Competition Bureau: Innovating to Succeed
Remarks by John Pecman, Commissioner of Competition
Canadian Bar Association’s Competition Law Spring Forum
May 19, 2016
(This is an expanded version of the remarks delivered by the Commissionner at the Spring Forum)
Good afternoon and thank you for the opportunity to be here today. It is a pleasure to be with you once again at an important event in the competition law calendar — which this year is happening just before the trilateral meeting with our North American competition law enforcement colleagues.
You’ll hear the word "change" throughout my remarks. It goes without saying that we are living in a period of disruption, when technologically‑driven changes are fundamentally reshaping our world. It is fundamental to the Bureau’s success that we adapt to this change — in the way we operate and the way we exercise our role. At times it’s a function of continuous improvement, at times it’s because the institutions, such as the courts, are adapting and asking us to navigate cases differently, and at times it’s because in order to do our job well, we have to understand the changes to business models and the implications of digital technology. Internally, we have navigated a significant transition, putting in place the structure, the governance and the plan to enable us to be a more open, collaborative and effective agency. Externally, we have forged new relationships and strengthened existing ones — including with the CBA’s National Competition Law Section.
I want to take some time today to provide both a clear picture of where the Bureau is going, and how our planning and work is setting us on the path to becoming the Bureau of the future — nimble, creative, and ahead of the curve. I am going to deliver my remarks in three parts.
- First, I will discuss our plans for the future — what’s driving our external environment and how we are preparing ourselves to respond to changes around us.
- Second, I will discuss our annual plan, lays the track to move us closer toward our goals.
- Finally, I will provide an overview of the Bureau’s work over this past year — a reflection of the hard work and commitment of staff to become the Bureau of the future.
II. Internal items of note
But before I do any of that, I’d like to highlight some important changes at the Bureau since I last spoke to you. We have some new faces and some returning faces. First, Vicky Eatrides has returned to the Bureau. Many of you will know that prior to her departure for Natural Resources Canada, Vicky served as Chief of Staff in the Commissioner’s office. She is now leading the newly established Competition Promotion Branch, which includes advocacy, communications, outreach, international affairs, and policy and planning functions, and is clearly is no small undertaking. Also returning to the Bureau is Ellen Creighton, who worked in the New Brunswick Premier’s office and has recently re‑entered our team, serving as my Special Advisor. Josephine Palumbo, who has served with the Competition Bureau Legal Services for 16 years, most recently as Deputy Executive Director and Senior Counsel, has joined the Bureau as Deputy Commissioner, Deceptive Marketing Practices Directorate for a one year secondment. For those of you who already know Josephine, you know that she will bring significant expertise and experience to this position which will be of great benefit to the Bureau. Finally, Elisabeth Lang has joined my office as Chief of Staff. Elisabeth comes to us from the Office of the Superintendent of Bankruptcy where she served as Deputy Superintendent for Program Policy and Regulatory Affairs. Elisabeth joined the Bureau in March and hit the ground running. Let me say that I am extremely pleased to have these accomplished and experienced women serving in leadership roles at the Bureau.
III. The future
The past year has been one of great transformational change for the Bureau, both in internal and external terms. Internally, we have undergone a significant transition, moving ourselves closer toward the vision of becoming a more open, transparent and collaborative agency. We are making substantial reforms to break down internal silos and operate as ‘One Bureau’. We developed a strategic plan that laid out objectives to guide our current and future work. We did this for two reasons — to make us more effective and efficient, and to be prepared for the future where nimbleness and creativity will be essential elements of our success. In order to achieve this, we will have to ensure we have the talent and tools to deliver on our mandate.
I touched on this earlier, but it bears repeating: our external environment is changing at a speed and magnitude which have never before been experienced. As the World Economic forum recently noted, we are standing at the precipice of the "Fourth Industrial Revolution"Footnote 1 and the changes that it will bring about will have far reaching impact, including for competition authorities like the Bureau. Among these impacts are business activities that increasingly cross national boundaries, the growth of disruptive technologies and new business models, and the implications of big data. These present new analytical and enforcement challenges for the Bureau and we need to be prepared for them. We cannot operate in a vacuum, oblivious to the massive structural changes occurring in our economy. Acknowledging these fundamental shifts, our new government is developing an "Innovation Agenda" to ensure that Canada is equipped to succeed in this era of change, including in the area of framework legislation such as the Competition Act. Our work is fundamental to the state of innovation in Canada, because strong competition drives innovation. This, in turn, produces economic growth to benefit Canadians and Canadian businesses. From our enforcement priorities, to our advocacy topics, to our analytical tools, to our internal structures and processes, we have our eyes firmly fixed on adapting and responding to the changes around us to support and promote competition in the new economy.
IV. Annual Plan
At last year’s Spring Forum, I spoke extensively about the Bureau’s realignment process which incorporated three elements — an internal restructuring, a new governance structure and a three‑year strategic plan. Today, I can report that this process is delivering results. We are eliminating silos and laying a strong organizational foundation for greater collaboration and coordination within Branches, across the Bureau, and with stakeholders, partners, and policy‑makers. I am proud of what our team has achieved in the last year; how we have become more collaborative, coordinated, and horizontal in our operations. Above all else, this hard work enables the Bureau to be more effective and have greater impact in protecting and enhancing competition. By no means are we finished with this endeavour. Staying ahead of the curve requires us to continuously improve our standard practices, and this includes the way in which we report on our work. We recognize that Canadians expect more transparent, more outcome‑focused reporting from public and private sector organizations. And so, beginning with our integrated planning in 2014, the Bureau has been gradually building this new approach into our performance measurement, which I will discuss in greater detail shortly.
Annual Plan and priorities
Last year, we began a new, integrated and strategic approach to planning. A first step was the development and release of the Bureau’s three‑year Strategic Vision, which outlined five strategic objectives to focus and guide our work. Today, I’d like to provide you with an update on our integrated planning, by providing some highlights from our Annual Plan for 2016‑2017, organized by where they fall under each of our strategic objectives. These areas of focus were developed through consultations with stakeholders and consultations with Bureau staff, and an external issues scan. The plan was released today for broader public consultation.
- Increase Compliance — Broadly speaking, we will continue to focus on high‑impact enforcement cases, merger reviews and outreach activities. We remain committed to using a "horizontal approach" to enforcement — using the broad tools we have to effectively resolve competition issues quickly, and vigorously pursuing those who engage in the most serious forms of anti‑competitive behaviour. The Competition and Compliance Framework, released in the past year, serves as the guideline for how we advance our investigations and, how our co‑operative enforcement model functions. The Bureau’s strategy is built on the recognition that the Bureau, the legal and business communities, and the broader network of enforcement agencies all have a role to play in promoting compliance with the law.
Innovation and new technology are driving our external environment and present the opportunity for greater choice, convenience, and other benefits for consumers. We know that competition is a key driver of innovation, and we also know that anti‑competitive behaviour and restrictive regulation can stifle both competition and innovation. In recognition of this, we will support innovation in the digital economy by deterring anti‑competitive conduct that impedes the entry of new businesses, products and services and by promoting regulatory environments that allow innovation to thrive.
