Canada: Commissioner Of Competition Resigns

Melanie Aitken's term notable for stepped-up enforcement in all areas of the Competition Act

Introduction

The head of Canada's Competition Bureau announced on June 28, 2012, that she will resign her post in September 2012 – almost two years before the end of her five-year term. Since her appointment as interim commissioner in January 2009, Melanie Aitken has overseen a whirlwind of activity at the bureau, from the introduction of wide-ranging amendments to the Competition Act to a highly visible enforcement programme. The commissioner initiated judicial challenges in all main areas of the act, including mergers, abuse of dominance, price fixing, price maintenance and misleading advertising.

As most of the enforcement actions she commenced have not yet been decided, it may be premature to speculate about her legacy, but it is clear that by reinvigorating competition law enforcement, Aitken raised awareness of the Competition Act in Canada's business community and the benefits of competitive markets for Canadians.

Major enforcement actions

Early in her term, Aitken indicated she would not shy away from bringing enforcement actions when she believed they were warranted. Actively enforcing the law would, according to Aitken, lead to developments in the jurisprudence, which in turn would provide clarity and transparency to Canadians about what constitutes acceptable and unacceptable conduct. Active enforcement would also serve to deter anti-competitive conduct. This commitment to active enforcement was tempered by a recognition that settling disputes and avoiding litigation is in the public interest and settlements would be reached when appropriate.

Many of the cases initiated by the commissioner remain before the courts. Major contested cases brought during Aitken's term include the following:

Mergers

  • The Commissioner of Competition v CCS Corporation et al. – successful challenge, as a substantial prevention of competition, of the acquisition of a potential entrant by the incumbent provider of secure landfill services for solid hazardous waste from oil and gas producers. The Competition Tribunal's May 29, 2012, decision has been appealed to the Federal Court of Appeal.
  • The Commissioner of Competition v Air Canada et al. – ongoing challenge to the transborder joint venture and various marketing cooperation and alliance agreements between Air Canada, Canada's legacy carrier, and United Continental Holdings, Inc. and its predecessors under both the merger provisions and the civil agreement between competitors provision of the act. This will be the first case to interpret the civil agreement between competitors provision, which was added to the act in 2009, but which only took effect in 2010. The case is scheduled to be heard by the Competition Tribunal in November 2012.

Abuse of dominance

  • The Commissioner of Competition v The Canadian Real Estate Association – challenge to the rules governing access to the online database owned by the Canadian Real Estate Association and operated by its members featuring homes for sale across Canada. The commissioner alleged the rules excluded competition from brokers and others wishing to offer a reduced set of services to customers. Although the association offered to modify its rules following the filing of the application, the commissioner was not satisfied with the proposed rule changes, as they did not prevent the association from making future rule changes that would undercut the proposed changes. The parties settled approximately eight months after the case was filed.
  • The Commissioner of Competition v The Toronto Real Estate Board– ongoing challenge to the restrictions imposed by the largest real estate board in Canada on how member agents can provide information from the Toronto multiple listing service system to their customers. The commissioner alleges the rules deny member agents the ability to provide innovative brokerage services over the Internet. The case will be heard by the tribunal in September 2012.

Price fixing and bid rigging

Although no contested cases were brought under Canada's conspiracy provision during Aitken's term, the commissioner has secured a number of guilty pleas in international and domestic conspiracy cases. With respect to domestic cases:

  • seven companies and 27 individuals have now pleaded guilty in the bureau's long-running investigation of price fixing in the retail gasoline industry in Quebec, and several companies also recently pleaded guilty in respect of price fixing at retail gasoline stations in Eastern Ontario; and
  • in January 2012 the commissioner secured guilty pleas and a C$12.5 million fine from Domfoam International and Valle Foam Industries under the per se conspiracy provisions that became law in March 2010.

Bid-rigging charges have been laid against firms and individuals in numerous industries – most commonly those related to construction – since 2009. Among the largest group of charges were those laid against 14 individuals and seven companies in February 2009 in respect of the alleged rigging of bids for government contracts. Two individuals subsequently pleaded guilty, but trials are ongoing in respect of the other parties. This case also gave rise to a defamation suit against the commissioner by one of the accused for statements made by the bureau in its announcement of the charges. That case is ongoing.

Price maintenance

The Commissioner of Competition v Visa Canada Corporation and MasterCard International Incorporated – ongoing challenge to the allegedly restrictive and anti-competitive rules that Visa and MasterCard impose on merchants that accept their credit cards. The commissioner alleges these rules effectively eliminated competition between Visa and MasterCard for merchants' acceptance of their credit cards, resulting in increased costs to businesses and, ultimately, consumers. The matter was heard by the tribunal in May and June 2012.

Misleading advertising

  • The Commissioner of Competition v Chatr Wireless Inc. – ongoing challenge to stop Rogers Communications' Canada-wide advertising campaign for its Chatr wireless service, which claimed that consumers subscribing to Chatr would experience "fewer dropped calls than new wireless carriers" and have "no worries about dropped calls." Based on the bureau's analysis of technical data, it believes there to be no discernible difference in dropped call rates between Rogers/Chatr and new entrants. The commissioner is seeking the maximum administrative monetary penalty of C$10 million. Rogers is challenging the constitutional validity not just of the penalty, but also of the misleading advertising provisions themselves. Hearings took place in June 2012 and the case continues in Ontario's Superior Court.
  • The Commissioner of Competition v Bell Canada, Bell Mobility Inc. and Bell ExpressVu Limited Partnership – the commissioner reached a consent agreement with Bell – Canada's largest incumbent telecommunications provider offering home telephone, wireless, Internet and digital television services – under which Bell agreed to cease making what the bureau had concluded were misleading representations about the prices offered for its services and pay an administrative monetary penalty of C$10 million, the maximum amount allowed under the misleading advertising provisions of the act. Although this is not a contested case, it is noteworthy as the first case in which the commissioner secured the new maximum C$10 million penalty. The commissioner subsequently touted this case as a victory against fine-print disclaimers and pursued parties in other industries that used similar disclaimers.
  • The Commissioner of Competition v Beiersdorf Canada Inc. – the commissioner reached a settlement with the Canadian distributor of Nivea skin care products to stop making what the bureau had concluded were false or misleading claims about one Nivea product. Beiersdorf was required to:
    • remove the products from Canadian shelves immediately;
    • post corrective statements on the Nivea website and in Canadian newspapers; and
    • pay an administrative monetary penalty of C$300,000, plus C$80,000 in costs to the bureau.

Beiersdorf also agreed to refund the purchase price and shipping costs to its Canadian customers. At first instance, this was a routine consumer protection case, but it became noteworthy due to Beiersdorf's subsequent statements to the media in a news release and on the Nivea website that, "Performance claims and testing related to Nivea 'My Silhouette' are supported by independent research, which has always complied with Canadian requirements and guidelines." The commissioner acted swiftly in alleging Beiersdorf had breached the terms of its consent agreement and, as a consequence, those statements were withdrawn.

Comment

All of the contested cases commenced by Aitken remain before the courts. In her first speech as interim commissioner, she noted the importance of bringing "responsible" cases to the tribunal and the courts, and that the bureau ought not "be paralyzed by the fear of losing." It is clear that her latter admonition was followed; time will tell whether the tribunal and the courts will vindicate her view that she brought "responsible" cases.

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