INDU Committee Report

Four Private Members’ bills propose amendments to the Competition Act: C-402 (Mr. McTeague), C-438 (Mrs. Redman), C-471 (Mrs. Jennings), and C-472 (Mr. McTeague). A brief summary of each is set out below. While the Committee’s present mandate does not specifically include a study of these bills, many witnesses appearing before the Committee expressed views on their content and underlying principles. The bills will be the subject of a series of roundtable discussions sponsored this summer by the Public Policy Forum, which expects to make its report in late September 2000.

This bill proposes to add three anticompetitive practices to the non-exhaustive list in section 78 of the Act (abuse of dominant position). The bill would not create new offences, but would rather provide greater certainty to industry with respect to the type of offences considered by the Bureau to constitute "abuse." The offences would have to be done with intent to either eliminate or discpline a competitor (or a supplier) or prevent entry or expansion into a market. The offences would include, but would not be limited to:

This bill would expand the deceptive marketing offences under the Competition Act, creating a new offence (in new section 52.1) of promoting games of chance by mail. A business would commit an offence where, for the purpose of promoting directly or indirectly the supply or use of a product, it delivered printed material conveying the general impression that the recipient had won something, whose award was made conditional on payment of a sum of money or specific telephone charges.

The current section 52 of the Act contains a general prohibition against knowingly or recklessly making false or misleading public statements for the purpose of directly or indirectly promoting any business interest. Section 52.1 applies the principle specifically to telemarketing; it prohibits the use of the telephone to promote a product or business unless certain material information is disclosed. The bill might best be understood as "filling a gap" in the current law by creating a criminal prohibition in respect of printed material similar to that which exists on deceptive telemarketing.

This bill has two distinct objectives: The first is to facilitate the exchange of information between Canada and other states for use in civil proceedings. It would authorize the Minister of Industry to enter into agreements with other states to determine whether a person had violated or was about to violate the competition law of that state and to enforce the competition law of that state. Certain matters would have to be addressed in the agreement, including:

the right of Canada, for reasons of security, sovereignty or public interest as defined by Canada, to refuse to give effect to a request;

the confidentiality of information sent by Canada to the foreign state pursuant to a request;

the information that would have to be set out in a request presented by the foreign state in order that effect might be given to a request under this Act;

an undertaking that the foreign state would provide assistance comparable in scope to the assistance provided by Canada;

an undertaking that information or evidence obtained would be used only for the purpose of enforcement and administration of the competition law of the foreign state;

an undertaking that information or evidence obtained from a person and provided to the foreign state would not be used for the purposes of criminal proceedings against the person;

the return of all the evidence provided by Canadian authorities;

an undertaking that any rights and privileges afforded under Canadian law would be preserved;

the termination of an agreement if confidentiality provisions were violated; and

a requirement that any violation of confidentiality would be promptly notified to the Canadian authorities.

The Commissioner of Competition would be responsible for the implementation of every agreement. A request could be denied if:

the foreign state could more conveniently have the request satisfied by another source;

execution of a request would exceed reasonably available resources; and

execution of a request was not authorized by Canadian law.

This bill would supplement current mechanisms for the exchange of information with foreign states in relation to criminal matters. The 1990 Mutual Legal Assistance in Criminal Matters Treaty (MLAT) allows for extensive and formal cooperation and coordination with the United States. Furthermore, the 1995 Canada-U.S. Agreement Regarding the Application of their Competition and Deceptive Marketing Practices Laws provides a framework for closer collaboration in the enforcement of Canada and U.S. competition law, and includes procedures for notification, expanded consultation and cooperation to minimize disputes between authorities of the two countries, and to expand the ambit of cooperation in order to include deceptive marketing practices.

Canada is also a party to multilateral, regional and bilateral cooperation agreements, including the 1995 OECD Revised Recommendation Concerning Cooperation between Member Countries on Anticompetitive Practices Affecting International Trade. This non-binding agreement provides for cooperation and consultation between OECD member states.

The Bureau’s current policy on confidentiality attempts to strike a balance between the need to exchange information and the concerns of the legal and business communities that commercially sensitive information provided to the Bureau not be communicated to third parties. Under the current legislation, only the types of information enumerated under section 29 of the Act receive explicit protection against communication to third parties. The Bureau’s policy, however, is to treat as confidential all information received that is not publicly available and not to share it with other agencies except where doing so would assist in the administration or enforcement of our legislation. Bill C-471 would enable Canada to promote cooperation with foreign enforcement agencies.