Recent Bureau investigations have led to numerous bid‑rigging charges being laid against companies and individuals involved in the procurement of infrastructure projects. Given that the federal government has signaled its intent to undertake one of the largest public sector infrastructure investments in Canadian history, the Bureau will heighten efforts to improve awareness about bid‑rigging and equip the procurement community and others with tools to prevent, detect, and deter this damaging and illegal behaviour. This will include presentations to key players, including procurement officials at all three levels of government and representatives from private industry. To advance these initiatives, we have been reaching out to counterparts in other government departments and we have received a high degree of interest.
Following the release of our Corporate Compliance Bulletin and the establishment of our Compliance Unit, the Bureau will continue efforts to increase compliance awareness among small and medium‑sized enterprises.
- Empower Canadians — In 2016‑2017, the Bureau will focus efforts on providing consumers with information to protect themselves from the harms of anti‑competitive behaviour. This will include providing timely and accurate advisories to reduce the risk of consumers becoming the victims of deceptive marketing, and partnering with other Canadian law enforcement agencies to develop a warning system for consumers. Since the way in which consumers receive information has changed dramatically, we will increase our use and reach of social media tools and other means of online and digital engagement with Canadians.
- Promote Competition — As I’ve noted, competition is a key driver of innovation, and provides greater choice, reduced prices and higher quality services. It also creates strong economic benefits that result in better outcomes for all Canadians. In order to foster an environment in which innovation can thrive, we will continue to advocate for the lessening or removal of barriers to competition in regulated markets. We will also engage with businesses and consumers through workshops and other tools to explore and promote the benefits of increased competition.
- Collaborate with Partners — By nurturing relationships and information‑sharing, we enhance our enforcement efforts. In 2016‑2017, we will build on our collaboration with domestic and international partners to further promote and protect a competitive marketplace, address cross‑border anti‑competitive activity, promote sound competition policies, and better disseminate best practices. This includes strengthening partnerships with our domestic and international counterparts, supporting trade liberalization efforts by engaging with competition authorities in the Asia‑Pacific and other regions, and by negotiating additional cooperation instruments. We will also continue to participate in fora like the Organization for Economic Cooperation and Development (OECD), the International Competition Network (ICN) and the International Consumer Protection and Enforcement Network (ICPEN).
- Champion Excellence — This links back to what I was speaking about earlier with regard to continuous improvement. If we want to be efficient and effective, if we want to stay ahead of the curve, then we must build continuous improvement and innovation into our own organizational culture. To achieve this, we will deliver a talent management strategy that is focused on attracting, retaining, developing and engaging our staff at all levels. We will also build the most healthy, respectful and supportive workplace possible.
Building a culture of continuous improvement is one strategy that enables us to be more efficient and effective. But in order to continuously improve, we must also have the right metrics for measuring our work, so that we may have a full picture of the areas in which we are succeeding and those in which we need to invest our attention and resources.
Last year, we embarked on building a new performance measurement framework that speaks to results and outcomes, instead of simply activities. We were ahead of the curve in this preliminary work, as we are well aligned with the current government’s shift to what is known as "deliverology": a results and outcome‑based approach to reporting. The new approach we are building requires shifting our performance measurement metrics from quantifying the work that we do, to the quality of the results we have achieved. For example, instead of examining our enforcement performance on the basis of the number of cases we’ve taken, we will look to see whether these cases have encouraged compliance or created deterrence. Or, from an advocacy perspective, assessing whether we’ve succeeded in advancing the merits of competition to legislators and regulators, as reflected in their decision‑making, and not just assessing the number of interventions we’ve undertaken. The Bureau recognizes that progress toward goals like deterrence and relative levels of competition are much more difficult to measure. Indeed, deciding what to measure, and how, in order to meaningfully report on results is a challenge facing competition authorities around the world. As with building any complex evaluation framework, this transition will be gradual and subject to consultation with staff, external experts, and other competition authorities. Our goal is a model of performance measurement that incorporates a mix of both outcomes and outputs, is simple and easily interpreted, and is delivered in a manner that is proactive and transparent.
Working with the Competition Tribunal Bar Liaison Committee, Competition Bureau legal services and the Public Prosecution Service of Canada
When we think about increasing our effectiveness, we recognize that this simply cannot be achieved without collaboration with the Bar, the Competition Tribunal, and the Public Prosecution Service of Canada.
We are pleased to participate in the reinvigorated the Competition Tribunal Bar Liaison Committee, which began in 2014. The committee, which consists of members of the judiciary, members of the bar, Competition Bureau Legal Services (CBLS) and members of the Bureau, meets regularly to examine and develop creative ways to advance a tribunal system that is both efficient and credible to the public. One recent example of the innovative approaches developed by the Committee is the first mediation undertaken in the Tribunal’s history — in the Parkland/Pioneer matter.
We are also making progress in developing the internal capacity in CBLS. As you know, the vast majority of litigation is now being handled internally through CBLS and others in the Department of Justice. This shift will continue to help us build on the community of practice and efficiency within our Justice team as they litigate cases, gain experience and train new staff.
A key ingredient in an efficient and effective Bureau is our relationship with the Public Prosecution Service of Canada (PPSC). It is imperative that investigators and prosecutors work collaboratively. The PPSC are our partners in criminal litigation, and have final and independent authority for all decisions regarding the prosecution of cases. They determine whether a case has a reasonable prospect of conviction and if the contemplated prosecution is in the public interest. The Bureau is continuing to renew this relationship; updating our MOU with the PPSC to ensure that the roles and expectations of both parties are clearly understood. We are confident that we will be able to further build on a collaborative and effective working relationship with the PPSC and are putting our full weight behind achieving that goal.
Leniency and Immunity Programs
In December 2015, I announced that, in light of recent experiences and as part of our goal of continuous improvement, the Bureau would review its current Immunity and Leniency Programs (and corresponding FAQ’s) to determine whether changes or clarifications were necessary. Since that time, a working group, comprised of officers from the Cartels and Deceptive Marketing Practices Branch, has consulted internally on how these programs might be improved. Broadly speaking, the feedback received to date has been focused on improvements in four areas: process, cooperation, timeliness and external support for the program. The Bureau is broadening its consultation to include the PPSC and others on potential changes, and will be engaging in a more formal consultation process in the coming months.
Private civil enforcement
Before I move on to our year‑in‑review, I want to take a moment to touch on private civil enforcement. As everyone in this room will know, owing to s.36 of the Competition Act, class actions continue to occur following Bureau investigations. Not surprisingly, from these class actions issues arise with respect to the disclosure of Bureau documents. Courts are responding to questions about where the balance lies between the rights of private parties who have initiated class actions, the confidentiality provisions contained in s.29 the Competition Act and other privileges such as public interest privilege. For example in Imperial Oil v. Jacques, the Supreme Court of Canada allowed access to wiretap transcripts. In the companion case of Thouin v. Couche Tard, Ultramar, Irving Oil, Imperial Oil et al, we are presently seeking Leave to Appeal to the Supreme Court of Canada on the issue of whether a Senior Bureau investigator can be cross‑examined. In the case of Pro‑Sys v. Microsoft, the British Columbia Supreme Court denied a request for third‑party disclosure of what could have potentially been millions of documents in the possession of the Bureau on the basis of public interest privilege. While confidentiality of our investigations and the records obtained through these investigations is of the utmost importance, businesses and individuals need to be aware that third party civil actions and follow‑on claims for documents are not only possible, but increasingly more likely following a Bureau investigation, and jurisprudence is providing further guidance in this regard.
