Remarks by John Pecman, Commissioner of Competition

The Competition Bureau: Past, Present and Future

Written Remarks prepared for the 2014 Competition Law Spring Forum

Toronto, Ontario

May 21, 2014

(Check against delivery)


I. Introduction

Good afternoon and thank you for the opportunity to be here today. It is a pleasure to once again be providing the keynote address at the CBA Competition Law Spring Forum. As I have said before, this is an important event on the competition law calendar.

When I spoke at this forum last May, I did so as the Interim Commissioner. Much has happened since then, including my appointment as Commissioner for a five-year term. It is hard to believe that almost a year has passed since my appointment in June 2013 — due in no small part to the tremendous volume of work that you have brought to me and my staff.

All kidding aside, I am truly honoured to be serving as Commissioner, not only because I believe in the value of competition, but also because I now have the opportunity to make some important changes at the Competition Bureau (the "Bureau"). While these changes are at various stages, they all have one thing in common — they are intended to make the Bureau a more efficient, flexible and transparent law enforcement agency — one that is better equipped to ensure that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

II. Compliance Promotion

Before I discuss these changes and other significant developments at the Bureau, I would like to do something a little different.

As you all know, I have spoken a lot about compliance over the last year — and that is no accident. Promoting compliance with the Competition Act (the "Act")Footnote 1 and the other legislation we enforceFootnote 2 has been, and will continue to be, a priority for the Bureau. Going forward, we will work with our partners and utilize the full range of tools available to us to ensure maximum compliance with this legislation for the benefit of Canadians.

I am sure that you have heard enough about how shared compliance comes from the recognition that we all — the Bureau, the business community and the legal community — have a role to play in promoting compliance. I am also sure that some of you are getting sick of hearing me speak about it. So I am not going to speak about it today. Instead, I am going to show it to you.

You may be aware that we launched our first annual anti-cartel day on March 24, 2014, which was aimed at increasing awareness among businesses about how to avoid engaging in cartel activity, such as price-fixing and bid-rigging.Footnote 3 In conjunction with anti-cartel day, we released and provided links to a variety of publications and other documents on compliance and compliance-related subjects.Footnote 4 We also produced a short video on corporate compliance — which is the "show part" of what I was just referring to.Footnote 5

I believe that this video illustrates the importance of complying with the Act in an innovative and easy to understand way, but I’ll let you be the judge.


Promoting Corporate Compliance

Transcript

We’re the Competition Bureau of Canada.

And if you’re watching this video, chances are that you are part of a Canadian business.

Well, we’d like to talk to you about a little thing we call COMPLIANCE.

Let’s get started.

First of all… we believe that competition is a healthy thing, and a positive force in our market economy.

Healthy competition takes place at every level in business in Canada… even the most humble ones!

It’s a fact that many innovations have come about by the need to carve out a special niche or compete against competitors.

And that’s often how great ideas and great products are born.

But… people don’t always play fair.

Sometimes, companies take wrongful actions to draw customers away from competitors who offer products or services in an honest manner.

Such conduct may go against the Competition Act.

It’s not fair.

It’s not honest.

And the losers in this battle for loyalty and attention are the consumers, the competitors and the Canadian economy.

We’re talking about price‑fixing, bid‑rigging, false or misleading representations, abuse of dominance, and a lot of other ways in which some businesses act fraudulently or non‑competitively.

Fact is, every business in this country is required to act lawfully,

and the risks and penalties of NOT complying with the Competition Act and other legislation governing business can be… devastating.

So… it just makes sense to build your own solid compliance program, a program that will help you to identify and detect things you or your employees might be doing wrong, and to put processes in place to establish procedures, training, and monitoring that will help you keep your ship on the right course.

A compliance program is a way of operating that involves everyone… meaning all employees from the mailroom to the executive offices.

As a business leader, you need to build in the time, the resources, and the collective will to make your compliance regime… business as usual.

Building an effective and credible compliance program can help you create what we call a “culture of compliance”, and it will solidify your reputation.

Just makes sense, right?

I mean, who wants law suits, fines, bad publicity and… jail time?

So start with us: We have tools to help you build a rock‑solid compliance program for your company.

Visit our website and check our Corporate Compliance Programs bulletin at www.competitionbureau.gc.ca.

Complying with the law is good for business, good for consumers and good for the economy.

(Canada Wordmark)

Video Length: 3 minutes, 20 seconds


While I do not need to educate anyone in this room on the importance of compliance, I know that videos like this are a valuable resource for your clients and I hope that you will share this video with them.

