The past year has been a busy one for Canadian competition law.
Developments in 2011 include new cases, enforcement and legislation in most key areas including abuse of dominance (the Competition Bureau’s ongoing challenge of The Toronto Real Estate Board and CREA settlement in late 2010), criminal conspiracy (developments in price-fixing class action litigation and some Bureau enforcement), refusal to deal (several important private access section 75 cases, including a decision of the Federal Court of Appeal), contested mergers (in the waste and airline markets), price maintenance (the merchant fees case involving Visa and MasterCard) and misleading advertising (involving Bell Canada, Rogers and others).
The Competition Bureau is testing the new rules under Canada’s Competition Act, which came into force in 2009 and 2010, and private plaintiffs are creating new law in a number of ongoing competition/antitrust class actions in Canada (principally indirect purchaser price-fixing cases relating to the sale and supply of dynamic random access, or “DRAMs”, high fructose corn syrup and computer operating systems).
At the same time, several new pieces of legislation have been introduced including a federal omnibus crime bill, which will eliminate conditional sentences for some competition law offences, and sweeping new anti-spam legislation (Bill C-28 or “FISA“) that once in force will be among the strictest anti-spam regimes in the world.
The Commissioner of Competition, and other federal enforcement officials including the RCMP, have also expressed intentions to adopt tougher enforcement stances in relation to competition law and other white collar crime.
In general, these developments mean that it remains important for Canadian companies, organizations and their executives to maintain a practical awareness of Canadian competition law.
Some of the key competition law and related developments of 2011 include:
New RCMP Commissioner Announces New “Tough Line” on White-collar Crime
The new head of the RCMP, Bob Paulson, who was named new RCMP Commissioner in November, has vowed to take a new “tough line on white-collar crime” (See: New RCMP head takes tough line on white-collar crime), particularly in relation to major fraud and securities law investigations.
This announcement follows a recent law enforcement trend by the Conservative government generally and key Canadian regulatory officials. For example, an extensive federal omnibus crime bill was recently passed that will, among other things, significantly restrict conditional sentences (e.g., sentences served in the community for criminal offences) including for some criminal offences under the Competition Act.
Supreme Court of Canada Denies Leave in Refusal to Deal Case: Nadeau Poultry Farm v. Groupe Westco Inc.
On December 22, 2011, the Supreme Court of Canada, per Justices McLachlin, Rothstein and Moldaver, denied leave to appeal in Nadeau Poultry Farm Limited v. Groupe Westco Inc. (see: Supreme Court of Canada denies leave in Nadeau Poultry Farm v. Groupe Westco Inc. (December 22 2011)). The applicant in this section 75 refusal to deal case under the Competition Act, Nadeau Poultry Farm, was seeking leave to appeal an earlier Federal Court of Appeal decision that affirmed a Competition Tribunal decision dismissing its application in 2009 (see: Federal Court of Appeal dismisses appeal in Nadeau Poultry Farm Ltd. v. Groupe Westco Inc.).
On December 5, 2011, a federal omnibus crime bill (Bill C-10) was passed that will, among other things, eliminate conditional sentences of two years or less from being ordered by courts for violation of two of the core criminal offences under the Competition Act: criminal conspiracy agreements (section 45) and bid-rigging (section 47).
Privacy Commissioner Issues New Online Behavioural Advertising (Tracking) Guidelines
On December 6, 2011, the federal Privacy Commissioner issued new online tracking guidelines for advertisers which, among other things, restrict the tracking of children and tracking technologies without an opt-out mechanism.
Federal Government Raises the Possibility of Amending Canada’s Foreign Investment Rules – Again
Bloomberg reported that the federal Minister of Industry has again raised the prospect of amending Canada’s Investment Canada Act in remarks made in New York (see: Canada Open to Changing Foreign-Takeover Law, Paradis Says). The Industry Minister’s comments closely follow a recent C.D. Howe Institute report calling for fundamental changes to Canada’s foreign investment rules to stimulate foreign direct investment in Canada, including a change to the overarching test for foreign investment approval (replacing the current “net benefit to Canada” test with a national interest test) (see: New Publications – C.D. Howe Institute Report – Reforming the Investment Canada Act: Walk More Softly, Carry a Bigger Stick).
The Supreme Court of Canada, per Justices LeBel, Fish and Cromwell, granted leave to appeal in the Pro-Sys Consultants Ltd. v. Microsoft Corporation and Sun-Rype Products Ltd. v. Archer Daniels Midland Company cases. These cases relate to conflicting indirect purchaser class action certification decisions in British Columbia (companion decisions of the British Columbia Court of Appeal) and Quebec (a recent decision of the Quebec Court of Appeal) (See: Quebec Court of Appeal rejects B.C. Court of Appeal passing-on defence decisions in Pro-Sys and Sun-Rype and British Columbia Court of Appeal allows Microsoft appeal in Pro-Sys v. Microsoft – creates de facto passing-on defence).
