Remarks by Melanie L. Aitken, Commissioner of Competition

Competition Bureau

Canadian Bar Association

Ottawa
September 20, 2012

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Introduction

Thank you, Omar,Footnote 1 for your kind introduction, and thank you, colleagues, for this opportunity to speak with you one last time in my capacity as Commissioner. Last year, I understand you patiently listened to my recorded remarks, as I was unavoidably absent. Let me say, it's very nice to be here in person this year.

A few years ago, when I first addressed the CBA,Footnote 2 competition law stood at the threshold of a new era. Of course, competition policy must continuously evolve to keep pace with the changing marketplace. But policies don't always keep pace and for understandable reasons other policies sometimes take priority. But that Spring of 2009, this Parliament had given us better tools, and the Bureau was eager to get to work in using them.

For many years, many voices and more studies had called for reform of the Competition Act. In 2002, for example, a House of Commons CommitteeFootnote 3 shone the spotlight on the criminal conspiracy provisions of section 45 and its necessity to prove an undue lessening of competition. The Committee report described the "undueness" requirement as a "design flaw" that posed "the greatest obstacle to a successful conviction under section 45." And yet this requirement endured — for 123 years.

The 2002 Commons Committee wasn't alone in calling for competition reform. The 2008 report of the Competition Policy Review Panel, chaired by Red Wilson, noted that the Act contained many provisions that were either ineffective or obsolete, and did not measure up to international best practices.

So, after more than a century of reform at a stately pace, amendments to the Competition Act were passed and came into force in the spring of 2009 — the most significant amendments to our act since 1986.

Within a very short time, the Competition Bureau was making its presence felt, in ways that Canadians had not seen recently. We demonstrated that the Bureau was prepared to go after what we saw as anti–competitive behaviour where we find it — to date, in industries ranging from airlines to real estate to credit cards. And I do believe that our work has had real public impact. While the public may not always see the detail or machinations of how our work gets done, I believe that today, Canadians understand that the Competition Bureau can achieve tangible results. And that there is value, indeed sometimes to them very directly, in an enforcement agency that is willing to fight for competition.

Challenges and priorities

I chose to begin my remarks today with this bit of recent history to remind ourselves of the significant challenge we were presented with, not that long ago. When I stood before you that spring of '09, while the Government had provided the Bureau with a great set of new tools, it remained to be seen how we could – and would – use them.

Earlier this year, at the CBA Spring meeting, I talked specifically about how the amendments changed the Act and our enforcement of it in four areas:

  • Merger review;
  • Agreements between competitors;
  • Price maintenance; and
  • New remedies and increased penalties.

I've since expanded those remarks into an article that will be published shortly in the Canadian Competition Law Review.

Today, I would like to take a more thematic approach to considering what the transformations have meant, and leave you with a few parting thoughts of my own on where competition policy might be heading in our goal to deliver Canadians vigorously competitive markets.

From the beginning, we focused on the three key priorities that I outlined to you in that first address. These simple priorities continue, and we have seen how each helps to re-enforce the other:

First, implement the amendments to the Act and, in the process, strengthen our relationships with stakeholders, including those in the Bar.

Second, reassert the Bureau's presence as a strong enforcer on behalf of Canadian consumers and businesses;

And third, improve transparency to enhance predictability and certainty for businesses and their counsel — particularly important at a time of shifting legal standards.

Implementing amendments

Given the timing of my appointment, it was necessarily my first priority to deal with implementing the significant amendments. These amendments continued a general shift from criminal to civil review for many practices. They removed some of the sector-specific provisions and they provided the Bureau with greater flexibility in the remedies available to us, including administrative monetary penalties. And, they aligned Canadian practices with those of our major partners––in particular with respect to incentives in the merger review process.

The amendments have allowed the Bureau to significantly, and very positively, change the way we carry on business in many respects. For example, the average review of a complex merger used to take on average 50 days. Today, the vast majority of reviews now take only 30 days. At the same time, we haven't lost any ground in clearing non-complex cases quickly – 92% in under 14 days.

Now, as most of you know, under the new system, transactions that raise significant competition issues that will require additional information may be subject to a Supplementary Information Request — or SIR. When the amendments were introduced, some practitioners, understandably, were concerned that the system would be overburdened with SIRs. In fact, in the three fiscal years since the 2009 amendments, the Bureau issued a total of 18 SIRs — that's about three percent of the roughly 225 transactions we review each year and roughly what we anticipated in advance, having studied the US experience and adjusted for differences.