The second objective of the bill is to create a means by which certain questions could be determined more quickly by the Tribunal. The Commissioner and the party to a dispute may, by mutual consent, refer to the Tribunal on a question of law, fact, or mixed law and fact arising under Part VII.1, Part VIII or Part IX. Additionally, the Commissioner may refer any question as to the interpretation or application of Part VII.1, Part VIII or Part IX to the Tribunal for hearing and determination. References are to be heard in a summary way. The proposal is intended to: (a) reduce the length of proceedings and encourage settlement of disputes by clarifying issues without the necessity of a full-blown hearing; and (b) promote the development of a body of case law in order to reduce reliance on Bureau enforcement guidelines.

Of the four bills, C-472 proposes the most significant amendments to the current system. The first of these would be to replace section 45 (conspiracy). The terms "conspires, combines, agrees or arranges" would be replaced with the single term "collusion," defined as an agreement or arrangement between a person and one or more competitors of the person in relation to the production, supply or acquisition of any product where the person knew, or ought reasonably to have known, that the agreement or arrangement, if implemented, would or would be likely to have the effect of: (a) fixing, establishing, controlling or maintaining the minimum price of the product; (b) allocating any markets, territories, customers or sales for the product between the person and the competitor; (c) boycotting a competitor or a competitor’s suppliers or customers; or (d) preventing, eliminating, lessening or otherwise limiting the production or supply of the product.

The offence of collusion would be an indictable offence liable to imprisonment for a term of up to five years and/or a fine of up to $10 million. As a criminal offence, the agreement would have to be proved "beyond a reasonable doubt"; however, the court might infer the existence of collusion from circumstantial evidence. The court would not convict if it found that: (a) the collusion related only to a service and to standards of competence and integrity that were reasonably necessary for the protection of the public; or (b) if the collusion related only to the export of products from Canada and if it did not, or was unlikely to: (i) result in a reduction or limitation of the real value of exports of a product; (ii) restrict any person from entering into or expanding the business of exporting products from Canada; or (iii) prevent or lessen competition in the supply of services facilitating the export of products from Canada.

An agreement or arrangement would not be considered to be collusion if: (a) it was between or among only federal financial institutions; (b) it was made only among companies each of which was an affiliate in respect of every one of the others; (c) notice was given to the Commissioner; (d) it was ancillary to, and reasonably necessary for, another agreement or arrangement among the same participants and the other agreement or arrangement would not itself constitute collusion, when considered on a separate basis; or the participants collectively did not account for, or control, at least 25% of the relevant market for the product affected by the agreement or arrangement (this last exception is also known as the "safe harbour").

According to the third set of amendments, persons who alleged that they were directly affected in their business or were precluded from carrying on business due to their inability to obtain adequate supplies of a product anywhere in a market on usual trade terms could, with leave of the Tribunal, make an application under section 75. Currently, only the Commissioner has standing to make an application to the Tribunal. Similarly, persons who alleged that they were directly affected in their business by exclusive dealing, tied selling or market restriction would be entitled, with leave of the Tribunal, to make an application under section 77. The Commissioner would have 30 days to become party to the application and, after 30 days, would require the request of, or leave of, the Tribunal.

The third set of amendments would add new sections 79.1 and 79.2 to allow the Tribunal, upon an application by the Commissioner, to make an order directed against any person who was a participant in an agreement or arrangement with one or more competitors with respect to the production, supply or acquisition of a product; when the agreement or arrangement had had, was having or would be likely to have the effect of preventing or lessening competition substantially in the affected market. The Tribunal could also order reasonable and necessary action to overcome any of the effects of the agreement or arrangement or to restore competition in the market. However, the Tribunal could not make an order where, in its opinion, the duration of the agreement or arrangement was limited to the reasonable time needed to facilitate the entry of a new product, or a new supplier of a product, into a market. Similarly, no application could be made in respect of an agreement or arrangement entered into only by affiliated companies, partnerships or sole proprietorships. The Commissioner might also issue a clearance certificate, valid for three years, where he was satisfied that the agreement or arrangement that the person was about to enter into would not be likely to have the effect of preventing or lessening competition substantially.