Archive for the 'Associations' Category
I am pleased to be delivering the Competition Law and REALTORS course for the Real Estate Board of Greater Vancouver on August 29, 2012. This course has been designed by the Alliance for Canadian Real Estate Education (ACRE) in conjunction with The Canadian Real Estate Association (CREA).
From ACRE:
“Competition Law and REALTORS®: What You Say and Do Matters was designed by ACRE with the assistance of CREA 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.”
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The Canadian council of Chief Executives (CCCE) has published its draft agenda for the upcoming Canada in the Pacific Century conference, to be held in Ottawa from September 24-25, 2012: Canada in the Pacific Century – Draft Agenda.
Topics are to include “Asia’s Rise and the Opportunities for Canada”, “Powering Asia’s Rise: Opportunities and Challenges for Canadian Energy Producers”, “Success Stories and Cautionary Tales From the Executive Suite”, “Canadian Trade Strategy in the Pacific Century” and “Foreign Direct Investment in the Pacific Century”.
Tentative speakers are to include a rather diverse range of representatives from CIBC, the University of Singapore, Canada Pension Plan Investment Board, Munk School of Global Affairs, University of Alberta, BMO, Rotman Institute for International Business, Manulife, McKinsey, Asia Pacific Foundation of Canada, Richardson International, Power Corporation and the BC First Nations Energy and Mining Council, as well as the Minister of Foreign Affairs John Baird and Bank of Canada Governor Mark Carney.
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I am pleased to be participating in the Canadian Bar Association’s upcoming CBA Canadian Legal Conference in Vancouver on a panel on August 13th, part of which is still to be announced, discussing recent competition law developments for in-house counsel:
“Canada’s competition and foreign investment laws are being enforced more vigorously than ever. The Competition Bureau has wide powers allowing them to investigate conduct that might have an anti-competitive impact on the Canadian marketplace, and investigations often involve high-stakes consequences for companies including public stigma, criminal penalties, or unneeded complications arising in the middle of a strategic merger. Learn how to minimize your risk and limit liability with practical guidance from our experienced panel on how to ensure regulatory approval for mergers, strategic alliances and joint ventures. (90 min)”
For more information about the CBA’s conference or this panel see:
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The Malaysian Competition Commission (MCC) has set out its position on information exchanges in the association context, in relation to information exchanges involving the Malaysian Automotive Association (MAA).
According to the MCC, it had previously advised the MAA as to why and how the dissemination of disaggregated information to MAA members could infringe Malaysian competition law.
In her announcement, the MCC’s chief executive officer pointed to potential risks of the formation of horizontal or vertical agreements that may raise competition concerns, principally dampening competitive rivalry among them:
“The detailed information exchanged and shared by the MAA’s members may facilitate them to coordinate their prices and such information could facilitate members to plan their marketing strategy by allocating territories or adjusting their production. This indirectly has the consequence of discouraging members from competing fairly and more effectively against one another.”
The potential issues associated with information exchanges between competitors is not, of course, unique to Malaysia, nor are the types of commonsense precautions trade and professional associations can take to reduce competition/antitrust issues from arising.
In Canada, like many other jurisdictions, the potential risk of exchanging competitively sensitive information in un-aggregated form (e.g., price, cost, market, market share, customer or supplier information) is generally twofold: first, exchanging such information can lead to agreements that violate section 45 of the Competition Act (the criminal conspiracy provision, which prohibits price-fixing, market allocation/division and output/supply restriction agreements between competitors); and second, that information exchanges can be used as evidence by the Competition Bureau, a court or private plaintiff to infer the existence of an agreement.
Also, since the passing of Canada’s relatively new civil agreements provision (section 90.1), information exchanges can also now in theory be challenged on a stand-alone basis (i.e., apart from, for example, a price-fixing agreement) where they prevent or lessen competition substantially (or as well raise issues in relation to otherwise legitimate vertical agreements and arrangements).
