Competition/Antitrust Industry Highlights

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2009

Competition Bureau Seeking Comments on Revised Merger Review Process Guidelines
On March 24, 2009 the Competition Bureau announced that it is seeking public comments on its draft Revised Merger Review Process Guidelines. A revision of the guidelines was required due to the recent amendments to the merger provisions of the Act.

The draft guidelines set out the Bureau’s policies and procedure relating to the Competition Act’s two-stage merger review process. Specifically, the draft guideline provide an introduction to the revised process, describe the process the Bureau will follow during the initial 30 calendar day waiting period, and explains the process the Bureau will follow when it decides to issue a supplementary information request.

The Bureau asks that comments be submitted no later than May 29, 2009.

Three More Guilty Pleas in Québec Gasoline Cartel Case
On March 17, 2009, the Competition Bureau announced that two more individuals and one more company have pleaded guilty to criminal charges for conspiring to fix the price of gas. These pleas follow the Bureau’s ongoing investigation into price fixing in the retail gasoline market in Québec.

The individuals to plead guilty are a senior executive of Philippe Gosselin et Associés Limitée (Gosselin), Carol Lehoux, and a former representative of Gosselin, Andre Bilodeau. Gosselin was fined $600,000 and Lehoux and Bilodeau were each sentenced to 10 months imprisonment (to be served in the community) and 75 hours of community service.

To date, charges have been laid against 13 individuals and 11 companies, with five individuals (including Lehoux and Bilodeau) and four companies (including Gosselin) pleading guilty. According to the Bureau’s press release, total fines imposed amount to over $2.6 million and three individuals have been sentenced to terms of imprisonment totalling 32 months.

Bill C-10 Competition Act and Investment Canada Act amendments enacted
On March 12, 2009, Bill C-10, the Budget Implementation Act, 2009 received Royal Assent. The Act incorporates the most significant amendments to Canada's competition and foreign investment regimes in more than 20 years.

With the exception of the new hybrid/"dual-track" conspiracy provisions (which will come into force on March 12, 2010), all of the Competition Act amendments enter into force immediately. These include:

• a new U.S.-style "two-stage" merger regime;
• an increase in the "size-of-transaction" threshold for pre-merger notification;
• de-criminalization of predatory pricing, price discrimination and promotional allowances;
• conversion of resale price maintenance from a per se criminal offence to a civilly reviewable practice;
• substantial increases in the penalties for deceptive marketing practices and misleading advertising; and
• introduction of substantial administrative monetary penalties for abuse of dominance.

Changes to the Competition Act Regulations necessitated by the Bill C-10 amendments have not yet been published. In its press release the Bureau made the following suggestions:

• parties filing merger notifications should continue to use the existing short-form reflecting information required under section 16 of the current Notifiable Transactions Regulations;
• the Bureau will continue to accept long-form notifications that parties wish to file;
• either form of notification will trigger the 30-day waiting period found in the amended subsection 123(1); and
• the applications for advanced ruling certificates under section 102 are unaffected by these amendments.

It is expected that the Bureau will be issuing draft guidelines on the new merger review process in the near future.

Moores Clarifies Advertising to Resolve Competition Bureau Concerns
On March 6, 2009, the Competition Bureau announced that Moores Clothing for Men agreed to amend all advertising related to its national “buy one get one free” designer suit sale. The advertisements promoted the sale without adequately disclosing the fact that it applied only to select suits, raising misleading representation issues under the Competition Act. Moores agreed to prominently disclose in its in-store, television and online advertising that the sale applies only to select suits.

Bulletin on Efficiencies in Merger Review
On March 2, 2009, the Competition Bureau published its Bulletin on Efficiencies in Merger Review. The Bulletin, a supplement to the Merger Enforcement Guidelines, provides guidance on the Bureau’s approach to the enforcement of Section 96’s efficiency exception. The Bulletin identifies the type of information that would be helpful to the Bureau in its analysis of efficiency claims and clarifies the Bureau’s approach to efficiencies.

