Davies partners Mark Katz and Elisa Kearney delivered a presentation on Canadian competition law highlights to the Antitrust Lawyers Study Group, Tokyo, Japan.

Presentation to Antitrust Lawyers Study Group. Tokyo, Japan

OUTLINE

  1. 1. Agreements with Competitors (Criminal/Civil/Class Actions)
  2. Mergers
  3. Unilateral Conduct and Pricing/Distribution Agreements
  4. Marketing Practices
  5. Advocacy/Regulatory Interventions by Competition Bureau

AGREEMENTS WITH COMPETITORS

Criminal Competitor Agreements (s.45) "Cartels"

  • The Competition Act prohibits agreements / arrangements with competitors to:

    • Fix prices
    • Allocate markets
    • Control production or supply
  • Limited defence ("ancillary restraints")

    • If agreement is ancillary to and reasonably necessary for a broader and separate legal agreement between the same parties
  • No requirement to prove anti-competitive effects
  • Fines: up to $25M; Prison: up to 14 years

Civil Agreements with Competitors (s. 90.1)

  • Applies to agreements / arrangements between competitors that are likely to prevent or lessen competition substantially

    • Efficiencies defence available
  • Remedies:

    • Prohibit person from doing anything under the agreement
    • Require person to take any other action on consent
  • Broad application, e.g. joint ventures, trade associations
  • No limitation period – could capture long-standing arrangements similar to mergers (e.g., Commissioner's challenge to Air Canada/United JV)

Class Actions

  • "Follow on" private actions increasingly commonplace, typically in the form of class actions

    • Could be "follow on" to announcement of investigation or plea in Canada/abroad
  • Notable recent examples of Canadian civil actions for conspiracy claims include high fructose corn syrup, hydrogen peroxide, air cargo, chocolate, DRAM/SRAM, aftermarket automotive lighting products
  • Aggressive/innovative tort claims of common law conspiracy
  • Provinces differ on class action litigation process and rules

Supreme Court of Canada Weighs in on "Indirect Purchaser" Claims

  • Three decisions on antitrust claims by indirect purchasers of Supreme Court of Canada held:

    • Defendants cannot assert a "passing on" defence against direct purchasers (i.e., no damages because such purchasers just passed on the price increase) – remains to be seen how courts will protect against double recovery in damages awards
    • Defendants Indirect purchasers can sue for damages under s. 36 of the Competition Act
    • Low certification threshold for plaintiffs to establish a methodology for proof of loss on a class-wide basis – need to establish only "some basis in fact"

      • However, SCC raised prospect of re-visiting certification after discovery
    • Unlike in U.S., no need to demonstrate predominance of common issues to obtain certification
    • Lower thresholds in Quebec

      • Need only an "arguable case" for establishing class-wide proof of loss, which typically does not even require expert evidence
      • Quebec courts have jurisdiction over manufacturer whose products are sold to consumers in Quebec, even if the manufacturer is not present in Quebec and was not a party to contracts with Quebec consumers

Public Works Canada Nov. 2012 Integrity Policy

  • Corporation disqualified from bidding if it or any of its affiliates (including foreign affiliates) has been convicted of specified offences, including s. 45 conspiracy
  • Participants in Leniency Program no longer exempted
  • No limitation period
  • Exceptions to disqualification

    • Public interest reasons (emergency, national security, health and safety, economic harm)
    • Restoration of bidding capacity by Cabinet
    • Suspension of criminal record – must complete sentence & abide waiting period to be eligible
  • Calls for review of policy – perceived to be excessively harsh

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