By working together to promote compliance with the Act, we can accomplish more than we ever could alone in ensuring an efficient, competitive and open marketplace — for the benefit of consumers, businesses and the economy.

As I mentioned earlier, promoting compliance with the legislation we enforce is a priority for the Bureau. To ensure that we are doing this as effectively as possible, we have retained an expert to help us determine how best to promote compliance and ensure that we have the right incentives in place.

III. Realignment

Since I have been appointed Commissioner, I have spent much time thinking about ways to make the Bureau an even better law enforcement agency. I would like to spend a few minutes talking about one of the changes happening at the Bureau.

It will be no surprise to anyone in this room when I say that we in the public sector are operating in a culture of austerity — one in which we are continually expected to do more with less. At the same time, the demands on our organization and the expectations for delivering on our mandate have increased. When you see this trend continuing throughout government for a number of years, you very quickly come to realize that it is, in fact, not a trend, but a new reality; and that if your organization wants to continue succeeding, you must adapt.

With that in mind, the Bureau has begun the process of what I like to call "realignment". This includes plans to restructure the Bureau to leverage its current resources and enhance collaboration, with the goal of increasing its impact in the economy. While there are many elements to realignment, the most visible change will involve combining our existing eight branches into four branches. The current thinking is as follows:

  • The Fair Business Practices Branch ("FBPB") and the Criminal Matters Branch ("CMB") will be combined into a single branch.
  • The Mergers Branch and the Civil Matters Branch will be combined into a single branch.
  • The Economic Policy and Enforcement Branch ("EP&E"), the Legislative and International Affairs Branch ("LIA") and the Public Affairs Branch will be combined into a single branch. This branch would be responsible for our advocacy efforts, inter-governmental affairs and corporate compliance, as well as economic and international support and external communications.
  • The Compliance and Operations Branch would continue to operate as a separate branch. This branch would be responsible for, among other things, managing resources, overseeing the Bureau’s electronic evidence and conversion unit, and managing the Bureau’s Information Centre.

Realignment will not decrease the size of the Bureau or impact the nature of the work it does. Rather, realignment is about building a stronger, more flexible and more adaptive agency. It is focused on ensuring that the Bureau is responding to current realities and prepared for continued success in the future.

IV. Vision for The Bureau

I would like to turn now to my vision for the Bureau.

When we last met, I spoke about openness and transparency and how critical these are to the future success of the Bureau. In fact, if you look at governments, public sector institutions, publicly-funded organizations and private sector companies, they are all moving in one direction — toward greater openness. I believe that it is incumbent on the Bureau to heed this and to itself create a culture of greater openness.

What does this mean for the Bureau? Quite simply, it means increased dialogue with parties under investigation and more transparency in the work we do, while preserving our discretion and other enforcement interests; more competition advocacy; and more developed, diversified and coordinated relationships with our partners and stakeholders.

We are looking to create a more open culture and to work more closely with our external partners with a view to enabling us to be more effective in delivering on our mandate. As the old saying goes, we can accomplish infinitely more together than we ever will alone.

We are also going to place a renewed emphasis on making sure that we use all of our tools to encourage compliance with the legislation we enforce. In this regard, it goes without saying that vigorous enforcement is crucial to promoting compliance with the Act — enforcement is, after all, the Bureau’s bread and butter. But other tools, such as advocacy, outreach, suasion and publications, are also important in promoting compliance. The tool used in a particular case will, of course, depend on the circumstances in question.

As I have said previously, we are currently in the process of updating and rebranding the Conformity ContinuumFootnote 6 in order to provide greater transparency to our stakeholders. As with the current document, the revised document will describe the various tools available to promote compliance with the Act and the circumstances in which these tools may be used.

V. 2014-2015 Annual Plan

As part of communicating this new vision, we recently released our 2014-2015 Annual Plan, entitled "Promoting Compliance for the Benefit of Canadian Consumers".Footnote 7 This forward-looking plan sets out four priorities, which we will pursue over the coming year as we continue our efforts to ensure Canadians benefit from a competitive and innovative marketplace:

