The Toronto Sun has reported that the federal Competition Bureau has commenced an investigation into alleged price-fixing activities among concrete companies in the Greater Toronto Area home-building industry.
According to the Bureau, it is investigating businesses in the residential concrete forming industry in the Greater Toronto Area (companies that create basement foundations for residential homes). In addition to contractors, the allegations appear to include a trade association, the Residential Low Rise Forming Contractors Association of Metropolitan Toronto and Vicinity (the LRFA). Also according to Bureau officials, criminal searches have been conducted in the Toronto area.
Under section 45 of the Competition 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).
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 others.
Howard Ullman (mydistributionlaw.com) has written a rather good note on “The ‘top fives’ Concerning Antitrust Compliance Progams” (reprinted with permission).
Given the stepped up enforcement in Canada over the past few years, and the close parallels in enforcement priorities between Canada and the U.S., I thought this was a rather good note to post.
For an overview of competition law compliance in Canada please see our competition law compliance overview: Competition Compliance.
The “Top Fives” Concerning Antitrust Compliance Programs
There are a number of lengthy articles about antitrust compliance programs. This quick post will give you short answers to three questions: (i) why should you have a compliance program? (ii) what features should a program have? and (iii) what red flags should you look for when auditing or reviewing compliance?
Top Five Reasons to Have a Compliance Program
1. It’s the right thing to do, isn’t it? Integrity is important to virtually all businesses.
2. It may help avoid a substantial problem and subsequent expensive litigation.
3. In the criminal price-fixing or bid-rigging context, under the United States Sentencing Guidelines (2011), a corporation’s “culpability score” (used to calculate a criminal fine) can be reduced if it had in place an effective compliance and ethics program. To qualify, among other things, those with operational responsibility for the program should have direct reporting obligations to the “governing authority” (i.e., a corporate board) or an appropriate subgroup. (Note, though, that when the Justice Department uses non-prosecution or deferred prosecution agreements in criminal cases, and in other civil settlements, it may not consider effective compliance programs. In fact, the DOJ takes the public position that if a company is a criminal antitrust defendant or potential defendant, its compliance program must have failed and the company deserves no credit for it. Anecdotal evidence suggests that in some cases, though, the DOJ gives private consideration to companies which are essentially victimized by rogue employees and which have compliance programs.).
4. Having a compliance program is a good excuse to rationalize your pricing and distribution system.
5. Some governmental customers require programs as a condition of doing business with them.
The CBA’s National Section on International Law has called for papers for its next newsletter:
“It is time again to put together a newsletter for the International Law Section. Please consider providing a submission for the next edition. We are looking for articles of interest to all Section members: (i) updates on recent/upcoming activities including substantive developments in your jurisdiction; (ii) case summaries; (iii) new legislation.
Here are a few guidelines to help with your submission: (i) articles only need to be between 300 and 1,000 words; (ii) articles over 1,000 words must be accompanied by a summary or précis (100-300 words); (iii) articles can be submitted in French or English.
Christine Duhaime
(Duhaime’s Anti-Money Laundering Law in Canada)
New York lawyer Matthew Kluger was sentenced yesterday in federal court in New Jersey to 12 years in prison for insider trading. His sentence is the longest term ever imposed for that crime in the U.S.
Kruger stole undisclosed transactional information on approximately 30 deals when he was a corporate lawyer with several U.S. law firms including Cravath, Swain & Moore LLP and Skadden, Arps, Slate, Meagher & Flom LLP. The deals involved Sun Microsystems Inc., 3Com Corp. and Acxiom Corp. According to U.S. prosecutors, trades from the illegal tips generated US$37 million. Kluger tipped off a middleman who subsequently tipped New York securities trader Garrett Bauer, using disposable cellular phones to escape detection. The illegal activity spanned 17 years.
Today was a day for telecom – some of the interesting telecom, competition and regulatory law developments include:
The Acting Chairman of the CRTC delivered remarks to the Canadian Telecom Summit in Toronto on competition in the telecom sector, proposed small telecom ownership rule changes, caps in the upcoming spectrum auctions, Do Not Call List enforcement funding (to allow the CRTC to recover administration and enforcement costs from the telemarketing industry) and anti-spam enforcement: Speech by Leonard Katz to the Canadian Telecom Summit.
The Minister of Industry also delivered a keynote address at the Telecom Summit with brief remarks discussing the spectrum auctions and proposed small telecom ownership rule changes, as well as new funding for SMEs, copyright reform and anti-spam legislation: Speaking Points to the Canadian Telecom Summit, Minister Paradis Challenges Telecom Industry to Innovate, Create and Thrive.
Howard Ullman
(mydistributionlaw.com)
In Smith v. eBay Corp., No. C 10-03825 JSW (N.D. Cal. May 29, 2012) (White, J.), the court refused to dismiss tying claims against eBay and PayPal where the plaintiffs alleged that eBay had tied national on-line auction services to the national on-line payment services provided by PayPal.
Distinguishing the Ninth Circuit’s recent cable TV channel tying case, Brantley v. Universal, Inc. 675 F.3d 1193 (9th Cir. 2012), which I covered here, the court noted that plaintiffs had alleged that defendants’ tying of auction services to on-line payment services had denied alternative payment systems such as Google Checkout access to the largest online marketplace (eBay). Plaintiffs thus alleged, in essence, that they had been precluded from offering Google Checkout as an alternative to PayPal. ”It is reasonable to assume from these allegations that the alleged tying arrangement caused consumers of on-line auction services to forego substitutes for PayPal.”
Howard Ullman (Orrick) has launched a new competition law group on LinkedIn (Competition and Intellectual Property Law):
“The group focuses on intellectual property (IP) law and antitrust and competition law. Although there are some other great LinkedIn groups on various aspects of both IP law and competition law, this group targets the interesting intersection of issues arising from competition in markets involving patents, copyrights, trademarks, and other IP.”
I wish him all the best success!
____________________
For more information about our regulatory law services contact: contact
For more regulatory law updates follow us on Twitter: @CanadaAttorney
A few interesting competition and regulatory law developments caught my eye today including:
The Federal Privacy Commissioner announced that she would be tabling the annual PIPEDA Report in Parliament tomorrow: Media Advisory – Commissioner’s annual report on private-sector privacy issues expected to be tabled in Parliament, Privacy Commissioner news release.
Late last week the Federal Attorney General appointed a new Competition Bureau Chairman: Competition Tribunal Appointment Announced.
Gus Van Harten of Osgoode Hall Law School has published an interesting, if critical, note on Canada’s foreign investment rules (thanks to our friend Harpinder Mangat at Carswell who Tweeted this): Not all foreign takeovers are good for Canada.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
