Advertising Standards Canada (ASC) will be hosting two upcoming seminars on privacy in Toronto and Montreal entitled “The Truth About Privacy: Canada and Beyond”. According to the ASC, the seminars are based on a recent McCann study on how Canadian and worldwide consumers think about privacy.
From the ASC:
“In a transparent world where virtually all aspects of our lives have become digitized, the question of personal privacy keeps arising. What do consumers really think about privacy? To find out, McCann Truth Central asked over 6,000 people worldwide what privacy means to them. With ASC’s support, McCann has now extended its research to include 1,000 Canadians. In this ground-breaking study, McCann probed many areas, including: where do people draw the line between public and private information?; when do consumers feel their privacy has been violated?; what motivates consumers to share their data?; how do Canadian perceptions of privacy stack up against the rest of the world?; how can advertisers manage data as an opportunity and not a risk? Join us as Laura Simpson and David Tucker from McCann Truth Central, McCann’s global thought leadership unit, share the extraordinary insights gleaned from this important study. ASC will also provide an update on our industry’s new self-regulatory framework for online behavioural advertising and the launch of the Digital Advertising Association of Canada.”
“Is everything sacred in Canada? At first it was a hole in the ground. Then it was the stock exchange and a DIY chain. This week, regulators blocked two more big deals, including a $5.2 billion bid for Progress Energy by Petronas of Malaysia. Taken as a whole, these actions signal the market for corporate control in Canada – especially when it comes to foreign buyers – is effectively closed.”
(Slate)
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“Sources say Ottawa asked Petronas at the eleventh-hour for a delay to rule on its bid to take over Progress until Dec. 7, so it can finalize its new policy. Industry Canada, which is reviewing the transaction, had already delayed its decision once and had promised to produce a ruling by Friday.”
(Financial Post)
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“The lack of transparency is starting to reach new heights. Who releases such an important decision at midnight on a Friday? Someone who has something to hide and no way to explain.”
(NDP leader Thomas Mulcair)
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In a week of surprises that included the CRTC denying BCE’s BCE’s acquisition of Astral, late on Friday night the Minister of Industry announced that he was not satisfied that Petronas’ proposed acquisition of Progress Energy Resources was likely to be of net benefit to Canada:
“I can confirm that I have sent a notice letter to Petronas indicating that I am not satisfied that the proposed investment is likely to be of net benefit to Canada. I came to this decision after a careful and thorough review of the proposed transaction. Under the Investment Canada Act, Petronas now has up to 30 days to make any additional representations and submit any further undertakings, which can be extended with my agreement and that of the investor. Subsequently, I will either confirm this initial decision or approve the acquisition.”
While the Minister reiterated similar earlier statements by the Prime Minister and other Government officials that Canada remained open to investment (saying that the Government remained “committed to maintaining an open climate for investment”), this decision casts those statements further in doubt and, while statistically absolutely true, raises again the question of the applicable rules investors and in particular SOEs must meet.
On Sunday, on CTV’s Question Period, Canada’s Finance Minister Jim Flaherty also said that Canada “welcomes foreign direct investment” but that Petronas type bids must ultimately be “correct”.
The Petronas/Progress deal had received some, but by no means as much, attention as the pending CNOOC/Nexen deal, which has recently been extended until November to allow for a national security review.
According to media reports, Petronas refused the Government’s request for more time to review its proposed bid to acquire Progress, had grown frustrated with negotiations attempting to satisfy the Investment Canada Act’s (ICA) net benefit to Canada test and according to media sources was getting little Government input on required commitments. On October 5th the initial ICA review period had been extended (see: here).
The Minister has an initial 45 days to review proposed investments under the Investment Canada Act, which can be unilaterally extended another 30 days (with further extensions with consent of an investor). Where an investment is opposed, investors may make further submissions in an attempt to clear a transaction with further undertakings.
