Remarks by John Pecman, interim Commissioner of Competition

Stikeman Elliott LLP

Toronto, Ontario
April 16, 2013


Introduction

Thank you for the invitation to be here this morning. It's a pleasure to be here with you. I am going to share my time today with Kelley McKinnon who is Deputy Commissioner of our Mergers Branch and then we'll both be happy to take your questions.

Before I begin, I want to touch on an item which some of you will be aware of. Yesterday, the Competition Tribunal issued its decision in the Toronto Real Estate Board (TREB) matter.

The decision stems from a May 2011 application we filed with the Tribunal under the Competition Act's abuse of dominance provisions, seeking to prohibit what we alleged to be anti‑competitive practices by TREB. Namely, we sought to eliminate rules that denied real estate agents the ability to introduce innovative, web-based services.

While I am disappointed in the decision to dismiss the application, I can tell you we are currently reviewing the decision to determine our next steps.

It's been 6 months now since I began serving as Interim Commissioner and throughout that time I have been meeting with stakeholders from the business and legal community, hearing their thoughts and sharing my vision for the Bureau.

The 3 priorities I have outlined for the Bureau going forward should come as no surprise.

They are:

  1. benefitting Canadians, through focused enforcement and strategic regulatory interventions;
  2. applying Canada's competition laws in a transparent and predictable manner; and
  3. building trust through enhanced collaboration.

None of these can be achieved by the Bureau alone.

Working with our stakeholders and our partners, both domestically and internationally, is how we deliver on these priorities.

I have been talking for months about my belief that successful collaboration is built on mutual trust, and trust must be established through open lines of communication.

Trust is the means by which we will achieve results — and I'm not alone in this belief. The OECD recently published a paper which noted that:

"Trust is now recognised in economics literature as a key determinant of policy effectiveness, reduced uncertainty and low transaction costs."

The need to build trust is clear — but this can only be achieved by working together.

Accordingly, my mantra for the Bureau is — "building trust through collaboration" — between the Bureau and all of its stakeholders.

This is not a catch phrase.

For those of you who have interacted with the Bureau recently, I believe you will have noticed this change in approach.

Transparency, certainty and predictability are critical to our continued success. This is what Canadian consumers and the business community should expect from us.

Increasingly, the traditional, vertical model of governance is no longer efficient or appropriate for public institutions. The very nature of our world has led public institutions, and in particular enforcement agencies, to be more interdependent.

This means that, in order to operate effectively, the Bureau, like all public institutions, must move to a collaborative, horizontal approach where we engage our partners, our stakeholders, and Canadian consumers.

These notions of trust, collaboration, transparency and predictability are precisely why I am here speaking to you today, and why I have spent the last few months speaking to your colleagues in the legal and business communities.

Since I began speaking about these themes, I have received a lot of positive feedback from consumer groups and the legal and business communities. But, I have also been asked a few pointed questions about what exactly collaboration means to the Bureau and what we hope to achieve through this approach.

So today, I'd like to expand on these points.

Let me begin by telling you about my vision for the Bureau. My vision is to create a Bureau without borders — a Bureau where our enforcement reach is not strictly limited by our resources or constrained by cross-jurisdictional boundaries whether international or domestic.

Building that Bureau will be a process, but in my view, the first steps are to collaborate with our stakeholders and to cooperate with our enforcement partners.

This open and inclusive approach is about promoting confidence and increasing compliance with competition law with the goal of achieving a more competitive economy.

It will come through being transparent about how we develop, communicate and apply policies, practices and procedures and, where appropriate, being increasingly public and transparent about both enforcement and policy projects.

This will, of course, always be done with the appropriate safeguards to avoid the disclosure of commercially sensitive information.

Cooperation on enforcement matters

Let me first touch on some examples of enforcement cooperation.

The Bureau is currently working co-operatively with both domestic and international enforcement partners at all levels and in all branches. We are developing "pick up the phone" relationships with these counterparts in other agencies, when files of mutual concern arise.

Why are we doing this?

We are doing this for several reasons: to increase our own expertise, to increase the effectiveness of our enforcement activities, and the enforcement activities of our partner agencies at home and abroad, and finally, to build a more effective and efficient effort in competition enforcement both within Canada and globally.

Now, to the "how" we are doing this.

Domestically, our Criminal Matters Branch works with a number of partners — with extraordinary results on enforcement cases. Among these are the Unité permanante anticorruption (UPAC) in Quebec, the Ministry of Public Works and Government Services, the RCMP and other regional police forces.

