Canada: Section 11 Orders Unfair

As published by the Globe and Mail, February 6, 2008 (

The case against the Competition Bureau's no notice subpoenas.

Industry Minister Jim Prentice's probe into the Competition Bureau's use of Section 11 orders in its investigation of the Labatt/Lakeport merger provides a welcome opportunity for the Bureau to restore a greater degree of balance and fairness to its investigations.

Currently, the Bureau's practice is to seek these court orders, which require the production of significant amounts of information, without any notice to the affected parties. In our view, the lack of notice is not only unnecessary in most circumstances, but also unfair. Providing prior written notice to parties that are required to expend extraordinary resources and divert important management time to respond to such orders should be the norm and not the exception.

On January 28, 2008, a Federal Court judge set aside two Section 11 orders previously obtained against Labatt and Moosehead by the Commissioner of Competition as part of her ongoing inquiry into the Labatt/Lakeport beer merger. The judge found that the Commissioner's original applications were "misleading, inaccurate and incomplete". As a result of those decisions, Minister Prentice requested an investigation of the Bureau's conduct.

The Senior Deputy Commissioner of the Mergers Branch of the Competition Bureau has been quoted in the press as stating that the Bureau has reviewed what it had provided to the Court and is satisfied that it "did everything appropriate" in terms of providing the Court with the relevant and necessary information.

We are not writing here to comment on the specific merits of these two decisions. Our concern relates to the Competition Bureau's practice of consistently applying for Section 11 orders without notice to the persons who will have to comply with them. This concern has been building within the Canadian business and legal community for some time, as the Bureau has been resorting to Section 11 orders more frequently.

First some background. Section 11 of the Competition Act allows the Commissioner to apply to a Court for an order that is similar to a subpoena. Section 11 orders can be issued against anyone likely to have information relevant to an inquiry by the Commissioner – not just merging parties, but also customers and suppliers. Such orders can require a company to produce documents and answer questions in writing, often within a very short time.

Responding to such orders can require massive volumes of documents and information, including extensive searches of computer records and electronic databases going back many years. These orders also frequently require the creation of new types of reports or data streams. Once a Section 11 order is issued, grounds for appeal are limited.

Section 11 orders often impose extraordinary costs on the Canadian businesses (both large and small) receiving such orders in terms of diversion of scarce management and employee time and fees for lawyers and electronic data services, for example. In the recent Labatt decision, the judge noted that, under a previous Section 11 order, Labatt had produced thousands of documents and paid approximately $750,000 in external costs alone in order to comply with the previous order.

While public information regarding the cost of Section 11 orders is rare, an affidavit filed in connection with the proposed bank mergers in 1998 indicated that one of the banks produced over 500 boxes of documents pursuant to such an order. Section 11 orders are also routinely used in market practice investigations, such as for allegations of abuse of dominant position. One competition lawyer has written that the cost of responding to the Section 11 orders obtained by the Commissioner in an inquiry into film distribution in 2000–2002 likely exceeded $20 million and involved the production of over 1,000 boxes of documents by the approximately 40 motion picture exhibitors and distributors receiving such orders.

As the Bureau no longer reports on the frequency of its resort to Section 11 orders, it is difficult to measure the full extent of their use. However, a review of the register of just the Federal Court indicates that the Commissioner applied for and obtained over 95 such orders from that Court in 2007. These included over 30 orders issued without notice against advertisers and competitors in connection with the Bureau's review of the Bell Globemedia Inc./CHUM Ltd. merger. [Bell Globemedia is the parent company of The Globe and Mail.]

To be sure, the Competition Bureau does need confidential business information to assess the likely impact of mergers and market practices on competition in order to enforce the Competition Act. In some cases, a great deal of information is required for such analysis, and it is inevitable that Bureau investigations will impose significant costs on the targets of the investigation and potentially also other industry participants. The controversy frequently centres on what and how much information is truly needed for the Bureau to do its job. Section 11 orders can be overly broad, requiring the production of excessive, outdated or irrelevant information, or information in a form that is more readily available in other formats.

While the Competition Act permits applications for Section 11 orders without notice, it does not preclude the Commissioner from advising or consulting with the proposed recipients first. Presumably, the ability to apply without notice was provided in the legislation for rare cases of such urgency that notice was not practical. In the Labatt case, the judge commented that applications without notice are almost always brought on an emergency basis, with little time for preparation of material.

But there was no suggestion of any urgency to the application in the Labatt case - the merger under investigation had closed over seven months previously. In our experience, in the vast majority of cases where the Commissioner has applied for Section 11 orders, the circumstances were not so urgent as to justify a denial of notice to the receiving party.

The National Competition Law Section of the Canadian Bar Association has expressed concern about the Bureau's use of Section 11 orders for some time. In a submission last year, the Section expressed its view that the bias should always be in favour of giving notice where doing so would not impair the integrity of the investigation. Similarly, in its recent comments to the Canadian Competition Policy Review Panel, the Canadian Real Estate Association (most of the members of which are small businesses) recommended that Section 11 orders no longer be obtained without notice to the parties and that the breadth of such orders should be more restricted and less burdensome on the receiving parties. We agree.

In our view, the Commissioner should give notice of applications for Section 11 orders to persons against whom they are proposed to be issued with sufficient time, at least 48 hours, to allow them to appear and make representations to the judge. In many cases, the Bureau may actually receive better or more focussed information more quickly as a result. The proposed recipients of the order may be able to point out aspects of the request which can be narrowed to focus on the relevant information. Indeed, without representations from the persons required to comply with the order, neither the Bureau nor the Court may appreciate the burden or the lack of relevance of some of the broad requests in the Section 11 order.

The judge in the Labatt decision recognized the dangers associated with applications without notice because the party against whom the order is sought is "at the mercy" of the applicant. She quoted previous case law to the effect that "there is no situation more fraught with potential injustice and abuse of the Court's powers". At one time, the staff of the Mergers Branch of the Bureau would, in appropriate circumstances, provide merging parties with a draft of an information request before it was formally issued. In our view, both the Bureau and the parties benefited from such consultation.

Even if a judge does not accept some or all of the submissions of a company about to receive a Section 11 order, the company will at least have an opportunity to have its day in court and have an independent arbiter consider any concerns. Our position is simple: absent very extraordinary circumstances, before a judge imposes on Canadian businesses orders as intrusive and burdensome as most Section 11 orders, such businesses should have a right to be heard by the judge. It's only fair.

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

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

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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