For more information about information exchanges and competition law in Canada, and steps associations can take to minimize competition risk, see:
Associations and Competition Law
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In an interesting story in yesterday’s Globe, Jeff Gray reported on a recent decision by the U.S. Court of Appeals for the Seventh Circuit reviving a U.S. antitrust suit against Potash Corp., Agrium Inc. (and several other firms: Mosaic Co. and four Russian and Belarussian potash companies). The plaintffs in this case allege that the seven firms controlled 71% of the world’s potash supply and that they coordinated cuts to production to maintain prices. The case is an interesting example of an alleged output restriction cartel (in Canada, section 45 of the Competition Act prohibits agreements between competitors to restrict output/supply) and a challenge against an export cartel (Canadian competition legislation includes a number of exemptions, including for agreements relating only to exports). Like Canada, however, the U.S. is an “effects” jurisdiction, in that agreements formed abroad that may adversely impact U.S. consumers can be challenged under U.S. antitrust laws. According to the Globe, the recent Court of Appeals ruling reversed an earlier decision quashing the case now in the favour of the plaintiffs and apparently the U.S. DoJ and FTC (who filed submissions in the case). Also interesting is that the pleadings challenge Canpotex Ltd. the Potash/Agrium/Mosaic JV that sells potash outside North America.
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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.
Companies and other organizations, such as trade and professional associations, may exchange information for a wide range of legitimate and pro-competitive purposes. These may include industry research, benchmarking, joint ventures or other business or strategic alliances or in the context of merger negotiations.
Indeed, the exchange of information between companies or association members can have many pro-competitive purposes and effects – for example, facilitating research or production initiatives that would be impossible without cooperation, increasing market transparency and consumer knowledge, leading to enhanced products and services or supporting lobbying and industry advocacy efforts. In this regard, competition enforcement officials, both in Canada and other major jurisdictions, generally acknowledge that markets operate more efficiently when information is relatively free and openly available to industry members.
Having said that, information exchanges – that is the exchange of certain types of competitively sensitive information between competitors, such as price, cost, market, market share, customer, supplier or business or strategic plan information – can represent a significant risk for companies, trade or professional association members (as well as their management and boards) and merging or joint venture partners.
Generally speaking, the exchange of competitively sensitive information between competitors can dampen competitive rivalry by reducing competitors’ uncertainty about their rivals’ competitive and commercial responses. More specifically, the exchange of competitively sensitive information between competitors can raise significant competition law risk under the Competition Act (the “Act”).
In Canada, the principal risk of information exchanges between competitors is that they can lead to agreements that violate section 45 of the Act, which makes it a criminal offence for competitors (or potential competitors) to enter into agreements to fix prices, divide markets or restrict output. Potential penalites under section 45 include criminal fines of up to $25 million (per count), imprisonment or up to 14 years and damages arising from civil actions.
While section 45 does not criminalize information exchanges themselves, the risk of such exchanges between competitors, without appropriate safeguards, is two-fold: first, exchanging (or discussing) competitively sensitive information may result in an agreement that contravenes section 45 (e.g., a price-fixing agreement); and second, an information exchange may be used by a court, the Competition Bureau or a private plaintiff to infer the existence of an agreement that violates section 45 (i.e., be used as “circumstantial” evidence of the existence of an agreement).
Canadian courts have relied on evidence of information exchanges as one basis to conclude that an illegal conspiracy existed and such exchanges are commonly relied on in criminal and civil proceedings in Canada under section 45. Information exchanges have sometimes involved conduct as seemingly straightforward as the discussion of prices at association meetings and in one older, but noteworthy, case, an attempt by industry members to adopt an “open pricing” policy (by exchanging price information with no express agreement to follow the exchanged rates) without contravening section 45.
I am pleased to be delivering the Competition Law and REALTORS course for the Real Estate Board of Greater Vancouver on Monday, June 18th. This course is available to members of Canadian real estate boards. From the Alliance for Canadian Real Estate Education:
“Competition Law and REALTORS®: What You Say and Do Matters was designed by ACRE with the assistance of CREA 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: 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)
