Archive for the 'Competition Law' Category
On January 6, 2012 the Competition Bureau announced its first cartel case under Canada’s amended Competition Act, partially brought under the new section 45 of the Competition Act.
In this case, two companies pleaded guilty of fixing the price of polyurethane foam and were fined a total of C $12.5 million (see: Cartels Update: Bureau Announces $12.5 Million Fine in First Price-fixing Case Under Amended Competition Act and Competition Bureau Sends Signal to Price-Fixers with $12.5 Million Fine).
In making the announcement, believed to be one of a number of new cartel cases currently being investigated, the Bureau highlighted its stepped-up enforcement of cartels:
“’Yesterday’s guilty plea is the first conviction under Canada’s amended conspiracy law,’ said Melanie Aitken, Commissioner of Competition. ‘This investigation highlights the Bureau’s reinvigorated mandate to stop consumer harm caused by price-fixing, and to secure significant fines for these serious criminal offences.’
In other recent public remarks, the Bureau has similarly indicated that it intends to enhance its investigation of cartels under Canada’s new conspiracy (cartel) rules:
“In our Criminal work, we continue to concentrate on the, admittedly, lengthy process of ‘changing the game’— reorienting our approach at the Bureau, our processes, and our mindset to a more appropriately aggressive stance to respond, as we must, to our new more powerful criminal provisions.
As we move forward with our new criminal regime, consistency, consistency, and consistency is our focus. There will be no arbitrary relaxing of standards under the Bureau’s watch — a practice that can only impair predictability and fairness in enforcement. Further, we will use our investigative tools such as searches, wiretaps and section 11 orders.
Cartels and bid–rigging continue to be our focus, given the seriousness of this conduct, and its unambiguously harmful nature. We are committed to advancing cases that matter to Canadians, doing so in a timely manner, and following them through to the end.”
(See: Commissioner of Competition, Keynote Speech at the Canadian Bar Association 2011 Fall Conference).
Based on these and other recent developments, we will be posting overviews of Canadian conspiracy and bid-rigging laws, each concluding with practical steps companies can take to reduce potential criminal liability (and overviews of the Bureau’s Immunity and Leniency Programs, which are increasingly proving to be key for both Bureau investigations and parties to reduce liability).
For Part 1 see: here.
March 2012 will be Fraud Prevention Month. The Competition Bureau will be holding a series of three upcoming panel discussions on the topic of online and mobile mass marketing fraud, including an upcoming event at Concordia University:
“Canada’s Competition Bureau is holding a series of three panel discussions to address the issue of online and mobile mass marketing fraud. One of the discussions, organized in collaboration with Professor Mourad Debbabi, is scheduled for Tuesday, March 13 at Concordia.
Debbabi, Concordia University Research Chair in Information Systems Security, will also participate as a panellist during the discussion. “I’ll be talking about our research, which is related to fraud detection, prevention, and attribution,” he says. “For example, we conduct research on brand abuse (the false use of known brand names to attract visitors to websites), false associations, and detecting and geo-locating cybercrime servers.”
Deputy Commissioner of Competition for the Competition Bureau Lisa Campbell says the purpose of the discussions, also scheduled for March 6 in Ottawa and March 8 in Edmonton, is to promote discussion and raise public awareness about the issue of mass marketing fraud through the Internet and mobile devices.”
We read this rather fine article by Ted Banks recently on corporate antitrust compliance in Competition Policy International and reprint it here with permission. CPI is currently featuring a series of articles on corporate compliance.
By Theodore L. Banks
Ted Banks is counsel to the law firm of Schoeman Updike Kaufman & Scharf: www.schoeman.com and President of Compliance & Competition Consultants, LLC: www.complianceconsultants.com). First published in Competition Policy International (CPI) Antitrust Chronicle (February 2012(1)).
Antitrust Compliance – It’s All About the Culture
INTRODUCTION
What does it take to develop an antitrust compliance program that works? There are a lot of pieces. The employees must be presented with materials that are directly relevant to each of their jobs. It must be done in a way that is easily understandable. It must be ubiquitous, so that little or no effort is needed to gain access to information. There should also be business controls so that violations are not easy to accomplish—or difficult to detect.
We’ve known these things for a long time. In antitrust, which in many ways is the grandfather (or perhaps the godfather) of corporate compliance programs, we’ve had detailed policies, handbooks, training courses, videos, slides. No shortage of information—yet the violations continue. The Justice Department seems to have given up on compliance when it comes to antitrust. Their main method to control cartel behavior is not to encourage prevention (i.e., compliance), but to encourage confession (i.e., the amnesty program). In fact, they are apparently so disgusted with the sorry state of compliance[1] that they got a carve-out from the Federal Sentencing Guidelines when it comes to antitrust. If convicted of a violation of any other federal criminal law, the company can get credit for good intentions if its compliance program met the definition of an “effective” program. But not true for antitrust.
It is not as if antitrust is the only area where compliance programs do not seem to be making continuous improvement. The recently released 2011 National Business Ethics Survey from the Ethics Resource Center is not very encouraging. It showed an increase in companies that employees thought had a “weak ethics culture” and where employees felt pressured to ignore the company’s own ethical policies or break the law. Employees perceive there is more retaliation against employees that report wrongdoing, and more employees thought their managers were unethical. And what do they think of senior management? More perception of self-interest without being guided by ethics.