Our partnership with UPAC has seen us cooperate on a number of investigations include, an investigation regarding bid-rigging allegations that resulted in 77 charges being laid against nine companies and 11 individuals.

These charges were laid in June of 2012, for their respective roles in a cartel to rig bids for contracts for road construction, water plants and infrastructures projects in the region of St-Jean-sur-Richelieu, Quebec.

The co-ordination between our two agencies has seen joint searches, witness interviews and information sharing.

The success of our cooperation has led us to enter into a more formal relationship through the development of a Memorandum of Understanding that will guide our future work together.

Public Works and Government Services Canada have partnered with us for many years to address challenges related to bid-rigging.

As you may know, PWGSC is the main procurement arm of the government, providing services to businesses and other government departments.

PWGSC refers bid-rigging complaints and cases it receives to us for investigation, and we provide bid-rigging prevention training to their staff, as part of our outreach program.

Our relationship has delivered results — in 2005, PWGSC contacted us with concerns about specific bidding processes and we, in turn commenced an investigation that resulted in bid-rigging charges against 14 individuals and seven companies in the IT services sector.

Thanks in part to our work with PWGSC we were able to secure a guilty plea in one of the charges. This matter is now before the courts.

We will be solidifying this cooperation shortly with an MOU that will further the effective practices that have developed between our organizations and build on lessons learned.

Our organizations will achieve this by recognizing formally our co-operative efforts in the areas of enforcement, information sharing and education and awareness.

In the course of our enforcement work, the Bureau also works in cooperation with the RCMP and other Canadian police forces, often in the areas of conducting searches and wiretapping.

One of our important joint efforts is the Canadian Anti-Fraud Centre, which is our country's central fraud repository, jointly operated by the Bureau, the RCMP and the Ontario Provincial Police.

The centre serves a pivotal function as Canada's central fraud repository and in the supportive role it plays for enforcement agencies within Canada and abroad.

By cooperating through these partnerships, what we do is facilitate what I spoke of earlier — creating a Bureau without borders, a Bureau that, in maximizing all the resources and knowledge available in our country, extends its reach and its ability to deliver on its mandate.

Domestically, we will work to strengthen and grow these co-operative efforts, and through them build a stronger and more effective approach to the enforcement of competition matters in Canada.

I want to touch on one final, but important domestic piece and it relates to an initiative that we are actively engaged in — developing stronger working relationships with sector regulators.

Examples include the Canadian Radio and Television Commission, Investment Canada and Transport Canada, with whom our enforcement responsibilities frequently intersect, primarily on the subject of merger review.

This occurred recently in the Bell-Astral merger, where we reached a consent agreement with the parties on March 4th. Through that agreement, we required significant divestitures and behavioural commitments in order to ensure that competition was being preserved in the marketplace. The merger is now being reviewed by the CRTC.

Canada's institutional framework is such that overlapping mandates exist and where merger reviews are concerned, parties sometimes have to deal with more than one agency.

This can result in concurrent and duplicative efforts; and sometimes in divergent outcomes. While this isn't common, I recognize the frustration that it creates for the business community.

And, it's why we have reached out to some of our counterpart departments and agencies.

Through this, we hope to be able to collectively provide greater transparency with respect to the interface between our organizations.

Our co-operative efforts are not limited to Canada. As I mentioned earlier, creating a Bureau without borders means creating a Bureau that is not constrained by cross-jurisdictional issues but rather one that, through partnering with fellow agencies, extends its reach beyond its national borders.

Recently, I had the opportunity to do just that in Washington, where I met with the new Assistant Attorney General of the U.S. Department of Justice Antitrust division, William Baer and the new Chair of the Federal Trade Commission, Edith Ramirez.

Our meetings produced substantive discussions about further increasing the level of cooperation and transparency between our agencies.

Canada and the Bureau have put in place several formal cooperation instruments with international partners to facilitate cooperation and information exchange on competition law enforcement and the coordination of global enforcement efforts.

And I'd like to share with you a recent example of the successes that we have achieved through our work with our international partners.

Last week, we saw the announcement of the largest fine ever ordered by a court in Canada for a bid-rigging offence under the Competition Act.

As part of an ongoing investigation by the Bureau, Furukawa Electric Co., a Japanese supplier of motor vehicle components was fined $5 million by the Ontario Superior Court of Justice for its participation in an international bid-rigging conspiracy.

During the course of our investigation, invaluable assistance was provided by our antitrust partners in Australia, Europe, the United States and Japan, and by connecting with other antitrust agencies around the world.

The information sharing that resulted from working with our partners and our ability to reach beyond our own borders played a pivotal role in the success of this case to date.

