Archive for the 'Associations' Category
March 21, 2013
The American Bar Association has published an updated version of its Frequently Asked Antitrust Questions (see: here). Aside from the fact that the ABA publishes a number of excellent competition/antitrust texts, this one in particular caught my eye as having a new chapter on associations and antitrust – an area I do quite a bit of work in.
March 21, 2013
In a somewhat unusual but interesting case released yesterday, a U.S. appeals court in Louisiana upheld the ability of Benedictine monks to sell caskets in competition with and more cheaply than state funeral homes (for a copy of the decision see: here).
March 18, 2013
Readers of this blog will know that I often write about bid-rigging (see for example: here, here, here, here, here, here, here and here). Frequently I write about a recent case, investigation, newly announced guilty plea, key types of bid-rigging and penalties and convictions (e.g., the elimination of conditional sentencing for bid-rigging).
March 10, 2013
Readers of this blog will know that two of my main interests are competition/antitrust compliance and cartels. Despite the continually escalating fines and persuasive reasons cartels should be aggressively punished, they seem to chug on in the corporate world unabated. Perhaps it’s the game theory of cartels that I find fascinating. At any rate, in this vein this new paper on cartels and compliance caught my eye by D. Daniel Sokol: “Policing the Firm” (see: here). Abstract:
“Criminal price fixing cartels are a serious problem for consumers. Cartels are hard to both find and punish. Research into other kinds of corporate wrongdoing suggests that enforcers should pay increased attention to incentives within the firm to deter wrongdoing. Thus far, antitrust scholarship and policy have ignored this insight. This article suggests how to improve antitrust enforcement by focusing its efforts on changing the incentives of internal firm compliance.”
February 17, 2013
Surveys can be a great way to collect member information and are commonly used by trade and professional associations. Indeed, one of the most important functions that an association can perform for members is the collection and dissemination of information, which may include statistical information, industry trends, production levels and industry laws and regulations.
Surveys and information exchanges can have many legitimate and pro-competitive effects – for example, facilitating research initiatives and benchmarking exercises, increasing market transparency and customer knowledge, promoting improved products and services and supporting lobbying and advocacy efforts.
Associations may also, however, from time-to-time want to collect and distribute information about members’ business practices or competitors’ activities. This may include information about product or service pricing, markets (or customers and suppliers) or new and contentious business models that may be perceived as a risk or threat to the association, the industry or both.
Information relating to these areas is often referred to as “competitively sensitive information”, which can include information relating to current or future pricing, market shares, costs, customers, markets, market shares or current or future marketing or business plans.
In this regard, surveys and information exchanges can also constitute one of the most significant risks for trade associations and their members.
While the mere exchange of competitively sensitive information is not a competition law offence in Canada (though may in some cases raise concerns under other sections of the Competition Act), there are generally two potential issues with surveys or information exchanges involving competitively sensitive information where appropriate precautions/procedures have not been adopted.
First, the survey or exchange could lead to an agreement that contravenes the Competition Act (e.g., an agreement between competing members to fix-prices, divide/allocate markets or restrict/limit output). Second, a mere exchange of competitively sensitive information could be used by the Competition Bureau, a court or a private plaintiff to infer the existence of an agreement that violates the Act.
In addition to the fact that evidence of improper information exchanges has been used by the Bureau and Canadian courts for over a century to prove illegal agreements between competing members of associations, associations have also been the subject of heightened competition enforcement in Canada over the past few years. The Interim Commissioner of Competition has also recently highlighted inappropriate information exchanges through associations as a concern saying:
“… 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 they are in highly concentrated markets with relatively homogenous product offerings.”
As such, when association business turns to surveys, information exchanges or “benchmarking” that may raise competition issues or involve the exchange of the types of information above, the competition law radar of association leadership should go up. A few important initial questions to ask include:
January 30, 2013
Given that I do a lot of work in the area of competition/antitrust law and trade and professional associations, this upcoming webinar being hosted by Strafford entitled Antitrust Pitfalls for Trade Associations and Members caught my eye.
While there are differences between the application of competition law to associations in Canada under the Competition Act and in the U.S. under the Sherman Act and state laws, many of the principles are the same. From Strafford:
“This CLE webinar will prepare counsel to and members of trade associations to minimize the risks of antitrust liability. The panel will explain recent guidance from the FTC and other federal agencies and outline clear antitrust compliance measures for associations and their members.
Successful antitrust suits can be catastrophic for businesses. Defendants may be liable for millions of dollars in civil forfeitures, triple damages to individual plaintiffs, enormous attorneys’ fees, and even criminal sanctions.
In trade associations, competitors communicate and collaborate. However, associations and members must avoid even the appearance of anticompetitive intent in all activities to ensure they don’t violate antitrust laws and regulations.
Recent cases offer critical guidance on antitrust compliance for trade associations and their members. Trade associations must have clear compliance programs to prevent conduct that would facilitate competitors coordinating on pricing or competition.
Listen as our panel of experienced antitrust practitioners examines the antitrust pitfalls for trade associations and their members, discusses lessons from recent anticompetitive conduct enforcement actions, and offers guidance for minimizing the risk of antitrust violation.”