  • Apply effective and integrated enforcement and administration of the Competition Act and labelling statutes — Consistent with what I said earlier, this includes utilizing our full toolkit to ensure maximum compliance with the legislation we oversee as economically as possible; adopting collaborative approaches to enforcement with other law enforcement or government agencies to better leverage our mutual resources; and continuing to consider the priorities of Canadians in focusing our enforcement efforts. We will also advance operational improvements through enforcement policies and procedures, such as making greater use of evidence-handling software to assist with document review.
  • Increase competition promotion efforts to advance a culture of compliance and competition advocacy — This includes increasing our competition promotion efforts through our advocacy, stakeholder outreach and communication functions. We will also complete market studies; broaden awareness of, and support for, competition principles; increase the competition-related advice we offer to other government departments; continue to meet with our stakeholders to address key matters; continue to diversify and strengthen partnerships with key regulators; and enhance our participation in multilateral fora, roundtables and workshops. In addition, as part of our ongoing Action Plan on Transparency,Footnote 8 we will continue to consult on important issues and provide guidance on investigations and stakeholder communications through the release of our Information Bulletin on Communication during Inquiries, position statements and other guidance documents.
  • Align with and deliver on Government of Canada priorities — This includes supporting the Government’s intention to address unjustified cross-border price discrimination; continuing our advocacy efforts on telecommunications and wireless issues by intervening or making submissions before the CRTC; and implementing and enforcing CASL in collaboration with the Privacy Commissioner of Canada and the Canadian Radio-television and Telecommunications Commission (the "CRTC").
  • Increase organizational synergies through our people, planning and systems — This includes better integrating our business processes and better utilizing our deep, diverse skill sets to ensure fair, healthy competition in Canada as efficiently and effectively as possible.

We are also in the process of developing a three-year annual plan, which we hope to have ready for consultation later this year. This plan will inform future annual plans.

VI. Year in Review

Now, it’s been about a year since the last CBA Competition Law Spring Forum and, as such, I think it is appropriate to provide a "year-in-review" — starting from June 2013.

Let me begin by saying that it has been a very busy year at the Bureau and we see no signs of slowing down anytime soon. On the enforcement side, we have received a number of significant court decisions, including in TREB,Footnote 9 Visa/MasterCard,Footnote 10 Rogers/Chatr,Footnote 11 HovilaFootnote 12 and Pétroles Global.Footnote 13 We also obtained record fines in criminal cases and we resolved a number of complex mergers. Work done by LIA has allowed us to make strides in our relationships with India and China. And EP&E has continued to increase our advocacy function in different sections of the economy, including telecommunications, while supporting our enforcement work and providing valuable economic advice.

(a) New Senior Deputy Commissioners

I would like to start off by welcoming our newest SDCsMatthew Boswell in CMB and Lisa Campbell in the Mergers Branch. I am very pleased to have such strong and capable hands managing these two important branches.

(b) Mergers Branch

During the last fiscal year, the Mergers Branch completed 219 merger reviews, 46 of which were designated as "complex". It conducted these reviews efficiently, decreasing average review times and meeting the service standard in 90% of its reviews.

Those of you who attended the Mergers Roundtable earlier this month will know that the Mergers Branch is continuing to streamline its review of "non-complex" mergers, which will allow it to devote more resources to the review of "complex" mergers. I am confident that this will result in further reduced average review times, which our stakeholders will no doubt appreciate.

I now want to take some time to highlight some of the great work done by the Mergers Branch over the last year.

The Mergers Branch reviewed the Sobeys/Safeway and Loblaw/Shoppers transactions, both of which raised significant competition concerns that were resolved by way of consent agreements.Footnote 14 These agreements require numerous divestitures in order to preserve competition for the retail sale of groceries, pharmacy products and drugstore-type merchandise in Canada.Footnote 15 The agreement with Loblaw also includes behavioural restrictions that apply to certain of Loblaw’s programs and agreements with suppliers. Notwithstanding these restrictions, we are continuing to investigate Loblaw’s conduct related to pricing strategies and programs with suppliers.

The Mergers Branch also reviewed and entered into consent agreements to resolve its competition concerns in respect of the Agrium/GlencoreFootnote 16 and La Coop/Groupe BMRFootnote 17 transactions. It subsequently approved Agrium Inc.’s sale of seven agri-product retail outlets and nine anhydrous ammonia businesses to CHS Inc. pursuant to the Agrium/Glencore consent agreement.Footnote 18

In addition, the Mergers Branch cleared the Life Technologies/Thermo Fisher transaction after concluding that it would not substantially lessen or prevent competition in the production and supply of life sciences product as a result of, among other things, a remedy obtained by the European Commission.Footnote 19 While the Bureau’s priority is to obtain a remedy that resolves competition concerns in Canada, it will, where appropriate, take into consideration and rely on remedies agreed upon in other jurisdictions, provided that such remedies address the Bureau’s concerns.

