Legislative Initiatives: Bill C-23 (An Act to Amend the Competition Act and the Competition Tribunal Act)

Chris Martin, Legislative Affairs Division
Competition Policy Branch
Competition Bureau

Annual Conference of the Canadian Bar
Competition Law Section

September 20, 2001

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INTRODUCTION

Thank you for allowing me to participate in this panel on legislative initiatives.

I would like to start by announcing some recent changes which took place within the Competition Bureau. On June 11, 2001, the former Amendments Unit became the Legislative Affairs Division and was amalgamated with the former Economics and International Affairs Branch to form our new Competition Policy Branch. This new branch, with legal, economic and policy expertise, provides a strong foundation in which the Legislative Affairs Division carries out its mission. The Division will continue to fulfill its role in promoting ongoing, incremental amendments to theCompetition Act, as well as the three labelling statutes for which the Bureau is responsible, to ensure that these laws remain as effective and up-to-date as possible. This, in turn, will help to ensure that Canada is prepared to meet the demands of a rapidly changing economic environment by having strong economic framework legislation.

Today, I will provide a brief overview of the process which led to the introduction of Bill C-23, An Act to Amend the Competition Act and the Competition Tribunal Act,in the House of Commons on April 4, 2001. I will then outline the four main initiatives and some of the miscellaneous amendments included in the bill. Finally, I will share with you the Bureau's approach to certain proposed amendments that were not included in Bill C-23, but had been part of our public consultations prior to its introduction.

THE CONSULTATIVE PROCESS

As with each of our amendment initiatives, Bill C-23 is aimed at ensuring that Canada's competition laws are well situated to foster a more efficient and competitive Canadian marketplace. This ensures that Canada keeps pace with the rapidly changing global economy. This initiative is a good example of how policy issues can be identified, discussed and developed to improve and advance competition law and policy in Canada.

The Competition Bureau is always open to advancing opportunities that lead to a discussion of competition policy in Canada. We like to think of the amendment process as both fluid and dynamic.

There are many ways to gather ideas on potential amendments, including through public discussion and dialogue, correspondence, ongoing policy consultations, the work of international organizations (e.g., the Organization for Economic Cooperation and Development), academic conferences and, as we have seen through the process leading up to Bill C-23, Private Members Bills.

Increased public interest in competition policy opens new opportunities for discussion, and much of this interest has been media-driven. According to our own media analysis, there were 147 newspaper articles covering Bureau activities in 1997-1998. The next year that number increased dramatically to 834 articles. And last year, the Competition Bureau was mentioned in more than one thousand newspaper articles.

We have also witnessed an increased interest in competition policy in Parliament. In 1999, the House of Commons Standing Committee on Industry began a review of the anti-competitive pricing provisions. The Committee held hearings and tabled its Interim Report in June 2000. At the same time, four Private Members Bills aimed at amending the Competition Act were introduced in the House of Commons.¹ Sharing a common interest in the subject of these bills, the Minister of Industry requested that the Competition Bureau consult the public on the matter. In April 2000, we engaged the Public Policy Forum to undertake national consultations.

The consultation process accomplished several objectives. Firstly, it gave Canadians the opportunity to participate in a national dialogue on competition policy. The Public Policy Forum received more than 100 written submissions which were posted on their website. Roundtable discussions were held across Canada, giving a broad cross-section of interested parties the opportunity to meet and voice their views. Secondly, the Public Policy Forum identified a number of consensus areas in its December 2000 Final Report, which was subsequently used to frame Bill C-23. Thirdly, the subjects canvassed during consultations and the current process under way with respect to Bill C-23 illustrates the important role Members of Parliament play in shaping law and policy in Canada. If there is one lesson we might take from this, it is that the process of competition law and policy development has changed significantly from previous rounds.

INITIATIVES CONTAINED IN BILL C-23

Bill C-23 contains principally four initiatives, namely:

Although these initiatives can be seen as independent of each other, they share the common goal of benefiting Canadian businesses and consumers through more effective and efficient competition law administration and enforcement.

I will now turn to each of these topics and discuss them briefly.