January 26, 2013
Steve Szentesi
Kevin Wright (Davis LLP)
(with contributions by Jonathan Gilhen – Davis LLP)
Extract from a chapter to be published in CLEBC’s
Annual Review of Law & Practice – 2013
____________________
2012 was a busy year for Canadian competition and foreign investment law, with significant developments in all major areas including misleading advertising, mergers, abuse of dominance, criminal matters (including cartels, bid-rigging and deceptive marketing) and private actions. The following is an overview of some of the key abuse of dominance, private action and other competition developments in 2012.
Abuse of Dominance
Commissioner of Competition v. The Toronto Real Estate Board
In Commissioner of Competition v. The Toronto Real Estate Board, the Competition Bureau (the “Bureau”) commenced an abuse of dominance application against The Toronto Real Estate Board (“TREB”), Canada’s largest real estate board. The Bureau is alleging that TREB is dominant in the residential real estate services market in the Greater Toronto Area (“GTA”), certain TREB membership rules governing the use of its multiple listing service or “MLS®” data are anti-competitive and that competition has been substantially lessened in the relevant market (residential real estate services in the GTA).
In particular, the Bureau’s challenge involves TREB membership rules governing the use of its MLS® data that the Bureau argues restrict or prevent members from offering various innovative new services over the Internet, such as “virtual office websites” or “VOWs” that would allow potential clients to conduct their own property searches on brokers’ password protected websites without the assistance or involvement of brokers. The Bureau is arguing that TREB’s restrictions on using its MLS® data for VOWs has prevented the development of more efficient and cost effective business models by forcing existing members to use traditional broker models and prevented members from joining TREB to launch new Internet based services.
TREB in turn has argued that the rules for the use of its MLS® system are a legitimate exercise of intellectual property rights, its policies do not substantially prevent or lessen competition, that some proposed uses of its data raise privacy concerns and that it cannot be dominant in a market in which it does not participate (as a trade association it does not itself provide any real estate services).
Like the Bureau’s 2009 abuse of dominance challenge against The Canadian Real Estate Association, this case also focuses on membership rules and access to the MLS® system, and more specifically TREB’s ability to exclude and discipline non-compliant members by foreclosing access to its MLS® data. This case was ongoing at the time of writing.
New Abuse of Dominance Enforcement Guidelines
In September 2012, the Bureau issued new Abuse of Dominance Guidelines (“Abuse Guidelines”) that set out its enforcement policy for the civil abuse of dominance provisions of the Competition Act (the “Act”) (sections 78 and 79). The Bureau’s new Abuse Guidelines replace its former 2001 guidelines and several sector- and conduct-specific guidelines and bulletins relating to the airline, grocery and telecommunications industries and predatory pricing.
The new Abuse Guidelines are substantially shorter with significantly less analysis and fewer examples than the Bureau’s previous guidelines. In general, they also provide less comfort for firms regarding several key concepts, notably potential investigation risk in the absence of market power or conduct that is not exclusionary. They also introduce some new and somewhat controversial positions by the Bureau. Some key aspects of the new Abuse Guidelines include:
Preserving market share thresholds with no bright line safe harbors. As before, the new Abuse Guidelines contain no bright-line market share safe harbours below which the Bureau may not commence enforcement (for single firm dominance, a market share of less than 35% will generally not prompt further examination; between 35% and 50% will prompt further examination if a firm appears likely to increase its share through anti-competitive acts; and more than 50% will generally prompt further examination).
Expanding when the Bureau may investigate allegations of abuse. The new Abuse Guidelines state that the Bureau may investigate allegations of abuse of dominance in some instances even where a firm does not currently possess market power.
Joint dominance. The Abuse Guidelines provide new guidance on the degree of coordination the Bureau considers necessary for joint dominance, adopting a new approach to assess joint dominance (considering the ability of existing and potential competition to restrain firms’ market power and competition between firms) and stating that similar or parallel conduct alone is insufficient to conclude that firms are jointly dominant.
Enforcement in the absence of exclusionary conduct. The Abuse Guidelines also indicate that the Bureau may take enforcement action in some cases where conduct is not exclusionary (i.e., not only where a dominant firm engages in conduct that is predatory, exclusionary or disciplinary toward a competitor, the test for an anti-competitive act established by the Tribunal and the Federal Court).
Valid business justification. The Abuse Guidelines discuss what may constitute a valid business justification for the second branch of the test for abuse of dominance under section 79 with some examples, including reducing costs or improvements in technology. While the Federal Court of Appeal held in the leading Canadian abuse of dominance case, Canada Pipe, that proof of a valid business justification for allegedly anti-competitive conduct can offset and provide an alternative explanation for conduct, Canadian courts and the Bureau have to date provided little guidance as to what may in fact constitute a valid business justification.
January 20, 2013
The Canadian Society of Association Executives (CSAE) in Toronto has issued a call for conference speaker proposals for their upcoming 2013 National Conference & Showcase, to be held in Winnipeg in September. I had the honor of speaking at this conference last fall, on the topic of trade associations and competition law compliance. It is an impressive event attended by association executives from across Canada in many sectors. For more information about the conference and speaker proposal process visit the CSAE’s website: CSAE.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
