Annual Report 1994/95 - A Key Role in International and Inter-juristictional Matters

One of my priorities for the past year, as enunciated in the 1993-94 Annual Report, was "...promoting greater cooperation among enforcement agencies and harmonization of legal and economic principles and practices across competition policy regimes in the international area."

At the case level, the number and complexity of notifications and requests for assistance and other interactions between the Bureau and foreign competition authorities continued to increase. During the year, the Bureau received 39 notifications from foreign competition authorities and sent 21 notifications to foreign authorities or governments. The vast majority of such interactions was with the United States.

Notifications are made pursuant to the Canada-U.S. Memorandum of Understanding (MOU) on Notifications, Consultation and Cooperation and the 1986 OECD Revised Recommendation Concerning Cooperation between Member Countries on Restrictive Business Practices affecting international trade (the OECD Recommendation on Co-operation). During the fiscal year, assistance was received from the U.S. in two instances and provided to U.S. competition authorities in two other instances under the Canada-U.S. Mutual Legal Assistance Treaty and Mutual Legal Assistance in Criminal Matters Act.

Bilaterally

A notable result of the new, more intensive level of bilateral cooperation between the competition authorities of Canada and the United States was the successful joint investigation between the Bureau and the U.S. Department of Justice of a foreign-directed price-fixing conspiracy on thermal facsimile paper, leading to two separate guilty pleas and substantial fines in both countries.

On July 12, 1994, Kanzaki Specialty Papers, Inc. of Ware, Massachusetts, pleaded guilty before the Federal Court of Canada on one count under paragraph 45(1)(c) and was fined $950,000. Kanzaki conspired to fix the prices for thermal fax paper in Canada from July 1991 to early 1992. On August 5, 1994, Mitsubishi Corporation of Tokyo, Japan and Mitsubishi Canada Limited of Toronto pleaded guilty in Federal Court in Toronto to charges under section 46, paragraph 45(1)(c) and section 61 and were fined $950,000 in total. These proceedings were a result of a joint investigation with the Antitrust Division of the U.S.Department of Justice. On July 14, 1994, in the U.S., a settlement was reached with Kanzaki and Mitsubishi Corporation resulting in fines totaling $6 million (U.S.).

In a second case, Thomas Liquidations, the ability to achieve the remedy, a guilty plea, a prohibition order and a $130,000 fine for misleading advertising, was a direct result of the capacity to be able to employ the Canada-U.S. Extradition Treaty for criminal competition matters.

The case of Thomas Liquidation Inc., c.o.b. as Pascal Stores Ltd. on February 7, 1995, in Toronto was the first in which an international agreement has been used to cause American accused to attend a Canadian criminal court and answer charges under the Act. It sends the message to advertisers that Canada will not hesitate to use the extradition process to enforce the Act. The action taken in this case is in line with the Bureau's commitment to international co-operation in detecting and fighting unfair and deceptive marketing practices, an area flagged for development in last year's Annual Report. After formal extradition processes were initiated the president of the company voluntarily entered Canada from the U.S. and entered a guilty plea on behalf of the company. The company was fined $130,000.

With regard to bilateral consultations, in September 1994, Bureau officials and I met in Ottawa with the Assistant Attorney General, United States Department of Justice, Antitrust Division, and the Chairman of the Federal Trade Commission. The discussions focused on ways and means to enhance bilateral cooperation on enforcement matters, including the strengthening of institutional arrangements.

At the same time, an initiative of the Bureau's Marketing Practices Branch brought together representatives of the Bureau of Consumer Protection in the U.S. Federal Trade Commission, and other law enforcement agencies to discuss the investigation and prosecution of deceptive and fraudulent cross-border telemarketing. A number of initiatives stemming from this meeting continue to be pursued while ensuring on-going compliance with the requirements respecting confidentiality under the Act.