Though this is a great success to point to, it's not our only one. The Bureau works actively with its partner agencies across the globe, and we are continually working at expanding that reach to new partners.

Our co-operative efforts with partners in the United States, Europe, Australia, Japan and New Zealand in the areas of searches, information sharing and other investigative steps, has only served to reinforce the importance of cooperation and furthered our drive to grow these international relationships.

To paraphrase Aristotle, I believe that cooperation with our enforcement partners allows each of us to be greater than the sum of our parts.

Now, I have touched fairly extensively on the importance of cooperating with our enforcement partners and I know that Kelley will touch on some of the co-operative work we do in mergers, so I want to move on now to discuss the importance of collaborating with our stakeholders.

Collaboration — practices, policies and procedures

While cooperation focuses more directly on enforcement-related matters, collaboration is about working together on the development of the practices, policies and procedures that inform our work.

Much like our enforcement work, collaboration involves both domestic and international partners, many of whom are also our partners in the enforcement related matters I described above.

The goal here is moving toward a harmonization of these practices, policies and procedures, where it makes sense, to develop a more cohesive approach.

It's about sharing best practices and developing these practices, with all of the information available to us.

Our collaboration isn't limited to our international partners. At home, we are collaborating with the Canadian Bar Association on a number of initiatives. These include:

  • Investigative procedures, where we are working toward a greater exchange of information during the review process for civil matters;
  • Updating our Immunity and Leniency programs, to reflect developments and to respond to feedback regarding areas that are not clear;
  • E-evidence, where we are discussing issues that have arisen in the context of electronic document production.

We recognize that collaboration between the Bureau and the CBA is critically important for both of our organizations and again, it speaks to the Bureau's desire to provide greater transparency, certainty and predictability to its partners.

We will, pursuant to our mutual collaboration initiative, continue to work with the CBA on practices, policies and procedures with an end goal of creating a more open, effective and efficient working relationship.

On the international front, we achieve this through our support of and leadership in partnerships that include the International Competition Network, the International Consumer Protection and Enforcement Network, the Organisation for Economic Cooperation and Development, the International Bar Association and the American Bar Association.

A good example of this collaboration is our recent meeting with International Cartel Task Force, led by the antitrust section of the American Bar Association.

This meeting took place in Washington last week, where a number of productive discussions and consultations occurred, including:

  • Canada's "open court" principle and what steps the Bureau is taking to address concerns around public access to ITOs, and what steps the Bar could take to assist in preserving the confidentiality of the immunity process; and
  • the implications of the Maxzone decision on our Leniency program and how we are addressing these.
  • an update and feedback on the FAQs we drafted for the Immunity and Leniency programs.

The ultimate goal of our involvement in these partnerships and with these stakeholders is to enhance our ability to protect consumer interests and our ability to fulfill our part in ensuring a competitive and innovative marketplace.

Our involvement in the ICN is particularly important as it works toward the goal of creating superior standards and procedures in competition policy across the globe and to further more effective international cooperation, which feeds directly in to the co-operative efforts I spoke to earlier.

Before I conclude, I would like to touch on an important point that has recently been raised with me.

It has been suggested to me that while I have made cooperation and collaboration important priorities, the Bureau's enforcement actions do not necessarily reflect this at all.

And to some extent, that is true.

Let me be clear: the Bureau always prefers to resolve issues amicably, but we must see genuine progress in negotiations and a commitment to address our concerns.

When an agreement cannot be reached, we will not hesitate to seek a remedy before the courts.

I appreciate that this can sometimes be a question of perspective — depending on what side of the fence you happen to be sitting on, but while our default is to try and resolve matters consensually, the reality is, this is sometimes not possible.

As an independent law enforcement agency, our job, first and foremost, is the principled enforcement of the Act.

This means that we cannot allow anything to interfere with our ability to perform that function and that my commitment to enforce the Act will never take a back seat to my commitment to trying to reach a consensual resolution.

Conclusion

I would like to leave you today with one message.

It is human nature to unwittingly create silos, in the interest of what appears to be efficiency. To believe that everything has a place and it must remain in its place, performing its specific function, lest we upset the order of the Universe.

And so, breaking down those silos, and creating an organization that is not bound by its borders or limited by the resources and knowledge it houses within them, isn't necessarily an easy task. It goes against "conventional thinking".

What's more, organizations and the people that run them become protective of their silos, of their mandates and of their information.

But I believe that if those engaged in competition matters work to take down our borders and step outside of our silos and if we do this through cooperation and collaboration, we can achieve immeasurably more than we ever will alone, to the benefit of consumers, business and the economy.

Thank you.

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