Interestingly, the failures that were identified were not ones of lack of knowledge, but were failures of culture.
Marlene Koury of Constantine Cannon LLP has written an interesting comparative article on the extension by some international enforcement agencies of protections to whistleblowers, in addition to existing immunity or leniency program protections (see: Making It Easier to Whistle While You Work).
According to the author, while approximately 50 foreign jurisdictions now have leniency programs in place, and while the U.S. pioneered leniency as a cartel detection tool, the U.S. does not yet have whistleblower protections.
In this interesting article, the author describes the fact that, for example, while the Antitrust Division of the U.S. Department of Justice, like Canada’s Competition Bureau, relies on its Corporate Leniency Program to encourage self-reporting of cartel activity, it is limited in that it fails to offer people who are aware of, but not complicit in, cartel activity with any incentive to report:
“The question of whether U.S. antitrust enforcement should emulate foreign whistleblower rewards programs as part of a crackdown on cartels is analyzed in a recent article by a Constantine Cannon attorney: Making It Easier to Whistle While You Work.
Cartel detection and prosecution are top priorities for the Antitrust Division of the U.S. Department of Justice (“Antitrust Division”) – regardless of which political party occupies the White House. Given the often secretive nature of cartels, however, they can be hard to detect. The Antitrust Division relies on its Corporate Leniency Program to encourage self-reporting of cartel activity, by offering immunity and/or reduced sanctions.
As important as leniency programs are, however, they are limited. Given their narrow focus on those at the heart of the cartel, corporate leniency programs fail to offer people who are aware of, but not complicit in, cartel activity with any incentive to report illegal activity. This absence of an antitrust informant rewards program undoubtedly means that much cartel activity victimizing U.S. consumers goes unreported.
Over the past 10 years, four jurisdictions – South Korea, Pakistan, the United Kingdom and Hungary – have addressed the limitations of their corporate leniency programs by adding an antitrust informant, or whistleblower, rewards program. Each jurisdiction noted that the aim of adding a rewards program was to increase reporting from those who are either uninvolved in, or on the periphery, of a cartel.”
Bruce Lyons has posted a very interesting summary of the European Commission’s and U.S. DoJ’s approval of Google’s acquisition of Motorola Mobility on Competition Policy Blog (University of East Anglia)
From Competition Policy Blog:
“The European Commission and US DoJ have approved a (mainly) vertical acquisition of Motorola Mobility (MM) by Google because the specific transaction would not lessen competition. They did so with weary resignation that it is part of the patent arms race into which they will be drawn to adjudicate in the coming months and years. The underlying problem is that ‘fair, reasonable and non-discriminatory’ (FRAND) royalty commitments are fit for purpose as part of standard setting agreements.”
For the complete post see:
Merger Approval of Google-Motorola Mobility and the Failure of FRAND
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We have been seeing an increase lately in penalties imposed in competition cases against individuals in Canada. A number of commentators have also recently noted this shift in enforcement by the Competition Bureau and some Canadian courts.
As a result of this trend, I thought I’d post a short note highlighting some of the recent statements by the Bureau, legislative developments and penalties imposed in one particularly noteworthy case – the ongoing Quebec gasoline price-fixing cartel case (the largest criminal investigation in the Bureau’s history).
For example, the Commissioner of Competition recently indicated that the Bureau had a stronger appetite to pursue penalties against individuals:
“In both cartel and bid–rigging cases, we will be appropriately aggressive when dealing with individuals. To date, 38 individuals have been charged in the Quebec Octane case, and last December, five individuals were accused of rigging bids for private sector contracts in residential highrise buildings in the Montreal area” (see: Keynote Speech at the Canadian Bar Association 2011 Fall Conference).
On February 17, 2012, the Competition Bureau announced that Construction G.T.R.L. (1990) Inc., Acoustique JCG Inc. and Enterprises de Construction OPC Inc. pleaded guilty to bid-rigging in Quebec Superior Court in a case relating to the expansion of the Chicoutimi Hospital in 2003 (see: Quebec Construction Companies Plead Guilty to Rigging Bids for the Chicoutimi Hospital).
In making the announcement, the Bureau said:
“The court ordered Construction G.T.R.L. to pay a fine of $50,000, and Acoustique JCG and Entreprises de Construction OPC to pay a fine of $25,000 each. The companies are subject to a court order for a period of 10 years.
‘Bid-rigging harms everyone but the criminals who cheat the system for their own financial gain,’ said Melanie Aitken, Commissioner of Competition. ‘In this case, the bid-rigging scheme ultimately harmed the Chicoutimi Hospital and Saguenay residents, by preventing the hospital from obtaining a competitive price for its renovation.’”
The construction industry has long been a target of competition/antitrust regulators. For example, some of the construction related cases in Canada, many of which have also involved trade associations and have gone back about a century, have included building contractors, corrugated metal pipe manufacturers, electrical contractors, gypsum dealers and manufacturers, plumbing contractors, road surfacing contractors, chain link fence contractors, among many others.
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