Remarks by John Pecman, Commissioner of Competition
November 14th, 2013
(Check against delivery)
Intro: 4Cs (Priorities)
Thank you for inviting me to join you today. I have been speaking lately around the Bureau, to our Deputy Commissioners about the importance of reaching out and speaking at events like this one.
Events like this are crucial to building and maintaining relationships with our partners in the legal and business community, and, as we generally post these remarks online after they are delivered, to increasing the public’s understanding of what we do at the Bureau.
I know a lot of effort and time are expended in organizing events like this, and make no mistake — they serve a valuable purpose and I want to thank Graham Reynolds and Michelle Lally for their efforts in organizing today’s event.
So, with that out of the way, I want to remind you that each of us is here to do a job.
My job is to talk and yours is to listen.
The challenge is for me to finish my job before you have finished yours.
In all honesty, I try not to get too preachy, pedantic or lengthy when I’m delivering remarks.
The way I look at it, Socrates was a lot wiser than I am and despite that, after a while, people got tired of listening to him and they poisoned him.
So, really, keeping my remarks brief and to the point is really about self-preservation.
And on that note, I better get moving along with these remarks.
I want to begin by talking about my priorities; I think it is a good way to frame the discussion as most of the subjects I want to cover today fit within our areas of focus.
For the last year, I’ve been talking about how my priorities relate to enforcement and advocacy, to applying our laws in a transparent and predictable manner, and to building trust through collaboration.
These priorities are well captured by what I like to call the "4Cs":
- Collaboration; and
I want to begin by talking about the first “C” I referred to — compliance —and specifically the importance of compliance and how it impacts trade associations. However, before I get to this, I want to briefly explain our shared compliance approach.
We know that businesses, for the most part, want to comply with the Competition Act — and that the vast majority of businesses put in place credible, effective compliance programs and monitor and update them to help ensure compliance.
A credible, effective compliance program that is regularly updated and enforced is a company’s best tool for avoiding the reputational and financial costs that can arise from non-compliance with the Act.
In recognizing that most businesses want to be compliant — we believe that the most effective way to approach compliance is as a shared objective.
That being said, the Bureau is also keenly aware of the incentive for market incumbents to protect their market power; and that this can lead to the introduction and adoption of the wrong kinds of competitive rules or the uneven application of these rules.
From the Bureau’s perspective, if companies with market power engage in anti-competitive activity, we will use the full force of the law to achieve compliance, including seeking administrative monetary penalties and/or divestiture orders, where necessary. The adage: "tread lightly and carry a big stick" could apply here.
Now, back to voluntary compliance. I am guilty of over-using the phrase, "the whole is greater than the sum of its parts". But in this case, it’s appropriate. When we treat compliance as a shared responsibility, we can achieve immeasurably more than we ever will individually, to the benefit of consumers, business and the economy.
I know I just touched on the importance of compliance programs and by now I hope that everyone in this room knows that a proper compliance program will reduce the risk of non-compliance, and mitigate potentially embarrassing and costly situations. Matthew will expand on the crime and punishment piece shortly.
And when those situations do arise, compliance programs can and do assist companies and their employees in their dealings with the Bureau, specifically in qualifying for immunity from prosecution when violations of the Act have occurred.
But I want to underscore that the business community’s role in shared compliance doesn’t begin and end with a compliance program that is drafted and then tossed in a drawer.
In order to truly fulfill their part in shared compliance, businesses must foster a culture of compliance.
I cannot underscore this enough — policies, procedures and training cannot and will not, on their own, ensure compliance.
Companies that will succeed in being compliant are those who start first with a corporate culture that views compliance as a fundamental value — and not just on paper, but in the actions of the most senior leadership.
That means that those at the top must set the tone by actively and visibly participating in and promoting compliance programs.
It is incumbent on the leadership of any business to send the message that compliance is the rule, not the exception, and then demonstrate this through their own actions. This is true whether you are a large, multinational corporation, or a smaller, regional enterprise.
Before I conclude on compliance, I would like to add that we will be updating and rebranding the Conformity Continuum and the Compliance Bulletin and, as we move forward with doing so, we will be establishing a working group to solicit views and will be seeking input from stakeholders like you.
I have been asked to touch briefly on the subject of trade associations — this seems to be a common request as I was asked about this in a few of my recent events as well.
Perhaps this is owing to the fact that the Bureau has had a number of investigations involving trade associations, several within the last two years alone.
These have included matters involving the Canadian Real Estate Association, the Toronto Real Estate Board and the Canadian Wireless and Telecommunications Association.
The first thing I want to say is that the Bureau does not operate under the assumption that trade associations are inherently bad. We do, however, acknowledge that from time to time they engage in practices which can significantly increase the risk of issues arising under the Act.
