The OECD published a new working paper earlier today (November 6th) on Canada entitled “Unleashing Business Innovation in Canada”.
Abstract:
“This paper discusses how to improve Canada’s business innovation in order to boost labor productivity and output growth. Many general framework conditions are highly favorable to business risk-taking and innovation, including macro stability, openness, strong human capital, low corporate tax rates, low barriers to firm entry and flexible labor markets. However, they can be improved further by reduced external and interprovincial barriers in network and professional service sectors, more efficient capital markets, fewer capital tax distortions and improved patent protection. A second focus should be on ensuring that incentives arising from government subsidies are targeted on actual market failures. The very high level of support to business R&D via the federal Scientific Research and Experimental Development (SR&ED) tax credit and provincial top-ups may affect the incentives of small firms to grow and should be redesigned. A plethora of small, fragmented granting programs, mainly geared to SMEs, should be streamlined for better government-business collaboration. The large public share in venture capital should be wound down, as it may crowd out more productive private finance. A final focus should be on boosting manager and worker skills that are intrinsic to all forms of innovation, by filling gaps in training, mentoring and education. This Working Paper relates to the 2012 OECD Economic Review of Canada (www.oecd.org/eco/surveys/Canada).”
The OECD’s new working paper on Canada includes several recommendations for changes to Canada’s Investment Canada Act regime:
“To take full advantage of FDI, Bergevin and Schwanen (2011) and CPRP (2008) have recommended that the Investment Canada Act’s (ICA) net benefit test for foreign investments should be either removed or the onus shifted to government to prove that a proposed investment is not in Canada’s interests, with the reasons publicly stated. As announced in the 2012 budget, the federal government is in the process of making targeted improvements to the Investment Canada Act to enhance transparency while preserving investor confidentiality. The Ministries of Industry and Canadian Heritage would do well also to create procedures to provide foreign investors with timely and binding opinions concerning ICA compliance of prospective transactions (CPRP, 2008). At the same time, ownership restrictions in sheltered sectors, notably telecommunications and broadcasting, need to be lifted in order to get much needed capital, contestability and management talent. This process has already begun: in 2010, foreign ownership restrictions were removed for Canadian satellites and changed to permit greater foreign investment in the air transport sector; and in 2012, the federal government lifted foreign investment restrictions for telecommunications companies that hold less than a 10% share of the total Canadian telecommunications market.”
In an interesting Canadian Bar Association (Competition Law Section) teleseminar earlier today (November 6th), the Competition Bureau’s Acting Senior Deputy Commissioner of Competition, Criminal Matters Branch, discussed the enforcement of cartels in small jurisdictions from a Canadian perspective.
The teleseminar, which included enforcement agency panelists from Canada (Matthew Boswell, Competition Bureau), Ireland (Patrick Kenny, Irish Competition Authority), New Zealand (Mary-Ann Borrowdale, New Zealand Commerce Commission) and Israel (Gadi Perl, Israel Antitrust Authority), focused on three aspects of “Cartel Enforcement in Smaller Jurisdictions”: the preparation of effective cartel laws; practical cartel enforcement issues; and enforcement results. In sum, the spectrum from the preparation of cartel rules to carrying them out.
The Senior Deputy Commissioner’s remarks focused on the Bureau’s Immunity and Leniency Programs and recent enforcement results. Interestingly, the Deputy Commissioner also discussed Bureau efforts to detect domestic (i.e., Canadian) cartels, a renewed focus on associations and the Bureau’s participation in the ongoing Quebec corruption/competition probe, which resulted in the resignation of Montreal’s Mayor last night and involved searches of four Laval engineering-consulting firms this morning.
Continued Reliance on Immunity and Leniency Programs
With respect to the Bureau’s Immunity and Leniency Programs, the Senior Deputy Commissioner summarized some of their key elements, confirmed that they continue to be the Bureau’s most important cartel detection tools (calling them “extremely important to the successful detection” of cartels in Canada), reminding applicants that the threshold to obtain markers was extremely low (to encourage participants to come forward at their “earliest opportunity”), while emphasizing that the Bureau continues to expect strict compliance with the timelines in both programs.