The introduction of a new civil and criminal track to with deal agreements between competitors has also increased our efficiency and our effectiveness. Our first case under s. 90.1 – the civil agreements provision – the Air Canada case, is now making its way through the Tribunal, and we look forward to the increased clarity that decision will bring.

Section 76 contains new civil price maintenance provisions and, likewise, we can expect to learn from the Tribunal's decision in the Visa/MasterCard case. In challenges with Rogers, Bell Canada and Yellow Page Marketing as well as the claim recently filed against Bell, Rogers, Telus and the Canadian Wireless and Telecommunications Association for misleading consumers, we have also signalled how importantly we regard misleading advertising by seeking the maximum Administrative Monetary Penalties now available.

Section 45 — the criminal cartel provision – has been amended and is now confined to dealing with hard-core criminal cartel agreements that fixed prices, allocated markets, or restricted output. The removal of the "effects" requirement from section 45 gives us the ability to use our powers more appropriately aggressively to combat this most egregious form of criminal behaviour.

The criminal provisions, you will remember, came into effect the year after the civil amendments. Two years on, we can point to some early successes. The average investigation length has decreased, largely because we no longer have to gather the complex evidence required to establish the undue lessening requirement. In the years prior to the amendments, it took an average of nearly two years to secure a remedy; since the amendments, that has been brought down to six months. And we had our first conviction under the new provision, last January.

To my mind though, the most significant point about the amendments to the criminal provisions is that they represent an opportunity for a real paradigm shift in how we handle criminal matters, and we have still not felt the full impact, not by a long stretch, I would suggest. As the Bureau's Criminal Matters Branch builds enforcement capacity and gains experience in taking conspiracy charges to trial, the number of cartel prosecutions may well increase. Now, the fundamental long term goal, of course, is to deter such activity through robust guilty pleas — saving public resources but still fully censuring such harmful conduct. But this will only be possible once the Bureau shows its mettle, through active prosecutions.

A strong enforcer

That paradigm shift is also closely related to my second priority that I mentioned earlier: The time was right and was ripe to reassert the Bureau's presence as a strong enforcement authority. And that, of course, under different Commissioners, was the case in earlier eras, and I want to recognize several of those individuals who are here today. For us, the time was right in 2009. Canadian businesses and consumers depend on us for the dogged and effective pursuit of offenders, and we had a responsibility to step up.

We have used the new and the old provisions to send a strong signal to the marketplace that the competition laws must be respected. We had the courage to take cases where, unfortunately, no consensual resolution could be reached––cases like CREA, Air Canada and CCS. At the same time, owing to that preparedness – and I strongly believe this to be the case – we have also been able to secure robust outcomes in other matters to the enormous benefit of Canadians and indeed the parties themselves. Think of cases like Bell, the Waste Management resolution, the NIVEA case. By looking at cases through the lens that we must always be ready for litigation––as much as we would rather not go that route, has allowed us to enhance our credibility, many times over, as a principled and active enforcement agency. As well, the record AMPs (administrative monetary penalties) that we have sought has sent a strong message of deterrence to others.

Today, right across the spectrum, we have an unprecedented number of contested cases in progress. We have taken steps internally to increase and improve our capacity to suitably aggressively support our pursuit of these cases. And, of course, we do this in partnership with our colleagues at the Public Prosecution Service of Canada and the Competition Bureau Legal Services Division.

Whatever the outcome of these cases, pursuing them will improve clarity for all parties. The Bureau always prefers to reach consensual resolutions, but meaningful and robust consent agreements only come from jurisprudence that is coupled with a demonstrated preparedness to enforce the law. The long-term aspiration, of course, is that the resolution of contested cases will give the bureau greater scope to reach outcomes that address the public harm, without the cost and distraction of frequent litigation.

Transparency

As I know we all agree is important, within the parameters of our confidentiality obligations, the Bureau sought, as our third priority, to improve our transparency to enhance certainty and predictability.

To that end, we struck an internal working group to study our approach around transparency. We've since published a greater number of position statements to outline the Bureau's analysis of complex merger cases. As well, we now publish a merger register on a monthly basis, which is designed to provide stakeholders with valuable insight into our reviews, while remaining vigilant to respecting our obligations to maintain confidentiality.