INTERNATIONAL COOPERATION

Currently, Canada has more than 30 treaties with other countries that provide for mutual legal assistance in criminal matters (often referred to as MLATs).² However, MLATs apply only to criminal matters including those under the Competition Act. Currently, no comparable mechanism exists for non-criminal competition law matters. Yet, this is essential to permit us to obtain evidence located abroad.

Continuing technological change and falling trade barriers have accelerated global competition, and increased the risk of anti-competitive behaviour with effects that spill over from one country to another. The Competition Bureau needs the tools to address such behaviour to protect Canadian consumers who reap the benefits of a vigorous and healthy marketplace. We must be able to ensure that businesses competing in the Canadian marketplace do so on a level playing field. By implementing treaties or agreements that provide for mutual assistance in non-criminal competition law matters, Bill C-23 would ensure that the Bureau has the ability to obtain the information it needs to make enforcement decisions affecting competition in Canada when that information is located in another country.

Of course, treaties in Canada are not self-implementing. Legislation is required to change the domestic law of Canada where it is not consistent with the provisions of a treaty. In the case of the criminal regime, MLATs are implemented through the Mutual Legal Assistance in Criminal Matters Act. The new Part III in Bill C-23 essentially mirrors the provisions of that Act.

Generally speaking, Bill C-23 requires the following to be included in any agreement:

For full details on the necessary provisions in such agreements, I refer you to the bill itself.

DECEPTIVE NOTICE OF WINNING A PRIZE

Another amendment contained in Bill C-23 would prohibit sending notices that give recipients the general impression that a prize has been won where they seek payment or require the recipient to incur a cost. This provision, contained in proposed section 53, would apply to notices sent by any means, including electronic mail. Subsection 53(2) limits the application of the section so that no offence would arise where the recipient actually wins the prize and the person who sent the notice disclosed the number and approximate value of the prizes in an adequate and fair manner, distributed the prizes in a timely manner, and selected participants or distributed the prizes randomly -- these steps are already required to be taken by virtue of section 74.06 of the Act.

This initiative follows on the heels of 1999 amendments which introduced provisions to deal with telemarketing scams. Those amendments have had a positive impact on Canadian consumers and businesses who have been on the receiving end of such scams. They have also benefited telemarketing businesses who play by the rules. Bill C-23 seeks to build on that success by deterring telemarketing scams from migrating to the mail and ensuring that accurate information exists in the marketplace.

STREAMLINING COMPETITION TRIBUNAL PROCESSES

Of all the proposals that were part of our consultations, streamlining the Competition Tribunal process received the greatest support and required the least amount of debate. Stakeholders recommended that the Tribunal be provided with better tools, which most courts already have, as a means of speeding up the process and saving everyone money. With these amendments, the Tribunal will be better able to manage its proceedings.

Bill C-23 would give the Tribunal the jurisdiction to hear and dispose of references for all matters under Parts VII.1, VIII and IX. The Commissioner and a party who is the subject of an inquiry will have the ability to refer a matter for determination on a question of law, mixed law and fact, jurisdiction, practice or procedure except with respect to matters under Part IX. The Commissioner, acting alone, will have the ability to refer a matter to the Tribunal to determine a question of law, jurisdiction or practice and procedure in relation to the application of Part VII.1 to IX.

Bill C-23 would give the Tribunal the jurisdiction to award costs in all proceedings that come before it.³It could make awards where it finds that the proceedings are frivolous or vexatious or any step is taken to hinder or delay their progress. Costs could be awarded against any party, including interveners and the Crown and, to allow the greatest flexibility, awards would be at the discretion of the Tribunal.

Another amendment to the Competition Tribunal Act would permit parties to bring a motion to the Tribunal to dismiss an application summarily. A single judicial member would decide the issue, and the application or response to it could be dismissed or granted in whole or in part if he or she is satisfied that there is no genuine basis for it. Costs awards are complementary to this authority in that they will encourage appropriate use of this procedure.

INTERIM ORDERS

Currently, it is only possible to obtain an interim order under Part VIII in two cases. Firstly, the Competition Tribunal may issue such an order in the case of mergers after an application for review has been filed (section 100). Secondly, the Commissioner may make a temporary order when dealing with any anti-competitive act in the airline industry (section104.1).

