Remarks by John Pecman, Commissioner of Competition

International Privacy Enforcement Meeting

Ottawa, Ontario

June 4, 2015

(Check against delivery)


Thank you, Commissioner Therrien, and good afternoon, everyone.

A warm Ottawa welcome to those international visitors who are joining us here today.

I’m well acquainted with the hazards of speaking immediately after lunch. I hope that the topic I have chosen for my remarks will compensate for the timing.

I’d like to talk to you about the growing importance of working closely with domestic and international partners. I will use the example of the Competition Bureau, and not just because I have been there for thirty years! Rather, in my view, the Bureau’s experience is instructive in why partnerships are vital in delivering on our mandate. I will welcome your questions at the end of my remarks.

Let me start with a bit of context.

First, the Bureau. The Competition Bureau is an independent law enforcement agency that strives to ensure Canadian consumers and businesses prosper in a competitive and innovative marketplace, by administering and enforcing the Competition Act and three labelling statutes. The Bureau is an investigative body and our cases are adjudicated before the courts or the specialized Competition Tribunal.

Second, the Competition Act is a federal law governing most business conduct in Canada. It includes criminal and civil provisions aimed at preventing a wide range of anti‑competitive practices in the marketplace. The key provisions relate to ensuring truth in advertising, investigating cartels, preventing abuse of market power and reviewing mergers. The purpose of the Competition Act is to maintain and encourage competition in Canada in order to, among other things, promote the efficiency and adaptability of the Canadian economy and provide consumers with competitive prices and product choices.

Finally, my role. As Commissioner of Competition, I am responsible for promoting fair and competitive markets in Canada. I and my team at the Bureau deliver on our mandate through competition enforcement and competition promotion, such as interventions before regulatory bodies.

So that is the broad context. Traditional notions of jurisdiction would have us confined to our Canadian borders in most of our operations. But, developments in trade and economic patterns over the last few decades, and especially since the Age of the Internet, have created an environment in which a domestic law enforcement agency could not do its job well without a strong network of partners.

After all, no institution, however independent, is an island. In an age marked by complex networks and global relationships, to deliver on our mandate we must be able to rely on institutional cooperation and collaboration at home and abroad — not just to do our job well, but to do it all.

Cooperation is the key to achieving my vision of a Bureau without Borders — where we are not constrained by jurisdiction and can extend our reach and resources by working in collaboration with our enforcement partners. And, while our experience is in the competition law arena, the lessons we learn are transferrable to other regulatory and enforcement networks.

I will address this theme in three parts. First, the value of our domestic partnerships; second, our bilateral international partnerships; and third, the benefits of multilateral cooperation.

Domestic alliances

Let me turn to the first of my three themes — the value of the Competition Bureau’s domestic partnerships.

Our network of domestic alliances includes other federal departments and agencies as well as provincial governments and law enforcement entities. Some of these alliances are formalised through Memoranda of Understanding, to provide a framework for cooperation and to establish regular lines of communication; others are more organic, having developed over time. Let me give you three examples of what, in my view are successful domestic alliances.

In 2013, the Bureau signed an MOU with the Department of Public Works and Government Services Canada—the principal procurement agency of the Canadian government—in order to coordinate activities between that body and the Bureau.

This has made it far easier to identify and address possible bid‑rigging or price‑fixing in procurement processes under the responsibility of PWGSC.

The Competition Bureau also signed an MOU with the Canadian Radio‑television and Telecommunications Commission (CRTC) and the Office of the Privacy Commissioner of Canada to join forces to make Canada’s new anti‑spam legislation as robust and easily enforceable as possible. Sharing information among all three parties creates a more aggressive stance against the illegal collection of personal information, as well as the bulk harvesting of email addresses.

Meanwhile, Canada’s largest fraud data repository is the product of participation between the Competition Bureau, the Royal Canadian Mounted Police and the Ontario Provincial Police. Called the Canadian Anti‑Fraud Centre, that organization simultaneously educates the public about marketing fraud while also supporting law enforcement to tackle the issue of fraud in our marketplace.

These are only some of the partnerships between the Competition Bureau and various federal and provincial bodies across Canada, and as their number grows, their message becomes clearer and stronger. That message is that we intend to work together with our government and law enforcement partners to help provide Canadians a marketplace governed by fair competition above all.

International cooperation

As rapid globalization has changed the world of business, the models of anti‑competitive conduct have likewise evolved. For the Competition Bureau, this emphasized the need for greater international cooperation.

