Archived — Speaking notes for Melanie L. Aitken, interim Commissioner of Competition

Canadian Bar Association, Competition Law Section, 2009 Spring Forum

Toronto, Ontario

May 12, 2009

(Check against delivery)


Introduction

Thank you for your introduction, and for this opportunity to join you for the Spring Forum on Competition Law.

Having just completed a stimulating and rewarding cross-Canada "amendments tour", where we had the privilege to meet with a wide range of interested Canadians, I confess it is nice to be home — or closer to it — with our colleagues in the Bar Association and other stakeholders with whom we collaborate regularly. I had the opportunity to speak to some of you at Langdon Hall in February, but this is the first time I am addressing a large audience since the passage of the amendments to the Competition Act, a significant development in the history of competition law in Canada. I am very pleased to be here.

We are excited by the amendments, in the sense that we firmly believe that we now have the tools to effectively discharge our fundamental mandate — that is, to enforce the Act to promote and protect competitive markets, for the benefit of all Canadians. I will turn to touch on the fundamentals of those amendments in a moment but, before I do that, let me address one topic that is particularly relevant to this audience, although the payoff will be enjoyed far beyond this group. I am referring specifically to the collaboration between the Section and the Competition Bureau.

Relations with the Bar

As I mentioned in February and, for those who know me, know well, the relationship between the Bureau and the Bar has been a long-term interest of mine. In 2006, the Section Executive and the Bureau agreed to establish a Task Force on Collaboration. It is fair to say, I think, that we all recognized there were opportunities we were missing to promote a more healthy and productive — innovative, if you will — dialogue across our two constituencies, with a view to ever-better enforcement policies and practices. As pleased as we members of the Task Force were with the release of our report in the summer of 2007, I don't think any of us realized what we had started. Nor, certainly, could we have recognized that, after almost two years of cultivating a whole new level of debate and collaboration as between the Bar and Bureau, we would get the opportunity of a lifetime to put the fledgling relationship to the test!

Well, here we are. And, to my mind, we are very fortunate that we set ourselves on this course. From my first phone call to John Bodrug earlier this year, as it was becoming clear we might well have amendments, the Section, and many members of the Bar more generally, have been generous in sharing their perspectives, in a largely productive and respectful way. With the invaluable assistance of the CBA, we have already engaged in a number of formal and informal technical sessions to gather input and to discuss the amendments and our proposed enforcement policy and practices. While of course we don't agree on everything, it has been very gratifying to see us all work hard together to clearly and honestly articulate our concerns. The rigour this joint quest for efficient implementation of the amendments has added to the process cannot be overstated. We are testing ourselves, you are testing us, and together we are constructively identifying, with the greatest particularity we can, the scope and the limits of these amendments and how they should be enforced. We will continue to turn to and count on your insights and perspectives. I am confident all Canadians will be the beneficiaries as we shape effective and predictable implementation of these provisions and enter an era of reinvigorated, while always measured and responsible, enforcement of our competition laws.

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This Conference

Now, let's move on to some content. One of the ways in which the Bar and the Bureau have always been able to come together is in this venue, and its counterpart conference in the Fall. As those of you attending the CBA conference last September will recall, we were uncharacteristically quiet owing to the election then under way — I am certainly pleased — and hope you'll agree — that we are back in front of the microphones here, and looking forward to participating fully and openly in the debates.

Yes there are the amendments, and we will discuss these a good deal I am sure. But we had and continue to have a great deal of other important work ongoing at the Bureau that your agenda raises, and that we will want to address. As you know, what antitrust philosophy should inform an approach to unilateral conduct is a live and lively topic in circles around the globe. For example, the European Commission has recently released its enforcement approach dealing with Article 82, while the U.S. Department of Justice enforcement guidelines on Section 2 appear to continue to provoke debate, having now been explicitly withdrawn by the new Assistant Attorney General, Christine Varney, who has committed to aggressively pursuing monopolization cases. The months ahead promise to be interesting.

Consistent with that swell, last year we identified our approach to abuse of dominance cases as a subject we wanted to explore further and clarify through revised guidelines. In January we issued our draft revised guidelines to reflect recent jurisprudence and modern economic thinking with what we believe is the best approach.