Trade associations provide a forum that may encourage competitors to collaborate and because of this, they are exposed to greater risks of anti-competitive behaviour.
And so the second thing I want to say here is that for this reason, compliance programs are of the utmost importance to trade associations.
Now, I know that on the whole, trade associations are aware of this and take action to mitigate risks arising under the Act. They are extra vigilant in managing and alleviating the risks associated with their work.
However, it’s worth repeating that developing a credible and effective compliance program is the first and most important step. That culture of compliance I was just speaking about isn’t restricted to businesses.
We are often asked to give trade associations direction on how to avoid non-compliance, so I have boiled it down to a few simple pieces of advice, which I offer to associations and their members:
- Most importantly — develop a corporate compliance program, update it on a regular basis, train your employees to ensure they understand it and then, enforce it.
- Avoid improper communications with competitors on prices, output, markets and customers, as well as on bids.
- Avoid setting rules or standards that exclude, predate or discipline non-members or that otherwise harm competition in a market.
- And finally, if you are uncertain about something you are planning to do — seek legal advice. I know that you all have competent and capable counsel who will provide you with the right advice.
I think I am going to switch gears now for a bit, as I fear I am wading in to Socrates territory.
The second "C" I referred to was communication and for some time I have been speaking about the need for more open, two-way communication both within the Bureau, and externally with our stakeholders. Part of that includes being more open about our policies, practices and procedures.
As I have said many times, transparency, certainty and predictability are essential to the Bureau’s future success. Applying our laws in a transparent and predictable manner is a large component of that.
And in order to deliver on that component, as many of you know, we announced our Action Plan on Transparency at the CBA’s Spring Forum.
To recap, the primary objectives of the Action Plan on Transparency are:
- To promote the Bureau's overarching policy and commitment to transparency and accountability.
- To identify future transparency initiatives and guidance.
- And, to increase the quality and quantity of available information about the Bureau's activities.
We will accomplish these objectives through a number of different activities, for example:
- By continuing to consult on important issues, including the development of new bulletins and guidelines.
- By publishing information about the outcome of our inquiries.
- And by, developing guidance on investigation and stakeholder communications.
Since that first announcement, we have released a draft bulletin on Communication during Inquiries for consultation.
This bulletin provides an overview of how we typically communicate during an inquiry with the parties that are subject to the investigation, with other stakeholders, and with the broader public.
In the short-term, we want to receive input that will assist us in identifying potential areas where our communication efforts during an inquiry could be better.
Longer term, we are aiming to promote the development of a more transparent, efficient and responsive agency.
The consultation will run until the end of the year, with a view to issuing the final bulletin early in the New Year and we are encouraging input from all interested parties.
The third "C" I referred to is collaboration. You know, it’s been said, and I can’t recall who said it but it was some famous communicator: "right around the time you think that you’ll be ill if you have to repeat your message one more time — that’s when people first start to hear you."
If that’s the case, by my stomach, people are just about tuning in to my comments about collaboration and building a Bureau without borders.
No, in all seriousness, these are themes I have been talking about ad nauseum.
It’s about working with our partners and stakeholders toward building a Bureau where our reach is not strictly limited by resources or jurisdictional boundaries.
And what I am going to talk about next — our international cooperation efforts — is a major piece of that.
Internationally, we are deepening our relationships and cooperation on trans-border investigations across the globe with the Americans, the Europeans, and the Australians — all of whom are our traditional partners.
However, we are also increasingly engaging with emerging agencies, specifically those in Latin America, including with agencies in Brazil and Mexico.
I like to say that we are increasing the number of "pick-up-the-phone" relationships that we have at the Bureau — because it’s true.
These aren’t merely relationships that exist on paper through a cooperation agreement — they are real, active, sometimes day-to-day relationships.
I think it’s important to say that growing our relationships with our international counterparts is really about the Bureau becoming an integrated enforcer, in the sense that we don’t operate in a silo; we work collaboratively with other agencies and partners.
This ties directly into that Bureau without borders theme that I have now been talking about for several months.
Collaboration isn’t just occurring bilaterally. The Bureau is also actively engaged in and leading initiatives through forums like the Organization for Economic Cooperation and Development (OECD), the International Competition Network (ICN) and the International Consumer Protection and Enforcement Network (ICPEN).
For example, the ICN undertook a large initiative around transparency last year, which we were actively involved in. The great result from that is that all agencies involved have become more transparent in how they work.
This has increased predictability and certainty for our stakeholders through clearly articulating priorities and collaboration in developing policies, procedures and programs.
For me — convergence is a huge piece and I have to note that we are seeing increasing and better cooperation between countries with competition laws both through forums like those I just referenced and through regional competition networks.
At the same time, we are also seeing greater numbers of countries with competition law. For those who want to engage in anti-competitive behaviour, it’s like Martha and the Vandellas famously sang: "no where to run to…no where to hide."