IV. Year in review
As I’ve done every year, I will now provide an overview of the Bureau’s recent work. It has been another very busy year for the Bureau, and I am extremely proud of the work that we’ve done to advance competition in the Canadian marketplace, to benefit Canadian consumers, businesses and the economy.
We have achieved many milestones since I last spoke with you. On the enforcement side, we’ve had a number of significant decisions including, very recently, a favourable ruling for competition and innovation from the Tribunal in the abuse of dominance case against the Toronto Real Estate Board (TREB), and the first ever mediated settlement with the Competition Tribunal, in the Parkland Fuel Corporation (Parkland) and Pioneer Energy merger. Our investigations have led to guilty pleas and fines in cartels related to auto parts, retail gasoline, and sewer services, and the laying of 44 criminal charges against companies and individuals accused of rigging bids for the supply of water services to municipalities. We’ve also secured record‑setting consumer restitution in our ongoing investigation into allegations of false or misleading advertising in the wireless telecommunications sector.
Before I go into detail about our recent work, I want to share with you some statistics which highlight the level of work going on at the Bureau within the last year.
- The Bureau commenced 299 investigations and examinations in FY 2015‑16
- In that same year, we received 8 guilty pleas in cartel cases, and received the second largest fine ever ordered by a court in Canada for a bid‑rigging offence.
- We presently have 16 active matters before the Tribunal and the courts.
- In keeping with our objective of working toward consensual agreements and avoiding lengthy and costly court proceedings where possible, the Bureau resolved cases through alternative case resolutions in 24 instances and registered consent agreements in five others.
- We obtained $5.75 million in administrative monetary penalties and $7.34 million in restitution in FY 2015‑2016.
- The Bureau concluded 221 merger matters in FY 2015‑16, seven of which involved issues that were resolved through a consent agreement.
- With regard to our use of formal powers in non‑merger cases, the Bureau obtained 15 section 11 orders and 13 search warrants in FY 2015‑2016
The Bureau’s shift toward a more balanced, horizontal, and multi‑pronged approach to promoting compliance with the Act is reflected in improved outputs, including an increase in the number of partnerships, coordination instruments, outreach activities, and a more active advocacy agenda with a higher number of regulatory submissions. As we build our performance measurement framework, the proof will be in the pudding in terms of how all of these activities improve competition outcomes.
I’d like to now provide you with highlights of our work, itemized by Branch.
a) Mergers and Monopolistic Practices Branch
The Mergers Directorate reviews mergers to determine whether or not they are likely to substantially lessen or prevent competition in the marketplace. In terms of general activities, during the 2015‑16 fiscal year, staff completed 221 merger reviews, which was relatively static when compared with 2014‑15. However, the number of mergers designated as "complex" increased this year, up from 55 to 65 — an increase of approximately 18%. At the same time, the average time to review these mergers remained relatively steady at 35.87 days during 2015‑16. The Mergers Directorate met the service standard in 85% of these complex reviews and 96% of its non‑complex reviews during the last fiscal year. The Mergers Directorate has good reason to be as proud of these results, as I am.
In what was the most significant mergers‑related development of the last year, the Bureau reached the first ever mediated settlement, conducted by the Honourable Paul Crampton, Chief Justice of the Federal Court and member of the Tribunal.
This settlement resulted in a consent agreement resolving litigation related to Parkland Fuel Corporation Ltd’s (Parkland) acquisition of Pioneer Energy (Pioneer). The Bureau’s application with the Tribunal challenged Parkland’s acquisition of Pioneer gas stations or supply contracts in 14 markets in Ontario and Manitoba, following a review which concluded that the acquisition would have substantially increased Parkland’s post‑merger share of the various local markets, increasing the concentration in the markets and the possibility of coordination between remaining retailers.
The agreement ensures that consumers in certain Ontario and Manitoba markets benefit from competition at the pumps by requiring Parkland to divest itself of stations or exclusive supply agreements in six markets. The agreement also prevents Parkland from increasing any margin that it earns on the gasoline sold at wholesale to its dealers in two markets in Manitoba.
We achieved three milestones in the Parkland/Pioneer case. To begin with, the Bureau contested the merger by advancing both a unilateral and coordinated effects theory of harm. Secondly, we obtained a precedent setting injunction that recognized that interim harm to consumers could form the basis for a s.104 order. Thirdly, as I already mentioned, the consent agreement is the first of its kind reached through a mediation process in a Competition Tribunal proceeding.
The Parkland‑Pioneer matter was not the only contested matter before the Tribunal within the last year. In late 2015, the Bureau filed an application challenging Staples’ proposed acquisition of its main competitor, Office Depot, which operates in Canada under the name Grand & Toy. Our review found that if the acquisition were to proceed, Staples would account for over 80% of sales of various office products to affected customers in Canada and concluded that the acquisition would likely substantially lessen competition in the office products delivery business. In the absence of a viable and effective remedy offer, we sought to block the merger to protect competition for Canadian consumers, businesses and organizations, as did our US counterparts, the Federal Trade Commission (FTC).
This case is the first simultaneously litigated challenge to a merger in Canada and the United States, and it demonstrates our ability to leverage our collaborative relationships with international counterparts to protect competition within Canadian borders. Representatives of the Bureau and, the FTC worked closely in our respective reviews. Our long standing relationship with the FTC led to an efficient and coordinated review of this matter, consistent with our agreement on best practices on cooperation in cross‑border merger investigations. As you will now be aware, the US District Court for the District of Columbia has ruled in favour of the FTC’s injunction and the parties subsequently decided to abandon the merger.
The Mergers Directorate also entered into consent agreements to resolve competition concerns in respect of the Pfizer/Hospira, Iron Mountain/Recall, Teva/Allergan and CPS Wendland transactions. The directorate completed reviews of a number of other high profile transactions including, Lowe’s/Rona, Renaud‑Bray/Archambault, Shaw/Wind Mobile, and Cara/St‑Hubert.
However, the review which undoubtedly garnered the greatest attention was the Bureau’s decision not to challenge Postmedia’s acquisition of Sun Media. While I addressed this matter in my remarks last year, a number of developments may merit a second discussion of this transaction. In October 2014, the Bureau undertook an extensive review of Postmedia’s acquisition of Sun Media Corporation’s English‑language newspapers from Quebecor. The Bureau’s review focused on the effect of the transaction on competition for both advertising and readership in the cities where both parties operated local daily newspapers. Based on evidence gathered from the parties and the market, we concluded that the level of rivalry between the Postmedia and Sun Media papers with respect to both these facets was low. The readership audiences were largely distinct and therefore advertisers saw ad space in each paper as differentiated and generally non‑substitutable.