As part of our consultation process on these draft guidelines, we are organizing a roundtable for September to bring together leading experts from the private and public sectors, from Canada and abroad, to extend and enrich the debate about the guidelines. We believe this kind of open forum will advance our appreciation of different perspectives and contribute to a better final product, one that you, your clients, and we can rely on to provide strong, clear guidance in this complex area of the law.

That said, while guidelines are valuable, they need to be put to the practical test of case work. I can tell you that our Civil Matters Branch is looking at a number of challenging issues in various sectors of the economy. We expect to be able to address some of those challenges through the resolution of cases this year.

Amendments

Now, on to the amendments. The amendments became law on March 12, 2009, with the grant of Royal Assent. The exception is the cartel provisions, which come into force in March 2010.

These changes have modernized the Act and brought it more closely in line with the competition laws of our trading partners. We are confident that the changes will better protect Canadian consumers and legitimate businesses from the harm caused by anti‑competitive conduct, and advance predictability in the enforcement of our laws.

We acknowledge that with this opportunity comes a significant responsibility to implement the amendments in the most effective and transparent way possible.

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Consultation

To that end, our number one priority since it became clear the amendments were likely to become law has been to plan and deliver upon an extensive program of outreach and consultation to the Bar, business community, and consumer groups. Central to this effort has been our publication of two sets of draft guidelines, on the new merger review process and competitor collaborations. Both are out for consultation, and both will provide material guidance on how the Bureau intends to move forward in these key areas.

A guiding principle for us throughout this process has been to offer as much predictability and transparency as possible and to lay the foundation for Canadians to trust we will act responsibly, but firmly and effectively, to enforce the important market framework law that has been entrusted to our stewardship.

Our outreach started right after the legislation received Royal Assent in March. I made a series of telephone calls to senior practitioners and business groups across the country to plan our consultations and educational sessions. As complements to the guidelines, we have posted FAQs and general explanatory material on our Web site. As well, we have been actively engaged in a rather intense schedule of meetings with business and consumer groups in Montreal, Ottawa, Toronto, and Vancouver so far, hosted technical roundtables on our draft guidelines and participated in all manner of informal consultations with interested parties. It's been time enormously well-invested. We have learned a good deal, and will be adjusting our guidelines to respond to certain issues. Most important, perhaps, we want to build on the momentum to keep this important communication going. And I look forward to doing so in the coming months as we gain experience with the new Act.

Now, let me turn to a few of the key features of the amended legislation.

Specific amendments

A good deal of the initial public attention was focused on the revised Merger Review provisions.

As many of you know, consistent with the recommendation of the Competition Policy Review Panel, the amendments introduce a two-stage merger review process. The vast majority of mergers must be cleared within 30 days after filing. For those very few mergers that raise significant potential issues, the Bureau may issue a Supplementary Information Request; pending compliance with that request, parties can not close. But, as soon as they comply with the information request (which is subject to ongoing narrowing with the Bureau), they can close after 30 days pass.

As the most significant feature, in introducing this new process the amendments align the incentives for merging parties and the Bureau to communicate early and openly, to drive to the heart of any possible substantial issues, and to do so quickly. Let me assure you of a few things. First, we will strive to continue our strong record of resolving 90% of filings within 10-14 days. Second, we will work hard, be creative and accessible, and do all we can responsibly to reduce the burden of any Supplementary Information Requests that are issued. And third, and this is a theme that emerged in our roundtables last week as something the Bar feels strongly we need to retain, we will be flexible and will work with parties to make this new system work.

As noted, we have provided "Made in Canada" guidelines that provide a detailed discussion on Bureau proposals to narrow the scope of Supplementary Information Requests as much as reasonably possible. We are heartened that the general response we have received to our "Made in Canada" guidelines, reflecting the unique Canadian experience and context, has been very positive. Interested parties are invited to continue to provide comments by May 29. The plan is to issue guidelines in final form before the end of the summer.

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Cartels/Competitor Collaborations

We are pleased that the initial concern about the new merger process appears to have quieted, and we have heard from many that our guidelines were among the reasons why. We hope that the same will be true of the competitor collaboration guidelines released last Friday. We have tried very hard to ask ourselves the tough questions as to what we believe Parliament intended to catch in the new narrow cartel regime, and taken pains in our draft enforcement guidelines to be explicit in exempting, categorically, certain kinds of agreements from criminal investigation.

