To celebrate our new competition law handbook for associations – The Competition Law Guide for Trade Associations in Canada – we thought we would post a few of the more interesting competition/antitrust association cases from 1905 to 2012.
Our small tiptoe through the history of associations and competition law will include cases involving ambulance operators, banks, building contractors, business forms suppliers, coal dealers, corrugated box manufacturers, corrugated metal pipe manufacturers, electrical contractors, fruit growers, gypsum dealers and manufacturers, insurance salespersons, lawyers, mandarin orange importers, notaries, pharmacists, paper mills, plumbing contractors and suppliers, real estate agents, softwood lumber dealers, surveyors and wholesale grocers, among others.
We’ll wrap up with the ongoing TREB case, the CREA case (settled in the fall of 2010) and a few of the more interesting recent international association cases over the past 10 years or so. To kick things off, the following are a couple of good old ones from the silent film era.
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The King v. Elliott (1905)
In The King v. Elliott, the president of an Ontario coal association was accused of conspiracy under section 520 of the Criminal Code. This case involved association rules that sought to restrict the sale of coal from operators and shippers directly to consumers or non-members. Members of the association were also given rights to certain areas, with the association dictating coal prices and issuing a “look out list” for suppliers of non-members that were not entitled to buy coal directly from suppliers. The Ontario Court of Appeal, in the first successful combines prosecution in Canada, confirmed the lower court’s judgment convicting the accused.
Wampole & Co. v. F.E. Karn Co. Ltd. (1906)
In Wampole & Co. v. F.E. Karn Co. Ltd., plaintiff manufacturing chemists sought damages and an injunction restraining defendant druggists from alleged breaches of a contract, which fixed the wholesale and retail prices of drugs. The defendants argued that the agreements constituted an unlawful conspiracy. The Court agreed, finding that the agreements, which were in the form adopted by two associations (the Association of Retail Merchants and Association of Wholesale Merchants) “entirely destroyed” competition and contravened the Criminal Code.
In an interesting development in the ongoing LIBOR-TIBOR price-fixing case, Reuters, the Financial Post and others are reporting that RBS has successfully obtained a stay in the Ontario Superior Court to produce documents under section 11 orders obtained by the Competition Bureau.
This ongoing investigation, also involving antitrust enforcement agencies in the United States, Europe, Japan and Switzerland, involves allegations that a number of global banks coordinated to fix interbank lending rates, including the Tokyo interbank offered rate or “TIBOR”.
The essence of the investigation appears to be whether alleged manipulations of interbank lending rates, if true, adversely affected the price of derivative and other financial products, such as credit default swaps, mortgages, etc.
This development is rather interesting given, among other things, that while compulsory production orders obtained by the Bureau (both search warrants and “section 11 orders”) have been challenged on many past occasions, including a number of constitutional challenges, they have largely been unsuccessful.
On January 6, 2012, the Competition Bureau announced its first conspiracy (i.e., cartel) case under Canada’s amended Competition Act, partially brought under the amended section 45 of the Act.
In this case, two companies pleaded guilty of fixing the price of polyurethane foam and were fined a total of C $12.5 million (see: Cartels Update: Bureau Announces $12.5 Million Fine in First Price-fixing Case Under Amended Competition Act and Competition Bureau Sends Signal to Price-Fixers with $12.5 Million Fine).
In making the announcement, believed to be one of a number of ongoing cartel cases currently being investigated, the Bureau described its stepped-up enforcement of cartels as “reinvigorated”:
“’Yesterday’s guilty plea is the first conviction under Canada’s amended conspiracy law,’ said Melanie Aitken, Commissioner of Competition. ‘This investigation highlights the Bureau’s reinvigorated mandate to stop consumer harm caused by price-fixing, and to secure significant fines for these serious criminal offences.’
In other recent remarks, the Bureau has similarly indicated that it intends to enhance its investigation of cartels under Canada’s new conspiracy (cartel) rules:
“In our Criminal work, we continue to concentrate on the, admittedly, lengthy process of ‘changing the game’— reorienting our approach at the Bureau, our processes, and our mindset to a more appropriately aggressive stance to respond, as we must, to our new more powerful criminal provisions.
As we move forward with our new criminal regime, consistency, consistency, and consistency is our focus. There will be no arbitrary relaxing of standards under the Bureau’s watch — a practice that can only impair predictability and fairness in enforcement. Further, we will use our investigative tools such as searches, wiretaps and section 11 orders.
Cartels and bid–rigging continue to be our focus, given the seriousness of this conduct, and its unambiguously harmful nature. We are committed to advancing cases that matter to Canadians, doing so in a timely manner, and following them through to the end.”
(See: Commissioner of Competition, Keynote Speech at the Canadian Bar Association 2011 Fall Conference).
Based on these and other recent developments, we have posted a series of posts on Canadian conspiracy law (for Parts 1, 2 and 3 see: here, here and here). This is the final post – practical steps for companies to take to reduce cartel risk.