Additionally, we took into account the evolving media marketplace in the cities where both parties operated local daily newspapers, including the decline of both readership and advertising in local daily newspapers, the general decline in the number of printed newspapers, and the rise of digital alternatives. For these and other reasons, we reached the conclusion that a single owner of both the Postmedia and Sun Media papers would have insufficient additional power in the market to materially increase price. This matter received renewed attention with the closure of newsrooms in certain cities. The Bureau recognizes the public interest in ensuring a sufficient diversity of voices in the media landscape because it provides citizens with the freedom to form their own opinions, which in turn, contributes to a healthy, democratic society. That said, it is important to note that our Act is a general framework legislation, applicable to all sectors of the economy and, that the Act requires us to consider a merger through an economic lens. This is the lens through which we view our merger reviews. It is the approach the Bureau has consistently followed and will continue to follow in its reviews of media mergers.
One of the more notable features of the Bureau’s review of Postmedia is that, for the first time, it issued a public statement encouraging Canadians to use the Bureau’s website to share their views regarding the Postmedia/Sun Media transaction. The Bureau subsequently employed this approach in several other merger reviews and will, as part of its efforts to engage and empower Canadians, continue to explore ways to ensure that the public have an easily‑accessible means by which to communicate their views.
Monopolistic Practices Directorate
The Bureau recently received an important decision in regards to its application against the Toronto Real Estate Board (TREB) when, in late April, the Tribunal ruled in favour of the Commissioner and found that TREB had abused its market power. The case had been ongoing since 2011, when the Bureau filed an application seeking to prohibit TREB’s rules that restrict how its member agents provide information to consumers, such as previous listings and previous sale prices. The Bureau alleged that these practices effectively denied agents the ability to introduce new and innovative real estate brokerage services using the internet.
The Tribunal agreed, in all important aspects, with our position, finding that:
- TREB controls the market for Multiple Listing Service (MLS) based residential real estate services owing to its control over the MLS, a key input for the supply of residential real estate services. TREB engages in anti‑competitive practices by restricting its members' ability to use and display certain MLS information over the internet; and,
- TREB's restrictions substantially prevent competition in the supply of residential real estate brokerage services in Toronto. If TREB's restrictions were to be removed, then its members could use technology and the internet to deliver a wider range of innovative and higher quality services at a lower cost to home buyers and sellers in the greater Toronto area.
We welcome the decision addressing TREB’s anti‑competitive practices and the strong message it sends about the role of competition and innovation in the Canadian marketplace. The Tribunal noted that dynamic competition, including innovation, is the most important type of competition, and consumers are deprived of the enhanced services when TREB members are shielded from disruptive competition. The decision provides the Bureau with important jurisprudence regarding the scope of section 79 of the Competition Act, and paves the way for enforcement action dealing with non‑price effects and innovation.
We remain focused on achieving a timely remedy to address the competition concerns we raised in our application and we look forward to the remedy hearing that will take place in Ottawa on June 2.
As some of you will be aware, we have an ongoing investigation into Loblaw in relation to concerns with respect to certain policies by Loblaw that reference their rivals’ conduct. This investigation has involved the collection of information from a number of suppliers, using tools such as section 11’s and information obtained directly from Loblaw. Our investigation continues and we hope to have more to say on this in the coming months.
We recently concluded an extensive investigation into a number of allegations of anti‑competitive conduct on the part of Google in relation to its online search, search advertising and display advertising services in Canada. Specifically, the Bureau’s investigations focused on allegations that the company had engaged in conduct with the intention to exclude or disadvantage its competitors, contrary to the abuse of dominance provisions of the Competition Act.
Our investigation included over 130 interviews with market participants, consultations with industry and economic experts, the analysis of large volumes of information obtained from Google through a Federal Court order, and consultation with international counterparts including the FTC and the European Commission (EC). Following our thorough analysis, we found evidence to support one of the allegations against Google: that the company used anti‑competitive clauses in certain types of contracts that negatively affected advertisers, with the intent to exclude its competitors. In response to similar concerns from the FTC in 2013, Google made changes to these clauses and subsequently, in response to the Bureau, has agreed not to reintroduce these clauses in Canada, or any others that may have the same effect in its contracts. As a result of these changes, advertisers now have more flexibility to use competing ad platforms, allowing for greater search advertising competition. In keeping with our core values of openness and transparency, we provided a comprehensive position statement that details the extent of the Bureau’s investigation.
While our review did not find sufficient evidence of a substantial lessening or prevention of competition in the market to support the other allegations, the Bureau recognizes that data‑driven companies play an important and growing role in Canada’s economy. The collection, analysis and use of data is increasingly becoming an important source of competitive advantage, driving innovation and product improvement. Any anti‑competitive activity by a dominant firm could negatively affect competition, and inhibit the development of an open, dynamic and innovative digital marketplace for consumers and businesses. Given the global nature of these complex issues, the Bureau participates in international dialogue regarding the intersection between data, competition policy and privacy, through workshops with international counterparts. We are closely monitoring developments in this area to take action should anti‑competitive activity come to light that affects the Canadian market, and we are also following the investigations being undertaken by our international counterparts.
In another important case related to the digital economy, in late October, the Bureau concluded its review of Rogers’ and the NHL’s 12 year agreement regarding broadcast hockey rights in Canada. The $5.2 billion agreement provided Rogers exclusive rights to all national NHL games, including the Stanley Cup Playoffs. Prior to the agreement, the national NHL rights were split between Bell (TSN) and CBC, with Rogers and Bell each holding the regional rights to various Canadian teams. This was an interesting and complex review because Rogers’ acquisition of the NHL rights coincides with the evolution of the broadcasting landscape, as viewers move away from the traditional "linear" model of watching television, toward increasingly watching content where, when and how it suits them, through various emerging service options. The Bureau’s review involved a broad range of market participants, including advertisers, television service providers and distributors and examining a large volume of evidence from Rogers, the NHL and other sources. Our analysis considered the potential impact of the agreement on prices paid for Rogers’ Sportsnet channels, advertising rates during NHL games and, the ability of Rogers’ broadcast competitors to obtain important sports programming. The information we obtained in the course of our review did not indicate that the Rogers/NHL agreement had, after its first year, substantially lessened or prevented competition. As in all matters, our decision in this review was based on available evidence, and should new and compelling evidence come to light that this or any other arrangement has harmed competition, we will not hesitate to act.
On another matter, I am also pleased to share that on April 25th, the Tribunal heard Kobo’s section 106 (2) application to vary or rescind the terms of the consent agreement we reached with major ebook publishers Hachette Book Group, HarperCollins, Macmillan and Simon & Schuster. As you may recall, this consent agreement resolved concerns that the aforementioned companies were engaging in anti‑competitive conduct that restricted retail price competition for ebooks in Canada. Bureau staff have been working towards this hearing for over two years, as appeals wound their way to the Supreme Court, and we are pleased that the case has moved forward. We look forward to receiving the Tribunal’s pending decision, at which point we will review and determine our best course of action to resolve our ongoing competition concerns in the market for ebooks.
We also have a number of significant ongoing abuse of dominance investigations that deal with novel and complex issues including monopsony power, joint dominance, gatekeeper roles in upstream markets and contracts that reference rivals.
b) Cartels and Deceptive Marketing Practices Branch
Before I begin highlighting the successes of the Cartels Directorate in the previous year, I want to take a moment to address some of the challenges this branch has faced and acknowledge the work they are doing to overcome these. It will not come as a surprise to anyone in this room that within the last year or two, the Bureau experienced setbacks in two of its major investigations — including the Bureau’s chocolate and information technology cases. The former in which charges were stayed, and the latter in which the parties involved were found not guilty.
