The OECD has published a new report on global competition law compliance entitled Promoting Compliance with Competition Law. The OECD’s new report, which is the result of a roundtable in 2011 on competition law compliance, includes submissions from more than twenty competition/antitrust enforcement authorities including Canada, as well as Australia, the EU, France, Germany, Japan, Korea, Mexico, New Zealand, South Africa, the UK and United States. Introduction:
“Over the past 20 years, courts and competition authorities have imposed fines and, in some jurisdictions, imprisonment with sharply increasing severity, yet there does not seem to be solid evidence that anti-competitive conduct – particularly cartel conduct – is declining in response. Then again, it is impossible to observe the number of undetected cartels, so it is possible that deterrence has increased. The delegates identified and assessed numerous factors that influence compliance, such as competition advocacy, financial penalties, imprisonment, leniency programs and the establishment of a culture of competition. There was general agreement that authentic corporate competition compliance programs can be helpful, but substantial variation among the delegates on whether and how such programs should be rewarded.”
For a copy of the OECD’s new report see: Promoting Compliance with Competition Law
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Gift cards are a type of stored-value payment card issued by retailers that are preloaded with a specific value for future purchases. These include cards that can be used at a particular store or retailer, cards redeemable at a chain or mall and credit card branded cards that can be used wherever a particular brand of credit card is accepted.
There are two main types of gift cards: “open loop” and “closed loop” cards. Open loop gift cards can be used anywhere (e.g., in any store in a shopping mall). Closed loop gift cards can only be used at a particular store, location or chain.
Gift cards are primarily regulated by provincial legislation, although some federal legislation can also apply (e.g., the misleading advertising provisions of the federal Competition Act). Key aspects of provincial gift card regulation include rules relating to expiry dates, fees and the disclosure of key terms and conditions.
British Columbia introduced gift card legislation in 2008. In British Columbia, the Business Practices and Consumer Protection Act (“BPCPA”) and Prepaid Purchase Cards Regulation regulate prepaid purchase cards. Consumer Protection BC enforces British Columbia’s gift card legislation and regulations.
“Prepaid purchase cards” are defined as cards, written certificates or other vouchers or devices with a monetary value that are issued or sold in exchange for the future supply of goods or services to consumers, including gift cards and gift certificates.
In general, British Columbia’s gift card legislation prohibits expiry dates and fees (except in certain circumstances), requires suppliers to disclose certain prescribed information (and sets out how that information must be disclosed) and gives gift card purchasers certain refund and other rights where the legislation is not complied with.
The Conference Board of Canada has published a new briefing entitled “Who Dimmed the Lights? Canada’s Declining Global Competitiveness Ranking” that examines Canada’s current competitiveness in light of the recent World Economic Forum’s Global Competitiveness Report 2012-2013, which ranked Canada 14th globally. Canada dropped two positions this year in the WEF’s report, with some of the critical commentary in the report including:
“Canada falls two positions to 14th place in this year’s rankings. Although Canada continues to benefit from highly efficient markets (with its goods, labor, and financial markets ranked 13th, 4th, and 11th, respectively), well-functioning and transparent institutions (11th), and excellent infrastructure (13th), it is being dragged down by a less favorable assessment of the quality of its research institutions and the government’s role in promoting innovation through procurement practices. In a similar fashion, although Canada has been successful in nurturing its human resources compared with other advanced economies (it is ranked 7th for health and primary education and 15th for higher education and training), the data suggest a slight downward trend of its performance in higher education (ranking 8th place on higher education and training two years ago), driven by lower university enrollment rates and a decline in the extent to which staff is being trained at the workplace.”
Top 10 “most problematic factors for doing business in Canada” in the WEF’s report were: an inefficient government bureaucracy, insufficient capital to innovate, inadequate access to funding, inadequately educated workforce, tax rates, tax regulations, restrictive labor practices, inadequate infrastructure, a poor work ethic and policy instability.
On September 28, 2012, the Competition Bureau announced that Irving Oil and its Quebec manager have been charged (three charges against each of the corporation and manager) for allegedly fixing gasoline prices in certain local Quebec markets in the Bureau’s ongoing Quebec gas price-fixing investigation. In making the announcement, the Bureau said:
“’These charges highlight our continued and steadfast commitment to combating domestic price-fixing cartels,’ said John Pecman, Interim Commissioner of Competition. ‘Canadians are ultimately on the losing end of secret agreements that cheat them out of their money.’
By using a number of investigative tools, including wiretaps and searches, the Bureau found evidence that in certain local Quebec markets gas retailers, or their representatives, communicated with one another to agree on the price they would charge customers for gasoline.
Thirty-nine individuals and 15 companies have now been charged with criminal price-fixing in this case. To date, 27 individuals and seven companies have pleaded guilty with fines totalling over $3 million. Of the 27 individuals who have pleaded guilty, six have been sentenced to terms of imprisonment totaling 54 months.”
Under Canadian competition law, the federal Competition Act makes the following three categories of agreements between competitors (or potential competitors) per se illegal:
1. Price-fixing agreements. Agreements to fix, maintain, increase or control the price for the supply of a product.
2. Market allocation/division agreements. Agreements to allocate sales, territories, customers or markets for the production or supply of a product.
3. Output/supply restriction agreements. Agreements to fix, maintain, control, prevent, lessen or eliminate the production or supply of a product (which is broad enough to potentially include group boycotts).