By now it should come as no surprise that we may require behavioural remedies to resolve our concerns with a merger when structural remedies are either unavailable or insufficient. In addition to the behavioural restrictions imposed against Loblaw, we obtained behavioural remedies in respect of the Telus/Public Mobile and Garda/G4S transactions. In particular, Telus Communications Inc. agreed to offer a $19/month "Unlimited Talk" plan until at least the end of 2014Footnote 20 and Garda World Security Corporation agreed to change certain of its contracting practices for the supply of armoured car services in Quebec.Footnote 21

In some cases, parties have chosen to either restructure transactions to resolve our concerns or abandon transactions altogether if they cannot negotiate acceptable remedies with the Bureau. For example, the Bureau decided not to challenge Cineplex’s proposed acquisition of 24 movie theatres from Empire Theatres Ltd. after it withdrew its plans to acquire two additional theatres from Empire in light of concerns raised by the Bureau.Footnote 22 In addition, Louisiana Pacific Corporation and Ainsworth Lumber Co. Ltd. recently terminated their previously announced transaction after concluding that divestitures significantly beyond those contemplated in their agreement would be required to obtain clearance from the Bureau and the United States Department of Justice (the "US DOJ").Footnote 23

We cooperated and worked very closely with the US DOJ throughout our review of the Louisiana Pacific/Ainsworth transaction. The Bureau’s long standing relationship with the U.S. DOJ ensured an efficient and coordinated review of this matter, consistent with the agencies’ agreement on Best Practices on Cooperation in Cross-Border Merger Investigations, which was published on March 25, 2014.Footnote 24

Beyond this, the Supreme Court of Canada (the "SCC") heard the appeal in the Tervita matter. While I’m obviously not in a position to discuss the particulars of a matter that is currently before the SCC, the Bureau is firm in its position that both the Competition Tribunal (the "Tribunal") and the Federal Court of Appeal (the "FCA") reached the correct conclusion: if this acquisition is allowed, Tervita will be in a position to entrench its monopoly on secure hazardous waste disposal in Northeastern British Columbia. We look forward to the SCC’s decision.

I spoke earlier about our increased focus on transparency, and the Mergers Branch is no exception. Since last June, it has issued 14 position statements, which summarize its findings and provide our stakeholders with valuable guidance on our approach to merger review. It will continue to issue position statements in appropriate cases, including where the issues are sufficiently important or complex; clarification of a point of law or policy is needed; the matter in question has generated substantial public interest; or the review involved new analytical tools, findings or outcomes.Footnote 25

Finally, the Mergers Branch published Pre-Merger Notification Interpretation Guidelines Nos. 12 and 14.Footnote 26 These two guidelines, along with 12 other Pre-Merger Notification Interpretation Guidelines previously published by the Bureau, assist parties and their counsel in interpreting and applying the provisions of the Act relating to notifiable transactions.

(c) Criminal Matters Branch

Moving on to CMB — I am very pleased to report that it has had a record year, with more than $54 million in fines being imposed under the criminal cartel provisions in the last fiscal year. These include:

  • Fines of $39.7 million in our auto parts case, including a $30 million fine against Yazaki Corporation,Footnote 27 a $5 million fine against Furukawa Electric Co., Ltd.Footnote 28 and a $4.7 million fine against Panasonic Corporation Footnote 29 under the bid-rigging provision.
  • Fines of $9.5 million in our bearings case, including a $5 million fine against JTEKT CorporationFootnote 30 and a $4.5 million fine against NSK Ltd.Footnote 31 under the bid-rigging provision.
  • A fine of $4 million against Hershey Canada Inc. under the price-fixing provision in our chocolate confectionary case.Footnote 32
  • Fines of almost $2.5 million in our air cargo case, including a $1.5 million fine against Cathay Pacific Airways LimitedFootnote 33 and a $975,000 fine against LATAM Airlines Group S.A.Footnote 34 under the price-fixing provision.
  • In the current fiscal year, fines of almost $1.7 million have been imposed in our ocean freight shipping case, including a $1 million fine against ECU Line Canada Inc. under the price-fixing provision.Footnote 35 Two individuals also received conditional sentences ranging from three to four months and community service ranging from 20 to 30 hours.