First, I want to state that the Bureau recognizes that these cases represent an opportunity to re‑examine our process and procedures. To that end, we are undertaking a ‘lessons learned’ exercise which has included, as I noted earlier, reviewing our leniency programs and, engaging an external expert to review our procedures. The Bureau is also working to enhance collaboration, predictability and communication with the PPSC. We have engaged in thorough and constructive discussions and are renewing and building the relationship.
The Bureau welcomed another significant development in our investigation involving motor vehicle components in late April when Showa Corporation (Showa), a Japanese manufacturer and supplier of automobile components, pleaded guilty to one count of bid‑rigging for participating in an international conspiracy. Showa was fined $13 million by the Ontario Superior Court of Justice, the second largest fine ever ordered by a court in Canada for a bid‑rigging offence. The company also implemented a competition compliance program to reduce its likelihood of committing a subsequent offence. This decision follows an investigation by the Bureau that found Showa had engaged in a secret illegal agreement with another supplier of electric power steering gears sold to Honda Motor Co. for cars manufactured in Canada. This was one component of the Bureau’s broader investigation into a series of alleged conspiracies and bid‑rigging agreements or arrangements among various suppliers in the sale and supply of components used in the manufacturing of motor vehicles in Canada and elsewhere.
Since April 2013, our investigation involving motor vehicle components has resulted in nine guilty pleas and over $70 million in fines imposed by the courts. The case is an example of where the Immunity and Leniency Programs are delivering results: the Bureau first learned of the cartel activity through the Immunity Program, and the investigation benefitted significantly from the Leniency Program which facilitated the cooperation of a number of companies, including Showa.
Continuing on the subject of our motor vehicles investigation, in December of 2015, Toyo Tire & Rubber Co. Ltd. pleaded guilty to three counts of bid‑rigging and was fined $1.7 million for its participation in an international bid‑rigging conspiracy related to the supply of anti‑vibration components to Toyota Motor Corp., Ltd. (Toyota). This was the eighth guilty plea in this investigation, and Toyo’s participation in our Leniency Program is yet another example of the success of this program in enabling the Bureau to bring cartelists to justice.
Bureau investigations also led to guilty pleas and fines in cartels related to retail gasoline and sewer services in the province of Quebec. To date, five companies and one individual have pleaded guilty for their participation in this sewer services bid‑rigging scheme. The companies were fined a total of $268,000 and the individual was ordered to do 100 hours of community service. The Bureau also laid 44 criminal charges against companies and individuals accused of rigging bids for the supply of water services to municipalities in the province of Quebec.
Deceptive Marketing Practices Directorate
On the deceptive marketing practices front, the Bureau’s investigation into "premium text messaging" charges on customers’ wireless phone bills led to settlements with Rogers and Telus that included $12.76 million in total rebates made available to consumers — the largest in the history of the Bureau. As a result of the agreements, Telus was also required to provide over $250,000 to consumer advocacy and research groups whose work advances the public interest in areas related to the digital economy.
The investigation began in 2012, when the Bureau initiated an inquiry in relation to Rogers, Bell, Telus and the CWTA for permitting charges by third parties on their customers’ wireless phone bills for premium text messaging services — tackling the point of diffusion for the deceptive marketing practices. These included charges for items like trivia questions and ringtones that they did not intend to purchase and for which they had not agreed to pay. As part of their respective settlements, Rogers and Telus also agreed to issue a public notice to affected customers; implement a corporate compliance program; and develop a consumer awareness campaign to educate consumers about how charges can be incurred on wireless devices and how to avoid unwanted charges.
In what was an excellent example of the concept of "shared compliance" at work, in October of 2015, the Bureau reached an agreement with Bell Canada (Bell) that addressed Bureau concerns related to "astroturfing" ‑ the practice of providing positive online reviews that create the general impression of being made by independent and impartial consumers, when that isn’t the case. Our investigation concluded that certain Bell employees and contractors were in fact, encouraged to post positive consumer reviews and 5‑star ratings for the new MyBell Mobile App and Virgin My Account App, that created the materially false or misleading general impression that they were made by independent and impartial consumers. Bell cooperated fully with the Bureau’s investigation, acted quickly to remedy the situation, and implemented measures to prevent any future occurrence. As part of the consent agreement, Bell committed to paying an administrative monetary penalty of $1.25 million, affirmed its commitment not to direct, encourage or incentivize its employees to rate, rank or review apps in app and agreed to enhance and maintain its corporate compliance program, with a specific focus on the conduct at issue in this matter. Bell will also host a workshop at its own expense to promote, discuss and enhance Canadians’ trust in the digital economy. The Bureau’s view is that ratings and reviews are an increasingly important source of information for consumers about products and services and, as such, those ratings and reviews should reflect the authentic experiences of other impartial consumers.
Also in 2015, we settled our case regarding performance claims being made by hockey equipment manufacturer, Reebok‑CCM in relation to its CCM Resistance hockey helmet and other similar products. As part of a consent agreement with the Bureau, Reebok‑CCM agreed to stop making the performance claims and to make a $475,000 donation of sports equipment to a Canadian charity that supports youth in sports or teams, associations or leagues for financially underprivileged children or youth hockey players. Our investigation into advertisements for the CCM Resistance hockey helmet concluded that they contained words, images and videos that created the general impression the helmet would protect players from head injuries like concussions. Despite the fact that Reebok‑CCM had conducted testing on the helmet, we concluded that it was not adequate and proper to support the general impression created by the claims being made.
This was the second performance claim case that we pursued in this area, as we reached a similar Consent Agreement with Bauer in 2014. These Consent Agreements are important for Canadian families, as they ensure that families are receiving accurate information about the products they are purchasing to protect their loved ones. This speed at which the Reebok‑CCM matter was resolved is also a strong endorsement of the Bureau’s use of alternative case resolutions, as it provided a positive and beneficial alternative to spending time and resources in a courtroom. While the Bureau strongly encourages innovation in the marketplace and recognizes the important role that competition plays in fostering that innovation, all businesses have a legal responsibility to ensure that any claims being made are based on, and fully substantiated by adequate and proper testing that supports the claims.
While the Bureau prefers to resolve matters on a consensual basis, we will not hesitate to commence contested proceedings where appropriate and our litigation record demonstrates this. Within the Deceptive Marketing Practices Directorate, two cases come to mind within the last year that fall into this category: the Bureau’s proceedings against outerwear manufacturer Moose‑ International Inc. (Moose Knuckles), and its legal proceedings involving certain car rental companies.
In late April, we filed an application with the Tribunal under the deceptive marketing practices provisions of the Competition Act regarding alleged false or misleading representations by Moose Knuckles by labelling jackets as ‘Made in Canada’. The jackets are sold in a variety of up‑market stores across Canada, and typically retail for $595 to $1,000. The Bureau is alleging in its application that the high‑end jackets manufactured by Moose Knuckles are marketed and labelled as made in Canada, while they are largely manufactured in Vietnam and elsewhere in Asia and only the finishing touches to the jackets, such as adding the trim, zippers and snaps, are done in Canada. We are seeking an end to what we believe to be false or misleading ‘Made in Canada’ representations, an administrative monetary penalty of $4 million and restitution for consumers.