At a very basic level, international cooperation leads to increased detection and deterrence of anti‑competitive conduct. It promotes strong competition principles and sharing of best practices. It creates opportunities for investigative coordination and information sharing.

While it’s essential to emphasize the benefits of cooperation, it’s equally important to recognize that a lack of collaboration can lead to real, tangible costs for both government agencies and businesses. And as anti‑competitive conduct and transactions increasingly cross borders, the growth of international antitrust enforcers has greatly expanded the risks of: increased costs of compliance; inconsistent remedies; uncertainty over legal treatment; and duplication of resources.

Cooperation between competition agencies thus plays an important role in mitigating costs and arriving at more effective and efficient outcomes. It increases the likelihood of consistent analysis being applied across jurisdictions, streamlines reviews and remedy processes, and reduces uncertainty for businesses.

In practical terms, these developments highlight the need for greater international cooperation so that we can more effectively deliver on our mandate for the benefit of all Canadians.

Like most other agencies, we cooperate through both informal and formal mechanisms. Let me take a couple of minutes to explain the different mechanisms, because they illuminate some of the challenges that we face in confronting the globalized adversaries of competitive markets and how the Bureau and its partners have been able to support one another.

Let me start by outlining three of our informal mechanisms: information exchange; investigative coordination; and dialogue with our partners.

Information exchange in an informal context is routine but it does give rise to its own specific challenges. For example, we exchange confidential information with other agencies where cooperating parties have provided consent, or a “waiver”, to do so. This is common practice during merger reviews and also in cartel investigations, where there may be common immunity or leniency applicants in multiple jurisdictions. Where we have such waivers, we can work with our international partners whether or not there is a pre‑existing framework.

And what if you don’t have such explicit consent from the parties? We need to educate our staff about the bounds of their legal authority to exchange information and empower them to do so. If case handlers believe that the process of collaboration is overly onerous, complex or restrictive, cooperation will not take place and an opportunity is lost.

In this regard, section 29 of the Competition Act is one of the ways our case handlers are empowered. It acts as an information gateway, which allows the Bureau to share information for the administration and enforcement of the Competition Act. This is a very useful mechanism and relatively few other agencies have similar information gateway provisions in their legislation.

Let me stress that we are judicious with information we receive and share. We treat any information received from third parties or other agencies as if it were our own information. In all cases where confidential information is communicated to a foreign authority under section 29, the Competition Bureau seeks to maintain the confidentiality of the information. The Competition Bureau also requires that use of the confidential information by a foreign authority be limited to the specific purposes for which it is provided.

In instances where there are limits on the ability to exchange confidential information, this does not end cooperation. This is the second of my ‘informal’ examples.

Where possible, we coordinate common investigations with counterpart agencies and educate each other on our respective laws and processes.

To the extent practicable, we work to coordinate timing of processes and remedies.

After all, if compliance with the Competition Act can be achieved by actions of one of our partners, then we should defer to the other agency. And we have done so.

And if remedies by other agencies do not resolve our Canadian concerns? Then the Competition Bureau takes independent action.

The third way in which we collaborate informally is through regular communications and dialogue with our partners.

Competition Bureau senior managers have regular high level bilateral meetings and conference calls with our key partners. The Competition Bureau works hard to build and maintain these relationships, which are vitally important to establish trust and provide the ability for agencies to react quickly and realize the maximum benefits of collaboration.

We also have a great deal of case specific cooperation at the working level. Having a “pick up the phone” relationship between investigators allows for exchanges on the theory of the case, investigative processes, the nature of evidence gathered and to coordinate timing of steps, such as searches or settlement announcements.

I should add that the benefits of informal communication and information sharing also hold true when we work with our numerous domestic enforcement partnerships.

Our informal networks work well. But, there are times when it’s necessary to rely on more formal mechanisms to cooperate with our counterparts. Let me briefly touch upon some key formal instruments.

Mutual Legal Assistance Treaties, or MLATs, can be used to obtain information and evidence located abroad, for use in domestic legal proceedings. MLATs typically allow the state parties to the treaties to request assistance in obtaining information located in the other jurisdiction through such means as depositions, interviews, searches and requests for records. These treaties include specific confidentiality provisions.

Cooperation and information sharing in competition matters are also important components of many international instruments, including: Free Trade Agreements; Cooperation Agreementsbetween Canada and other jurisdictions; and inter‑agency arrangements between the Commissioner and foreign counterparts. The Competition Bureau has negotiated cooperation instruments with 13 international jurisdictions.