Commissioner of Competition Addresses Current Enforcement Priorities in Two Wide-ranging Talks
The Commissioner of Competition, Melanie Aitken, addressed current enforcement priorities in two engaging and wide-ranging talks recently inVancouver: a keynote speech at a reception hosted by theUniversityofBritish Columbia, National Centre for Business Law at the Four Seasons and a Vancouver Competition Policy Roundtable meeting organized by Professor Tom Ross of the Sauder School of Business.
The Bureau recently announced that it had “serious concerns” about the Maple Group’s bid to acquire the TMX Group:
“The Commissioner advised Maple and TMX Group that she has serious concerns about the likely competitive effects of the proposed transactions in the current environment, primarily in connection with equities trading and clearing and settlement services in Canada.
The Commissioner indicated that she has not reached a final conclusion and that her current views may be affected by further factual information and developments, which may include changes in the applicable securities regulatory regime, and any commitments or other remedial measures that Maple may be prepared to take to address her concerns.
Maple and TMX Group intend to continue to work closely with staff of the Competition Bureau to address the Commissioner’s concerns, including by identifying appropriate remedial measures. As Maple has stated previously, it is committed to working constructively with all of the relevant regulators, including Canadian securities regulators, to address any questions they may have so that the proposed transactions can proceed in the best interests of TMX Group, its shareholders and the Canadian capital markets. Maple and TMX Group continue to strongly believe that the proposed transactions will substantially benefit all capital market participants.”
(TMX News Release, November 29, 2011)
Madam Justice Simpson Proposes Reforms to the Competition Tribunal
In a short but interesting recent note, Madam Justice Sandra J. Simpson has proposed that changes be made to the federal Competition Tribunal, including wider powers for the Tribunal to decide references and award damages for abuse of dominance (monopolization).
The Quebec Court of Appeal unanimously overturned the earlier 2008 Quebec Superior Court decision in Option Consommateurs v. Infineon Technologies AG, (the ongoing indirect purchaser “DRAMs” case) which had earlier denied a motion to commence class action proceedings.
Supreme Court of Canada Denies Leave in U.S. Steel Investment Canada Case
On November 24, 2011, the Supreme Court of Canada denied leave in United States Steel Corporation et al. v. Attorney General of Canada. See: Supreme Court of Canada Judgements. See also: National Post – Supreme Court Won’t Hear U.S. Steel Appeal. This landmark Investment Canada Act dispute, between the Canadian Government attempting to enforce undertakings provided by U.S. Steel, has since been settled.
Competition Bureau Announces Quebec Sewer Services Bid-rigging Cartel
On November 22, 2011, the Competition Bureau announced that criminal charges had been laid against six companies and five individuals accused of rigging bids for provincial and municipal contracts for sewer services in Montreal (see: Competition Bureau Exposes Sewer Services Cartel in Quebec and Backgrounder – Competition Bureau Exposes Sewer Services Cartel in Quebec). While the Bureau has yet to bring a section 45 conspiracy case under the amended conspiracy provisions of the Competition Act, it has been very active in bringing bid-rigging cases under section 47 of the Act.
C.D. Howe Institute Issues Report on Competition Bureau Enforcement and Strategic Alliances
On November 10, 2011, the C.D. Howe Institute issued a report reviewing the Competition Bureau’s enforcement of the criminal conspiracy offences of the Competition Act, enforcement efforts in relation to strategic alliances and policies regarding the issuance of binding advisory opinions.
Competition Tribunal Grants CREA Leave to Intervene in TREB Abuse of Dominance Case
On November 2, 2011, Madam Justice Simpson of the federal Competition Tribunal granted leave to Realtysellers and The Canadian Real Estate Association to intervene in the Bureau’s abuse of dominance (monopoly) case against The Toronto Real Estate Board.
CRTC and 12 International Enforcement Agencies Form International Do Not Call Network
The federal Canadian Radio-television and Telecommunications Commission announced that, together with the Australian Communications and Media Authority, it has assembled 12 international enforcement agencies to form an International Do Not Call Network. See: CRTC announces creation of international network to facilitate cooperation on telemarketing enforcement.
Commissioner of Competition Speech Highlights Enhanced Competition Bureau Enforcement
On October 25, 2011, the Competition Bureau published the Commissioner’s speech given at the 2011 Canadian Bar Association’s Annual Competition Law Conference inOttawa. It is fair to say that the Commissioner’s recent speech presented a singular tone across the civil and criminal competition law areas: continued enhanced enforcement.