Further, in the wake of the amendments, we drafted extensive new guidelines and revised existing guidelines. Within the context of mergers in particular, we now have a coherent regime in place to enable us to quite readily issue other policies and Interpretation Guidelines to increase clarity as issues surface.

Looking to the future

As Commissioner of Competition, it will not surprise you to hear me say that I believe the Bureau's role to ensure that Canadian businesses and consumers prosper in a competitive and innovative marketplace is important. And, indeed it may take on even greater importance in times of economic challenges.

As defined by our mandate from Parliament, the Bureau has and will continue to play an integral role in fostering competitive markets, so that business can harness the innovation and productivity power that accompanies them, for the benefit of all Canadians.

I mentioned earlier how the 2009 amendments brought much-needed change to the Competition Act. In the years since then, we've moved quickly to implement and enforce the law, and provide greater transparency and clarity. But what does the future hold for competition policy in Canada? If we were to build upon the momentum that was achieved by the work of the Industry Committee and Red Wilson's panel, what would we hope to achieve?

My personal view is that, while we've made significant progress in responding to the amendments that promote competition in Canadian markets, we still have some distance to go before we realize upon their full potential.

The amendments will continue to drive a fundamental shift in the Bureau's culture, which, I assure you, has taken hold. But there are at least three fundamental challenges that remain.

First, the Bureau has no authority or power to prosecute, but works with the Public Prosecution Service of Canada, which directs the pace, direction and ultimate resolution of the matter. The PPSC is a highly-valued partner of the Bureau, but the reality is that the PPSSC has both other priorities and public interest considerations that extend beyond the Competition Bureau's concerns. Future consideration will have to be given to ways to address this important feature to our system if we are to maximize our ability and agility in this area.

The second challenge lies even more out of our control. It is a clear-eyed recognition and historical reality rather than an operational limitation. Specifically, it is the Canadian attitude toward "white collar crime." Through the 2009 amendments to the Competition Act and elsewhere, Parliament has signalled a determination to codify significant penalties for criminal conspiracies under the Act. However, the prosecutorial traditions in Canada and the courts themselves seem reluctant to impose fines or jail times to the full extent the law allows. All too often, individuals guilty of white collar offences get off easy. I believe that to deter conspiratorial conduct in Canada, and to be taken seriously by would-be commercial criminals around the world, prosecutors in Canada must insist upon serious consequences, and the courts must seriously penalize those guilty of such harmful conduct. The crimes may be economic, but they are no less criminal, and they deserve appropriately aggressive censure.

I do see some encouraging signs. The day is coming I believe, when the Canadian legal system will acknowledge the real harms caused by cartelists. But this shift is, necessarily, going to take time. We need cases to come before the courts to establish jurisprudence, and to send tough and hard signals to the marketplace. To do that, we've got to stay the course.

Third, outside the criminal context, I think it is fair to say that there are limits to our tools that need to be recognized as limits, and then an evaluation made as to whether they are the 'right' limits. They might be. But I think, for example, of the "efficiencies" defence, which, while the goal itself is unquestionably laudable, may in the way it is currently embodied in the Act, allow for the most monopolistic and harmful of mergers to go through. Or, perhaps there is an opportunity to better align ourselves with our major trading partners by giving us the ability under our civil agreements provision to challenge any agreement in restraint of trade that is substantially harmful to competition.

While indeed there are challenges ahead, I must say that, since the changes to the Competition Act were passed, I've seen the influence of the Bureau grow. I dare say, we cast a longer shadow today than we did three years ago — here in Ottawa among those entrusted with designing the laws of the marketplace, but also I think, across the country where businesses and consumers are now making choices in an environment where the rules are more clear. I believe the Bureau's ability to support a competitive marketplace will increase further still.

Thank you

As I look back on the past three years, and forward to what lies ahead in competition law, I'm very proud of how far we have come together. It has been a transformational time in our field, and we've all been privileged to participate in reshaping the way competition works in the marketplace. I have many people to thank for their support, understanding and effort.

Let me begin by thanking the Government of Canada for the opportunity to serve the public in this capacity. As Commissioner, I had the privilege to report to Parliament through two Ministers of Industry — the Hon. Tony Clement and the Hon. Christian Paradis – and I valued highly the confidence they placed in me.

Cabinet has championed framework laws as a way to keep Canada strong and competitive in a global economy. It became clear early on that we pursued similar objectives and I greatly appreciate the support they provided in my efforts to navigate new practices, procedures and renewed objectives in competition policy.