Criminal charges were also laid in a number of CMB’s ongoing investigations last year, including the following:

  • In June 2013, charges were laid against three companies and three individuals for their alleged role in fixing the price of chocolate confectionery products in Canada between 2002 and 2008.Footnote 36
  • In January 2014, additional charges were laid against one company and one individual for their role in an agreement to rig bids for contracts involving road construction, water treatment and other infrastructure projects in the Saint-Jean-sur-Richelieu region of Quebec between January 2008 and December 2009.Footnote 37
  • Criminal charges were also laid against one company and seven individuals in two cases involving public procurement. First, charges were laid against one company and six individuals in May 2014 for their alleged roles with respect to a bid-rigging conspiracy relating to federal government contracts for the supply of professional information technology services to Library and Archives Canada ("LAC"), worth a total of $3.5 million.Footnote 38 The company and three individuals have been charged with bid-rigging under the Act. The other individuals, who were allegedly involved in the conspiracy while employed by LAC, have been charged under subsection 80(1) of the Financial Administration Act for allegedly making opportunity for another person to defraud the government. Second, charges were laid in June 2013 against an individual allegedly involved in an agreement to rig bids for federal government contracts for real estate advisory services.Footnote 39

In the retail gasoline sector, Les Pétroles Global Inc. was found guilty for its role in a gasoline price-fixing conspiracy.Footnote 40 This case is significant because the court concluded that a territorial manager is a "senior officer" for the purpose of section 22.2 of the Criminal Code and can therefore make an organization a party to an offence through his or her actions. In addition, three individuals who were found guilty of price-fixing in March 2013 were sentenced to pay fines totalling $45,000.Footnote 41

Following a preliminary inquiry in November 2012, the Court of Quebec issued a decision refusing to commit six parties to stand trial for allegedly rigging bids for private sector ventilation contracts for residential high-rise buildings in the Montreal area.Footnote 42 The judge found that there was insufficient evidence on each of the relevant projects to show the existence of a "call or request for bids or tenders" for the purposes of section 47 of the Act. The Public Prosecution Service of Canada (the "PPSC") subsequently filed an application for certiorari, which was heard by the Quebec Superior Court in December 2013.

On April 15, 2014, the Quebec Superior Court issued a decision granting the PPSC’s application.Footnote 43 In particular, Justice Vauclair found that while the judge hearing the preliminary inquiry clearly identified the elements of the offence, she had exceeded her jurisdiction by determining whether the tendering authority had launched a call for tenders or an invitation to submit prices. Justice Vauclair referred the case back to the Court of Quebec for further consideration as to whether the accused should be committed to stand trial. The accused have since appealed this decision.

Cracking down on cartels has been, and continues to be, a top priority for the Bureau. When competitors agree on prices, they thwart the forces of competition. They deprive consumers of the benefits of competition, such as lower prices and increased product choice. These types of agreements represent the most egregious forms of anti‑competitive conduct and we will continue to put our full weight behind eradicating these deceitful practices.

While we are on the subject of cartels, it is worth noting that the SCC released its decisions in the indirect purchaser class actions on October 31, 2013.Footnote 44 Significantly, the SCC found that section 36 of the Act permits actions by indirect purchasers. This result is positive for the Bureau, as we view this provision as an additional enforcement mechanism serving not only the private recovery interests of plaintiffs, but also the broader public interest of deterrence of anti‑competitive conduct. Eliminating such actions for indirect purchasers would have limited the important deterrent effect of section 36 of the Act.

The SCC also heard an appeal relating to the disclosure of wiretaps on April 24, 2014. By way of background, in June 2012, the Quebec Superior Court ordered the Bureau and the PPSC to (a) disclose intercepted communications to the parties to the Quebec gasoline price-fixing class action within 120 days and (b) engage in a filtering process to protect privacy rights. The Quebec Court of Appeal denied leave to appeal in January 2013;Footnote 45 however, the class action defendants sought and were granted leave to appeal to the SCC. The Superior Court’s order has been stayed pending a decision by the SCC.

(d) Civil Matters Branch

Following an 18-month investigation into the ebook industry in Canada, the Bureau reached a consent agreement with Hachette Book Group, HarperCollins, Macmillan and Simon & Schuster — four major ebook publishers.Footnote 46 As part of the consent agreement, the four publishers have agreed to remove or amend clauses in their distribution agreements with individual ebook retailers that the Bureau believes have the effect of restricting retail price competition, which will allow retailers to offer discounts on ebooks.

Shortly after the consent agreement was filed with the Tribunal, Kobo Inc., the largest ebook retailer in Canada, brought an application seeking to rescind or vary the terms of the agreement on the basis that it includes terms that could not be the subject of an order of the Tribunal and a motion to stay the registration of the agreement pending the determination of its application. The Tribunal granted the requested stay.