Our recent bid-rigging case against Japanese auto parts suppliers is a prime example of this. This international cartel investigation has seen two guilty pleas thus far, which resulted in the two highest fines ever ordered by a court in Canada for a bid-rigging offence: $30M for Yazaki and $5M for Furukawa.
This ongoing investigation has benefitted from coordination with a number of other jurisdictions, including the United States, Japan, the European Union and Australia.
Competition agencies across the globe are increasingly tight knit — and, from my perspective, these relationships are only going to deepen and we will continue to work in a coordinated fashion, be it on mergers, cartels or consumer protection.
While we are on the subject of international matters, I know that most of you will be aware that the government has signed an agreement-in-principle on trade with the European Union.
While we understand that there are still technical issues to be resolved, we are pleased to learn that Canada and the EU have reached this stage.
The competition provisions under CETA are expected to make the trading environment fairer and more predictable for Canadian firms, which will in turn benefit Canadian consumers.
As many of you are likely aware, the Bureau leads the negotiation of the Competition Policy chapter in Canada’s free trade agreements.
And typically, our objectives in the negotiation of competition policy provisions in FTAs include:
- Ensuring that FTAs have measures barring anti-competitive business conduct.
- Ensuring that these measures are consistent with the principles of non-discrimination, transparency and procedural fairness.
- Ensuring cooperation on matters relating to competition law and policy enforcement.
- Ensuring the exclusion of the provisions on competition policy from all FTA dispute settlement procedures, including state-to-state and investor-state dispute settlement.
While on this subject, I would also like to note the fact that the Bureau has an existing cooperation agreement with the EU, which we are in the process of updating to deepen our enforcement collaboration with our European partners.
I think by now I must be at the fourth and final "C" I mentioned: Canadians.
What this refers to is our goal of strengthening the Bureau to ensure that Canadian consumers and businesses continue to prosper in a competitive and innovative marketplace.
We will achieve this through focussed competition law enforcement, increased advocacy and regulatory interventions promoting competitive markets, and enhanced collaboration and communication with stakeholders.
And this piece ties really nicely into the “consumer first” piece that was referred to in the Throne Speech, which spoke directly to the importance of healthy competition for both Canadians and the Canadian economy.
As you may know, the government announced that it would be taking further action to protect consumers and end price disparity.
We are pleased to see the government move forward with this approach: promoting consumer welfare is well aligned with the direction other prominent competition agencies are taking.
And we are looking forward to working with the government to advance this priority.
I understand that the government is considering its approach and, like other policy-related issues, the Government will determine its approach to addressing price parity after consulting with relevant departments and agencies.
I know that many of you will have views on this matter and I look forward to hearing about them following our remarks.
I would be pleased to pass your views onto Industry Canada, who is responsible for the competition policy file for the federal government.
As I wrap up, I want to mention two things which touch all of the C’s I have referenced today: advocacy and enforcement.
Advocacy & Enforcement
For those of you who have been following the Bureau, you will know that we have started speaking about advocacy of late, and with good reason.
It is our belief that we have a well-defined role to play in advocating for competitive markets, both through regulatory interventions and enhanced collaboration and communication with stakeholders.
And, in that vein, as some of you may know, we just concluded a public consultation on advocacy where we sought the views of Canadians as to areas in which they believe we should be advocating.
That consultation closed last week and we will be reviewing this input and factoring it into our decision making as we move forward.
Rest assured: we will continue to advocate to regulators and policy makers that they regulate only where necessary and that they rely on market forces as much as possible to achieve the benefits of competition.
With all this talk about advocacy though, I feel that it is important to note that our enforcement branches continue to work flat out.
You can see that in our numbers. We presently have 22 cases that are either before the courts or the Tribunal and over 80 active major enforcement investigations.
We are active in a number of key economic sectors, including the telecommunications, financial, transportation, retail, and oil and gas sectors.
So, while we have begun to increase our involvement in advocacy, we are doing this in a very targeted way, in a way where we can maximize value and we are doing this without ceding an inch where enforcement is concerned.
We will be relentless in our efforts to hold those who engage in anti-competitive behaviour to account.
Now, I realize that I am now dangerously in Socrates, territory but before I close I just want to note the recent judgements released from the Supreme Court of Canada on a number of class action suits.
At issue in these cases was whether section 36 of the Competition Act permits private legal actions by "indirect" purchasers, including the final customer of a price-fixed product.
In its judgements, the Supreme Court found that section 36 of the Act does permit private actions by indirect purchasers.
This is a positive development for consumers who may have been the unknowing victims of price fixed goods or services.
With that, I am going to seek to avoid Socrates’ fate and thank you for your time.
I look forward to your comments and questions.
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