Canada: 2006 Year in Review: Cartels and other Criminal Matters, Class Actions and Private Access

Last Updated: March 23 2007
Article by Huy A. Do, Mark D. Magro and Paul J. Martin

Cartels and other Criminal Matters

Notable Cartel Cases

Record fines were imposed for a domestic conspiracy involving Cascades Fine Papers Group Inc., Domtar Inc., and Unisource Canada Inc. Each accused pleaded guilty in the Ontario Superior Court of Justice to two counts of conspiring to lessen competition unduly in contravention of section 45 (conspiracy) of the Competition Act (the "Act"). Each of the companies were fined $12.5 million for conspiring to unduly lessen competition in respect of carbonless sheet markets in Ontario and Quebec. The illegal agreements extended to:

  • respecting each other's market share to stabilize prices;
  • coordinating a response to a new market entrant;
  • implementing a common discount program;
  • maintaining price discipline to avoid a price war; and
  • sharing sales and pricing data.

In another case, the Competition Bureau ("Bureau") obtained a prohibition order, in the Federal Court of Canada, against Sotheby’s and Sotheby’s (Canada) Inc. in connection with an international price-fixing conspiracy that may have affected Canadian sellers participating in U.S. auctions. The Bureau’s investigation concerned an international conspiracy to fix auction commission rates. The prohibition order prohibits both companies from contravening sections 45 and 46 (implementing a foreign conspiracy in Canada) of the Act and directs companies to implement and maintain compliance measures for this purpose. The companies were also ordered to pay the investigative costs of the Bureau, estimated to be approximately $800,000.

Bid-rigging

Bid-rigging charges under section 47 of the Act have been laid against Electromega Ltd. and its President and Tassimco Technologies Canada Inc. and its Vice-President. Both companies are suppliers of LED traffic lights. The charges arose following a call for tenders to replace incandescent traffic lights with LED signals in Quebec City. The accused parties could face fines set at the discretion of the court, imprisonment up to five years, or both.

Telemarketing

It is apparent that the Bureau actively pursued deceptive telemarketers in 2006. Charges were laid in four cases against corporations and individuals for offences under the Act and the Criminal Code, and in one case, a guilty plea was obtained for deceptive marketing practices associated with the promotion of supplies used in bank machines. In that case, a $75,000 fine was imposed along with a prohibition order for a period of 10 years.

Bureau Priorities re Criminal Enforcement

In separate speeches given in 2006, the Commissioner of Competition ("Commissioner") emphasized that cartel enforcement (particularly domestic cartels) and bid rigging are top priorities of the Bureau. To this end, the Bureau began implementing plans to increase both spending in its Criminal Matters Branch and the number of criminal matters officers in its regional offices.

Immunity Program Review

The Bureau’s efforts to improve its immunity program continue. On February 6, 2006, the Bureau released a consultation paper to elicit commentary on certain substantive issues related to its program, namely: confidentiality; oral applications and the paperless process; an applicant’s role in the offence; coverage of directors, officers and employees; "penalty plus"; restitution; revocation of immunity; creation of a formal leniency program; and, pro-active immunity. These issues were selected based on the Bureau’s previous experience dealing with immunity cases, input from counsel with experience representing immunity applicants, and the experience of competition authorities in other jurisdictions. Submissions were received until May 10, 2006. The Bureau’s consideration of comments and questions received from stakeholders is ongoing and the Bureau expects to release revised immunity program documents in the coming months.

Class Actions and Private Access

Class Actions

Typically, in Canada, proceedings brought in the competition law area by way of class action are "follow on" actions where a criminal conviction has already been obtained against some or all of the accused parties pursuant to the criminal provisions of the Act. The experience of the past year has been no different. Furthermore, with the increased globalization of the regulatory and enforcement process, including the developing cooperative nature of enforcement agencies (exhibited by such mechanisms as dawn raids on a pre-ordained country by country basis), the pace and number of concomitant civil actions remains strong.

However, Canadian jurisprudence in relation to the development of guiding principles in civil class proceedings has not materially advanced. Perhaps as a result, competition matters tend to more frequently land in court only at the settlement stage. As such, principal issues, so often seen in U.S. courts (e.g., whether indirect purchasers have standing to sue for violations of the criminal provisions of the Act), have yet to be fully addressed in Canada.