We have filed a reference pursuant to subsection 124.2(2) of the Act asking the Tribunal to determine the nature and scope of its jurisdiction under of subsection 106(2) of the Act, and in that relation the meaning of the words "the terms could not be the subject of an order of the Tribunal". Assuming that Kobo’s motion to strike the reference is unsuccessful, the reference will likely be heard on June 25, 2014.

In the Toronto Real Estate Board matter, TREB filed an application seeking leave to appeal the FCA’s decision to the SCC. We filed a response opposing TREB’s application. It is our firm belief that the FCA reached the correct decision in overturning the Tribunal’s decision and sending the matter back to the Tribunal for reconsideration. Assuming that TREB’s application for leave to appeal to the SCC is unsuccessful, the Tribunal is scheduled to hear this case between October 14 and 24, 2014. We look forward to resolving this matter.

On July 23, 2013, the Tribunal issued its decision dismissing our application in the Visa/MasterCard case, which challenged rules that the credit card companies impose on merchants who accept their credit cards.Footnote 47 The Tribunal did, however, recognize that this case should have been brought and found that Visa’s and MasterCard’s conduct had an adverse effect on competition. We subsequently announced that we would not appeal the Tribunal’s decision, but would instead focus our efforts on identifying alternate means of addressing the competition issues in the supply of credit card services in Canada.Footnote 48 In this regard, the Tribunal felt that regulation of the industry would provide a more appropriate solution than any remedy it could provide.

On September 12, 2013, the Tribunal agreed to further amend the Bureau’s consent agreement with Interac Inc. The changes to the consent agreement allow Interac to restructure from an unincorporated association to a corporation with an independent board and operate under a cost-recovery model, which will provide it with the flexibility needed to remain a viable low-cost payment alternative for merchants in an increasingly competitive marketplace. We consented to the requested amendments following a thorough assessment in which it was determined that there have been material changes in circumstances in the payments marketplace.

We are also continuing to prepare for the abuse of dominance proceedings brought against Direct Energy Marketing Limited and Reliance Comfort Limited Partnership. In this regard, we allege in our pleadings that each of these companies engaged in practices that intentionally suppress competition and restrict consumer choice. Specifically, each company implemented water heater return policies and procedures aimed at preventing consumers from switching to competitors. This anti‑competitive conduct affects consumers, other rental water heater companies, and businesses that sell water heaters, such as home improvement centres.Footnote 49 These cases are scheduled to be heard beginning January 12, 2015.

On a different note, as you may know, the Federal Court recently issued an important decision related to the Bureau’s use of section 11 orders.Footnote 50 This decision clarifies the legal principles that apply to applications for section 11 orders and is helpful to both the Bureau and the competition law bar.

Finally, like the Mergers Branch, the Civil Matters Branch is increasingly using position statements to increase the transparency of its reviews. Most recently, it issued position statements explaining why it decided to discontinue inquiries in respect of Canadian National Railway Company and Alcon Canada Inc.Footnote 51

(e) Fair Business Practices Branch

I want to begin my discussion on FBPB by briefly referring to two significant court decisions — Rogers/Chatr and Hovila — which I am sure all of you are familiar with.

On August 20, 2013, the Ontario Superior Court of Justice issued its decision in the Rogers/Chatr case.Footnote 52 While the court dismissed the misleading advertising portion of the Bureau’s deceptive marketing practices case, it found that Rogers did not conduct adequate and proper testing prior to making dropped call claims in some Canadian cities and also upheld the constitutionality of two important provisions in the Act. In particular, it upheld the constitutionality of the requirement for advertisers to conduct tests prior to making performance claims and the AMP remedy available under the misleading representations provisions of the Act.Footnote 53 Rogers was ultimately ordered to pay an AMP of $500,000.Footnote 54

On June 25, 2013, the Bureau announced that Matthew Hovila had been found guilty in connection with an online job opportunities scam.Footnote 55 On February 7, 2014, he was sentenced to 30 months in jail, including 15 months for contravening the criminal false or misleading representations provisions of the Act and 15 months for breaching a court order.Footnote 56 He also pleaded guilty to being in possession of proceeds of crime under the Criminal Code and was sentenced to a year in jail, to be served concurrently.

This is the first time the Bureau has obtained a conviction for the contravention of a registered consent agreement. Mr. Hovila was convicted of breaching a 10-year consent agreement signed with the Bureau in 2006 regarding the same website and he paid an administrative monetary penalty (an "AMP") of $100,000. At that time, Mr. Hovila admitted he had violated the Act’s civil false or misleading representations provision and agreed to cease the conduct and notify the public. Consent agreements that are registered with the Tribunal have the same force and effect as a court order.