As we’ve watched business take on a worldwide character in the era of globalization, we’ve had to face the underside of those who wish to take advantage of globalized approaches to engage in unfair and anti‑competitive market practices.

None of that is simple, which helps explain the many types of collaborative agreements we’ve worked hard to put in place.

Our recently published Best Practices on Cooperation in Merger Investigations with our American counterparts — namely the United States Department of Justice and Federal Trade Commission — is a case in point on how we’re trying to enhance our cooperative efforts. Developed upon years of increasing collaboration in merger review, the best practices promote effective coordination amongst the agencies when reviewing mergers that impact both countries. It also serves to increase transparency for the business and legal communities by outlining common cooperation practices as well as providing guidance on how they can work with agencies to further enhance the coordination of merger reviews.

Approximately one third of our cartel cases have an international dimension and one quarter of our complex merger reviews involve a significant level of cooperation with at least one international antitrust counterpart. The numbers neatly illustrate the need for competition agencies to routinely work together in our common interest. Our collaborative efforts have borne fruit in a number of real investigations.

For example, the Competition Bureau sought investigative assistance from the United States Federal Trade Commission in connection with an enforcement proceeding we brought against Canada’s three largest wireless companies and their industry association, the Canadian Wireless Telecommunications Association, in respect of alleged misleading advertising promoting costly "premium texting services”. The Competition Bureau alleged that the parties’ conduct facilitated the sale of premium‑rate digital content for fees that had not been adequately disclosed and which could be up to $10 per transaction.

Further to the Competition Bureau’s request, the Federal Trade Commission applied to the US District Court for the District of Maryland for an order authorizing the Federal Trade Commission to obtain oral and documentary discovery from a US contractor Aegis Mobile — a company the Canadian Wireless Telecommunications Association had hired to collect and analyse advertising that forms the subject of the enforcement action.

Aegis opposed the Federal Trade Commission’s application on a variety of grounds.

In August 2014, the US District Court ordered Aegis to hand over documents to the Federal Trade Commission so that those records could be shared with the Competition Bureau.

This decision marks the first time that an American court has granted authorization to the Federal Trade Commission to conduct discovery of an American resident to assist the Competition Bureau. The decision is important because deceptive marketing cases often involve persons outside of the country where enforcement proceedings take place.

Another example of comprehensive cooperation is the merger review of Louisiana Pacific Corporation’s acquisition of Ainsworth Lumber Company Limited.

As the mills that would have been acquired served purchasers in both Canada and the United States, the Competition Bureau cooperated and worked closely with the United States Department of Justice throughout its review, including regular calls between case teams, information sharing, comparing theories of harm, attending each other’s depositions, and coordinating on reviews of remedies proposed by the parties.

The agencies’ economists also worked closely together, notably, discussing the data provided by the parties and econometric models.

The parties ultimately abandoned the transaction on account of our collective competition concerns with the proposed transaction. All of this collaboration resulted in a more efficient review of this transaction for both agencies.

The recent review of Continental AG’s acquisition of Veyance Technologies, Incorporated provides a good example of the Competition Bureau deferring to remedies obtained by an international partner.

Given that Continental and Veyance primarily supplied Canada from manufacturing and final assembly plants located in the US and Mexico, the Competition Bureau greatly benefitted from coordinating its review with both US and Mexican competition authorities.

Though we had concerns that that the overlap in air springs for commercial vehicles would have resulted in a substantial lessening of competition in Canada, we were ultimately able to inform the parties that the Competition Bureau would take no immediate action due to a settlement agreement reached with the US Department of Justice. The parties were required to sell Veyance’s North American Air Springs Business, which resolved our Canada‑specific concerns.

As you can see, these examples illustrate the power of countries working together to keep worldwide marketplaces fair and competitive.

Multilateral cooperation and collaboration

The third type of partnership and collaboration requires us to zoom out even more — from bilateral international cooperation, to multilateral, truly global cooperation and collaboration.

I’m a firm advocate of international fora like the International Consumer Protection and Enforcement Network (ICPEN), the International Competition Network (ICN) and the Organization for Economic Cooperation and Development (OECD), which work to bring international competition agencies together on a regular basis to discuss best practices and promote soft convergence.

The project‑based work and meetings of these fora allow for conversations on practical topics and relationship‑building with international counterparts, which often translate into improved advocacy and enforcement efforts domestically.