I would like to thank my team at the Bureau — a team of nearly 400 employees who are the most dedicated women and men I have had the pleasure and privilege to work with. When I took on the role of Commissioner, they welcomed me as one who had worked with them for a number of years. But, most importantly, they supported me as we embarked together upon an expanded mandate. And, it has not been an easy time to work at the Bureau.

Change is never easy, and I appreciate that I did demand a lot. But I would also say that I felt a heavy responsibility to do what Parliament expected of us and to realize the enormous potential at the amazing place that is the Competition Bureau. Few government institutions go through as much change in as short a period of time as we did. But it has been an exciting time, and through it all we have grown together.

Today, I believe we better discharge the responsibilities we have to our fellow Canadians.

There are many individuals to whom I am indebted, but I have to single out just a couple. Ann Wallwork, my colleague and friend. She offered invaluable advice, perspectives and institutional knowledge, coupled with a fierce loyalty to our mission. Vicky Eatrides, my Deputy Commissioner, who so ably supported me, always patiently listening into the wee hours as I grappled with making sure we identified the right decision for Canadians. Both stood alongside me in the difficult times as well as the celebrations. I am particularly indebted to those two individuals, without whom I don't think I would be here today.

I want to thank those in my office, Patritzia Martino who is on secondment now, at the FTC in New York, Mike Hollingsworth, Matt Chiasson and Dominy McLellan — I owe you all a deep debt.

My senior management team — I want to thank you for your trust and confidence; for your dedication and for your commitment. To the extent that we accomplished things in the last few years — they are your accomplishments.

Finally, I would like to thank you — my colleagues from the Canadian Bar Association. I think you would agree that the past three years have given us some challenges and some insights. Your early openness to striking the task force on collaboration--and I see a few people here — Barry, Don and others. But to the individuals who really embraced that initiative with an open mind, it's very much to your credit. As a result we were able to repair what was then a neglected relationship, and certainly a missed opportunity, enabling us to work together since in a much more constructive and respectful fashion.

When the amendments came into force, many stakeholders—and I understand why--were taken aback by the significant changes in the law, and the speed with which they were about to come in to force. I greatly appreciate the 'can do', 'roll up your sleeves' attitude of many members of the bar who just got down to the business of trying to make these new laws work as well as we possibly could and develop as much guidance as we could.

The introduction of the amendments led to our work together to articulate and update a number of guideline documents including most recently the Abuse of Dominance Guidelines and the Merger Enforcement Guidelines. We had an opportunity to build stronger working relationships, and we seized it.

Although I appreciate that we may not have agreed on everything, I know that I speak for everyone at the Bureau when I say that an open dialogue is absolutely necessary to voice and debate different views, because it's only this way that we are going to be able to consider our options with a fully informed perspective, which is necessary if we want to develop the strongest competition policy we can.

While the Bureau was handed a daunting responsibility three and a half years ago, to actively enforce the Act and to "get it right", the amendments also gave the Bureau a strong foundation on which to establish itself as a force for competition. At the Bureau, we embraced that challenge and, during my tenure as Commissioner, I made it my number one priority to focus on the essence of the Bureau's mandate — the objective, principled enforcement of the Competition Act.

Today, I am proud to say that this is the way of doing business at the Bureau. Without a doubt, that is the most effective way for us to deliver on our mandate. We work hard to build confidence in the marketplace and to demonstrate our work to Canadians in their everyday lives. As we did so, some of the great benefits were that we were able to attract even more talent to the Bureau team. Having been part of that team for the last seven years is one of the most rewarding experiences of my career.

Conclusion

In closing, if there is one legacy of the past three years, I hope it is this: a better understanding in the corridors of Ottawa and, most of all, among Canadians that competition matters. Competition policy matters. It sounds esoteric but competition matters. And it can make a real difference in the lives of Canadians, if it is respected and enforced.

Canadians benefit from a rigorous competition framework, combined with a Bureau that has teeth and is not afraid to bite, when required. I believe that the coming years will see more interest in cases brought before the Competition Tribunal and the courts. And I truly believe that the results of those cases will fortify the ability of businesses to compete and of Canadians to benefit from that competition.

The most effective way the Bureau will benefit the economy is through the principled enforcement of the law. That's a challenge for the Bureau itself, but as I said earlier, this is the Bureau's new way of doing business.

Thank you.

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