Canadian COMPETITION LAW

In an interesting statement made yesterday, the Federal Government announced that it was extending the list of offences that will render companies and individuals ineligible from bidding on Government contracts to include money laundering, participating in criminal organization activities, tax evasion (income and excise tax), bribing foreign public officials and drug trafficking.  These new additions have been added to an existing list, which includes certain Criminal Code fraud offences against the Government and a number of Competition Act offences (including conspiracy and bid-rigging).

In making the announcement, the Government said:

“Our Government continues to stand up for accountability by ensuring we do business with companies that respect the law and act with integrity,” said Minister Ambrose. “We are taking action to protect taxpayers from fraudulent companies who seek to do business with the Government of Canada.”

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The Malaysian Competition Commission (MCC) has set out its position on information exchanges in the association context, in relation to information exchanges involving the Malaysian Automotive Association (MAA).

According to the MCC, it had previously advised the MAA as to why and how the dissemination of disaggregated information to MAA members could infringe Malaysian competition law.

In her announcement, the MCC’s chief executive officer pointed to potential risks of the formation of horizontal or vertical agreements that may raise competition concerns, principally dampening competitive rivalry among them:

“The detailed information exchanged and shared by the MAA’s members may facilitate them to coordinate their prices and such information could facilitate members to plan their marketing strategy by allocating territories or adjusting their production.  This indirectly has the consequence of discouraging members from competing fairly and more effectively against one another.”

The potential issues associated with information exchanges between competitors is not, of course, unique to Malaysia, nor are the types of commonsense precautions trade and professional associations can take to reduce competition/antitrust issues from arising.

In Canada, like many other jurisdictions, the potential risk of exchanging competitively sensitive information in un-aggregated form (e.g., price, cost, market, market share, customer or supplier information) is generally twofold: first, exchanging such information can lead to agreements that violate section 45 of the Competition Act (the criminal conspiracy provision, which prohibits price-fixing, market allocation/division and output/supply restriction agreements between competitors); and second, that information exchanges can be used as evidence by the Competition Bureau, a court or private plaintiff to infer the existence of an agreement.

Also, since the passing of Canada’s relatively new civil agreements provision (section 90.1), information exchanges can also now in theory be challenged on a stand-alone basis (i.e., apart from, for example, a price-fixing agreement) where they prevent or lessen competition substantially (or as well raise issues in relation to otherwise legitimate vertical agreements and arrangements).

For more information about information exchanges and competition law in Canada, and steps associations can take to minimize competition risk, see:

Information Exchanges

Associations and Competition Law

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The CBA’s National Section on International Law has issued a call for papers:

“It is time again to put together a newsletter for the International Law Section.  Please consider providing a submission for the next edition. We are looking for articles of interest to all Section members: (1) updates on recent/upcoming activities including substantive developments in your jurisdiction; (2) case summaries; (3) new legislation.

Here are a few guidelines to help with your submission: articles only need to be between 300 and 1,000 words; articles over 1,000 words must be accompanied by a summary or précis (100-300 words); articles can be submitted in French or English.

Please send your submissions to me at margot.hurlbert@uregina.ca . Please also canvass your co-workers and colleagues and ask if they would be interested in making a submission to the newsletter.”

For more information see:

CBA – National Section on International Law

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I’m a bit of a sap for good old competition/antitrust quotes.  The cases are sometimes ancient, doubtful any of them are good law anymore and it is virtually impossible to decode from some old decisions what on earth they might actually stand for.  Ah the days when our ancient courts cited more ancient English law, precedents were rare (well, that hasn’t changed much in Canada) and economists were unknown.  In the spirit of competition nostalgia, here are a couple great ones I came across today on a bit of research requiring a trip back through time:

On competition (Weidman v. Shragge, 1929):

“On the other hand, every step taken in the past to enlarge the bounds of human freedom of thought and action has stimulated discovery and invention, and as a product thereof, increased competition, which may have left by the way here and there financial wrecks as the result thereof.  This has made men cry aloud in denunciation of the waste of human energy, and loss of human comfort resulting from competition.  The cry is often a thoughtless one.  People raising it seldom reckon with the absolute necessary waste there is and must ever be incidental to growth, though all nature attests it on every hand.  Destroy competition and you remove the force by which humanity has reached so far.  The altruism some people would substitute for it may, when it has arrived, bring with it a higher sense of justice but it has not arrived.  To apply the standard of profit that might enable the stupid, the slothful, the ignorant, the over-capitalized man working with antiquated machinery, and a mill or warehouse over-manned, to compete with the standard that may be fairly reached by the men of brains, of energy, of sleepless vigilance, with only adequate capital to earn dividends for, and all the advantages that the latest improvements, invention or discovery can furnish, would be a sorry one indeed for society.  The fate of the former class must not be considered.  But the latter must not resort to unfair devices.  They do not need them.  They are without them the best kind of commercial asset the world can have, and must never be depressed or suppressed by the law.”