Bureau will not challenge XL Foods-Lakeside Acquisition
On February 27, 2009, the Bureau announced that it will not challenge the acquisition by XL Foods Inc. of the beef packing plant operated by Lakeside, the Canadian subsidiary of Tyson Foods, Inc.

A major concern raised during the Bureau’s review of the transaction was the impact of recent U.S. mandatory country-of-origin labeling legislation (“mCOOL”). The concern with the final rule of the mCOOL, which takes effect March 16, 2009, is that U.S. packers may adopt more rigorous labeling requirements for beef products which could inhibit the sale of Canadian slaughter cattle to the U.S. However, the final rule of mCOOL could also enable U.S. packers to increase purchases of Canadian slaughter cattle.

Although the Bureau cleared the transaction, it stated that it intends to closely monitor the industry and will reconsider the competitive impact of the transaction once the outcome of U.S. labeling measures and the U.S. packers’ responses to these measures, are clear.

Prohibition Orders Issued Against Newfoundland School Bus Operators
On February 19, 2009, the Federal Court of Canada issued two prohibition orders under the Competition Act against 14 companies and 18 individuals operating school bus services in St. John’s, Newfoundland. It is alleged that the parties agreed to share the market and fix prices for school bus services and engaged in bid-rigging activities between 2001 and 2003. The Bureau determined that the alleged activities could have prevented the school board from benefiting from competitive pricing. Under the terms of the Court’s order, the companies and their directors are required to implement and maintain measures to enable them to comply with the price fixing and bid-rigging provisions of the Competition Act. The parties are also required to pay a portion of the Bureau’s investigative costs.

Bureau Puts an End to Unproven Claims that Products Cure Cancer
On February 19, 2009, the Competition Bureau filed a consent agreement with the Competition Tribunal that prohibits Bioenergy Wellness Inc, carrying on Business as Energyworks Centre (Energyworks) and its Director, Alan Gordon, from advertising unproven claims that their products and services cure cancer. The consent agreement stems from an investigation that was initiated into claims as a part of Project False Hope, a cross-border initiative, which targets online cancer-related health fraud. The Bureau concluded that the claims being made by the company were not based on adequate or proper tests.

The consent agreement requires Energyworks and its Director to stop making unproven claims regarding products used to treat or prevent cancer, to offer full refunds, and to post a corrective notice on the company’s websites.

Criminal Charges Laid in Connection with Bid-Rigging for Government of Canada Contracts
On February 17, 2009, the Competition Bureau announced that criminal charges were laid against 14 individuals and 7 companies in connection with the rigging of bids to obtain Government of Canada contracts in the Information Technology (IT) services sector. The charges were made following an investigation by the Bureau which uncovered criminal activity in 10 competitive bidding processes from 2005.

The Bureau’s investigation revealed that the bidders’ objective was to collectively win and divide the contracts awarded, while blocking competitors who were not part of the conspiracy. The contracts, worth approximately $67 million, were for IT services provided to the Canada Borders Services Agency, Public Works and Government Services Canada, and Transport Canada.

Court of Appeal Decision Holds that Fraudulent Marketers who only Target Foreign Residents can be Prosecuted in Canada
In February, 2009 the Ontario Court of Appeal held that those who make false and misleading representations to the public can be prosecuted in Canada, even if the representations were made to only people outside of Canada.

The accused, David Stucky, operated a direct mail business in Ontario that promoted and sold lottery tickets and merchandise to persons outside of Canada. He was charged with sixteen counts of making false or misleading representations to the “public between” 1995 and 2002, contrary to Section 52(1) of the Competition Act.

The trial judge held that the phrase “to the public” meant “to the Canadian public”. Since none of the mailings were made to persons on Canada the trial judge found that Mr. Stucky was not guilty of the charges. The Court of Appeal, however, held that the phrase “to the public” is not restricted to the Canadian public and ordered a new trial. In his defence, Mr. Stucky placed heavy reliance on the fact that he had sought and acted on legal advice in respect of the promotions, however, the Court of Appeal held that it was not open to Mr. Stucky to advance such a defence.