With respect to the latter point, the Senior Deputy Commissioner made it clear that while the Bureau is willing to grant extensions to perfect markers beyond its 30-day guideline, extensions are not granted lightly and the Bureau looks for applicants to justify delays – for example, with reference to internal company investigations, a concrete work-plan to provide information and status updates on the progress of cooperation with other jurisdictions.
The Senior Deputy Commissioner also confirmed the Bureau’s continued expectation for Immunity and Leniency applicants to provide waivers for the Bureau to communicate and cooperate with foreign agencies (although backstopped his waiver comments by noting that the Bureau rarely exchanged documents and understood immunity/leniency applicants’ interest in maintaining a paperless process generally, including through the proffer process).
He also discussed the importance of predictability and transparency for the Bureau’s Immunity and Leniency Programs to operate effectively, noting the fact that the requirements for both Programs are set out in detail on the Bureau’s website (and in its Immunity and Leniency Bulletins), including key requirements, director and officer rights and guidelines for fine calculations.
Interestingly, however, the Senior Deputy Commissioner did not raise the recent Federal Court decision in the Maxzone case, which has created uncertainty of whether the Federal Court will accept mathematically derived joint sentencing submissions (see e.g.: here) particularly around the Bureau’s 20% of affected Canadian volume of commerce figure historically used as a starting point for fine negotiations.
Enforcement Priorities & Recent Developments
With respect to enforcement, which was in some ways the more interesting aspect of the Deputy Commissioner’s remarks earlier today, he discussed the Bureau’s practical need to divide its enforcement resources between international and domestic cartel cases, saying at one point that the Bureau could, if it wished, “completely fill its [cartel enforcement] dance card with international cases”. He did, however, emphasize the Bureau’s continued interest in detecting and commencing enforcement in relation to domestic (i.e., Canadian) cartels.
In this regard, the Deputy Commissioner indicated that while the Bureau’s Immunity and Leniency Programs had been very successful in attracting cross-border cartel immunity/leniency applicants, they had been less so for domestic cartels (saying that they had had “moderate success” in Canada to date).
As such, in order to find new ways to detect Canadian cartels, he discussed a four-pronged enforcement approach currently being utilized by the Bureau involving: (i) developing relationships with Canadian public procurement authorities, (ii) partnerships with Canadian law enforcement agencies, (iii) outreach efforts to Canadian companies and other organizations (e.g., trade and professional associations), and (iv) media and public awareness efforts (e.g., Bureau news releases, education, speeches, etc.).
Late last month, the Federal Privacy Commissioner and Alberta and British Columbia Information and Privacy Commissioners issued new privacy guidelines for mobile app developers to assist them in complying with Canadian privacy laws. In making the announcement, the Federal Privacy Commissioner’s office said:
“The mobile era has led to the placing of an increasing amount of personal data such as contacts, photos, emails and texts onto one device, which can be tracked in real time. As a result, mobile apps may not just provide users with unparalleled information and fun at their fingertips, but also hold the potential for comprehensive individual surveillance. A recent study showed that privacy concerns are swaying consumer choices. In September, the Pew Research Center released a report finding 57 per cent of users surveyed had either dropped or avoided installing an app over concerns about use of their personal information.”
The new privacy guidelines for app developers are generally structured around the following five core principles: accountability, transparency, collection, meaningful consent in the context of small screens and user notices and timing of consent.
Best Practices Checklist
More specifically, the guidelines provide a detailed discussion of the types of potential privacy issues that the Federal and Provincial privacy authorities see in relation to the rapidly developing mobile app industry and the following best practices checklist (a sort of do’s and don’ts privacy compliance list for app developers):
You are accountable for your conduct and your code
Your company, which may just be you, is responsible for all personal information collected, used and disclosed by your mobile app.
