Annual Report of the Commissioner of Competition for the year ending March 31, 2002

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Maintaining a Modern Approach to Competition Law

To ensure that Canadian consumers and businesses receive the full benefit of an innovative and competitive marketplace, the Bureau regularly reviews the Competition Act, as well as its own policies and enforcement guidelines, to ensure they are consistent with developing jurisprudence and economic thought. A modern, up-to-date legislative framework also enhances Canada's ability to compete internationally and to attract foreign investment.

The Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act help ensure that companies provide consumers with accurate and adequate information.

When changes are proposed to the legislation or to the Bureau's approach to enforcing it, the Bureau actively seeks the views of its stakeholders and the public.

Immunity

Under the Competition Act, the Attorney General of Canada may, at the Commissioner's request, grant individuals immunity from prosecution for criminal offences in exchange for assistance in investigating those offences.

As a result of the increasing integration of the world economy and the globalization of commerce, international cartels are growing both in number and complexity. Consequently, the Bureau is working more and more with agencies from other jurisdictions in its investigations of transnational anti-competitive conduct. Currently, the Bureau is investigating 18 international cartels, and it receives about eight immunity requests each year. In addition, the number of domestic cases involving immunity applicants has increased. The Bureau has posted the most frequently asked questions about the immunity program on its Web site.

Section 11 Challenge Function

In 2001-2002, the Bureau introduced an internal challenge function as part of its process for using the formal powers under section 11 of the Competition Act. Section 11 gives the Commissioner or an authorized representative the authority to apply to the courts for an order requiring parties to provide records, written returns of information, or oral evidence before a presiding officer.

The section 11 challenge function requires a senior officer in the Bureau's Compliance and Coordination Directorate to approve these applications before they can proceed to court. The officer must ensure that applications and requests for records and information are clear, and that the Bureau is seeking only necessary records and information.

The Bureau sought and obtained section 11 orders in 15 inquiries during 2001-2002. Many of these cases involved multiple orders, sought either simultaneously or at various stages of the inquiry.

International Internet Pilot Project

On April 24, 2001, the Bureau, along with competition agencies from 12 countries, participated in the launch of a Web site that allows consumers to file complaints on the Internet about e-commerce transactions with foreign companies. The site also allows users to obtain information and get practical advice on making safe on-line purchases.

House of Commons Committee Review of the Competition Act

In 1999-2000, the House of Commons Standing Committee on Industry, Science and Technology began hearings to review the anti-competitive pricing provisions of the Competition Act. The hearings continued through 2000-2001 and the committee issued an interim report on June 14, 2000. In the fall of 2001, the Committee's chair announced that the Committee would publish a final report, which precipitated two round-table hearings on December 3, 2001, and further hearings on February 5, 2002. ⁴

Modernizing the Competition Act

On December 10, 2001, the House of Commons passed Bill C-23, An Act to Amend the Competition Act and the Competition Tribunal Act. The Bill was subsequently introduced in the Senate and was referred to the Senate Standing Committee on Banking, Trade and Commerce on February 5, 2002, following second reading. Bill C-23, now called An Act to Amend the Competition Act and the Competition Tribunal Act, S.C. 2002, c. 16, came into force on June 21, 2002. This vital economic legislation strengthens Canada's competition law in a number of ways.

• The law prohibits companies from sending out notices that give the recipients the general impression that they have won a prize, and that involve the recipients having to pay money or incur a cost in order to obtain the prize. The provision applies to notices sent by any means such as regular or electronic mail.
• The Act enables the Competition Bureau to request formal assistance from foreign states to obtain and transmit evidence located abroad in non-criminal competition matters such as abuse of dominance. The Act's new Part III establishes a framework that sets out the basic requirements to be incorporated in any mutual legal assistance agreement negotiated for this purpose.
• The Competition Tribunal now has the authority to issue interim orders prior to litigation to prevent irreparable harm to a business. This authority applies to all reviewable matters under Part VIII of the Competition Act, except mergers and specialization agreements.
• The law gives the Competition Tribunal the authority to hear references (questions involving a specific aspect of a case or interpretation of the law), to award costs and to make summary dispositions when it finds no merit to the case or no genuine defence.
• The Act now allows private parties to apply directly to the Tribunal to address matters regarding refusal to deal, tied selling, exclusive dealing and market restrictions (sections 75 and 77 of the Competition Act). Private access allows individual businesses, most often small and medium-sized businesses, to deal with private or local matters independently.
• The Act includes measures to protect competition in the Canadian airline industry:
  • authority for the Competition Tribunal to grant further extension of a temporary order until the Commissioner has had sufficient time to receive and review information and determine whether to make an application before the Tribunal
  • further authority for the Competition Tribunal to impose an administrative monetary penalty against a dominant airline carrier that it finds to have abused its dominant market position.

These new provisions provide the Bureau with better tools to enhance compliance with the Act, for the benefit of consumers and businesses alike.

Amendments to the Conspiracy Provisions

Possible amendments to the conspiracy provisions of the Competition Act (section 45), were an important topic of discussion during extensive national consultations undertaken by the Public Policy Forum in 2000. In its final report, the Forum concluded that substantial support existed for amending section 45 by adopting a two-track approach for agreements among competitors. Under this approach, criminal sanctions would be limited to the most harmful types of agreements, such as price fixing or market sharing, while other types of agreements would be subject to review under a civil standard.

However, the Forum also indicated that, because of the importance and complexity of the issues involved, most stakeholders felt that more discussion, analysis and consultation were required. Further to this suggestion, the Competition Bureau contracted three independent studies on the conspiracy provisions during 2001-2002. These expert reports are available on the Bureau's Web site.

Private Members' Bills

No new Private Members' Bills on competition issues were introduced in the House of Commons during 2001-2002. Only Bill C-248, which proposes to amend the Competition Act to clarify when efficiency gains from a proposed merger would offset the merger's competition effects, progressed during that period. On February 25, 2002, the Bill was referred to the House of Commons Standing Committee on Industry, Science and Technology, following second reading.

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Footnotes

⁴ The Committee tabled its final report, A Plan to Modernize Canada's Competition Regime, on April 23, 2002. The report's 29 recommendations touch a wide range of issues, including conspiracies, enforcement, the airline industry, price maintenance and discrimination, abuse of dominance and mergers.