The Bureau noted in its press release that “this ruling will enhance our ability to ensure that Canada will not be a haven for scammers targeting foreign victims”.

Competition Bureau gives Dow Chemical’s acquisition of Rohm and Haas the green light
On January 23, 2009, the Competition Bureau announced that, in light of certain divestitures and other commitments to both the U.S. and Canadian antitrust authorities, it will not challenge Dow Chemical’s (Dow) acquisition of Rohm and Haas.

Dow and Rohm and Haas are large Canadian suppliers of certain acrylic acid products, acrylic latex polymer products, and hollow sphere particle products. When the proposed acquisition was announced, the Bureau conducted a review of the transaction in conjunction with the U.S. Federal Trade Commission and the European Commission’s Competition Directorate, and concluded that the merger would have anti-competitive effects in Canada for the supply of these chemicals. The Bureau’s competition concerns in Canada were resolved by Dow’s commitment to divest certain assets, which includes the transfer of all required intellectual property rights relating to the marketing and sale of the divested products in Canada.

Bureau will not challenge Labatt’s acquisition of Lakeport
On January 16, 2009, the Competition Bureau announced that it will not challenge the Labatt Brewing Company Limited’s (Labatt) acquisition of Lakeport Brewing Income Fund (Lakeport). Upon completing an extensive review of the transaction, which included consultations with industry experts and economists, the Bureau concluded that there was insufficient evidence to establish that the acquisition would be likely to lessen or prevent competition substantially.

Competition Bureau Seeks Public Comments on Abuse of Dominance Guidelines
On January 16, 2009, the Competition Bureau released its draft Abuse of Dominance Guidelines for public comment. The draft guidelines provide insight into the Bureau’s approach to enforcement of the Competition Act’s abuse of dominance provisions. In light of recent jurisprudential updates, i.e. the Federal Court of Appeal decision in Canada Pipe, the draft guidelines expand upon the existing guidelines in several areas, including the Bureau’s approach to anti-competitive intent and valid business justifications. The updated guidelines also clarify the Bureau’s approach to joint dominance, and discuss specific forms of anti-competitive conduct, such as exclusive dealing, tying and bundling, and denial of access. The Bureau welcomes any comments on the draft guidelines until April 20, 2009.

2008

15 Years in Jail for Canadian Involved in Deceptive Telemarketing Scheme
On December 18, 2008, the Competition Bureau announced that Lloyd Prudenza was sentenced to 15 years in jail for operating a cross-border fraudulent telemarketing scheme.

Prudenza, along with two other individuals who were sentenced to 19 and 23 years each, took part in the deceptive scheme which offered credit cards to American consumers who were required to pay a one-time processing fee prior to receiving the card, but the card was never sent.

All three individuals were also ordered to jointly pay over US$5 million in restitution to the victims. The scheme, which defrauded approximately 40,000 consumers, was based in Toronto, but all three operators of the scheme were extradited to stand trial in the U.S.

$3.15 Million Fine Imposed on Azko Nobel Chemicals International BV for its Role in an International Cartel
On November 21, 2008, the Federal Court imposed a $3.15 million find on Azko Nobel Chemicals International BV (Azko Nobel) for its role in an international cartel. Azko Nobel was co-operating with the Competition Bureau in its investigation and pleaded guilty to the criminal charges for price fixing hydrogen peroxide sold in Canada between October 1998 and June 2001. The Competition Bureau’s investigation into this international conspiracy benefitted from the co-operation of an immunity applicant and remains ongoing.

Bid-Rigging Charges Imposed Against Quebec Construction Companies
On November 10, 2008, the Competition Bureau announced its decision to charge three Chicoutimi-based construction companies and their presidents with bid-rigging. The parties had submitted bids for two contracts: the expansion and refitting of the emergency room at the Chicoutimi Hospital, and the finishing work to be performed at the Alcan smelter in Alma, Quebec.

The Bureau claims that the construction companies entered into agreements to fix the bid winner for both contracts, which held a combined value of $1 million.