On May 1, 2014, we announced that JYSK Canada has discontinued the sale of two brands of duvets, issued a recall notice for these duvets and offered consumers that purchased these duvets a full refund.Footnote 57 JYSK Canada’s actions follow inspections and independent laboratory testing which found that its Classic Down Duvets and Cascade Goose Down Duvets did not meet the minimum down percentage requirements under the Textile Labelling and Advertising Regulations to be marketed as "down" or "goose down" products.

Over the course of its inspections, the Bureau also raised other labelling issues with JYSK Canada in respect of certain bathroom, bedding, decorative and kitchen products. JYSK Canada is currently taking measures to resolve the Bureau’s concerns with the labelling for these additional products. This case is a prime example of our shared compliance approach and the Bureau working to resolve matters without the use of costly litigation.

On February 28, 2014, the Bureau, alongside representatives of the Vancouver Police Department, the Better Business Bureau and Fraud Prevention Forum partners, officially kicked off Fraud Prevention Month ("FPM") by announcing this year’s Top Ten Scams.Footnote 58 The Bureau participated in several activities and published a variety of materials during FPM, including an ebook version of the Canadian Edition of The Little Black Book of Scams and animated videos that profile four of the most common types of scams featured in it.Footnote 59

On October 1, 2013, the Bureau and University of Ottawa’s Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic co-hosted a one-day workshop to explore the areas of e-commerce and online advertising.Footnote 60 We held discussions on emerging issues in this area of the economy with guests from Canada, the United States, England and Australia involved in a variety of different fields, such as marketing, advertising and law enforcement.

On December 4, 2013, the Bureau announced that Gilles Tremblay had pleaded guilty to nine counts of deceptive telemarketing under the Act and two counts of fraud under the Criminal Code.Footnote 61 The Bureau’s investigation had found that two telemarketing operations in Montreal were using questionable tactics, such as implying that the caller represented a business that had an existing relationship with the victim’s company. Mr. Tremblay was sentenced to nine months imprisonment to be served in the community and to 12 months probation.

On August 2, 2013, the Bureau reached consent agreements with Canadian automobile distributors Hyundai Auto Canada Corp. and Kia Canada Inc. that formalized the steps they had been taking to respond to inaccurate fuel consumption ratings found in advertisements for a number of their automobiles.Footnote 62 The fuel consumption ratings were based on testing conducted at joint testing facilities in Korea. The consent agreements ensured that affected customers would receive full restitution plus 15% as an acknowledgement of the inconvenience caused.

On July 9, 2013, the Bureau announced that it had taken legal action against two of Canada’s largest furniture and home appliance retailers, Leon’s Furniture Limited and The Brick Ltd., for what we believe are deceptive marketing practices.Footnote 63 Our investigation into promotions that offered ‘buy now, pay later’ options on purchases revealed, among other things, that many customers were required to pay up-front fees, despite the ‘buy now, pay later’ promotions. As a result, we filed an action with the Ontario Superior Court of Justice seeking an end to this type of deceptive advertising, refunds for customers who paid so-called administration or processing fees, and AMPs from both Leon’s and The Brick.

Finally, on June 28, 2013, the Bureau announced that Claude Berthiaume was sentenced to six months of house arrest followed by six months of curfew after pleading guilty to making false and misleading representations in relation to a deceptive telemarketing operation that defrauded businesses in the United States.Footnote 64 He was also prohibited from engaging in telemarketing for 10 years.

(f) Advocacy

As you will all know by now, last year, the Bureau began to incrementally increase its use of advocacy and EP&E has been working tirelessly on a number of fronts ever since. 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 we continue to seek out opportunities to do so in areas that have a direct impact on consumers.

To support this objective, we conducted a public consultation asking Canadians to identify sectors of the economy in which the Bureau could play a targeted role in advocating for increased competition.Footnote 65 We are extremely pleased with the feedback we received from Canadians, including a validation that we are focusing our advocacy efforts in the areas that matter most to Canadians, including the telecommunications sector and regulatory restrictions imposed on competition between professions.

As you may know, we have recently provided submissions to the CRTC in respect of its wireless roaming rateFootnote 66 and wholesale mobile wireless services reviews,Footnote 67 and to the City of Toronto as party of its review of the regulatory regime for the taxi industry.Footnote 68 Within the last year, we have also have undertaken a review of the restrictions on advertising among pharmacists, dentists and veterinarians. The products and services these professionals provide are critical to the welfare of Canadians. As such, the Bureau has a responsibility to promote competition in these areas to ensure that consumers benefit from lower prices and higher levels of choice and quality.

