Annual Report of the Commissioner of Competition for the year ending March 31, 1999

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Introduction

This annual report provides an overview for the fiscal year April 1, 1998, to March 31, 1999, of the Competition Bureau's work under the following four Acts it administers:

• the Competition Act
• the Consumer Packaging and Labelling Act (non-food)
• the Precious Metals Marking Act
• the Textile Labelling Act.

As in last year's report, activities are grouped under the Bureau's four operational objectives:

• informing Canadians
• promoting competition
• reviewing mergers
• preventing anti-competitive activity.

Our raison d'être

The Competition Bureau strives to create an environment where Canadians can enjoy the benefits of lower prices, product choice and quality services in a vibrant and healthy marketplace.

In keeping with the Bureau's commitment to inform Canadians, this report not only explains the Competition Bureau's activities during the 1998-99 fiscal year, but also describes how the Bureau's work benefits Canada and society at large. Material such as statistical data and legal references is available electronically on the Bureau's expanded Web site.

About the Bureau

The Competition Bureau works on the premise that a vibrant and healthy marketplace is good for both businesses and consumers in Canada.

• It makes the economy work more efficiently.
• It strengthens the ability of businesses to adapt and compete in global markets.
• It gives small and medium-sized enterprises an equitable chance to compete and participate in the overall economy.
• It provides Canadians with the benefits of competitive prices, product choice and the information they need to make informed purchasing decisions.
• It balances the interests of consumers and producers, wholesalers and retailers, dominant players and minor players, as well as public and private interests.

Visit our expanded Web site

http://www.competitionbureau.gc.ca

Prevention is the Best Offence

The Competition Bureau is more than a law enforcement agency. The over-arching philosophy at the Bureau is that the combination of proactive, education-based strategies coupled with vigorous law enforcement activity is the most effective means of discouraging anti-competitive behaviour.

• By seizing every opportunity to talk directly with Canadians, the Bureau aims to heighten awareness of anti-competitive activities, and thwart the efforts of those who do not respect the law.
• By making sure that businesses have a good understanding of the law as it relates to them, the Bureau discourages anti-competitive behaviour.
• By amending legislation on a timely basis, the Bureau ensures that the Competition Act and related statutes respond to emerging business trends and current enforcement requirements in Canada and abroad.

This report demonstrates how placing more emphasis on the education side of what the Bureau calls the "conformity continuum," the expense of often time-consuming investigations and prosecutions can be reduced substantially.

Prosecution or contested cases before the Competition Tribunal is the Bureau's least preferred option. Investigations can take a long time to bring to court, and the outcomes are often uncertain. Moreover, until there is a conviction, the Bureau has no legal way of removing dubious products or services from the market.

The Bureau's conformity continuum approach is based on the belief that most businesses want to operate within a competitive marketplace framework, and that the vast majority are willing to comply once they understand how the legislation relates to their particular activities.

The Bureau's preference is to choose the best and most efficient means of restoring competition in the marketplace. It resorts to an adversarial approach only when all other avenues to correct anti-competitive behaviour have failed or the activities constitute a flagrant disregard of the law. This annual report demonstrates where more effective alternatives to court proceedings and trials have been pursued, such as when organizations or individuals have been willing to work with the Bureau or provide undertakings to comply with the law.

This does not imply that the Bureau will be lenient with those who engage in serious anti-competitive conduct. Where there is evidence of serious violations of the criminal provisions of the Competition Act, cases will be referred to the Attorney General of Canada for prosecution. It will continue to use the full force of the law. This can result in heavy fines and prison terms.

In civil matters, where solutions cannot be worked out by negotiation, consent orders or other means, the Bureau will not hesitate to go before the Competition Tribunal.

Beyond Law Enforcement: The Bureau's Conformity Continuum at Work

Promotion			Monitoring	Non-Conformity
Information and Education	Rule Making	Policy	Contacts	Moral Suasion	Consent	Adversarial
Bulletins, guidelines, outreach programs, public speaking and media contacts.	Regulations and voluntary codes.	Advocacy, and liaison with antitrust agencies and trade organizations in Canada and abroad.	Advisory opinions, consultations, prenotification filings, targeted inspections, and industry/client partnerships.	Warning letters, information sessions, and public education visits to businesses.	Undertakings by organizations to change behaviour, consent tribunal orders, consent court orders and guilty pleas.	Product seizures, prosecutions, contested prohibition orders and contested Tribunal proceedings.

Organizational Structure of the Bureau

As the organizational chart below shows, the Bureau is divided into six branches.

The Commissioner of Competition is head of the Competition Bureau and is responsible for the administration and enforcement of the Competition Act, the Consumer Packaging and Labelling Act, the Precious Metals Marking Act and the Textile Labelling Act .

Mergers Branch is responsible for the review of merger transactions. Mergers in which the parties to the transaction have combined sales or assets in excess of $400 million, and in which the value of the transaction exceeds $35 million, require advance filing with the Prenotification Unit of the Mergers Branch.

Compliance and Operations Branch is responsible for the development of the Bureau's compliance program, its enforcement policy, public education and communications. It also handles planning, administration and informatics activities.

Economics and International Affairs Branch coordinates international cooperation in many international fora on international competition policy and liaison with other government departments and agencies. The branch provides economic advice and analysis to the enforcement branches on specific cases, on enforcement policy issues, and on legislative changes and regulatory interventions. The branch also assists other government departments and agencies by providing competition policy advice and recommendations.

Civil Matters Branch investigates possible anti-competitive behaviour, such as the abuse of dominant position, and restraints imposed by suppliers on customers, such as refusal to supply, exclusive dealing and tied selling. The branch is also responsible for Bureau interventions before federal and provincial regulatory boards and tribunals.

Criminal Matters Branch investigates possible criminal offences relating to anti-competitive behaviour. These can include conspiracy to fix prices, bid-rigging, price discrimination, predatory pricing and price maintenance. It is also responsible for the Amendments Unit, which ensures that the provisions of the Competition Act and labelling legislation remain relevant.

Fair Business Practices Branch promotes fair competition in the marketplace through compliance monitoring, and education programs for industry and consumers. The branch applies the provisions of the Competition Act relating to false or misleading advertising and other deceptive practices. It is also responsible for the administration of the Consumer Packaging and Labelling Act, the Precious Metals Marking Act and the Textile Labelling Act.