Archive for the 'Associations' Category
In an interesting story reported by the Montreal Gazette, the Quebec Federation of Real Estate Boards (“QFREB”) has filed a misleading advertising complaint with the Competition Bureau against the sale-by-owner real estate firm DuProprio (see also REM’s article and real estate industry commentary: QFREB files complaint against DuProprio with the Competition Bureau). DuProprio operates as ComFree in other provices (Ontario, Saskatchewan and Alberta).
According to allegations being made by QFREB, DuProprio is misleading Quebec consumers with respect to price and savings claims being made in relation to its real estate sales services (allegedly misleading claims being made “both in terms of their rates and the hypothetical savings that … promised to consumers”).
According to media reports, while the QFREB has not disclosed any specific examples of DuProprio advertisements being challenged as misleading, client testimonials being used by the firm include cost savings between $12,000 and $22,000 and the founder of DuProprio has made public claims that his firm can help clients save an average of $15,000 on broker costs.
While the scope of the QFREB’s Competition Bureau complaint against DuProprio is not yet clear, and it is also not clear if the Bureau will take any enforcement steps against DuProprio, comparative commission claims have caused friction between real estate firms before (both between members and non-members of Canadian real estate boards).
In a speech earlier today, the new Interim Commissioner of Competition, John Pecman, in his first published remarks as Commissioner, discussed compliance, current Bureau enforcement policies and ongoing cases.
Some of the noteworthy aspects of the Interim Commissioner’s remarks include highlighting the Bureau’s continued enforcement in key areas (notably criminal cartel enforcement, including its Immunity and Leniency Programs, and abuse of dominance), highlighting the recent signals in the Maxzone case that the Federal Court will take a stricter approach to sentencing in cartel matters, and in particular compliance programs urging Canadian companies to adopt compliance programs (and discussing the risk of non-compliance and reputational benefits of adopting a credible program).
Compliance
Given that this speech was Mr. Pecman’s first official one as Interim Commissioner, and delivered at a national law firm seminar for firm clients, it is perhaps not surprising that his remarks focused on compliance:
“… the Bureau promotes compliance through enforcement and it provides the education and the tools that assist the corporate community in developing corporate compliance programs. We all know businesses and individuals have a duty to act lawfully — and, the Bureau expects that businesses and their senior management, on the whole, want to comply with the law. It is our hope that by now, it is clear that the legal, economic and reputational risks of non-compliance far outweigh any perceived advantages. Non-compliance costs businesses dearly – not just in terms of financial and legal penalties, but through negative publicity, loss of business opportunities and lost management time. While I suspect that you recognize the value of a compliance program and that many of you have clearly established compliance policies that identify and address questionable behaviour — and aim to prevent it from occurring in the first place, let me take a few minutes to expand on the benefits of such a program.”
The Commissioner reiterated the five elements that are in the Bureau’s view necessary for an effective compliance program: senior management involvement and support; compliance policies and procedures; training and education; monitoring, auditing and reporting mechanisms; and consistent disciplinary procedures and incentives.
Some of the specific compliance themes the Commissioner discussed included compliance programs that are not followed, the importance of senior management promotion of compliance policies and monitoring and internal power to enforce policies. The Commissioner was particularly critical of compliance programs that were well prepared but not followed or effectively delivered. In this regard, the Interim Commissioner said that “the issue is not [a compliance program’s] content, or [its] quality – the issue is internal enforcement …”
Trade Association Compliance
Interestingly, the Interim Commissioner also made a number of specific remarks relating to trade associations. These included highlighting the particular potential risks of associations (saying that associations face “unique compliance issues” and are “naturally exposed to greater risks of anti-competitive behavior”) and emphasizing the importance for associations to have effective compliance programs.
The Interim Commissioner also said that the Bureau would be likely to show an interest in trade association conduct where they engaged in three categories of conduct: (i) restricting the types of professional service practice offerings (e.g., setting limits on things like office location or size); (ii) limiting the number or range of members’ ability to compete (e.g., through mandatory or suggested fee schedules or product standards); or (iii) conduct that reduces incentives to compete vigorously (e.g., information sharing agreements and the exchange of competitively sensitive information).
I am pleased to be delivering two upcoming competition law compliance courses (Competition Law and REALTORS®) for the members of the Kamloops (November 26th) and Victoria (November 29th) real estate boards.
The compliance seminars will include overviews of Canadian competition law enforcement, the Competition Bureau, the conspiracy, misleading advertising, price maintenance and abuse of dominance provisions of the Competition Act and practical real estate related case studies.
Competition Law and REALTORS®: What You Say and Do Matters is a national competition law compliance course designed by the Alliance for Canadian Real Estate Education with the assistance of The Canadian Real Estate Association 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.
____________________
For more information about our regulatory law services contact us: contact
For more regulatory law updates follow us on Twitter: @CanadaAttorney
Advertising Standards Canada (ASC) will be hosting two upcoming seminars on privacy in Toronto and Montreal entitled “The Truth About Privacy: Canada and Beyond”. According to the ASC, the seminars are based on a recent McCann study on how Canadian and worldwide consumers think about privacy.
From the ASC:
“In a transparent world where virtually all aspects of our lives have become digitized, the question of personal privacy keeps arising. What do consumers really think about privacy? To find out, McCann Truth Central asked over 6,000 people worldwide what privacy means to them. With ASC’s support, McCann has now extended its research to include 1,000 Canadians. In this ground-breaking study, McCann probed many areas, including: where do people draw the line between public and private information?; when do consumers feel their privacy has been violated?; what motivates consumers to share their data?; how do Canadian perceptions of privacy stack up against the rest of the world?; how can advertisers manage data as an opportunity and not a risk? Join us as Laura Simpson and David Tucker from McCann Truth Central, McCann’s global thought leadership unit, share the extraordinary insights gleaned from this important study. ASC will also provide an update on our industry’s new self-regulatory framework for online behavioural advertising and the launch of the Digital Advertising Association of Canada.”