Make sure to have controls in place, such as contracts or user agreements, to ensure that third parties accessing personal information through your app are respecting their privacy obligations.
Map out where the information is going and identify potential privacy risks.
On November 5th, in somber but not altogether unexpected remarks, Montreal Mayor Gerald Tremblay resigned following the termination or suspension of a number of City of Montreal employees in the midst of the ongoing Quebec construction corruption probe.
In his resignation speech, the Mayor said that his father told him politics was a “dirty business”, that he had heard of “brown envelopes” for the award of construction contracts in Quebec though denied that he had ever seen them, accepted full responsibility, said that some of his staff had “betrayed his trust” and concluded by saying to Montreal residents that he never betrayed them.
This case has involved testimony of allegations of violations of federal and provincial criminal and competition laws, including violations of the criminal bid-rigging provisions of the Competition Act.
In an interesting announcement made earlier today, Canada’s Federal Privacy Commissioner Jennifer Stoddart issued new privacy guidance for videogames. In making the announcement, the Privacy Commmissioner said:
“Today, while they may be playing in the basement, they’re very likely doing so with others, whether they’re friends from around the block or virtual ones around the world. ‘As gaming consoles are now onramps to the Internet, we need to recognize that, like anything else that brings together personal information and connectivity, there are privacy issues at play … Interactive gaming accounts are increasingly becoming linked to social networks while videogames today are also avenues for advertisers to youth.’”
The Federal Privacy Commissioner’s new videogame play guidance includes information on the collection of personal information from gamers, providing credit card information, privacy controls, linked profiles over online networks and protecting personal information and profiles online.
The Privacy Commissioner also provides the following guidelines for online videogame play:
– Given that personal information is part of many gaming profiles, it is best to use strong passwords (e.g., capital and small letters, numbers and symbols);
– As most user accounts require credit card information, players should check their statements regularly and contact the gaming company or console service immediately for transaction issues;
– When consoles or individual games offer detailed privacy controls, users should examine them closely and choose wisely (e.g., users may opt to restrict profile visibility only to players who they actually know in real life);
Given that the Canadian Federal Government’s review of the CNOOC/Nexen was extended, again, last Friday until December 10th, this excellent note a couple days ago by Bruce Lyons (Competition Policy Blog in the U.K.) caught my eye: Beware of Siren Advice for Political Control of Foreign mergers.
In this thoughtful but critical note, Lyons argues that the U.K. which, unlike many other major jurisdictions, does not even have mandatory merger control notification, should be wary of potential government intervention in the change of control of its firms.
In this regard, Lyons discusses a recent review by a former U.K. trade minister (Lord Heseltine) entitled No stone unturned in pursuit of growth which, according to Lyons, includes proposals to interpose U.K. government review into foreign acquisitions to achieve objectives, among others, including building U.K. research and development capacity and domestic supply chains.
Given the fact that a series now of high-profile transactions in Canada have been blocked (or at minimum delayed) by either the Federal Government or Federal regulators (for example, as widely reported, BCE’s proposed acquisition of Astral, Malaysian state-owned Petronas’ efforts to acquire Canadian Progress and now last Friday CNOOC’s bid to acquire Nexen) it struck me as rather surprising that another leading jurisdiction would be contemplating adopting rules to reduce merger clearance certainty, increase opaqueness and insert government omniscience in a world where investment borders are rapidly dissolving.
According to Lyons’ note, the U.K.’s former trade minister provides a list of capabilities that should be kept out of foreign hands, including the U.K.’s R&D capability, intellectual property, advanced manufacturing capabilities and expertise in complex finance and insurance (all of which, according to the former finance minister, are “vital to the U.K.’s future prosperity”). In a world of increasing “communities” of thought, partnerships and free-flow of capital, such insular and xenophopic thinking also struck me as, well, rather like Japan in the 16th or 17th centuries. Canada recently officially eliminated lower foreign investment review thresholds for all “sensitive” industries, except cultural industries, although this may not be obvious given the predominance of the term “sensitive” in discussions of assets varying from potash, to shale gas to big-box improvement stores.