(g) Guidance Documents

As noted previously, the Bureau is committed to providing guidance to our stakeholders. Over the last year, the Bureau published final versions of the updated Information Bulletin on the Communication of Confidential Information under the Competition ActFootnote 69 and Frequently Asked Questions for the Immunity Program and the Leniency Program,Footnote 70 and new versions of Pre-Merger Notification Interpretation Guidelines Nos. 12 and 14.Footnote 71 In addition, it released for public consultation an updated version of the Intellectual Property Enforcement Guidelines ("IPEGs"),Footnote 72 new Price Maintenance GuidelinesFootnote 73 and a new Information Bulletin on Communication during Inquiries.Footnote 74

The IPEGs have been updated to reflect the amendments to the Act that have occurred since they were first released, to incorporate enforcement experience and to ensure consistency with other Bureau enforcement guidelines. The Bureau is contemplating a further update to the IPEGs or the issuance of another document to address additional IP-related issues, including those discussed at the one-day workshop on antitrust issues in the pharmaceutical sector that took place on November 13, 2013.Footnote 75

(h) Domestic Cooperation

The Bureau signed memoranda of understanding or similar documents with a number of departments and agencies in Canada, including the CRTC,Footnote 76 Public Works and Government Services Canada,Footnote 77 the Canadian Intellectual Property OfficeFootnote 78 and the Market Surveillance Administrator of Alberta.Footnote 79 These memoranda promote cooperation and collaboration by, among other things, providing for the sharing of information and best practices.

In addition, the Bureau entered into a Memorandum of Understanding with the Privacy Commissioner of Canada and the CRTC regarding the implementation of our respective mandates under CASL.Footnote 80 As you know, most of the provisions in CASL come into effect on July 1, 2014.

(i) International Cooperation

On September 12, 2013, the Bureau held its fourth bilateral meeting with the Japan Fair Trade Commission since the signing of the Canada-Japan Cooperation Agreement in 2005.Footnote 81 This meeting reflected the Bureau’s commitment to increased international cooperation and the exchange of best practices through face-to-face conversations with its counterparts. Topics of discussion included agency priorities, competition advocacy, the intersection between competition and intellectual property law, and recent enforcement cases.

In November 2013, a delegation from the Bureau travelled to participate in meetings with the High Commission of Canada, speak at the Indian Institute of Management International Conference on Competition Regulation, Competition and Competitiveness, and speak at the 3rd BRICS International Competition Conference. While in India, we also met with senior officials from the Indian competition authority, which allowed us to enhance our relationship and discuss areas of cooperation.

In January 2014, a delegation from the Bureau travelled to China to meet with senior officials from the three Chinese competition authorities — the Anti-monopoly Bureau of the Ministry of Commerce, the Anti-monopoly and Anti-unfair Competition Enforcement Bureau of the State Administration for Industry and Commerce, and the Price Supervision and Anti-monopoly Bureau of the National Development and Reform Commission. These meetings allowed the agencies to share information about recent developments in their respective jurisdictions and to discuss a variety of topics, such as merger review, cartel conduct, abuse of dominance and consumer protection.Footnote 82 The Bureau is in the process of negotiating memoranda of understanding with these agencies.

While in China, the delegation also met with the State-owned Assets Supervision and Administration Commission ("SASAC"). We met with SASAC again in Ottawa on April 16, 2014, in an effort to facilitate future communication and collaboration between the agencies.Footnote 83 The topics discussed during this meeting included SASAC’s role and policies relating to China’s state-owned investments in Canada.

Closer to home, we met with the heads of the U.S. and Mexican competition agencies in Washington, D.C. on February 13, 2014. This meeting built upon joint work undertaken by the four agencies over a number of years, and allowed the heads of the agencies to exchange information and discuss enforcement priorities, policy issues and recent developments in each jurisdiction.Footnote 84

Finally, I note that the Bureau recently stepped down as co-chair of Subgroup 2 of the ICN Cartel Working Group after 10 years in this role. It has, however, assumed the role of co-chair of the ICN Mergers Working Group. The other co-chairs of this working group are the European Commission and the Competition Commission of India.

VII. Conclusion

I realize that I have spoken at length and want to leave some time for questions. But before I leave, I want to emphasize that we value the collaborative relationship that we have built with the CBA over the past several years and we look forward to building an even stronger relationship going forward.

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