Reading some of the recent coverage of the global LIBOR price-fixing investigation made me think about how this case illustrates the sometimes subtle distinction between legitimate and anti-competitive industry “regulation” by associations.
For example, in this particular case, the U.K. Treasury announced today that it had accepted all of the recommendations of an independent review of the LIBOR benchmark, which will include the removal of the British Bankers’ Association (the “BBA”) as the “operational LIBOR administrator” (see also: Libor to be regulated ‘without delay’). LIBOR regulation is, therefore, set to be shifted away from the BBA (a trade association comprised of UK banking and financial services firms) to a new legislatively authorized Financial Conduct Authority.
Specific changes are to include: bringing LIBOR activities within the scope of statutory regulation (Including the submission and administration of LIBOR); creating a new criminal offence for misleading statements in relation to benchmarks, including LIBOR (and amending the language for existing offences); and giving the new Financial Conduct Authority specific power to make rules requiring banks to submit to LIBOR (including a code of conduct).
While the conduct in this specific case, LIBOR and the resulting competitive effects (or potential effects) are all clearly complex, and any wrongdoing not established, the case seemed to me as I said to raise the issue of when an association may assume an industry “regulatory” role and when industry association coordination, rules or barriers may raise competition/antitrust concerns.
I have been doing quite a bit of compliance work lately, and have been seeing a wide range of compliance by companies and associations, ranging from no compliance or guidelines whatsoever to full competition law compliance programs that follow the Competition Bureau’s recommended elements in its Corporate Compliance Programs Bulletin.
Given that the Competition Bureau continues to aggressively enforce the Competition Act in key areas (conspiracy, abuse of dominance, bid-rigging and misleading advertising), I thought that I would post a “top 10” competition compliance list (or as it happened to work out a top 15).
While by no means exhaustive, this list covers much of what companies and associations need to think about to reduce the likelihood that Competition Act issues will arise.
Key Competition & Advertising Compliance Rules
for Companies & Associations
DO NOT agree to fix prices, divide markets (geographic markets, customers or product/service lines) or restrict output with competitors.
DO NOT discuss competitively sensitive topics with competitors (e.g., prices, margins, costs, markets, market shares, marketing or strategic plans, etc.). Exceptions can include discussions in the context of mergers, joint ventures and some other legitimate pro-competitive competitor-competitor activities, but advice should be sought prior to doing so.
DO NOT make decisions with competitors to refuse to deal with or supply to competitors, customers, suppliers or other marketplace participants without obtaining legal advice. Some concerted refusals to deal (i.e., “boycotts”) can raise significant competition law issues, while others may be justified depending on the circumstances – for example, some membership decisions in the association context.
DO NOT agree with competing bidders or tenderers to fix the terms of a bid/tender, not bid/tender or withdraw a bid/tender that has already been made. Also avoid discussing the terms of bids/tenders, or whether your company intends to bid, with competing bidders/tenderers (e.g., at association events or in other forums). Some types of joint bids can be made (e.g., in the context of legitimate bid consortia that meet the requirements of the Competition Act), but legal advice should be sought prior to the preparation and submission of joint bids.
DO NOT incorrectly suggest, in internal documents or correspondence, that anti-competitive activities are occurring (e.g., language that suggests coordination with competitors in relation to pricing, customers or output – e.g., it would “be easier to cooperate than compete”; that decisions are being made for anti-competitive purposes – e.g., to “drive out” a competitor; or “loaded” language – e.g., “dominate”, “squash”, “eliminate”, “stabilize” competition, “us and them”, they’re “not following the rules”, etc.).
DO NOT attempt to interfere with competitors’ suppliers without consulting management or obtaining legal advice.
DO consult management or obtain legal advice before attempting to influence a customer’s or reseller’s prices (or refusing to supply or discriminating against a person where the refusal/discrimination may be related to the person’s low pricing policy).
Earlier today, the European Commission published a summary decision announcing the parties and imposing more than 82 million Euros in penalties against nine firms involved in a price-fixing cartel for mountings for windows and window doors.
According to the EC, the parties operated a cartel spanning the whole of the EEA in which they agreed on common price increases for mountings for windows and window doors, which was in place from late 1999 until mid-2007. Also according to the EC, the cartel involved coordination through trade association activities:
“At the occasion of meetings of associations in Germany in November of each year the parties regularly agreed to increase prices by coordinating the amount (percentage or percentage range) and date of the envisaged price increase. There was a common understanding that the price increase agreed for Germany at these meetings was to be applied in the entire EEA, with adaptations to the specific situation of each country to the extent necessary. In addition to the main meetings in Germany in November, regional representatives met to discuss the application of the agreed price increase to their respective territory.”
The vast majority of trade and professional associations (and their activities) serve many legitimate purposes, including promoting common interests to the public, lobbying and advocacy, research, member education and the promotion and improvement of product standards. However, because association activities by definition involve the interaction of direct competitors, they can in some cases raise serious competition law concerns under competition laws, including the Competition Act.
The Canadian Society of Association Executives (CSAE) is offering a number of new trade and professional association related books. From the CSAE:
“Books to help your Board, your staff, and you. If you lead an association or not-for-profit organization, these publications will help. The following publications are new to the CSAE Bookstore”:
199 Ideas: Creative Marketing & Public Relations
Return on Impact: Leadership Strategies for the Age of Connected Relationships
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
