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 Competition 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 new cartel cases currently being investigated, the Bureau highlighted its stepped-up enforcement of cartels described 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 will be posting overviews of Canadian conspiracy and bid-rigging laws, each concluding with practical steps companies can take to reduce potential criminal liability (and overviews of the Bureau’s Immunity and Leniency Programs, which are increasingly key to Bureau investigations and parties implicated in criminal conduct to reduce liability).
On February 24, 2012, Canada’s Privacy Commissioner Jennifer Stoddart sent an open letter to Google to request additional information about Google’s new privacy policy and set out some concerns. The Commissioner’s letter follows a meeting between representatives of the Office of the Privacy Commissioner and Google (see: Letter to Google regarding privacy policy changes).
As has been widely reported, Google is taking steps to reduce the number of its privacy policies (currently over 70) relating to its many products to a single general privacy policy (while retaining some product-specific privacy policies) (see e.g.: Advertising Update: Google’s New Privacy Policy).
In making the announcement, the Commissioner said:
“I am writing further to Google’s recently announced plans to change its privacy policy, effective March 1, 2012, and further to a meeting between a representative of Google and officials from my Office. I am pleased to take this opportunity to provide you with some of our feedback and to request some additional information on certain practices.
As we understand it, Google has a number of goals that it wishes to achieve through this effort. Primarily, the company is aiming to reduce the number of privacy policies that currently exist (over 70) in relation to its many different products and services to one general privacy policy. In addition to that general policy, Google will still retain a small number of product-specific policies (e.g., for Google Wallet) where it believes that this makes sense or is otherwise required by law. The other goals are to create a simpler, more intuitive user experience across multiple Google products; improve search results; and make ads more relevant.
I would first like to acknowledge Google’s efforts to alert users to the new policy. Google has worked hard to simplify and streamline its privacy policy. We have long been calling for better, more user-friendly privacy policies and yours is a step in the right direction. We do, however, have a number of questions and concerns, as outlined below, that we would appreciate receiving a response from you on.”
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 third 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.
For Parts 1 and 2 see: here and here.
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The Antitrust Section of the American Bar Association will be holding a teleconference on February 28, 2012 entitled “Antitrust Update for In-House Counsel” from 12:00 – 1:00 p.m. Eastern Time.
From the ABA:
“Join the Corporate Counseling Committee for its monthly Antitrust Update for In-House Counsel, a telephonic committee program to be held on Tuesday, February 28 from Noon to 1pm ET.
This program, which will cover developments occurring during the month of September, continues our popular monthly series of committee programs in which antitrust practitioners report on the most recent developments at the agencies and the courts. The program will last approximately one hour, including a Q&A period at the end.”
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The British Columbia Real Estate Association has published its 2012 Legal Update book for members of British Columbia real estate boards and BCREA.
This 2012 installment of its annual legal update series includes the following chapters:
Does One Have to be a Lie Detector in Real Estate (Greg Blanchard), Material Latent Defect or Stigmatization (Brian Taylor), Condition or Covenant (Peter Ramsay), Damages for Failure to Complete (Devin Kanhai), Licensee Remuneration – Entitlement (Devin Kanhai), The Homeowner Protection Act – What Needs to be Considered (Doug Cox and Jan Calkins), REDMA Update (Jennifer Clee), Electronic Transactions Act (Ed Wilson) and Canadian Competition Law – The New Competition Act – The First 2 Years in Force (Steve Szentesi).
The competition law update chapter in this new publication, prepared by our firm, includes discussions of: (i) the 2009 and 2010 amendments to the Competition Act, (ii) Competition Act enforcement and penalties, (iii) key enforcement developments in the past two years (including conspiracy and misleading advertising law developments), (iv) a discussion of key implications of Canada’s new competition laws for Canadian real estate agents and brokers, (v) a discussion of the CREA abuse of dominance case (settled at the end of 2010) and mere postings and (vi) and a brief overview of Canada’s new anti-spam legislation (Bill C-28).
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The Maple Group Acquisition Corporation (“Maple”) announced earlier today that it would extend its offer once again to acquire the TMX Group.
In making the announcement, Maple said:
“Maple and TMX Group are committed to the transaction and are working diligently to obtain the required regulatory approvals. To this end, they are in ongoing discussions with the regulators and have made numerous submissions to them, including a proposed CDS pricing model, and have proposed remedies to address concerns regarding equities trading.
As previously disclosed, under the Support Agreement between Maple and TMX Group, Maple has agreed to use commercially reasonable efforts to obtain all required regulatory approvals, including from the securities regulatory authorities and the Commissioner of Competition, and to accept all conditions, commitments and undertakings necessary to do so, provided they do not result in a “Material Detriment” as defined in the Support Agreement. Maple is continuing to seek to resolve outstanding issues and concerns raised by the securities regulatory authorities and the Competition Bureau. However, there can be no assurance that remedies short of a Material Detriment will address the issues and concerns raised by the securities regulatory authorities and the Commissioner or that the required regulatory approvals will be obtained.