Perhaps the most significant development of the past year with respect to class actions has been outside the area of competition law. In a recent decision of Ontario’s Court of Appeal, Cloud v. Canada (A.G.)1, the certification threshold for class action status was referred to as a "low bar". Further, the Court of Appeal held that a certification analysis should not be determined by an assessment of how many individual issues might remain following any trial of common issues. So long as a common issue could constitute a "substantial ingredient" to the claims, and notwithstanding that many individual issues might remain to be decided, the case might be appropriate for certification. To date, there is yet to be a contested certification application in the competition area where the liberal directives of the Cloud case have been considered.

A growing area of controversy in competition class action cases relates to the attempts by plaintiffs in Canada to access discovery materials in companion cases in the United States. In earlier decisions,2 courts in the United States had allowed such access notwithstanding arguments by defendants that such action was contrary to rules of civil procedure in Canada, which precluded such early stage discovery (pre-certification). However, in a recent decision, In Re: Hydrogen Peroxide Antitrust Litigation3, the U.S. court did adhere to the concerns of defendants and found that such requests were both premature and prejudicial. These conflicting approaches remain to be reconciled in future decisions.

Traditionally, class actions in the area of competition have related to cartels; however, the past year has seen new developments in areas relating to false advertising and issues pertaining to distribution channels. It can be said that the plaintiffs’ bar in Canada have developed a new appreciation for class action claims in the competition law area and it is expected that the popularity of such claims will expand into other areas of competition practice.

There has also been a dichotomous increase in the level of both cooperation and rivalry in the pursuit of civil claims, particularly across the Canadian-U.S. border. On occasion, the cooperation has led to more timely copycat cases being launched on both sides of the border. However, with respect to rivalries for the pursuit of such suits across the border, Canadian jurisprudence now has a greater acceptance of both North American-wide classes and extraterritorial enforcement of U.S. court decisions where Canadian class members would be affected.4

Private Access

The practice of private parties applying directly to the Competition Tribunal ("Tribunal") for relief in respect of certain reviewable matters (such as refusal to deal, tied selling, exclusive dealing and market restrictions), has yet to develop widely in Canada; to date, only a handful of cases have been brought. The pursuit of Tribunal remedies through private action first requires leave of the Tribunal. Moreover, parties’ remedies are limited to various forms of injunctive relief. In exceptional circumstances, the Tribunal itself may also become involved in the matter. To date, leave to proceed has been relatively circumscribed by the Tribunal and, in many respects, there has been very limited use of privately initiated proceedings.

Still, private access remains alive. For instance, in November 2005, the Tribunal granted leave to B-Filer Inc. ("B-Filer") to file an application against the Bank of Nova Scotia ("BNS") for refusing to provide B-Filer with Internet services for its online debit payment system. BNS appealed this decision to the Federal Court of Appeal.5 In the same decision, the Tribunal dismissed B-Filer’s application for leave to seek an order to prohibit BNS from engaging in exclusive dealing as proscribed in the Act. In June 2006, the Court upheld the decision of the Tribunal and, in doing so, cited its earlier holding in Barcode Systems Inc. v. Symbol Technologies Canada ULC,6 that:

"The threshold for an applicant obtaining leave is not a difficult one to meet. It need only provide sufficient credible evidence of what is alleged to give rise to a bona fide belief by the Tribunal. This is a lower standard of proof than proof on a balance of probabilities which will be the standard applicable to the decision on the merits."

The B-filer case represents the second successful application for leave since the Act was amended in

2002, adding section 103.1, which provides that private parties may seek leave to make an application before the Tribunal in respect of certain reviewable practices (e.g. refusal to deal and exclusive dealing, but not abuse of dominance).

Footnotes

1 (2004), 73 O.R. (3d) 401 (C.A.); leave to appeal refused by S.C.C., [2005] S.C.C.A. No. 50 (Q.L.).

2 See for example, In Re: Linerboard Antitrust Litigation, 333 F. Supp. 2d 333 (E.D. Pa., 2004).

3 In Re: Hydrogen Peroxide Litigation, July 31, 2006, MDL Docket No. 1682, Order of Stewart Dalzell, J.

4 See on the latter point, in particular: Currie v. McDonald’s Restaurants of Canada Ltd. (2005), 74 O.R. (3d) 321 (C.A.)

5 See B-Filer Inc., B-Filer Inc. doing business as GPay Guaranteed Payment and NPay Inc. v. The Bank of Nova Scotia, 2005 Comp. Trib. 31 (November 12, 2005).

6 [2004] F.C.J. No. 1657 (Q.L.).

www.fasken.com

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions