Archive for the 'News' Category
On July 4, 2012, the Competition Bureau announced that it had issued a No Action Letter clearing the Maple/TMX transaction (see: Competition Bureau Completes Review of Proposed Maple-TMX Transaction).
In two interesting notes yesterday and today (see: here and here) Bloomberg has reported that the Competition Bureau is seeking to overturn an earlier interim stay obtained by RBS in relation to a court order to produce records related to the Bureau’s ongoing LIBOR price-fixing investigation involving Deutsche Bank AG, HSBC, Citigroup Inc., ICAP Plc and RP Martin Holdings Ltd.
According to Bloomberg, the Bureau sought and obtained court orders for the compulsory production of documents (section 11 orders) requiring the firms being investigated to produce documents including lists of individuals responsible for making Yen LIBOR submissions and internal communications. Also according to Bloomberg, the Bureau has taken the position that its [section 11 orders] “may be the only tool available to the Commissioner to obtain evidence of an international cartel formed by foreign-based persons impacting the Canadian economy but where records are held in a foreign jurisdiction …”
On June 21, 2012 the Competition Bureau announced that, together with the Unité permanente anticorruption (UPAC) in Quebec, it has laid 77 charges against 11 individuals and 9 companies in relation to a broad range of allegations that include corruption in municipal affairs, breach of trust, influencing municipal officers, fraud upon the government, production and use of counterfeit documents, accepting reward, advance or benefit, extortion and conspiracy.
With respect to allegations of competition law violations, the Bureau has announced that bid-rigging charges were also laid under section 47 of the Competition Act.
According to the Bureau, this newly announced case is the result of an investigation that ran for more than two years, which uncovered “evidence of a sophisticated collusion scheme giving preferential treatment to a group of contractors to obtain municipal contracts, mainly for infrastructure projects in Saint-Jean-sur-Richelieu and surrounding areas.”
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).
In addition to these conspiracy offences, the Competition Act (somewhat in contrast to, for example, the U.S. where bid-rigging is challenged under Section 1 of the Sherman Act together with other types of cartels, such as price-fixing or market division arrangements) also contains stand-alone bid-rigging offences (under section 47 of the Act).
In this regard, section 47 of the Act makes it a criminal offence to: (i) agree to not submit a bid or tender, (ii) agree to withdraw a bid or tender already submitted (recently added to the Act as a result of the 2009 amendments) or (iii) submit a bid or tender that is arrived at by agreement. Bid-rigging in Canada is also, like the amended section 45, ”per se” illegal, in that no anti-competitive effects on a relevant market (or markets) need to be established in order to make out an offence (though all of the elements need to be established on the standard criminal burden of proof – i.e., beyond a reasonable doubt).
Some common types of coordinated bidding activities that can contravene the criminal bid-rigging provisions of the Act include: “cover”, “courtesy” or “complementary” bidding (some firms submit bids that are too high to be accepted, or with terms that are unacceptable to the party calling for bids, to protect an agreed upon low bidder); “bid suppression” (one or more bidders that would otherwise bid agree to refrain from bidding or withdraw a previously made bid); “bid rotation” (all parties submit bids but take turns being the low bidder according to a systematic or rotating basis); “market division” (suppliers agree not to compete in designated geographic areas or for specified customers); and “subcontracting” (parties that agree not to submit a bid, or submit a losing bid, are awarded subcontracts or supply agreements from the successful low bidder. Trade association activities involving information exchanges about upcoming or proposed tender opportunities, or that facilitate coordination of bids and tenders, can also raise competition law concerns.
The CBA’s National Competition Law Section has posted its letter to the Parliamentary and Senate Standing Committees on Finance and National Finance commenting on the proposed amendments to the Investment Canada Act (ICA) contained in Bill C-38 (for our previous posts on the proposed Investment Canada Act changes see: here and here).
Bill C-38 would, if passed, introduce two changes to the ICA: first, the Federal Government would be authorized to accept security for payment for certain penalties under the ICA, including where undertakings had been breached; second, it would broaden the exceptions to the existing privilege protections under the ICA to allow the Minister of Industry or Canadian Heritage to publicly explain why an investor had been sent a notice under subsection 23(1) of the ICA (a preliminary notice that the Minister was not satisfied that an investment was likely to be of net benefit to Canada, the relevant substantive test under the ICA).
The Section is generally critical of Bill C-38’s “omnibus style” of legislation and lack of “meaningful comment or debate”. The Section also questions whether security payments would increase compliance with undertakings, expresses a concern about the absence of limitations or guidance in the Bill on the circumstances when security may be taken (or the nature or amount) and takes the position that the additional disclosure powers for the responsible Minister under the ICA represents an “inadequate improvement on the status quo” (a criticism echoed by many other observers). In particular, the Section is critical of the permissive nature of disclosure and recommends a requirement to give reasons for Ministerial decisions (and make them public where the Minister approves or rejects an investment).
