On April 5, 2012, the U.S. DoJ published a rather interesting speech by the Deputy Assistant Attorney General of the U.S. DoJ, Antitrust Division, Fiona Scott-Morton, entitled “Contracts that Reference Rivals”.
The speech addresses one very specific and interesting aspect of vertical arrangements – namely when antitrust enforcement officials should scrutinize supply and other vertical contracts that reference and depend on information outside the buyer-seller relationship (e.g., competitor information):
“Consider first a contract between firms over the purchase of an input. Some contracts lay out a price per unit which the buyer must pay; others describe a quantity volume schedule open to all buyers, with one per-unit price for purchase of a limited number of units and a, typically lower, per-unit price for purchases of large numbers of units. I will call these standard contracts, and they are the benchmark I have in mind. By contrast, a contract between a buyer and a seller may refer to, and its terms may depend on, information outside the buyer-seller relationship: information from other transactions to which those same firms are party. Those references may be either explicit or implicit, and they can involve a host of factors, including price terms, non-price terms, terms pertaining to the buyer’s rivals, or terms pertaining to the seller’s rivals. I call these Contracts that Reference Rivals, or CRR.
An example of CRR is a purchase agreement containing a market share discount: the buyer will receive a discount on incremental units, or perhaps all purchased units, if it buys 90% or more of its needs from one seller. Note that the price the buyer pays on its purchases from one seller are linked to its purchases at rival sellers. Buying more than 10% of its needs from the rival sellers will increase the price paid in the contract.
Over the years, a number of investigations at the Antitrust Division have involved contracts that reference other transactions in the marketplace. Likewise, economists have studied many types of CRRs. The goal of this paper is to provide a brief survey of past and current CRR cases as well as the findings in the economic literature. The short preview of my conclusions is that the economics literature has identified many circumstances where CRRs have the potential to harm consumers and competition, particularly — but not always — when they involve firms with market power. CRRs have thus been, and will continue to be, the subject of antitrust scrutiny, both at the government and in private litigation.”
On April 4, 2012, the federal CRTC announced that it was calling for public comments on the state of competition in the Canadian wireless sector to decide whether to develop a national code for wireless services (see: CRTC seeks views on the state of competition in the Canadian wireless sector).
In making the announcement, the CRTC said:
“Today, the Canadian Radio-television and Telecommunications Commission (CRTC) announced that it is seeking views on whether the wireless market has changed enough to warrant its intervention in the development of a national code for wireless services. The CRTC recently received several applications suggesting that one be established.
In 1994, the CRTC decided it would not regulate the wireless sector. It was convinced that there was enough competition in the marketplace to guide the industry’s growth and provide Canadian consumers with a choice of innovative services.”
Comments can be submitted online at: Telecom Proceedings Open for Comment.
Earlier this week, the federal CRTC announced that it has taken sweeping enforcement steps against 85 companies for breaching Canada’s telemarketing rules.
In making the announcement, the CRTC said:
“Today, the Canadian Radio-television and Telecommunications Commission (CRTC) concluded a five-month investigation and took enforcement action against 85 companies for breaking the telemarketing rules. This investigation marks the latest step in the CRTC’s efforts, using a variety of enforcement strategies, to reduce unwanted calls made to Canadians.
The CRTC issued citations to 74 telemarketers who had failed to register with the National Do Not Call List operator or subscribe to the National Do Not Call List. Notices of violation were issued to an additional 11 companies for more significant breaches. Administrative monetary penalties totalling $41,000 were imposed on those 11 companies. In setting the penalty amounts, the CRTC recognized that many of these telemarketers are small businesses.”
According to the CRTC, it has imposed penalties of $2.1 million to date.
Under Canada’s National Do Not Call List (“DNCL”) rules, established under the federal Telecommunications Act, consumers may register their residential, wireless, fax or VoIP telephone numbers to reduce the number of telemarketing calls received. Registrations are valid for five years and become effective 31 days after registration (consumers must periodically renew their registrations before expiry).
Advertising Standards Canada (ASC) will be holding a breakfast seminar on Thursday May 3, 2012 (8:30 – 10:15 at the Sutton Place Hotel in Toronto) entitled “Tell the Truth: Honesty is Your Most Powerful Marketing Tool”, with keynote speaker Jonathan Salem.
From the ASC:
“According to Baskin, today’s consumers aren’t looking for conversations with brands as much as about brands. And what they take away from this engagement is far more important than the creative ways marketers deliver messages. Ultimately, consumers determine what is true, and smart companies have realized that every communications medium, especially peer-to-peer online conversations, can and will be used to contribute to their conclusions.
Baskin and his co-author conducted in-depth research on 50 companies to produce case histories about how truthful brands deliver sales, profits, and sustainable relationships. The bottom line is that truthful brands are the most profitable and successful, making truth telling the strategic and creative challenge of the 21st century.”
The University of British Columbia’s National Centre for Business Law will be hosting a downtown speaker series with Anthony VanDuzer, Professor of Law from the University of Ottawa, on Monday April 16, 2012 (12:30 – 1:30 – UBC Robson Square, Vancouver).
Professor VanDuzer will be discussing: The Canada-EU Negotiations for a Comprehensive Economic and Trade Agreement: Redefining the Role of the Provinces in the Negotiation and Implementation of International Trade Commitments.
Corporate Counsel recently published a rather interesting article by Catherine Dunn discussing the increase in the U.S. Department of Justice’s antitrust enforcement caseload and compliance efforts by U.S. companies (see: Antitrust Compliance is Becoming a Top Issue for U.S. Companies).
The article discusses, among other things, the fact that the DoJ’s antitrust pipeline is presently full (described as “white-hot”), cooperation between U.S. and international enforcement agencies, the complexities of cross-border investigations and a more flexible and “holistic” approach by companies to compliance, including competition/antitrust compliance.
The National Competition Law Section of the Canadian Bar Association recently posted upcoming events for its 11 Competition Law Committees, including: a Competition Bureau merger fee forum and roundtable (April 13th), Young Lawyers and Corporate Counsel Committees brownbag (“Working Effectively with In-house Counsel on Competition Files”) (April 19th), a criminal matters roundtable meeting with the Bureau (May 1st), the Competition Law Spring Forum (May 2nd), Mergers/Young Lawyers luncheon (“Merger Review Fundamentals”) and a foreign investment review conference (June 1st).
Stanford University Press will be publishing a new book in May in a new series on global competition law entitled The Global Limits of Competition Law.
From Stanford University Press:
“Over the last three decades, the field of antitrust law has grown increasingly prominent, and more than one hundred countries have enacted competition law statutes. As competition law expands to jurisdictions with very different economic, social, cultural, and institutional backgrounds, the debates over its usefulness have similarly evolved.
This book, the first in a new series on global competition law, critically assesses the importance of competition law, its development and modern practice, and the global limits that have emerged. This volume will be a key resource to both scholars and practitioners interested in antitrust, competition law, economics, business strategy, and administrative sciences.”
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
