigation with Yazaki alone paying $470 million. In addition to the corporate penalties, 11 individuals have been prosecuted and received sentences ranging from a year and a day to two years for their respective roles in the cartel.”
December 13, 2012
The Criminal Matters Committee and the Young Lawyers Committee of the Canadian Bar Association’s National Competition Law Section are presenting an upcoming conference (and teleconference) entitled “A Primer of Immunity and Leniency in Criminal Competition Practice”. This conference/teleconference is to be held on January 17, 2013 from 12:30 – 2:00 pm (Toronto time).
Overview from the CBA:
“Canada’s Competition Bureau has consistently cited effective immunity and leniency programs as the most productive means of discovering and prosecuting cartel behaviour. As these programs continue to play an increasingly vital role in the Canadian legal landscape, both new and experienced practitioners alike must stay current on the latest developments and ensure that they understand the key issues. Please join our distinguished panelists for an informative discussion from the perspectives of both the Competition Bureau and the private bar.”
November 24, 2012
Competition/antitrust law penalties in Canada, of course, do not compare to the magnitude of those in the EU or U.S. (where fines can reach hundreds of millions of dollars or Euros).
Having said that, given that 2012 is drawing to a close, I was curious what the fines in Canada have been over the past year. In this regard, though not exhaustive, the following is a brief tiptoe through the cartel, bid-rigging and misleading advertising fine landscape in the last year in Canada:
$12.5 million – Two companies sentenced in relation to a price-fixing cartel for polyurethane foam (January, 2012) (see: here).
$9 million – Five companies and three individuals held to have violated the misleading advertising provisions of the Competition Act (March 2, 2012) (see: here).
$5.5 million – An airline sentenced in relation to an international air cargo price-fixing cartel (July 19, 2012) (see: here).
$2 million – Three companies sentenced in relation to a gas price-fixing conspiracy in Kingston and Brockville, Ontario (March, 2012) (see: here).
$1.5 million – A company sentenced in relation to a price-fixing conspiracy in the aftermarket automotive lights market; part of the ongoing global auto parts cartel investigation (May, 2012) (see: here).
$500,000 – A company sentenced in relation to a gas price-fixing conspiracy in Belleville, Ontario (April 13, 2012) (see: here).
$125,000 – A company sentenced in relation to a bid-rigging cartel for federal government contracts (July 30, 2012) (see: here).
November 20, 2012
Earlier today, the Canadian Department of Justice announced that the final provisions of its omnibus crime bill, the Federal Safe Streets and Communities Act, eliminating conditional sentences for some serious crimes have come into force. In making the announcement, Canada’s Federal Attorney General said:
“’Our Government has a strong record of putting victims first, getting tough on serious and violent offenders, and keeping our streets and communities safe’ … ‘House arrest should not be available for offenders of serious crimes like sexual assault, kidnapping, and human trafficking. Those who commit these violent crimes must serve their time behind bars, not in the comfort of their homes and that is exactly the issue this legislation corrects.’”
On March 13, 2012, amendments to section 742.1 of the Criminal Code (the “Code”), which were part of the Federal Government’s omnibus crime bill (Bill C-10), received Royal Assent. The changes also restrict the availability of conditional sentences for some Competition Act offences.
In particular, where a person is convicted of an offence and a court imposes a sentence of less than two years, the court may impose a conditional sentence (i.e., served in the community), except in certain circumstances. These now include where an offence is an indictable offence with a maximum term of imprisonment of 14 years or life, which includes sections 45 and 47 of the Competition Act (conspiracy agreements and bid-rigging), as well as manslaughter, aggravated assault, arson and fraud over $5,000.
Other offences for which conditional sentences will not be available also include the following offences when prosecuted by indictment: prison breach, criminal harassment, sexual assault, kidnapping, human trafficking, theft over $5,000 and motor vehicle theft.
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.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