____________________
For more information about our regulatory law services contact: contact
For more regulatory law updates follow us on Twitter: @CanadaAttorney
On June 15, 2012, the Competition Tribunal released the public version of its decision in the contested BC landfill merger case Commissioner of Competition v. CCS Corporation, allowing the Commissioner’s application and making a divestiture order.
As we wrote in our earlier post, the case, which involves the acquisition by CCS Corporation of Complete Environmental Inc. and its wholly-owned subsidiary Babkirk Land Services, is noteworthy for being the first contested merger case in Canada in six years (since 2005) and an uncommon example of a “prevent” case (mergers in Canada may be challenged under the Competition Act where they either lessen or prevent competition substantially, being the two aspects of the substantive test under section 92 of the Act). While there have been three previous prevent cases considered by the Tribunal in Canada, all of those focused on the substantial lessening aspect of the substantive test under section 92.
The Bureau’s overarching concern in this case was that the completed merger was likely to prevent competition in the hazardous waste disposal service market in the relevant market in Northern British Columbia, given that, in the Commissioner’s view, Complete was ready to enter and compete with the acquirer CCS. In this regard, Complete had obtained regulatory approvals to operate a secure landfill for hazardous solid waste.
The case is also noteworthy as an example of the Bureau’s apparent increased willingness to challenge some transactions post-closing, regardless of size, that may raise competition concerns.
In granting the Commissioner’s application, albeit with a lesser remedy than that sought by the Bureau (i.e., divestiture not dissolution), the Tribunal had some interesting things to say about the analytical framework for “prevent” cases and the competitive effects in this case (all forward looking), efficiencies and the assessment of the appropriate remedy.
A few interesting points from the Tribunal’s decision include:
Substantial Prevention of Competition
The Tribunal found that the completed merger was likely to result in a substantial prevention of competition in the market for the supply of secure landfill services, and in particular that a decrease in average tipping fees of at least 10% would be prevented by the merger.
In coming to this conclusion, the Tribunal applied a “but for” test in assessing competitive effects (i.e., comparing whether the market would, “but for” the merger, be substantially more competitive, or in the Tribunal’s words: “comparing a world in which CCS owns the relevant Secure Landfills … with a world in which Babkirk is independently operated as a Secure Landfill”).
In adopting this test, the Tribunal drew on the Federal Court of Appeal’s decision in Canada Pipe, an abuse of dominance case under section 79 of the Act, finding a parallel between the language in sections 92 (which sets out the substantive test for merger review) and 79 (abuse of dominance).
Interestingly, the Tribunal refused to rely on U.S. authorities suggested by both the Commissioner and CCS to interpret the appropriate analytical framework in a prevent case, finding that they had developed in relation to a different statutory test and were not recently decided.
Entry
In its prevent analysis, the Tribunal held that it should focus on entry, both with respect to existing firms and new entrants. Entry is a key component of the Bureau’s analysis of competitive effects as set out in its Merger Enforcement Guidelines and barriers are a relevant factor under section 93 of the Act that the Tribunal may consider in evaluating the competitive effects of a merger.
Citing Hillsdown, the Tribunal said that “conditions of entry into a relevant market can be a decisive factor in [its] assessment of whether a merger is likely to prevent or lessen competition substantially … because, ‘[i]n the absence of significant entry barriers it is unlikely that a merged firm, regardless of market share or concentration, could maintain supra-competitive pricing for any length of time.’”
While CCS argued that the relevant market was not characterized by significant barriers, pointing to a permissive regulatory approval regime, growing demand for secure waste facilities and short-term contracting practices in the industry, the Tribunal found that effective new entry would likely take a minimum of 30 months from site selection to a complete operational landfill, with no evidence of proposed new entry.
The Tribunal also found that, absent the merger, the vendors (Complete Environmental) would have constructed a new competing secure landfill that would likely have been operational by the fall of 2012 or early 2013.
CCH has reported that the Competition Bureau is set to close three offices.
From CCH:
“As part of the federal government’s recent austerity measures, the Competition Bureau will be closing three regional offices in 2013, sources report.
Offices in Hamilton, Halifax, and Calgary are slated for closure, affecting approximately 30 employees. These locations deal primarily in Fair Business Practices branch enforcement matters such as mass marketing fraud, deceptive telemarketing, deceptive prize notice, and pyramid scheme /multi-level marketing cases. (Editor)”
For more posts from CCH’s competition law blog see:
____________________
For more information about our regulatory law services contact: contact
For more regulatory law updates follow us on Twitter: @CanadaAttorney
Steve Szentesi & Mark Katz
(First published in Competition Policy International, Antitrust Chronicle)
“As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles. We allege that executives at the highest levels of these companies—concerned that e-book sellers had reduced prices—worked together to eliminate competition among stores selling e-books, ultimately increasing prices for consumers.”
