There are a variety of circumstances in which company
representatives may find themselves communicating with their
trade association and industry activities;
joint bidding arrangements;
strategic alliances and joint ventures;
dual distribution arrangements (e.g., where a company operates
at more than one level of the distribution system, such as both a
wholesaler and a retailer);
standard-setting and patent pools; and
merger negotiation and related integration planning.
While these are generally legitimate business activities,
dealings with competitors potentially give rise to unique
competition law risks. Careless or improper conduct in these
circumstances may lead to allegations of an illegal conspiracy or
bid-rigging arrangement (refer to our Antitrust Advisory: Cartels and Antitrust Advisory: What You Need to Know About
Canada's Bid-Rigging Offence for further details
regarding these provisions of the Competition Act).
Accordingly, these activities require extra vigilance to manage and
mitigate potential competition law risks.
To ensure that you stay on track, the following are some key
"dos and don'ts" to bear in mind when communicating
Obtain legal advice prior to participating in
any meetings or discussions with competitors.
Ensurethat there is a legitimate
business purpose for all such communications and document
the legitimate business objective and rationale.
governing dealings with competitors as part of a comprehensive
competition law compliance policy.
Ensure thatany permitteddiscussions and meetings follow a pre-set agenda
and that the conversations/conduct do not go beyond the scope of
Exercise common senseand careful
judgment in all written and oral communications including
(but not limited to) internal memoranda, personal notes, email and
text messages, and avoid aggressive, ambiguous or speculative
language suggesting an anti-competitive intent or purpose.
Highlight the pro-competitive purposes for all such collaborative
Always object to and terminate any discussion
that you think is or may be questionable or inappropriate:
If in a meeting or on a phone call, object in an obvious way
and ask to have your objection recorded. If the discussion is not
terminated, leave the meeting/call and promptly report to legal
If in an email or other written communication, consult with
legal counsel as soon as possible before responding.
Discuss competitively sensitive matters,
particularly relating (but not limited) to current or future
pricing, input/production costs, production/output levels,
marketing/business plans, customer/market allocation matters, or
specific bids or tenders.
Participate in private meetings, "off the
record" discussions or social encounters with competitors
concerning competitively sensitive matters.
Take any action or make any statements which
could be construed as suggesting or expressing an agreement or
understanding to: jointly set prices or other sale terms (including
credit terms or discounts); fix or agree on bids (or agreements not
to bid); allocate markets or customers; reduce or control
production or output; or boycott, penalize or otherwise
discriminate against another company or person.
Hesitate to seek legal advice regarding
concerns you have about the appropriateness of any communications
with a competitor, even if you are not directly involved.
Bottom Line: Improper communications between
competitors may be used as evidence of an illegal agreement under
the conspiracy or bid-rigging provisions of the Competition
Act. These provisions contemplate significant penalties
including multimillion-dollar fines and potential jail time as well
as exposure to damages claims, reputational damage and possible
debarment from federal government procurements.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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