I want to focus first today on the International Competition Network, more commonly known as ICN, as it relates to your participation in the Global Privacy Enforcement Network. The ICN is a network of 132 national and multinational competition agencies from 119 jurisdictions whose goals are the promotion of soft convergence in competition laws and practices, and cooperation between member agencies.

Unlike other international fora, such as the OECD, the ICN doesn’t have a bricks and mortar building — all of its work is conducted virtually, that is via its website, webinars and conference calls.

The ICN’s website is an excellent communication tool to promote all of the Network’s work. The website has a dedicated section which has training materials to serve as a virtual university on competition law and practice for its members and stakeholders. The ICN offers many events that allow its members to discuss current practical enforcement issues and competition policy issues. The ICN Annual Conference and Working Group workshops are the centrepiece of this Network. I can’t overstate the importance of these face‑to‑face events to build trust among international counterparts.

The Competition Bureau has been strongly supportive of the ICN, over the years. The Competition Bureau has served as the Secretariat to the ICN since its inception just 13 short years ago. We have also had various leadership roles as Chair and Vice‑Chair of the Network, and Co‑Chairs of different Working Groups that have allowed the Competition Bureau to contribute to the development of a truly collaborative international community of enforcers. We have reaped the benefits of exchanging ideas, best practices and information that I believe has improved the ability of each agency to deliver on its own unique mandate.

I understand that Global Privacy Enforcement Network has been collaborating with other international groups such as the Asia Pacific Economic Cooperation forum and the OECD. To ensure synergies and communication between ICN and its international fora counterparts, the ICN Chair elected me, last year, to take on the role of ICN — OECD Liaison to ensure that the work of these two bodies is coordinated and maximises the benefits for all of their members.

As the number of new and developing agencies grow within the ICN, it’s important that stakeholders have a sense of all of the factors in play, and the Network is aware of that need, and ready to share best practices, encourage diplomacy, and develop work products effectively.

The five substantive Working Groups, namely, Advocacy, Agency Effectiveness, Cartels, Mergers and Unilateral Conduct are the workhorses of the ICN. While there is a large amount of good work done by the ICN, I would focus for a moment on the work of the Cartel and Merger Working Groups, given the Competition Bureau’s past or present leadership roles within these Working Groups.

The Cartel Working Group’s mandate is to take on the challenge of anti‑cartel enforcement.

One of the great evils of antitrust enforcement is hardcore cartels directed at price fixing, bid rigging, market allocation and output restriction.

For a period of 10 years, from 2004 to 2014, the Competition Bureau was a Co‑Chair of Subgroup 2 of the Cartel Working Group. For some of that period, I was working in our Cartels Directorate, and was very involved in this Working Group. As a subgroup Co‑Chair of the Cartel Working Group, we focused on organizing the annual Cartel Workshops, which brought together agencies from around the world, primarily at the case handler level, to share best practices and experiences, as well as relationship‑building.

Additionally, the Cartel Working Group has completed a number of projects, most notably the anti‑cartel enforcement manual, which at present has 10 valuable and informative chapters drafted by Working Group members with exhaustive experience in fighting cartels.

The Competition Bureau is the current Co‑chair of the Mergers Working Group. The mandate of this Working Group is to promote the adoption of best practices in the design and operation of merger review regimes to:

  1. enhance the effectiveness of each jurisdiction’s merger review mechanisms;
  2. facilitate procedural and substantive convergence; and
  3. reduce the public and private time and cost of multijurisdictional merger reviews.

As a Co‑chair, the Competition Bureau continues to actively liaise with Merger Working Group members, plan information sharing teleseminars, help organize workshops to discuss relevant issues and provide practical merger review experience, and participate in the Annual Conference which promotes convergence in merger review.

The second organization I would like to focus on is the International Consumer Protection Enforcement Network, or as it is commonly referred to ICPEN. Indeed, I understand that the ICPEN partly inspired the creation of the Global Privacy Enforcement Network.

ICPEN was created in 1993 to protect consumers by encouraging and facilitating practical action to combat cross border consumer protection violations. The Competition Bureau was one of the founding members and has always taken a strong leadership role. The Network shares information on intelligence, market developments and best practices, and coordinates to tackle market problems.

Every country in the network is represented by one domestic organization, typically at the federal level. There are currently 58 Member and Partner Organizations in the Network, with new countries taking interest and joining regularly.

ICPEN produces reports, projects and activities which include bi‑annual intelligence reports, Fraud Prevention Month and the International Internet Sweep. ICPEN has proven particularly useful for exchange of operational intelligence. It also tackles specific projects, presently focusing on e‑commerce and “the internet of things”.