In a brief news release issued by Progress on Saturday, it said:
“The Board of Directors, management and employees of Progress are disappointed in the announcement. ‘Progress will be working over the next 30 days to determine the nature of the issues and the potential remedies’ said Michael Culbert, President and Chief Executive Officer of Progress. ‘The long-term health of the natural gas industry in Canada and the development of a new LNG export industry are dependent on international investments such as PETRONAS’”.
This decision is rather surprising, although it is always difficult to predict whether transactions will receive ICA clearance based on the opaque political nature of the ICA net benefit criteria and fact-specific nature of every transaction and related undertakings.
State-owned enterprises are subject to an additional layer of review in Canada under Investment Canada’s SOE Guidelines that set out additional factors (relating to the corporate governance and commercial orientation of the SOE) in addition to the general net benefit to Canada factors in section 20 of the ICA. SOEs may also be required, as is being illustrated in this case, to provide more stringent undertakings than private investors – for example, undertakings for the complete duration of a proposed investment.
The American Antitrust Institute (aai) has published a new working paper entitled “Private Recoveries in International Cartel Cases Worldwide: What do the Data Show”?, which includes data on private actions in Canada.
Abstract:
“Despite being around for more than a century in the United States, the role played by ‘treble damages suits’ in cartel enforcement is controversial … Some think of them as exemplars of a hyper litigious society, while others perceive them as essential elements in a rational cartel-enforcement program. In the EU and other jurisdictions outside the United States, the desirability and ideal design of private rights of action are currently matters of intense debates … The purpose of this paper is to examine the size and role played by private damages recoveries in antitrust suits directed at contemporary hard-core international price-fixing cartels. After discussing the data source for this paper, I then describe the amounts and trends in U.S. settlements in private antitrust suits since 1990, the dominance of U.S. cases in the world, the extent to which private suits follow government investigations, and the severity of private recoveries relative to affected sales and to damages caused by the cartels. The last ratios can be used to judge the ex post deterrence power of current monetary cartel penalties. This paper elaborates and extends a book chapter by the author …”
Some of the Canadian data in this recent aai paper include statistics showing cartel damages between 1990 and 2012 of more than $436 million (second to the U.S.), that nearly all private competition/antitrust suits in Canada are follow on suits following U.S. actions (only 10 of the 130 sample Canadian recoveries were in relation to solely non-U.S. actions), the U.S. is the leader in nominal settlement and restitution amounts representing 93% worldwide (with Canada representing 1% and the rest of the world 6%), that Canada is relatively severe in penalties imposing a median amount of fines around 15% (median fines of about 17.5% for global cartels). This study, however, appears to confuse somewhat penalties imposed under the Competition Act (e.g., guilty pleas) with private civil action settlements under the Act. Nevertheless, it includes rather a lot of information and data.
“The CRTC’s well-reasoned decision to deny Bell’s application to acquire Astral addressed concerns of Canadians and consumers about the scope and impact of this transaction.”
(Canada’s largest media union,
the Communications, Energy and Paperworkers Union of Canada)
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“We commend the CRTC for this courageous decision. We believe Canadians should have fair and open access to content”
(Rogers)
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“This is a decision that should not stand. Canadian consumers were told today by the CRTC that they don’t deserve more – more choice, more competition, more Canadian content funding – all of which Bell and Astral committed to with this transaction.”
(George Cope, President and CEO of Bell Canada and BCE Inc.)
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“Evidently, this decision was taken in the best interest of not only the Canadian broadcasting system, but also in the best interest of all Canadian consumers. It demonstrates the CRTC’s desire to ensure healthy competition in the Canadian communications industry and to protect the interests of consumers.”
(Cogeco Cable Inc. CEO)
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On October 18, 2012, in a decision that to be honest surprised me a little (although perhaps it shouldn’t have), the CRTC announced that it was denying BCE Inc’s bid to acquire Astral Media Inc.