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PRACTICAL STEPS FOR COMPANIES TO TAKE TO REDUCE CARTEL RISK
Compliance programs. Adopt an effective compliance program or update the competition law section of an existing compliance program. Some of the benefits of a compliance program include reducing the risk of violating the Competition Act, reducing the costs of investigations and proceedings and potentially mitigating penalties. Options range from formal and extensive compliance programs encompassing all company activities to compliance guidelines for key activities (e.g., meetings, information exchanges and specific initiatives, such as benchmarking, research and development initiatives, joint ventures and strategic alliances with competitors, etc.). For more information on competition law compliance programs see: Compliance Programs and the Competition Bureau’s Corporate Compliance Programs Bulletin.
FEBRUARY 29, 2012
The American Bar Association (the Private Advertising Litigation, Consumer Protection and Privacy & Information Security Committees) is holding a teleseminar on February 29, 2012 entitled: “Hot Legal Issues in Social Media Marketing”.
From the ABA:
“Do you want to run a multinational promotion for tweens on Facebook to post videos of their experiences using your product? How about giving rewards to the “mayor” of your store locations on 4-Square? (Or maybe you are asking “What is that?”) Join an expert panel for a fast and furious hour and a half discussing current issues with marketing via social media and resources for your use in counseling through this minefield. The discussion will include new technologies (like 4-Square), marketing to kids, how CAN-SPAM and/or COPPA touch social media, the impact of FTC endorsement/testimonial guidelines, sweepstakes/contest laws, and more!”
We like to highlight particularly impressive competition/antitrust law websites, books and academic projects from time-to-time. In this regard, one of the most impressive ongoing collective scholarship projects is the Essentials of Merger Review project being worked on by members of the American Bar Association’s International Antitrust Law Committee (see: Essentials of Merger Review).
This staggering and ambitious project is currently assembling and updating the essential merger review rules for most countries with merger review systems, including Canada, under the supervision of a team of regional editors.
Currently, the Merger Review Project includes summaries for more than 40 jurisdictions.
On February 17, 2012, the Competition Bureau announced that Construction G.T.R.L. (1990) Inc., Acoustique JCG Inc. and Enterprises de Construction OPC Inc. pleaded guilty to bid-rigging in Quebec Superior Court in a case relating to the expansion of the Chicoutimi Hospital in 2003 (see: Quebec Construction Companies Plead Guilty to Rigging Bids for the Chicoutimi Hospital).
In making the announcement, the Bureau said:
“The court ordered Construction G.T.R.L. to pay a fine of $50,000, and Acoustique JCG and Entreprises de Construction OPC to pay a fine of $25,000 each. The companies are subject to a court order for a period of 10 years.
‘Bid-rigging harms everyone but the criminals who cheat the system for their own financial gain,’ said Melanie Aitken, Commissioner of Competition. ‘In this case, the bid-rigging scheme ultimately harmed the Chicoutimi Hospital and Saguenay residents, by preventing the hospital from obtaining a competitive price for its renovation.’”
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 many others.
There have also been a number of recent bid-rigging cases in Canada involving construction and construction supply related companies.
See for example: Guilty Plea and $425,000 Fine for Bid-rigging in Montreal, Charges Laid in Residential Construction Bid-rigging Scheme in Montreal, Competition Bureau Exposes Sewer Services Cartel in Quebec, Competition Bureau Obtains Court Order Against the Saskatchewan Roofing Contractors Association.
This is the fourth in a series of posts on Canadian bid-rigging law, which will conclude with practical steps for companies to take to reduce potential risk in light of historical risk and current heightened enforcement.
“A report that someone is under investigation or that they have been arrested for, or charged with, a criminal offence is not considered the ‘equivalent of saying that the person has committed the crime unless there is something in the language of the report that suggests the plaintiff’s guilt’ … However, reports of arrest or charges will be capable of conveying a defamatory meaning, ‘where it is stated, either directly or by clear implication, that an offence has been committed, and the qualifications contained in any of the surrounding statements are not sufficient to outweigh or nullify the effect of what appears to be a plain statement of fact’”.
(Ontario Court of Appeal in TPG Technology Consulting Ltd. v. Canada (Industry Canada) 2012 ONCA 87 (Ont. C.A.))
CANADIAN CASL (ANTI-SPAM LAW) PRECEDENTS
Do you need a precedent or checklist
to comply with CASL (Canadian anti-spam law)?
We offer Canadian anti-spam law (CASL) precedents and checklists to help electronic marketers comply with CASL. These include checklists and precedents for express consent requests (including on behalf of third parties), sender identification information, unsubscribe mechanisms, business related exemptions and types of implied consent and documenting consent and scrubbing distribution lists. We also offer a CASL corporate compliance program. For more information or to order, see: Anti-Spam (CASL) Precedents/Forms. If you would like to discuss CASL legal advice or for other advertising or marketing in Canada, including contests/sweepstakes, contact us: contact.
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February 26, 2012
In December 2010 Canada’s new anti-spam legislation was passed (the “Anti-spam Act”) which will, when it comes into force, be one of the strictest anti-spam regimes in the world (see: Anti-spam Act). The Anti-spam Act will require express or implied consent for the sending of “commercial electronic messages” or “CEMs” and also impose form (i.e., disclosure) and unsubscribe requirements for CEMs.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