According to Reuters reporting earlier today, Irving said it was not aware of the alleged price-fixing activities involving its personnel and took steps to stop the conduct:
“Our company was not aware of these activities and, when our company became aware of them, we took immediate steps to address the situation, including disciplinary action,” spokeswoman Carolyn Van der Veen said in an email. “Our company believes that we should not be held responsible for the actions of employees who knowingly violated company policy.”
The potential risk for individuals involved in criminal price-fixing and other activities under the Competition Act has also increased, given several key recent developments that include the elimination of conditional sentences (i.e., sentences served in the community) for price-fixing offences under the Act, an increased appetite by the Bureau to seek penalties against individuals and a recent decision by the Federal Court indicating that that Court will not necessarily automatically accept sentencing submissions carving out individuals in the context of pleas.
For a copy of the Bureau’s news release and backgrounder see: Irving Oil Charged in Gas Price-Fixing Cartel and Bureau Activities.
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On September 28, 2012, the Competition Bureau published its September In Brief newsletter, which includes recent announcements of the appointment of John Pecman as Interim Commissioner of Competition, publication of the Bureau’s final Abuse of Dominance Guidelines, commencement of its new misleading advertising suit against Bell, Rogers and TELUS and update on its abuse of dominance challenge against Canada’s largest real estate board, The Toronto Real Estate Board (TREB).
The Bureau also announced a joint Internet fraud sweep together with members of ICPEN (the International Consumer Protection and Enforcement Network), which targeted deceptive and fraudulent advertising in the “rapidly growing online and mobile markets.” In making the announcement, the Bureau indicated that it was focused on undisclosed fees and hidden terms (themes consistent with its recent challenge of Bell/Rogers/TELUS – see: here):
“Price-fixing agreements, like other forms of hard core cartel agreements, are analogous to fraud and theft. They represent nothing less than an assault on our open market economy. Buyers in free market societies are entitled to assume that the prices of the goods and services they purchase have been determined by the forces of competition. When they purchase products that have been the subject of such an agreement, they are effectively defrauded.”
(Chief Justice Crampton, R. v. Maxzone Auto Parts
(Canada) Corp., 2012 FC 1117)
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In detailed though critical reasons issued this week by the Federal Court in the auto parts price-fixing case, Chief Justice Crampton set the stage for the Court’s approach to joint sentencing submissions for future Canadian cartel cases (R. v. Maxzone Auto Parts (Canada) Corp., 2012 FC 1117).
Crampton C.J.’s reasons relate specifically to his (reluctant) decision last Spring to accept joint sentencing submissions and impose a fine of $1.5 million on Maxzone Canada for its role in the ongoing global aftermarket auto parts price-fixing investigation.
In this regard, on May 3, 2012, Maxzone Auto Parts (Canada) Corp. pleaded guilty under Canadian competition law to one count of contravening Canada’s foreign directed conspiracy offence under section 46 of the Competition Act. Chief Justice Crampton’s reasons also set out what the Court expects from future sentencing submissions.
Some of the key (if related) points from this interesting recent decision include:
Mathematical approach to sentencing. First, parties making sentencing submissions must do more than adopt the mathematical approach to fines set out in the Competition Bureau’s Leniency Bulletin (the “Leniency Bulletin”). The Leniency Bulletin sets out 20% of a cartel participant’s affected volume of commerce in Canada as a starting point for negotiations, which may be reduced by 50% for the first party that complies with all requirements of the Bureau’s Program.
The Bureau’s Leniency Bulletin can be an appropriate framework. Second, while the Bureau’s Leniency Bulletin can be an appropriate framework for sentencing submissions, it must be followed in both “letter and spirit” with regard to: (i) the fundamental purpose of sentencing and objectives set out in section 718 of the Criminal Code (the “Code”); (ii) the principal of proportionality in section 718.1; (iii) aggravating and mitigating factors in sections 718.2 and 718.21 (and related case law); and (iv) the other principles in section 718.2 (and case law). In this regard, Crampton C.J. held that “cooperation [under the Bureau’s Leniency Program] cannot so dominate the approach to sentencing as to leave virtually no meaningful role for relevant aggravating factors, other mitigating factors, and the principles of sentencing [under the Code].”
More detailed evidentiary records and submissions will be required. Third, the court held that significantly more fulsome evidentiary records and more detailed submissions would be required for the Court to be satisfied that a recommended sentence would not be contrary to the public interest or bring the administration of justice into disrepute.
CANADIAN CONTEST RULES/PRECEDENTS
Do you need contest rules/precedents
for a Canadian contest?
We offer many types of Canadian contest/sweepstakes law precedents and forms (i.e., Canadian contest/sweepstakes law precedents to run common types of contests in Canada). These include precedents for random draw contests (i.e., where winners are chosen by random draw), skill contests (e.g., essay, photo or other types of contests where entrants submit content that is judged to enter the contest or for additional entries), trip contests and more. Also available are individual Canadian contest/sweepstakes precedents, including short rules (“mini-rules”), long rules, winner releases and a Canadian contest law checklist. For more information or to order, see: Canadian Contest Law Forms/Precedents. If you would like to discuss legal advice in relation to your contest or other promotion, contact us: Contact.
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Social media is increasingly important for effective marketing and promotion, including the operation of contests. Contest organizers should be aware, however, that there can be specific terms of use that apply to the promotion and administration of a contest using social media.
The Canadian Society of Association Executives (CSAE) is offering a number of new trade and professional association related books. From the CSAE:
“Books to help your Board, your staff, and you. If you lead an association or not-for-profit organization, these publications will help. The following publications are new to the CSAE Bookstore”:
199 Ideas: Creative Marketing & Public Relations
Return on Impact: Leadership Strategies for the Age of Connected Relationships
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