In this regard a specific proposal to strengthen our ability to deal with deceptive telemarketing was developed as part of work on amendments to the Act. This work, along with on-going monitoring of similar developments in the U.S.,5 will continue in the forthcoming year.

During the year, Bureau staff also held consultative meetings with counterparts from France, Japan, Germany, Mexico, the United Kingdom, the European Union, and Australia. These meetings covered various matters of mutual interest including the desirability and feasibility of enhanced cooperation between the respective competition authorities. Discussions also continued regarding the development of a Canada-European Union competition accord on cooperation and coordination.

Regionally

Pursuant to the North American Free Trade Agreement (NAFTA) Chapter 15, Article 1504, the Working Group on Trade and Competition met twice during the year, in Ottawa on September 21, 1994, and in Mexico City on March 27-28, 1995. The Working Group continued its on-going work on examining the relationship between trade and competition policy within the framework established by the provisions of the NAFTA. As part of this work, the Bureau took the lead role in tabling a paper on National Treatment under the competition laws of the NAFTA countries. The next meeting of the Working Group was scheduled for Washington in September, 1995. The Bureau also contributed to competition-related questions and issues in respect of Chile's proposed accession into the NAFTA, as well as in respect of the proposed Canada-Israel Free Trade Agreement.

During 1994-95, the Bureau monitored and contributed to the discussions on the role of competition policy in trade liberalization within the emerging Asia Pacific Economic Cooperation area, the Free Trade Area of the Americas, and several emerging sectoral agreements such as those on telecommunications, energy and investment.

While there has been considerable interest lately in Canada regarding the removal of trade barriers, I have been keeping watch on how trade between jurisdictions can have an impact on competition. For example, in May 1994, I intervened before the Régie des alcools, des courses et des jeux in support of Lakeport Brewery's application for permission to distribute private label beer in Quebec. In its decision on June 22, 1994, the Régie granted Lakeport Brewery a distribution license. Appeals were launched and the matter is pending before the Courts.

On September 26, 1994, I intervened before the Canadian International Trade Tribunal (CITT) in its review of the 1991 decision of finding injury in the dumping of beer in British Columbia. On December 2, 1994, the CITT issued its decision, favourable to my position, rescinding its previous finding of material injury.

Multilaterally

Our participation in multilateral competition policy fora focuses on the OECD Committee on Competition Law and Policy (CLP) and, secondarily, the UNCTAD Intergovernmental Group of Experts on Restrictive Business Practices. A major development during the year was the completion of the work of the Convergence Steering Group of CLP Committee, under my chairmanship. This resulted in a report to the OECD Council of Ministers, outlining the substantial progress made in competition policy convergence and cooperation over recent years and recommending that further work be undertaken towards the harmonization process. The Council of Ministers accepted the report at its meeting of April 11-12, 1994, and instructed the OECD to continue to advance the convergence of competition laws and policies. The Bureau also contributed substantially to the joint work of the CLP and Trade Committees on the interrelationship between trade and competition policies, and I was elected to the Chairmanship of the CLP Working Party number one (WP1) on Competition and Trade. Finally, the Bureau contributed to the ongoing work of the CLP Working Party number three (WP3) on international cooperation on updating of the OECD Recommendation on Co-operation.

The Bureau participates regularly in the work ofthe Intergovernmental Group of Experts on Restric tive Business Practices of the United Nations Conference on Trade and Development (UNCTAD). The Bureau's representative was elected to the chair of UNCTAD's annual conference held in October 1994.

Technical Assistance

During the year, we provided technical assistance regarding the application of competition law to countries that are attempting to implement a modern, market-based economic policy framework, both bilaterally and in support of OECD and other multilateral programs. In 1994-95, technical assistance was provided to Mexico, Venezuela, Peru, China, Malaysia, Lithuania, Latvia, and Estonia. As well, two of our senior officers participated in training programs for competition officials of the countries of eastern and central Europe, as well as the Baltic republics, under the auspices of the OECD and the World Bank.