The decision is noteworthy for, among other things, its speed (public hearings had only concluded about a month ago), breadth (the decision to block the deal entirely) and a further expression of the CRTC’s apparently reinvigorated focus on the consumer. In this regard, some commentators (see e.g.: here) have noted that the decision is consistent with other recent consumer-oriented initiatives, including upcoming public consultations for a new mandatory wireless code that has started online (with public hearings scheduled to begin in the early new year) and emphasis on consumer access in the CRTC’s recently issued Three Year Plan.
Other CRTC initiatives lately also show its focus on the consumer include the first new interpretation guidelines for the upcoming anti-spam legislation issued last week (which are being criticized by some in the business sector as overly onerous to comply with and impractical in some respects) and stepped up Do Not Call List enforcement in the telemarketing area (e.g., the CRTC’s enforcement action against 85 companies for Do Not Call List violations last spring and exercising more enforcement muscle against offshore deceptive telemarketing – see e.g.: CRTC takes action against telemarketers offering anti-virus software).
In making the announcement earlier today, CRTC Chairman Jean-Pierre Blais said:
“’BCE failed to persuade us that the deal would benefit Canadians,’ said Jean-Pierre Blais, Chairman of the CRTC. ‘It would have placed significant market power in the hands of one of the country’s largest media companies. We could not have ensured a robust Canadian broadcasting system without imposing extensive and intrusive safeguards, which would have been to the detriment of the entire industry.’ The proposed transaction raised substantial concerns related to healthy competition, the concentration of ownership in the television and radio markets, vertical integration and the exercise of market power in an anti-competitive manner. The CRTC was not persuaded that the transaction would have provided significant and unequivocal benefits to the Canadian broadcasting system and to Canadians sufficient to outweigh its concerns.”
Reading some of the recent coverage of the global LIBOR price-fixing investigation made me think about how this case illustrates the sometimes subtle distinction between legitimate and anti-competitive industry “regulation” by associations.
For example, in this particular case, the U.K. Treasury announced today that it had accepted all of the recommendations of an independent review of the LIBOR benchmark, which will include the removal of the British Bankers’ Association (the “BBA”) as the “operational LIBOR administrator” (see also: Libor to be regulated ‘without delay’). LIBOR regulation is, therefore, set to be shifted away from the BBA (a trade association comprised of UK banking and financial services firms) to a new legislatively authorized Financial Conduct Authority.
Specific changes are to include: bringing LIBOR activities within the scope of statutory regulation (Including the submission and administration of LIBOR); creating a new criminal offence for misleading statements in relation to benchmarks, including LIBOR (and amending the language for existing offences); and giving the new Financial Conduct Authority specific power to make rules requiring banks to submit to LIBOR (including a code of conduct).
While the conduct in this specific case, LIBOR and the resulting competitive effects (or potential effects) are all clearly complex, and any wrongdoing not established, the case seemed to me as I said to raise the issue of when an association may assume an industry “regulatory” role and when industry association coordination, rules or barriers may raise competition/antitrust concerns.
I have been doing quite a bit of compliance work lately, and have been seeing a wide range of compliance by companies and associations, ranging from no compliance or guidelines whatsoever to full competition law compliance programs that follow the Competition Bureau’s recommended elements in its Corporate Compliance Programs Bulletin.
Given that the Competition Bureau continues to aggressively enforce the Competition Act in key areas (conspiracy, abuse of dominance, bid-rigging and misleading advertising), I thought that I would post a “top 10” competition compliance list (or as it happened to work out a top 15).
While by no means exhaustive, this list covers much of what companies and associations need to think about to reduce the likelihood that Competition Act issues will arise.
Key Competition & Advertising Compliance Rules
for Companies & Associations
DO NOT agree to fix prices, divide markets (geographic markets, customers or product/service lines) or restrict output with competitors.
DO NOT discuss competitively sensitive topics with competitors (e.g., prices, margins, costs, markets, market shares, marketing or strategic plans, etc.). Exceptions can include discussions in the context of mergers, joint ventures and some other legitimate pro-competitive competitor-competitor activities, but advice should be sought prior to doing so.