Ottawa Bid-rigging Case to Go to Trial
On October 5, 2011, the Ottawa Business Journal, Ottawa Citizen and Vancouver Sun reported that Ontario Justice Ann Alder ruled that an Ottawa bid-rigging case in the technology sector can go to trial. In this case, the Competition Bureau alleged that a number of companies, including TGP Technology, Spearhead Management, The Devon Group, Brainhunter, Nortak Software and Tipacimowin Technology, rigged bids in relation to IT contracts totaling about $67 million issued by the Canada Border Services Agency, Department of Transport and Public Works (see: Competition Bureau Announces Charges Against Companies Accused of Rigging Bids for Government of Canada Contracts and Backgrounder). Charges were also dismissed against several companies.
Competition Bureau Issues Updated Merger Enforcement Guidelines
On October 6, 2011, the Competition Bureau issued its updated Merger Enforcement Guidelines. The Bureau’s new MEGs, which set out its approach to the substantive review of mergers inCanada, are the first update to the MEGs since 2004 and the result of public consultations in 2010 and 2011.
Telemarketer Receives Two-Year Prison Sentence
On October 3, 2011, the Competition Bureau announced that a deceptive telemarketer has been sentenced to two years in prison in relation to a deceptive telemarketing scheme relating to the sale of business directories (see: Deceptive Telemarketer Receives a 2-year Prison Sentence).
Competition Tribunal Grants Leave in Refusal to Supply Data Case
In a significant recent decision by the Competition Tribunal, the Tribunal granted leave to the Used Car Dealers Association of Ontario to make a section 75 refusal to deal application relating to a refusal by the Insurance Bureau of Canada to supply data to the UCDA. This recent case, reasons for which were issued on September 9, 2011, is significant, in that the UCDA was seeking leave to make its application in light of a longstanding adverse decision – the Warner music case (which has stood as a barrier to invoking section 75 in relation to refusals to licence intellectual property).
On September 7, 2011, the Competition Bureau announced that it had reached a settlement with Nivea’s Canadian distributor, Beiersdorf Canada Inc., relating to allegedly false or misleading performance claims in its advertising. In particular, the Bureau took issue with claims that suggested that the use of skin cream could lead to weight loss. Under the terms of the consent agreement negotiated with the Bureau, Beiersdorf has agreed to pay an “administrative monetary penalty” or “AMP” (essentially a civil fine) of Cdn. $300,000, refund Canadian customers and remove its products from Canadian shelves.
Competition Bureau Revisits its Self-regulated Professions Study After Four Years
On September 2, 2011, the Competition Bureau released its “ex-post assessment” of its 2007 Self-Regulated Professions Study (Self-regulated professions – Balancing competition and regulation (December, 2007)). According to the Bureau, its new Study “surveys and assesses developments that have taken place relating to recommendations made in [its] 2007 Study” and “provides an overview of the progress made since 2007” to the earlier recommendations made by the Bureau.
Alberta Telemarketers Sentenced to Jail Time for Cross-border Deceptive Telemarketing Scheme
On August 30, 2011, the Competition Bureau announced that five individuals in Albertawere convicted and sentenced of deceptive telemarketing under the Competition Act.
Competition Bureau Issues New Merger Remedies Study
On August 11, 2011, the Competition Bureau issued a Merger Remedies Study, summarizing its review of the effectiveness of merger remedies negotiated in 23 Canadian merger cases between 1995 and 2005. According to the Bureau, the results of its study will be used to revise its Information Bulletin on Merger Remedies in Canada first issued in 2006 (see: Information Bulletin on Merger Remedies in Canada) and its companion consent agreement outline template.
In a very interesting refusal to supply case currently before the Competition Tribunal, the Used Car Dealers Association of Ontario sought leave from the Competition Tribunal for the re-supply by the Insurance Bureau of Canada of data used in one of the UCDA’s information products for members.
Montreal Company Pleads Guilty in Bid-rigging Case
On July 19th 2011, the Competition Bureau announced that aMontreal company, Les Entreprises Promécanic Ltée, pleaded guilty to three charges of bid-rigging and was fined $425,000 for its alleged role in rigging bids in relation to residential highrise building ventilation contracts inMontreal. According to the Bureau, theMontreal company admitted that it was involved in coordinating with competitors to pre-determine the outcome of bids. Interestingly, this case also included an internal compensation arrangement between the parties to the bid-rigging arrangement to ensure that contracts were awarded to the pre-arranged company.
On June 27th 2011, the Competition Bureau announced that it would seek to block a proposed joint venture between Air Canadaand United Continental which, according to the Bureau, would “monopolize ten important Canada/United States routes and substantially reduce competition on nine additional routes.” This case is one of two contested merger cases recently brought by the Bureau, the first in six years, and will, among other things, test the new civil agreement provision of the Competition Act (section 90.1).