A new global competition/antitrust law text that caught my eye is the soon to be published by Kluwer: Landmark Cases in Competition Law: Around the World in Fourteen Stories (forthcoming, January, 2013). I noticed this upcoming new book based on its unique approach to competition law in key jurisdictions, including Canada: a discussion of one “landmark case, scenario or ‘saga’ from each jurisdiction.” Evidently a sort of competition law Canterbury Tales. In addition to Canada, the survey also includes discussions of Australia, Brazil, the EU, Germany, Japan, New Zealand, South Africa, the UK and U.S.
Abstract:
“It is the thesis of this fascinating and highly instructive book on competition law that an examination of one landmark case, scenario, or ‘saga’ each from a range of legal systems leads to a thorough understanding of the issues informing and arising from competition policy, law, and legal practice. To this end, leading scholars from 14 jurisdictions enhance their academic authority and rigour with an element of panache to describe a particularly salient case in each of their countries, commenting in depth on the contribution of the case to the development of their particular competition law culture and to the case’s enduring significance for competition law and its enforcement from a global perspective. There are chapters for each of thirteen countries as well as the European Union, preceded by an informative and thoughtful introduction. For each landmark case selected, the legislative background, the case facts, and the legal ruling and reasoning are all minutely described, along with commentary, critique, and assessment of the case’s impact and contemporary significance. The cases cover vast swathes of the competition law territory in terms of substance and procedure, dealing with cartels, abuse of dominance, mergers, and vertical restraints, and involving diverse forms of public and private enforcement processes.
Aspects covered include the following: the tension between the objective of economic efficiency and that of low prices; the public interest test; bid-rigging in public procurement; entitlement of dominant companies to compete as other firms do; the hard-to-draw line between legitimate competition and unlawful monopolizing conduct; the dangers of eclectic borrowing in the development and interpretation of competition law rules; price-fixing collusion; ‘hub and spoke’ cartels; resale price maintenance agreements and the U.S. ‘rule of reason’; the increasing use of private enforcement and the right for victims of a competition law infringement to seek compensation; merger control in energy markets and the political use of merger review rules to benefit domestic firms; cooperation with criminal enforcement agencies and prosecutors; the role courts play in undertaking adequate legal supervision of competition authorities; leniency processes and obtaining access to ‘confidential’ whistleblowing documentation; imposition of administrative fines and other deterrence-based sanctions; and how the ‘consumer welfare’ standard is interpreted.
In an interesting story reported by the Montreal Gazette, the Quebec Federation of Real Estate Boards (“QFREB”) has filed a misleading advertising complaint with the Competition Bureau against the sale-by-owner real estate firm DuProprio (see also REM’s article and real estate industry commentary: QFREB files complaint against DuProprio with the Competition Bureau). DuProprio operates as ComFree in other provices (Ontario, Saskatchewan and Alberta).
According to allegations being made by QFREB, DuProprio is misleading Quebec consumers with respect to price and savings claims being made in relation to its real estate sales services (allegedly misleading claims being made “both in terms of their rates and the hypothetical savings that … promised to consumers”).
According to media reports, while the QFREB has not disclosed any specific examples of DuProprio advertisements being challenged as misleading, client testimonials being used by the firm include cost savings between $12,000 and $22,000 and the founder of DuProprio has made public claims that his firm can help clients save an average of $15,000 on broker costs.
While the scope of the QFREB’s Competition Bureau complaint against DuProprio is not yet clear, and it is also not clear if the Bureau will take any enforcement steps against DuProprio, comparative commission claims have caused friction between real estate firms before (both between members and non-members of Canadian real estate boards).
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