On combines (R. v. Alexander, 1932):

“Then what is a combine?  The statute does not answer.  The word was not known to the dictionaries as a noun till less than fifty years ago.  It does not appear in the Imperial Dictionary (London), 1859, or in Worcester’s Dictionary (Boston) 1872.  Its first appearance as a noun, so far as I have been able to discover, was in the Century Dictionary (New York) 1889, where the following definition is given: – ‘Combine, a combination or agreement: especially a secret combination for the purposes of committing fraud; a conspiracy.  (Colloq. and recent; First publicly used in the trial of an alderman for bribery in New York in 1886.)  This definition is carried without change into the last definition of the Century Dictionary (1913).   The word appears as a noun in Murray’s New English Dictionary (Oxford) 1893, with this definition: – ‘Combine – A combination, conspiracy, plot, U.S. colloq., – A combination of persons in furtherance of their own interests, commercial or political; a private combination for fraudulent ends.’  The New Standard dictionary (New York and London), 1913, carries this definition: – ‘Combine, A combination of persons, especially a union to effect, by underhand dealings what honest efforts openly employed cannot obtain; cabal; conspiracy.’  Webster’s New International Dictionary (Springfield, Mass.), 1914, has the word with this definition: ‘Combine.  Usually a combination of persons to effect some commercial, industrial or political object; – usually in a bad sense, and implying illegality or fraud.”

[I particularly like the bit about combines being equivalent to “cabals” – rather nice, if somewhat demonic, turn of phrase.]

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In an interesting story in yesterday’s Globe, Jeff Gray reported on a recent decision by the U.S. Court of Appeals for the Seventh Circuit reviving a U.S. antitrust suit against Potash Corp., Agrium Inc. (and several other firms: Mosaic Co. and four Russian and Belarussian potash companies).  The plaintffs in this case allege that the seven firms controlled 71% of the world’s potash supply and that they coordinated cuts to production to maintain prices.  The case is an interesting example of an alleged output restriction cartel (in Canada, section 45 of the Competition Act prohibits agreements between competitors to restrict output/supply) and a challenge against an export cartel (Canadian competition legislation includes a number of exemptions, including for agreements relating only to exports).  Like Canada, however, the U.S. is an “effects” jurisdiction, in that agreements formed abroad that may adversely impact U.S. consumers can be challenged under U.S. antitrust laws.  According to the Globe, the recent Court of Appeals ruling reversed an earlier decision quashing the case now in the favour of the plaintiffs and apparently the U.S. DoJ and FTC (who filed submissions in the case).  Also interesting is that the pleadings challenge Canpotex Ltd. the Potash/Agrium/Mosaic JV that sells potash outside North America.

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The Canadian Council on International Law (CCIL) have announced some updates for their upcoming 2012 fall conference as follows:

“We are well down the path of planning the 41st Annual Conference of the Canadian Council on International Law (November 8-10, 2012).  On-line registration will open very soon.

This year’s theme is ‘international law and crises and emergencies’. Crises and emergencies come in many forms. They may be financial, environmental or purely political, as states break apart, governments are ousted or armed conflicts occur. International reactions to emergencies and crises are the stuff of high politics. In some instances, international law may prove a useful tool in the decision-making of states confronting such calamities.  In other cases, it seems woefully inadequate and plays at best a supporting role.  What part is there for international law in dealing with crises and emergencies?  Is international law capable of providing useful guidance during catastrophes?  Or is it instead burdened with feet of clay?
 
Join us in November as we debate these issues. Highlights will include:

– Plenary speeches from Philippe Sands, QC, University College London and Daniel Bellemare, Former Chief Prosecutor for the UN Special Tribunal for Lebanon and Jennifer Hillman, former member of the WTO Appellate Body.

– A plenary discussion of the role of the UN Security Council, including David Malone, President  of the International Development Research Council, and Rohan Mukherjee of Princeton University.

– Workshops on practice before international tribunals, job searches for students, and student international law moot.

– Panels related to: International humanitarian and criminal law in times of conflict and natural disasters; Economic and financial crises and law related to them, specifically on international investment, trade, and labour law; International law applicable to environmental crises; Corporate social responsibility in times of crises; and Aboriginal law  in situations of crisis.”

For more information see:

CCIL

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The Institute of Competition Law has launched a new publication entitled “e-Competitions” which includes competition/antitrust commentary and articles from around the world.  For the most recent e-Competitions edition see:  e-Competitions: Antitrust Case Laws e-Bulletin

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Paul Rubin has published an interesting paper on the “Regulation of Information and Advertising” in Competition Policy International.

Abstract:

“Deception is the manipulation of information to gain some advantage. This paper considers commercial deception through advertising. The paper first discusses the economics of information. The literature has derived four major policy conclusions. First, truthful information regarding price should not be restricted by regulatory authorities.  Second, deception is most likely and most harmful for credence goods, and regulation is most useful (if it is useful at all) for these goods. Third, truthful information should never be restricted. Fourth, regulation of advertising is best done by authorities that specialize in advertising, rather than by agencies with another mission. A fifth, more tentative, conclusion is that regulation should limit itself to statements that are actually false, and ignore those that are misleading or deceptive. The paper begins with a discussion of the First Amendment issues in regulating advertising. It then considers advertising of prices and regulation and types of goods. The next section examines regulation of true information about characteristics of goods other than price, with special reference to the U.S. Food and Drug Administration. The paper also discusses measures of deception and policies of mandating disclosure of negative information and remedies.”

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