Bell Canada Agrees to Pay $10 Million Fine in Misleading Advertising Case
On June 28th, the Competition Bureau announced that Bell Canada has agreed to stop making allegedly misleading claims relating to the prices for its services and to pay an administrative monetary penalty or “AMP” (essentially a civil fine) of $10 million, the maximum penalty for misleading advertising under the Competition Act.
Maple Group Launches Cdn. $3.7 Billion Hostile Bid for TMX Group Inc.
On June 13, 2011, the Maple Group Acquisition Corp., a consortium of 13 Canadian financial institutions, launched a Cdn. $3.7 billion hostile bid to acquire 70% of the TMX Group Inc. for $48 per share.
Two More Individuals Plead Guilty in Quebec Price-fixing Case
On June 10, 2011, the Competition Bureau announced that two more individuals pleaded guilty in theQuebecgasoline price-fixing case to fix the price of gasoline at the pump inQuebecregional markets.
The U.S.Federal Trade Commission announced that it has filed a $450 million internet fraud civil suit against anAlberta online operator.
Competition Bureau Issues No Action Letter in TMX/LSE Deal
The Wall Street Journal reported that the Competition Bureau issued a no action letter in the proposed TMX Group Inc. / London Stock Exchange Group plc transaction.
Further Guilty Plea in Quebec Gasoline Price-fixing Cartel
The Competition Bureau announced that a further individual pleaded guilty and was fined in theQuebecgas price-fixing cartel. In making the announcement, the Bureau said that Micheline Lapointe-Cabana, owner of a service station inMagog,Quebecoperated under the Petro-Canada banner, was sentenced to personally pay a fine of $20,000.
Competition Bureau Files Abuse of Dominance Case Against the Toronto Real Estate Board
On May 27, 2011, the Competition Bureau commenced an abuse of dominance case against The Toronto Real Estate Board before the Competition Tribunal.
Competition Bureau Issues New Fee and Service Standards Handbook for Written Opinions
On May 18, 2011, the Competition Bureau issued its new Fee and Service Standards Handbook for Written Opinions to reflect the significant amendments to the Competition Act that came into force in 2009 and 2010 (see: Competition Bureau Updates Fee and Service Standards Handbook for Written Opinions).
Customer Allocation Conspiracy in the Refrigeration and Food Service Equipment Industry
The Competition Bureau announced that Kason Industries Inc. plead guilty for participating in a customer allocation conspiracy and was fined $250,000 by the Federal Court of Canada.
British Columbia Court of Appeal Allows Microsoft Appeal in Pro-Sys v. Microsoft
On April 15, 2011, the British Columbia Court of Appeal allowed Microsoft’s appeal in the Pro-Sys v. Microsoft class action case. This important decision, in which the Court of Appeal dismissed the plaintiffs’ action and set aside the earlier class certification order, was issued concurrently with a second Court of Appeal judgment in Sun-Rype Products v. Archer Daniels. These decisions are now subject to an appeal to the Supreme Court of Canada, based on the unsettled ability of indirect purchaser plaintiffs to commence competition/antitrust class actions inCanada.
Competition Bureau Announces New Size of Transaction Threshold for Mergers for 2011
The Competition Bureau announced that the pre-merger notification transaction-size threshold for 2011 will increase to $73 million (see: 2011 Pre-Merger Notification Transaction-Size Threshold).
Competition Bureau to Challenge Completed BC Landfill Merger
The Competition Bureau announced that it has applied to the Competition Tribunal for a Tribunal order to dissolve CCS Corporation’s acquisition of Complete Environmental Inc., owner of the proposed Babkirk Secure Landfill in Northeastern British Columbia (see: Competition Bureau Challenges BC Landfill Merger). Final arguments were recently heard by the Tribunal in this merger to monopoly case which, together with the ongoing AirCanada / United Continental case, is one of two contested mergers, the first inCanada in six years.
The Competition Bureau announced that it reached a settlement with two spa retailers in relation to allegedly false energy savings claims (see: Spa Retailers Required to Stop Making False ENERGY Star Claims). According to the Bureau, the retailers made misleading representations incorrectly conveying the impression that their hot tubs or insulation met the criteria of the ENERGY STAR Program.
In late 2010, Canada passed new anti-spam legislation (Bill C-28) which will, once in force, be among the strictest anti-spam regimes in the world.
____________________
SERVICES AND CONTACT
I am a Toronto competition/antitrust lawyer and advertising/marketing lawyer who helps clients in Toronto, Canada and the US practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
My Canadian advertising/marketing law services include advice in relation to: anti-spam legislation (CASL); Competition Bureau complaints; the general misleading advertising provisions of the federal Competition Act; Internet, new media and social media advertising and marketing; promotional contests (sweepstakes); and sales and promotions. I also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
For more information about my services, see: services
To contact me about a potential legal matter, see: contact
For more regulatory law updates follow me on Twitter: @CanadaAttorney