One area of focus at the last ICPEN conference in April, which may be of interest to you, was looking at how privacy issues can overlap with the consumer protection world, as several countries — Chile, Colombia, Costa Rica, Japan, Turkey and the United States — address both privacy and consumer protection matters under the same roof. These types of discussions may identify areas that are ripe for greater collaboration between the Office of the Privacy Commission and the Competition Bureau in the future.

The international economic community has made it very clear that worldwide threats to competition are developing very quickly. One thing I’d like to point out about ICPEN and the ICN is how thoroughly they have responded to the need for a coordinated and consistent response to those challenges.

Continuing challenges

While I am pleased to say that I have witnessed many governments moving swiftly in recent years to address the needs of competition agencies, we remain nonetheless faced with certain challenges that will not be easily resolved. There are four that I would like to outline.

  • First, a major challenge in international cooperation is the differences in substantive legal frameworks between jurisdictions. For example in international cartel enforcement, some jurisdictions have civil or administrative regimes, such as the European Union; while other jurisdictions have criminal enforcement regimes, such as those in Canada and the US. This framework difference can create complications, such as where civil jurisdictions have concerns that information they provide to a criminal jurisdiction may be used to seek custodial sanctions against individuals. Nevertheless, in many instances we have been able to develop appropriate methods of accommodating legal differences, enabling enforcement cooperation to the greatest extent possible.
  • A second challenge for multi‑jurisdictional competition cases is the differing legal treatment applying to exchange of confidential information. Many countries’ legal frameworks significantly restrict or prevent the sharing of confidential information with other nations’ competition agencies. The OECD explicitly supports reform in support of this type of cooperation in its 2014 Recommendation of the OECD Council concerning International Co‑Operation on Competitive Investigations and Proceedings. In it, the OECD encourages the adoption of legal provisions allowing for the exchange of confidential information between competition authorities without the need to obtain prior consent from the source of the information — essentially information gateways like the one we have in Canada today, which we find beneficial.
  • Third, competition investigations require technical expertise, enforcement experience and adequate funding. Many new competition agencies face deficiencies in one or more of these areas, and this can create challenges in coordination. To some degree, this challenge can be addressed through engagement with mature agencies and the provision of technical assistance or staff interchanges.
  • Finally, many emerging competition agencies operate in jurisdictions that have only recently adopted competition regimes. Canada does not have cooperation instruments in place, or established working‑level relationships, with a number of the new agencies. Necessary confidence and trust building between the Competition Bureau and new agencies can begin via participation in multilateral fora.

So we recognize that we—both at the Competition Bureau and in our cooperative work with agencies worldwide—cannot be idle in confronting threats to the marketplace.

It is imperative that we work diligently to continue providing support for emerging agencies, while at the same time sharing information among agencies more established and experienced in order to continue sharpening our approaches and developing ever more sensitive and complex responses to threats as they develop, rather than after they have become established.

We have good reason to feel optimistic. We continue to expand collaboration between agencies and nations, to share best practices through multilateral networks, and share information through a wide variety of powerful frameworks.

We are seeing a current trend toward deeper agency cooperation and so‑called “second generation” cooperation agreements to promote enhanced information exchange. I believe it’s important for the Competition Bureau to proactively seek opportunities to develop second generation agreements where legal frameworks allow, especially with our established cooperation partners. The Competition Bureau is in the process of negotiating a second generation agreement with our European partners and finalizing an arrangement with the New Zealand Commerce Commission that would improve our ability to exchange information.

At the same time, we are seeing greater regional cooperation, such as the European Competition Network and amongst the BRICS — shorthand for the five countries of Brazil, Russia, India, China and South Africa.

Conclusion

I want to allow time for your questions, so I will leave it there. I think you can tell that I’m passionate about the importance of cooperation in all the spheres in which we operate, both here in Canada and around the world.

Domestic partnerships, bilateral international cooperation and multilateral fora are tremendously important in today’s open, increasingly globalized and digital economy.

But this work can be intoxicating and all consuming.

If you want to pursue these relationships, you must budget time and resources strategically, and remember that your principal mandate is to serve your domestic market.

We do believe, however, that investing in building bridges pays important dividends, whether it is with old friends and trading partners like the United States, the European Union, and Australia, or with developing trade relationships, such as India, China, Latin America and the Association of Southeast Asian Nations.

Cooperation makes us all stronger, and ensures that consumers—regardless of where they live—enjoy the benefits of competitive markets.

Thank you.

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