(Attorney General Eric Holder, April 11, 2012)
“This was competition on the merits, with Apple providing a superior reading platform on a beautiful 10 inch iPad screen, with color, multi-media, and fixed display, and access to millions of future iPad purchasers. This is classic procompetitive behavior that should be celebrated, not condemned through litigation.”
(Apple Answer, May 22, 2012)
“Absent any direct evidence of conspiracy, the Government’s Complaint is necessarily based entirely on the little circumstantial evidence it was able to locate during its extensive investigation, on which it piles innuendo on top of innuendo, stretches facts and implies actions that did not occur and which Macmillan denies unequivocally. For the record, Macmillan did not conspire with other publishers in New York City restaurants.”
(Macmillan Answer, May 29, 2012)
INTRODUCTION
Before the U.S. Department of Justice (“DOJ”) filed its claim in the eBooks case earlier this year, Canadian class action plaintiffs commenced their own proceedings in the provinces of British Columbia, Ontario, and Quebec.[1]
As in the United States, the Canadian actions are challenging the agency eBook distribution model adopted by Apple and five of the world’s largest book publishers.[2] Specifically, the Canadian plaintiffs allege that Apple and the defendant publishers violated Canada’s price-fixing offense under section 45 of the Competition Act (the “Act”). The publishers allegedly committed the offense by collectively agreeing to discontinue their former wholesale distribution models, under which publishers sold eBooks at wholesale prices to distributors who in turn set retail prices, for a new agency model under which publishers set prices with distributors receiving sales commissions.[3]
The Canadian plaintiffs also allege that the publisher defendants illegally agreed not to set eBook prices below Apple’s iBookstore prices (a “most-favored-nation” provision). Finally, the plaintiffs plead a variety of non-statutory grounds for recovery, including certain common law torts (e.g., unlawful interference with economic relations) and—in Québec—claims under the Civil Code of Québec.[4]
As in the United States, the key substantive issue in Canada will be whether the conduct of Apple and the defendant publishers constitutes an illegal conspiracy. In addition, the case raises some uniquely Canadian issues relating to jurisdiction and certification and the interpretation of Canada’s conspiracy offense.
Before addressing these various questions, we provide a brief summary of the competition class action regime in Canada for background purposes.
A few interesting competition, advertising and regulatory law developments caught my eye today including:
The Competition Bureau published its May Report of Concluded Merger Reviews including Glencore/Viterra (3 advance ruling certificates and 16 no action letters): Monthly Report of Concluded Merger Reviews – May.
The ABA, Antitrust Section has launched new e-book: Handbook of U.S. Antitrust Sources: ABA – Handbook of U.S. Antitrust Sources.
Canadian Lawyer Magazine published a rather good article on corporate anti-corruption policies (which caught my eye given our work in the competition law compliance program area): Why Boards Need to Pay More Attention to Anti-Corruption Policies.
The CBA is offering an advertising law compliance seminar on June 19th entitled “Truth in Advertising 101: Tips for In-House Counsel”. For registration information see: Truth in Advertising 101: Tips for In-House Counsel.
The Canadian Real Estate Association, together with its U.S. counterpart the National Association of REALTORS, are making a play for the Top Level Domain (TLD) .REALTOR for their members: The Canadian Real Estate Association Partners with the National Association of REALTORS in its Application for .REALTOR Top Level Domain Extension.
The Globe has reported on a Wal-Mart review of the world’s greatest corruption risk jurisdictions (Brazil, China, India, South Africa and Mexico): Wal-Mart Bribery Review Flags Brazil and China as Corruption Risks.
The British Columbia Real Estate Association (BCREA) published its May 2012 Connections newsletter (featuring advocacy news and BCREA’s government relations activities) with updates on disclosure and remediation for properties used in drug operations, new legislation to help solve strata disputes and information for REALTORS for the move back to the PST: BCREA – Connections – May 2012.
Constantine Cannon has written an interesting note on the recent National Football League Players Association collusion claim against the NFL, its clubs and team owners alleging a concerted arrangement for a $123 million per-Club salary cap for the 2010 season: Players Charge NFL Imposed Collusive Salary Cap.
The 1709 Blog posted an interesting update on French publishers’ settlement with Google in the Google Book Search Project case: Some French Fresh Air to the Google Books Project.
____________________
For more information about our regulatory law services contact: contact
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)