Details of Maple’s offer are available in its Offer and Circular dated June 10, 2011, as varied by the Notice of Variation dated June 24, 2011, the Notice of Change and Extension dated August 8, 2011, the Notice of Extension dated September 29, 2011, the Notice of Variation and Extension dated October 31, 2011, the Notice of Extension dated January 31, 2012 and a further Notice of Extension to be filed by Maple on SEDAR and mailed to TMX Group’s shareholders in respect of the current extension of the offer. These documents are also available at www.abetterexchange.com.”
In an interesting recent decision by the Ontario Court of Appeal, the Court held that statements made by an enforcement agency, in this case the Competition Bureau, in relation to a criminal investigation, can be defamatory (see: TPG Technology Consulting Ltd. v. Canada (Industry Canada) 2012 ONCA 87 (Ont. C.A.)).
This decision is interesting for the Court’s analysis of Canadian defamation law, including the test to strike out a defamation claim, as well as its discussion of the distinction between statements that merely describe an accused being charged or investigated compared to those that suggest an accused is guilty of an offence.
According to the appellants, the Bureau’s charges against them and others of bid-rigging in violation of section 47 of the Competition Act and the manner in which those charges were communicated to the public were part of a “deliberate and malicious effort” to discredit and harm them.
William E. Kovacic (George Washington University), Robert C. Marshall (Pennsylvania State University), Leslie M. Marx (Duke University) and Halbert L. White (University of California) have published a new article on plus factors and agreement in antitrust law (see: “Plus Factors and Agreement in Antitrust Law”).
Summary of article (abstract):
“Despite the crucial role of concerted action to collusion among rival firms, few elements are more perplexing than the design of evidentiary standards to determine whether parallel conduct stems from collective or from unilateral decision making. Courts allow a collusive agreement to be established by circumstantial evidence, but the evidence must show additional evidence — “plus factors” — beyond parallel movement in price. Chief plus factors identified by courts have included actions contrary to each defendant’s self-interest unless pursued as part of a collective plan, phenomena that can be explained rationally only as a result of concerted action, evidence that defendants created the opportunity for regulation communication, industry performance data that suggests successful coordination, and the absence of a plausible legitimate business rational for suspicious conduct.
The frailties of the existing analytical tests for assessing plus factors impede the economically sensible resolution of many high-stakes antitrust cases where decisions made on the issue of conspiracy are decisive and such inadequacies may be magnified in the future. No cases have offered useful operational means for determining when the defendants have engaged in something more than consciously parallel conduct. It is possible to improve on existing approaches by focusing more precisely on the forms of behavior that firms use to communicate their intentions and to execute the tasks needed to achieve coordination on pricing, output, and other dimensions of effective collusion. Case law addressing plus factors has not established a methodology for ranking plus factors according to their probative value. The authors believe that the actions of an explicit cartel, and the outcomes of those actions, should illuminate the path to identifying plus factors and that any of those actions that surely do not result from unilateral conduct should be given special attention. Further, courts and enforcement agencies cannot address the agreement in question without awareness of remedial issues that stand in the background. Courts are left with a conundrum because they cannot meaningfully instruct firms not to react to their rivals’ pricing. When firms in an industry are players in a repeated game with substantially incomplete and asymmetric information, courts can examine buyer actions to attempt to distinguish between conduct that is an agreement in violation of the Sherman Act and conduct that is not.
This Article offers a way to increase understanding of plus factors and to improve the manner in which enforcement agencies and courts interpret them in individual cases by advocating the use of basic probability theory to rank plus factors in terms of their probative value. It proposes a formal definition of plus factors, a taxonomy of plus factors, and a coherent methodology for ranking them in terms of their probative values. It also proposes that plus factors should be considered in constellations whenever such groups are present because the probative value of the group can be far greater than the individual plus factors in the group.”
Circumstantial evidence and plus factors under Canadian law
Under the Canadian Competition Act, a court may infer the existence of a conspiracy, agreement or arrangement under the conspiracy offences of the Act (section 45) based on circumstantial evidence, with or without direct evidence of communication between or among the alleged parties (though a conspiracy agreement must still be proven on the criminal burden of proof, i.e., beyond a reasonable doubt). Some common examples of “plus factors”, sometimes also referred to as “facilitating factors”, that can be used to prove an unlawful conspiracy agreement, include evidence of meetings, simultaneous price increases or other simultaneous actions, statements inferring the existence of an agreement, enforcement or monitoring and conduct that can only be explained by the existence of an agreement.
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Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