For most Canadian consumers, a high‑end purchase such as this is a significant investment, and ‘Made in Canada’ claims can play a large role in the decision‑making process. We recognize that consumers are willing to pay a premium for products made in Canada and we strongly believe that Canadian consumers deserve to have accurate information to support them in making informed purchasing decisions. We will continue to take action, where warranted, to ensure this is the case.
As you may recall, last year, the Bureau initiated proceedings against Avis and Budget, alleging that the companies advertised prices online for vehicle rentals and other associated products that were not attainable because Avis and Budget charged consumers non‑optional fees in addition to the prices initially advertised. We alleged that the representations were made in various media, including on their websites, in mobile apps and, email messages, and that the non‑optional fees created the general impression that they were taxes, surcharges and fees that governments and agencies required car rental companies to collect from consumers. This case is significant in that it marks the Bureau’s first proceeding under the new provisions of the Act that came into force as part of the Canadian Anti‑spam Legislation in 2014.
In late 2015, the Bureau concluded its second investigation into misleading labelling claims on the part of home décor retailer JYSK Canada (JYSK). Our inspections found that numerous products failed to meet the requirements of the Textile Labelling Act and Consumer Packaging and Labelling Act. As a result, JYSK committed to replacing labelling on textile articles and prepackaged products bearing improper or incomplete information.
This investigation followed a May 2014 recall of two brands of down duvets at the Bureau’s request after it was revealed that the duvets did not meet the minimum down percentage requirements in order to be labelled and marketed as "down" or "goose down" articles. At that time, the Bureau also identified other textile articles and prepackaged products bearing improper or incomplete information, which were corrected. Our most recent inspection found that while JYSK had taken corrective action in 2014, additional textile articles and prepackaged products not previously identified — including duvets, bathroom, bedding, decorative and kitchen products — were improperly labelled and not in compliance with the acts. As part of its formal commitment with the Bureau, JYSK Canada will replace all labels in question, post a correction notice at the point of sale, implement a corporate compliance program and hire an independent officer to monitor its labelling and representations going forward.
To ensure that consumers receive accurate information regarding the quality of precious metal jewelry, the Bureau recently conducted an inspection blitz at major chain and department stores in Vancouver, Toronto and Montreal. The Bureau was supported in its efforts through a newly acquired X‑ray fluorescent analyzer that tests the purity of precious metal and in turn allows the Bureau to determine whether articles meet the quality mark identified. The inspections were conducted as part of the Bureau’s role in enforcing provisions contained in the Precious Metals Marking Act (PMMA). The Bureau tested almost 1000 pieces of jewelry with the analyzer and found issue with 16 articles which were then provided to the Royal Canadian Mint for further testing. Once this testing is complete, the Bureau will work with the retailers in question to ensure appropriate corrective action is taken, where required.
As part of our international cooperation efforts through ICPEN, in late November 2015, the Bureau coordinated the efforts of 24 consumer protection agencies from other jurisdictions in ICPEN’s Annual Internet Sweep. The theme for this year’s sweep was Online Pricing Issues, with efforts being specifically directed at "drip pricing" in the travel and tourism sector, and e‑commerce subscription traps — products that are promoted as "free trials" and then subsequently charge consumers for a monthly subscription if they fail to return the product in a short time frame. Within Canada, 80 websites were searched with 76 being flagged as "suspicious". The main issues we identified included non‑disclosure of terms and fees, improper contact information, astroturfing and use of unauthorized trust marks. The broader sweeps coordinated by the Bureau saw the review of 1,565 websites, 746, or 47.6% of which were flagged as potentially problematic.
Finally, on April 29th of this year, as some of you will be aware, the Bureau filed an application for section 11 orders pursuant to the Competition Act with the Federal Court of Canada to obtain more information related to the marketing practices of Volkswagen Group Canada Inc. and Audi Canada Inc. Our investigation into this matter continues.
c) Competition Promotion Branch
On the competition promotion front, we are proud of the contribution our white paper on the modernization of taxi regulations in Canada has made in the public discourse and ongoing regulatory reviews. Our recommendations have been reflected and referred to in numerous recent regulatory changes in municipalities across the country. We are similarly proud of the results being achieved through our newly created Compliance Unit. Last year, in keeping with our efforts to promote and increase compliance, the Bureau established a Compliance Unit to organize and spearhead our work in this area. This unit has been led by Nadia Brault, who holds the designation of Corporate Compliance and Ethics Professional — International, which she obtained from the Society of Corporate Compliance and Ethics. Since November 2015, we have given a dozen compliance presentations across Canada to various stakeholders ranging from law firms, business and trade associations, academia and government officials. Of particular note, is our involvement in a corporate compliance workshop that was held jointly with the International Chamber of Commerce and hosted by Blakes in Calgary. The three hour workshop involved practical hands‑on interaction by audience members. In addition to these presentations, we have also shared best practices with foreign anti‑trust agencies.
We are increasing our outreach with the public by ramping up our social media efforts and using new tools and existing forums like the Fraud Prevention Month and Anti‑cartel Day. We’ve also deepened our relationships with domestic and international partners through new and renewed agreements, and advanced public policy and enforcement discussions by hosting workshops on timely subjects. I will now discuss developments in each of these areas.
Advocacy and Economic Analysis Directorate
In fiscal year 2015‑16, the Bureau undertook 23 advocacy‑related initiatives. Nine of these were formal interventions, pursuant to our advocacy function under sections 125 and 126 of the Competition Act. The remainder included written submissions (including letters), and calls and meetings with regulatory groups and other stakeholders. While the Bureau continues to build its capacity to undertake advocacy initiatives, our focus has been less oriented toward the number of interventions we undertake, and rather on the potential impact and success of those interventions. With that in mind, it is fair to say that, where advocacy is concerned, the Bureau has seen some success this past year.
I’d like to highlight a recent Alberta Court decision in a private action between Sobey’s West Inc (Sobey’s) and the Alberta College of Pharmacists (the College) in relation to fidelity rebate programs and the College’s rules prohibiting pharmacists and pharmacies from offering such inducements. In his decision, in which he found "no evidence of actual or reasonable possible harm to customers (patients) as a result of loyalty programs or other forms of inducements", Justice Ouellette referenced a letter from the Bureau from 2013, which was submitted to the College as part of a public consultation on what was then a proposed prohibition on inducements. Specifically, Justice Ouellette noted that he agreed with the Bureau’s assessment which cited the "lack of empirical evidence" regarding the potential negative impact of such inducements and ruled that the prohibitions were outside of the College`s authority. Although the College did not make the changes we had advocated for, the result exemplifies one of our primary advocacy objectives: providing compelling reasons for regulators, legislators and other decision‑makers to employ an evidence‑based, competition lens in their decision making. Going forward, the Bureau will continue to employ this strategic and targeted approach to its advocacy efforts.