DO NOT make decisions with competitors to refuse to deal with or supply to competitors, customers, suppliers or other marketplace participants without obtaining legal advice. Some concerted refusals to deal (i.e., “boycotts”) can raise significant competition law issues, while others may be justified depending on the circumstances – for example, some membership decisions in the association context.
DO NOT agree with competing bidders or tenderers to fix the terms of a bid/tender, not bid/tender or withdraw a bid/tender that has already been made. Also avoid discussing the terms of bids/tenders, or whether your company intends to bid, with competing bidders/tenderers (e.g., at association events or in other forums). Some types of joint bids can be made (e.g., in the context of legitimate bid consortia that meet the requirements of the Competition Act), but legal advice should be sought prior to the preparation and submission of joint bids.
DO NOT incorrectly suggest, in internal documents or correspondence, that anti-competitive activities are occurring (e.g., language that suggests coordination with competitors in relation to pricing, customers or output – e.g., it would “be easier to cooperate than compete”; that decisions are being made for anti-competitive purposes – e.g., to “drive out” a competitor; or “loaded” language – e.g., “dominate”, “squash”, “eliminate”, “stabilize” competition, “us and them”, they’re “not following the rules”, etc.).
DO NOT attempt to interfere with competitors’ suppliers without consulting management or obtaining legal advice.
DO consult management or obtain legal advice before attempting to influence a customer’s or reseller’s prices (or refusing to supply or discriminating against a person where the refusal/discrimination may be related to the person’s low pricing policy).
The Brookings Institution has published a very interesting new article on the proposed acquisition by CNOOC (China National Offshore Oil Corporation) of Nexen in Canada, which discusses, among other things, some of the possible rationales for Chinese interest in unconventional oil assets in Alberta including increasing reserves and production (North America now being the “epicenter” of unconventional upstream oil and gas mergers), a desire to acquire technological and operational expertise to develop China’s own domestic shale gas reserves and to diversify political risk. I thought this was a rather good commentary on the proposed CNOOC/Nexen deal (the Investment Canada Act review for which was recently extended by another 30 days for a national security review). This recent Brookings article also discusses CNOOC’s failed bid for Unocal. For a copy of this Brookings Institution note authored by Erica Downs see: China, Iran and the Nexen Deal.
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In the second of two recent major announcements (the first being yesterday’s release of the CRTC’s inaugural guidelines under Canada’s impending anti-spam legislation – see: here), Canada’s telecom regulator today announced public consultations on a new mandatory wireless code. The thrust of the new consultations appears to be primarily two-fold: to impose guidelines for contracts (e.g., increased clarity of terms, required terms, changes to terms, cancellation, expiry, renewals, etc.) and reduce potential misleading advertising related issues.
While the CRTC has allowed market forces to govern the wireless industry since the early-1990s, this new announcement shows some willingness by the CRTC to regulate Canada’s concentrated wireless sector (albeit at this stage through a mandatory code of conduct). In making the announcement, the CRTC’s Chairman Jean-Pierre Blais said:
“Our goal is to make sure that Canadians have the tools they need to make informed choices in a competitive marketplace. … In the past, Canadians have told us that contracts are confusing, and that terms and conditions can vary greatly from one company to another. We are asking them to assist us in developing a code that will help them better understand their rights as consumers and the responsibilities of wireless companies.”
The CRTC’s Notice of Consultation describes the rationale for the new consultation and code:
“In Telecom Decision 2012-556, the Commission determined that it would be appropriate to develop a code for retail mobile wireless data and voice services (mobile wireless services) to ensure the clarity of mobile wireless service contracts and related issues for consumers. The Commission concluded that consumers need additional tools to better understand their basic rights, as well as their service providers’ responsibilities with respect to mobile wireless services, in order to participate in the competitive market in an informed and effective manner. With this Notice of Consultation, the Commission initiates a proceeding to establish a mandatory code to address the clarity and content of mobile wireless service contracts and related issues … The code developed as a result of this proceeding is intended to provide a clear and concise list of consumers’ rights and service providers’ responsibilities regarding mobile wireless services.”
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