Bill C-23 proposes the addition of section 103.1 to the Competition Act, which would authorize the Competition Tribunal to issue an interim order prior to the application for any review proceedings under Part VIII in circumstances which are not covered by sections 100 and 104.1. The Commissioner would be able to apply ex parte and would need to certify that an inquiry is under way. Interim orders would have an effect for an initial 10 days but could be extended for two periods of 35 days each.

Under subsection 103.1(2), the Tribunal would be able to make the interim order if it finds that, in the absence of the order, injury to competition that cannot be adequately remedied by the Tribunal is likely to occur, a person is likely to be eliminated as a competitor, or a person is likely to suffer a significant loss of market share, a significant loss of revenue or other harm that cannot be adequately remedied by the Tribunal.

MISCELLANEOUS AMENDMENTS

There are several other amendments proposed in Bill C-23 which I would like to mention briefly. Sections 74.12 and 105 respecting consent orders would be amended to allow the filing of consent agreements based on any terms for immediate registration. This would have the same force and effect as a court order.

Subsections 74.11(5) and (6) would be amended to allow the court to extend a temporary order made under Part VII.1 for an additional period of time as the court considers necessary. Again, this will provide the court with the ability to use its discretion in light of the facts of each case.

Section 124.1 would also be added to the Competition Act to permit application to the Commissioner for a binding advisory opinion. As a matter of practice, currently the Commissioner's advisory opinions are treated as binding so long as the material facts upon which they are based remain unchanged. Bill C-23 would codify this practice.

OUTSTANDING ISSUES

There were several proposed amendments that were part of our public consultations, but have not been included in Bill C-23. One such proposal was for a limited right of access by private parties to the Competition Tribunal for sections 75 (refusal to deal) and 77 (tied selling, market restriction and exclusive dealing). The Public Policy Forum did not find a consensus on this proposal, but it found that one may be possible in the future. I look forward to a further examination of this subject by the House of Commons Standing Committee on Industry, later this Fall.

The public consultation process also considered proposed changes to the criminal conspiracy provisions of the Act intended to make them more effective against the most harmful types of agreements between competitors, such as price fixing or market sharing, while allowing other types of agreements, which might be benign or pro-competitive, to be examined under a new civil reviewable provision. While there was general agreement that section 45 needs to be modernized, the consultations suggested more analysis and discussion was required concerning this cornerstone provision of the Competition Act. The Bureau has since contracted three independent studies on the matter. We will likely hear more about this subject at an upcoming conference in Toronto, on October 12, when we will look at all aspects of section 45.

Similarly, there no consensus on a proposal to expand the list of anti-competitive acts which illustrate abuse of dominant position. It was concluded that further discussion is required on this proposal. Since the underlying Private Member's Bill was targeted at the grocery trade, there are now three studies in progress examining the practices in this sector. These will provide input to draft guidelines to be issued this Fall on the application of section 79 to the grocery trade.

CONCLUSION

In conclusion, I would like to thank you for the opportunity to outline Bill C-23 as well as other subjects that are still on our agenda. From the Bureau's point of view, it is important that we keep an open dialogue on the question of amendments. There is still further work to be done. We must not only ensure that the Competition Bureau has the tools it needs to effectively administer and enforce the legislation for which it is responsible, but we must also ensure that all Canadians have a voice in defining the role of competition policy in Canada's economy of the future.

This leads us to a consideration of the next round of amendments, in keeping with our commitment to incremental and ongoing legislative renewal. Although we are in the early stages of planning the process, I can assure you that it will reflect the principles under which the Competition Bureau operates, namely: transparency, fairness, predictability, timeliness and confidentiality.

I look forward to hearing my fellow panel members' comments on Bill C-23 and future amendments.

Thank you.

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Footnotes

¹  During 2000, seven Private Members' Bills involving competition policy were introduced in the House of Commons. This year, nine such bills and one motion have been tabled.

²  MLATs in force at the time of writing include 27 bilateral and 5 sharing agreements. A further 8 are signed but not in force, with 10 more currently under negotiation.

³  Although courts have the inherent jurisdiction to award costs, statutory tribunals must have this power conferred upon them by legislation. The Competition Tribunal examined this issue in Director of Investigation and Research v. Chrysler Canada Ltd. (13 October 1989), CT-88/44, Reasons and Order, and ruled that the Tribunal had no general power to make cost awards.