Our intervention in the Taxi industry is perhaps the most discussed and most impactful advocacy work we have done to date. It is an example of a well‑timed, well‑researched and well‑executed effort, with far reaching impacts. The intervention centred around a white paper with the central theses that regulations governing the taxi industry must be modernized and overhauled to allow taxis and ride sharing services to compete on a more level playing field, and that policy‑makers should go no further than necessary to achieve legitimate public policy outcomes. Further, it noted that consumers stand to benefit from lower prices, reduced waiting times and higher quality services if regulators allow the forces of innovation and competition to shape the industry. Many of the recommendations contained in the white paper were subsequently cited and employed by a number of municipalities including the cities of Ottawa, Edmonton, Toronto and Calgary in the development of their respective taxi regulations.
Our intervention in the taxi industry is a template for how we intend to approach our interventions going forward. They will echo our previously articulated position that regulation should be minimally intrusive on market forces, allowing competition to drive innovation and improve outcomes for Canadians. The Bureau will focus its efforts in areas where it has identified the potential for a significant impact and where there is an identified need for regulatory change to facilitate greater competition. Specifically, the Bureau intends to direct its attention to sectors that are being impacted by innovation and new technology, with a particular focus on the digital economy space.
It is with all of these factors in mind that I am announcing today that we will commence a market study into technology‑led innovation in the Canadian financial services sector, also referred to as "FinTech". We will direct our attention to innovations that impact how consumers and small and medium businesses interact with financial services and products. These will include areas like peer‑to‑peer banking, mobile wallets and payments, crowd‑funding and online‑based financial advisory services (also known as "robo‑advisors"). The Bureau will be looking at the impact of technology led‑innovation on the competitive landscape, examining the barriers to entry, expansion or adoption for FinTech companies as well as the state of the current regulatory framework. In undertaking this study, we will gather and analyse information from various sources including key stakeholders, industry experts, academic literature and other jurisdictions. The Bureau will also provide, through our website, a means for interested parties to provide feedback in written and oral format, and this portal opens today. As with any study, it may change in scope and size. Should this occur, the Bureau will update both the general public and stakeholders. We understand that innovative business models, such as those emerging in FinTech, have the power to challenge the status quo. This study will provide guidance to the Bureau and regulators, to ensure that Canada nurtures an environment that provides support and opportunities for FinTech companies to innovate, grow and compete globally.
As many of you will be aware, market studies are one of the vehicles through which the Bureau advocates for greater competition. Market studies allow the Bureau to study an industry in depth, and understand the competitive dynamics in that industry. They are a useful tool for diverse stakeholders, including policy makers, industry participants, and consumers. In addition, market studies provide the Bureau with insights that equip us to make better enforcement decisions. Completing them comes with challenges, however. The greatest challenge is that the Bureau is limited to collecting information on a voluntary basis. Unlike our colleagues in other jurisdictions including our major trading partners — the European Union, the United States, the United Kingdom and Mexico — the Bureau does not have the expressed legal authority to use market studies as a key tool to enhance economic competitiveness. Moreover, unlike the Bureau, these agencies have access to formal investigative powers to compel information from regulators and companies. The value of these formal investigative powers in enhancing agencies’ ability to thoroughly assess the state of competition in a given market was recently recognized by the OECD’s Competition Committee. We know, through numerous examples, that our international counterparts are active in this area and that the impact of their efforts has been significant in terms of their ability to advance evidence‑based, effective, pro‑competitive suggestions for regulatory reform. Formal market studies are a critical tool for advancing innovation and enhancing economic growth, as they enable competition authorities to make recommendations that facilitate the removal of barriers to innovation and competition.
Domestic and international cooperation
In keeping with our strategic objective to increase our collaboration with domestic and international partners, the Bureau participated in a number of noteworthy collaborations within the last year. On the domestic front, the Bureau deepened its relationships with domestic law enforcement agencies, signing first‑of‑their‑kind agreements with the Ontario Provincial Police (OPP) and the Royal Canadian Mounted Police (RCMP). While the Bureau has worked with these organizations for a number of years, and has signed several agreements that include these organizations, the recently signed MOUs represent a new era of formalized collaboration and will enhance our mutual investigative successes.
Internationally, the Bureau signed cooperation agreements this year with competition authorities in China and New Zealand, and participated in a number of bilateral meetings with officials from other competition authorities, including the North American Antitrust Authorities, the Korea Fair Trade Commission (KFTC) and the Japan Fair Trade Commission (JFTC).
The Bureau’s cooperation arrangement with the New Zealand Commerce Commission represents a milestone, as it is the Bureau’s first "second generation" cooperation arrangement; it follows a cooperation arrangement made with the NZCC and the Australian Competition and Consumer Commission in October 2000. This new arrangement will further enhance our collaboration with the NZCC, by facilitating greater information sharing and investigative assistance on cross‑border competition matters.
In January of this year, I met with Vice Chairman Hu Zucai of China’s National Development and Reform Commission (NDRC), to sign an MOU that will further enhance cooperation between Canada and the People’s Republic of China (PRC) on competition matters. The MOU facilitates greater communication and collaboration in the areas of mutual interest, by sharing experience and views and by informing each other of our respective policy and enforcement developments.
Lastly, following our meeting with the NRDC in Beijing, Bureau officials and I met in Tokyo with representatives of the JFTC, as part of our 2005 cooperation agreement with Japan. I was pleased to have the opportunity to discuss competition law and policy developments in our respective countries, including those related to agency priorities, corporate compliance and our immunity and leniency programs. The Bureau was pleased to facilitate greater communication, collaboration and trust with one of Canada’s largest trading partners. While in Tokyo, representatives of the Bureau also participated in the 11th International Bar Association‑American Bar Association`s International Cartel Workshop. This event provided an opportunity for competition enforcers and practitioners across the globe to discuss in practical terms how international cartels are investigated in their respective jurisdictions, using a hypothetical example.
To date, Bureau has entered into cooperation instruments with 13 different jurisdictions, including Australia, Brazil, Chile, the European Union, India, Japan, the People’s Republic of China, the Republic of Korea, Mexico, New Zealand, Taiwan, the United Kingdom and the United States. Collaboration with international counterparts is critical to ensure that markets remain competitive and innovative in an increasingly global economy, and to ensure that the Bureau stays abreast of international best practices.
We remain committed to advancing collaboration at both the international and domestic level as a means to enhance the impact of our competition enforcement and promotion efforts. The Bureau is presently working with a number of partners to explore opportunities to strengthen our cooperation. We are hopeful that a number of other cooperation instruments will be finalized in the near future. As part of our commitment to be open and transparent, these instruments will be made available publicly.
Public Affairs and Outreach Directorate
To advance our strategic objective to promote and increasing compliance with competition law, and facilitating a greater awareness and understanding of the Bureau’s work, we continued our outreach efforts this past year. In addition to the work of the Compliance Unit, the Bureau hosted its 3rd annual Anti‑cartel Day, which took place during the Bureau‑led Fraud Prevention Month.