We believe these amendments create a more effective criminal enforcement regime. They narrow criminal exposure to the most egregious forms of cartel agreements, while at the same time allowing other forms of potentially anti‑competitive competitor collaborations to be reviewed under a civil standard, including the necessity for the Bureau to establish substantial economic harm.

We look forward to consultations on the competitor collaboration guidelines in June, and to issuing guidance later this year, well before the provisions come into force. In doing so, clarity, transparency, and effectiveness will again be our watchwords.

Another significant set of amendments repealed the former criminal pricing provisions. Removing the spectre of criminal prosecution from these activities will, we believe, help promote innovative, competitive pricing behaviour as companies seek a competitive edge through creativity and honest play. Decriminalizing these practices increases certainty for Canadian business that innovative pricing behaviour will not be exposed to the risk of a "criminal" investigation. In this way, we believe the amendments strike the right balance between innovation and business growth, and better protection for legitimate businesses from unlawful practices.

The fourth basket of changes involves the deceptive marketing provisions, where the penalties for individuals used to be nominal — a maximum of $50,000 for a first-time offence, and $100,000 for subsequent offences — mere license fees in many cases. These individual practices have been raised to more meaningful levels of $750,000 and $1 million. The same goes for companies; the penalties have been increased to $10 million and $15 million, for first and subsequent offences, respectively.

Finally, I am sure you have all noted the introduction of the potential for Administrative Monetary Penalties for abuse of dominance, at a maximum of $10 million for a first offence and a maximum of $15 million for subsequent offences. The Government takes this conduct seriously. In appropriate cases, which may well not be every case, the Bureau will request the Tribunal to consider ordering this deterrent.

I feel incredibly fortunate to be leading the Bureau at such an exciting, groundbreaking time. The corresponding responsibility is significant. We at the Bureau are working hard and our talented staff are committed to getting the "right" enforcement practices in place and the resources devoted to the right work. At the same time, and significantly, the support in the sense of engagement which many of you have been providing will help shape these provisions into what I am confident will be effective and enduring enforcement tools and practices.

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Enforcement

Let me close by reinforcing a message I mentioned earlier in passing. Yes, the new legislative changes are incredibly important. Yes, we must direct and explain ourselves plainly through appropriate guidance, in this and in every area of our enforcement. And yes, we are determined to do this in an open, collaborative, and respectful fashion.

But at the end of the day, we must not lose sight of our first responsibility. It is our duty to actively enforce the law. Canadians must have confidence that we will do so in a measured, responsible, and effective fashion.

In doing so, we benefit from the substantial guidance we have developed and made public over the past few years, our maturing cooperative and collaborative relationships with our foreign counterparts, and the opportunity the amendments have given us, including breathing new life into the interest among our stakeholders beyond the Bar. I believe the time is right, then, to more actively engage in our enforcement role.

To do that we need to initiate responsible cases more often. We must and will always be measured, and consider consensual resolutions where the public interest supports doing so, but we should not be paralyzed by the fear of losing a case. Jurisprudence brings clarity. It sharpens the lines and marks the bounds of acceptable conduct.

Provided the case is responsible, whether we win or lose, we will achieve three objectives that are important to us, important to you as Canada's competition advisors, and important to Canada's competitive framework.

First, we shed light on the issues before the courts. This attention alone will help deter anti‑competitive conduct.

Second, we clarify and provide transparency. Guidelines on complex enforcement issues are important, but can only go so far. Greater clarity and transparency comes from jurisprudence.

Third, we demonstrate we have the will to responsibly enforce the law. There is no substitute for this message as an effective deterrent to other individuals or companies that might contemplate anti‑competitive practices.

Conclusion

There is no doubt that the current economic environment brings particular challenges. These pressures only confirm to me that, in all of our work, we must be clear, timely and decisive. And we must resist calls for the Bureau to lighten antitrust scrutiny in a time of economic crisis, as to do so would be to abandon Canadians when they need us most, and would risk lasting harm.

The Competition Act, as a law of general application, can accommodate both ordinary and extraordinary market conditions. It applies during times of prosperity to prevent conduct that deprives markets of innovation, efficiency and productivity. It is of equal, or greater, importance during times of economic hardship, when consumers and legitimate business can ill afford the costs of anti‑competitive activities.

I assure you that we will stay the course, remain principled while sensitive to the hardship defining the environment around us. And we will engage our new tools to protect the market from anti‑competitive behaviour. That will include open lines of communication, consultation, and measured enforcement.

Thank you.

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