Canadian Competition Law Highlights

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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