Anti‑cartel Day is a relatively new event for the Bureau, first taking place in 2014. This event was developed with the goal of educating Canadian consumers and businesses about the existence of cartels and their destructive impact on the Canadian economy. For the 3rd edition of Anti‑cartel Day, the Bureau, in collaboration with the Canadian Chamber of Commerce, invited its partners to take part in a panel discussion on cartels. The objective of the panel discussion was to help businesses and consumers better understand how cartels work, how to avoid being a part of one, and how to identify and report them. Senior Deputy Commissioner, Matthew Boswell and I were joined by Warren Everson, Senior Vice President, Policy, Canadian Chamber of Commerce; Tom Whittaker, Detective Staff Sergeant, Anti‑Racket Branch, Ontario Provincial Police and Michel Pelletier, Director of Operations, at the permanent anti‑corruption unit in the province of Quebec.
We know, through experience, that the best weapon against fraud is information, which is why we continue to work alongside our Fraud Prevention Month partners to combat fraud in the marketplace. In 2016, the Bureau and its partners launched an updated theme for Fraud Prevention Month: Recognize, Reject and Report. Events hosted by the Bureau and other partners, such as the national launch of the Top 10 Scams with the Better Business Bureau, focused on helping Canadian consumers and businesses to recognize a scam when they see one, empowering them to reject it, and take action by reporting it to the appropriate law enforcement agencies. The Bureau’s awareness efforts this year touched on a number of current issues that we and our partners are combating, including investment fraud, so‑called "free" trial scams, immigration and refugee scams, and government grant and loan scams.
Fraud Prevention Month and Anti‑cartel Day were not the only means through which the Bureau reached out to Canadians and Canadian businesses. In the last year, the Bureau held a number of workshops, the most notable of which was our January workshop on emerging competition issues, which examined how competition policy, enforcement and government regulation can keep pace with innovation. To facilitate discussions about these important issues, the Bureau brought together over 120 leading thinkers representing business, law, academia and government, both domestic and international. Participants shared insights into two key themes: disruptive business models and the questions they raise for competition agencies and regulatory bodies; and how best to incorporate non‑price effects, such as innovation, quality and consumer choice, into competition assessments.
In addition to workshops and public awareness events, last year the Bureau delivered 135 speeches and presentations to external stakeholders. In keeping with our commitment to greater transparency and clarity, we published 64 new or revised documents including enforcement guidelines, position statements, pamphlets and FAQs. While we’ve provided a full overview of the guidance documents we’ve released in the copy of my speech posted on our website, I’d like to highlight a few of the more significant pieces we’ve released this year.
Guidance notes and enforcement bulletins
Competition and Compliance Framework
First, in November of last year, we released the final Competition and Compliance Framework bulletin. The final framework was informed by the input provided by the bar and the business community during the consultation phase. This bulletin is designed to help businesses compete and prosper within the law. It describes our comprehensive and integrated approach to promoting compliance with the legislation the Bureau enforces, namely the Competition Act, the Consumer Packaging and Labelling Act (except as it relates to food), the Textile Labelling Act and the Precious Metals Marking Act. The bulletin provides support to the business community by outlining the various tools that the Bureau uses in its comprehensive and integrated approach to promoting compliance. We encourage all businesses to develop and enact credible and effective compliance programs to ensure that they are fully compliant with all of the aforementioned legislation. When this does not happen, the Bureau is committed to employing the full range of options at its disposal to address these contraventions including advocacy, outreach, suasion and enforcement. As I’ve noted many times, our approach will be determined on a case‑by‑case basis.
Intellectual Property Enforcement Guidelines
When I spoke at the Annual Competition Law Fall Conference in 2013, I signaled that we would make it a priority to provide increased clarity on how we deal with competition issues involving intellectual property. This was to be done in two phases; the first, updating our Intellectual Property Enforcement Guidelines (IPEGs) to reflect changes to the act that had occurred since their first release, incorporate enforcement experience and ensure consistency. The second phase involved updates to address the Bureau’s approach to other IP‑related issues including patent litigation settlements, standard essential patent owners and the activities of patent assertion entities.
On March 31, 2016, following an extensive public consultation process, we released the final IPEGs. The updated IPEGs provide clarification on the Bureau’s approach to conducting investigations of alleged anti‑competitive activities that relate to intellectual property, making it easier for stakeholders such as the legal community, the pharmaceutical industry and others with a stake in intellectual property matters to operate within the law. Key revisions to the guidelines include two issues that are affecting the pharmaceutical industry both within Canada and internationally: patent settlements and product switching. The new guidelines provide clarification of the Bureau’s position on these issues. They also address the conduct of patent assertion entities and conduct involving standard essential patent owners.
The IPEGs are reflective of the Bureau’s past enforcement experience, Canadian case law, guidance documents from other jurisdictions as well as feedback from stakeholders including from the Canadian and American bar associations, industry associations, major technology firms, and well known anti‑trust scholars. We also considered the current economic and technological environment and the rapid rate of technological change occurring in many industries. To support innovation and ensure that guidance keeps pace with developments, we will review the IPEGs annually and revise them as needed in light of experience, changing circumstances and decisions of the Competition Tribunal, the Canadian courts and international developments.
Deceptive Marketing Practices Digest
Shortly after I last spoke to you, the Bureau released its first volume of a publication called the Deceptive Marketing Practices Digest (the Digest). The Digest is intended to periodically provide advertisers, their counsel, and the general public with current information related to advertising and marketing. It is designed to promote a better understanding of the Competition Act and other legislation enforced by the Bureau. This publication reflects our priority to promote competition in order to advance a culture of compliance. The first volume addressed topics of interest in the digital economy and includes articles related to online advertising in Canada, disclaimers and fine print, and online reviews. Our second volume provided a primer on consent agreements, examined the issue of performance claims, and contained an overview of the Bureau’s efforts with its partners to combat fraud through the Canadian Anti‑Fraud Centre. It also highlighted the Bureau’s acquisition of new technology that will support its enforcement of the Precious Metals Marking Act, which we used in recent surprise inspections. The Digest is yet another tool for the Bureau to achieve the objective of transparency and providing greater guidance around how we conduct our enforcement work.
Thank you for your attentiveness this afternoon; I realize that many of you will have questions, so I am going to wrap up quickly so that we may accommodate them. In closing, I’d like to underscore how committed the Bureau is to keeping current with a world that is constantly evolving. While the core of what we do remains the same, we must be prepared for the world that is on the horizon, not the world that is before us now.
In the words of the Great One — "we need to skate to where the puck is going, not where it’s been". That is how we are going to approach our work going forward. And, as we move forward with this vision, we will continue to work with you, our partners, on all aspects of our work. We recognize that the collaborative relationship that we have built with the CBA will be critical to advancing our vision for the Bureau.
Thank you again for the opportunity to be here today. I look forward to any questions you may have.
- The Deceptive Marketing Practices Digest — Volume 2
- Updated instructions related to supplementary information requests in the Merger Review Process Guidelines
- Pre‑Merger Notification Interpretation Guideline Number 16: Definition of "Goods" (Paragraph 111(a) of the Act)
- Competition and Compliance Framework
- 2016 pre‑merger notification transaction‑size threshold
- Competition Bureau releases updated Intellectual Property Enforcement Guidelines
- Competition Bureau invites public comment on its 2016‑2017 Annual Plan
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