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Prohibition Orders

Report

1996

1. Background

Section 34 of the Act deals with prohibition orders. Such orders prohibit the continuation or repeti tion of an offence. Under s. 34(1), they are available following criminal conviction or, under s. 34(2), they may be obtained as a "stand-alone" remedy without criminal conviction. While a wide variety of prohibition orders has been issued over the years, s. 34 does not permit prescriptive terms which would require a party to take positive steps or acts. Such a power does already exist in other federal statutes, such as the Fisheries Act .

The inclusion of a provision which would allow courts to make orders containing prescriptive terms would facilitate the effective enforcement of the Act by allowing the government greater flexibility in enforcing the provisions of the Act. As the delays and costs of pursuing a matter before the courts have increased, so has the use of alternative dispute resolution processes. Using prescriptive terms in orders would be an effective tool in seeking alternatives to litigation. Enforceable orders would encourage compliance with the Act in the future, provide an educational tool concerning competition offences and help restore the marketplace.

Finally, s. 34 does not expressly authorize the courts to rescind, vary or interpret a prohibition order. Whether authority to do so forms part of the courts' inherent jurisdiction is uncertain and, thus, warrants clarification.

2. The Public Consultations

The Bureau's discussion paper identified the need for prescriptive terms in prohibition orders and sought suggestions for the way in which such orders should be structured.

While some responses to the discussion paper did not support the proposal, overall, most were in favour of the inclusion of prescriptive terms where the parties to the order consent.

Responses which did not support the proposal expressed concern that orders containing prescriptive terms may become overly intrusive. They could impose an unreasonable burden on businesses, having a counterproductive effect on a corporation's ability to compete and an unacceptably high risk of adverse impact on business reputation and goodwill. Other concerns related to the far-reach ing nature of the proposal, since orders could be made against firms or individuals who have not been convicted of any violation of the Act.

Most responses supported providing the courts with the discretion to order any prescriptive term which meets certain defined criteria. Very few responses supported the creation of an exhaustive list of possible orders.

Further amendments suggested were:

allowing for the variation or rescission of orders;

formalizing the Bureau's ability to accept undertakings and rendering them enforceable;

providing the right to seek relief where the terms of an undertaking become unreasonable by reason of changed circumstances;

imposing a statutory time limit on prohibition orders (with the possibility of extension if this is necessary and in the public interest); and

providing for the automatic termination of those prohibition orders that are based on the price discrimination or promotional allowances provisions of the Act, should those provisions be repealed.

3. The Consultative Panel

The Panel expressed support for establishing a general provision authorizing the issuance of pre scriptive orders. It discussed the circumstances in which such orders should be available and the manner in which the provision ought to be drafted. The Panel favoured creating a general power to include prescriptive terms. It did not see a need for an illustrative list of possible prescriptive terms. Should such a list prove to be useful, this could be provided in Bureau guidelines.

Panel members agreed that prescriptive orders be permitted in circumstances where all parties consent, but expressed concern that their terms not be excessively onerous in contested proceedings.

With respect to contested proceedings, the Panel concluded that prescriptive terms should only be directed towards preventing the continuation or repetition of the offence. It was the Panel's view that it is inappropriate, for example, to have prescriptive orders for the purpose of overcoming the effects of the offence, since the courts would be engaging in de facto regulatory oversight by the crafting of such orders.

A concern was also raised with s. 34(2), which allows the Attorney General to pursue a remedy under this provision and later charge the same party with an offence. This was viewed as being unfair since it forces the party to present a defence before trial on the substantive offence. Follow ing discussion on this issue, it was suggested that, if the Attorney General chooses to proceed by way of s. 34(2), the Crown should forfeit its right to lay any charges with regard to substantially the same facts.

The Panel also agreed that, should a criminal law provision be repealed, the outstanding prohibition orders relating to this provision should be withdrawn. It would make no sense to have in force prohibitions against practices that would no longer be illegal.

The Panel concluded that the Act should provide the courts with the power to vary, rescind or inter pret any order (including previously existing orders) at the request of any party to the order or the Attorney General of Canada. In the Panel's view, this power could be exercised where the court finds that the circumstances that led to the making of the order have changed and, in the circum stances that exist at the time the application is made, the order would not have been made or would have been ineffective to achieve its intended purpose. It should also be possible for a court to vary or rescind an order where the Attorney General of Canada and the person against whom an order has been made have given their consent.

Finally, the Panel was of the view that the statute should require the court to specify a time limit for an order, with a maximum statutory time limit of ten years.

4. Recommendations

1) The Act should be amended to provide that any prescriptive term may be included in an order pursuant to s. 34(1) or (2) if all parties to the order consent.

2) Where there is a contested application, a court should be able to make an order containing prescriptive terms, but these should be limited to preventing the continuation or repetition of the offence. The amendments should also make clear that prescriptive terms which are necessary to ensure compliance with the prohibition order may be included (such as a requirement to inform company personnel or management of the contents, scope and purpose of an order, so that the order can be given effect).

3) Section 34(2) should be amended to provide that, when an application for an order pursuant to this provision has been adjudicated on the merits on a contested basis, the Attorney General will forfeit the right to lay any charges with regard to substantially the same facts.

4) The court hearing a matter should be required to specify the duration of an order, with a maxi mum statutory time limit of ten years.

5) The Act should provide the courts with the power to vary, rescind or interpret any order (in cluding previously existing orders) at the request of any party to the order or the Attorney General of Canada. This power could be exercised where the court finds that the circumstances that led to the making of the order have changed and, in the circumstances that exist at the time the application is made, the order would not have been made or would have been ineffective to achieve its intended purpose. It should also be possible for a court to vary or rescind an order where the Attorney Gen eral of Canada and the person against whom an order has been made have given their consent.

6) Should a criminal law provision be repealed, outstanding prohibition orders relating to the provision should be withdrawn.