Advertising Agreement between Google Inc. and Yahoo! Inc. Terminated
On November 5, 2008, Google Inc. (Google) announced the termination of a proposed search advertising agreement with Yahoo! Inc. (Yahoo). If executed, the proposed agreement would have provided Yahoo the option of displaying Google’s sponsored search advertisements along with, or in place of, its own sponsored search advertisements in Canada and the U.S.

Despite reaching the proposed agreement in June 2008, its implementation was voluntarily delayed to permit antitrust/competition authorities in both the U.S. and Canada to review the agreement. Nevertheless, on November 5, 2008, the U.S. Department of Justice’s Antitrust Division informed the parties that it would file an antitrust lawsuit to block the implementation, should it be allowed. According to the Bureau, as Google is a more dominant player in Canada than in the U.S., the proposed agreement presented potentially unique anticompetitive effects to the Canadian market.

Guilty Plea in Quebec Gasoline Cartel Case
On October 31, 2008, the Competition Bureau announced that Pierre Bourassa, a former sales representative Les Pétroles Global Inc. (operating under the Olco banner), pleaded guilty to criminal charges for fixing the price of gasoline in Québec. The plea follows the Bureau’s investigation in June 2008, against 13 individuals and 11 companies for conspiracy to fix gasoline prices in four cities in Québec.

Mr. Bourassa was sentenced to 12 months imprisonment, to be served in the community. He is the third individual to plead guilty to the price-fixing activities. The Québec Superior Court has imposed over $2 million in fines on three companies, including Les Pétroles Therrien Inc (operating under the Petro-T banner), Distributions Pétrolières Therrien Inc., and Ultramar Ltée. The Bureau announced that “attacking these cartels continues to be a top Bureau priority.”

Competition Bureau Releases Draft Bulletin on Trade Associations
On October 24, 2008, the Competition Bureau released a draft Information Bulletin on Trade Associations for public comment. The draft bulletin provides guidance to trade associations on how to best ensure compliance with the Competition Act, and best practices to safeguard against anti-competitive conduct. The Bureau welcomes any comments on the bulletin until January 23, 2009.

Corporate Compliance Bulletin Updated
On October 24, 2008, the Competition Bureau issued an updated bulletin on Corporate Compliance Programs. The bulletin provides guidance to businesses on compliance with the Competition Act, Consumer Packaging and Labelling Act, Textile Labelling Act and the Precious Metals Marking Act. While the bulletin has no legal effect and is not binding, it provides direction to businesses regarding the elements of a credible and effective corporate compliance program.

Consent Agreement Filed in Respect of Unproven Claims in Weight Loss Infomercials
On October 21, 2008, the Competition Bureau filed a consent agreement with the Competition Tribunal in respect of Northern Response Ltd, a distributor of infomercials and their related products. The Bureau’s concerns related to the use of unsubstantiated claims in the company’s commercials for a weight loss product. The company’s commercials’ claimed that use of the Velform Sauna Belt, a waist-belt device, would melt away fat and cellulite, resulting in significant weight loss. While the company was relying on third-party information as to the performance of the device, it did not conduct its own independent testing. The Bureau concluded that the representations were false and misleading under the Competition Act and were not based on adequate or proper testing.

Pursuant to the consent agreement, Northern Response Ltd. will pay $400,000 in penalties and costs, cease using the unsubstantiated claims, offer full refunds to customers who purchased the Velform Sauna Belt, and broadcast a corrective notice on television. The Bureau cautioned that companies should not solely rely on third-party information before marketing a product and independent testing is encouraged.

Competition Bureau Reviews ICBC Policies
On August 19, 2008, a Competition Bureau investigation concluded that the Insurance Corporation of British Columbia’s (ICBC) policies relating to optional auto insurance do not contravene the Competition Act.

The Bureau’s investigation was triggered by a complaint against the ICBC, alleging that its policies were anti-competitive and had prevented and substantially lessened competition in the optional auto insurance market. The Bureau reviewed ICBC’s policies to determine whether they were contrary to the abuse of dominance provisions under Section 79 of the Competition Act. The policies in question prevented brokers affiliated with a competing insurance company from selling optional auto insurance from both their affiliate and ICBC as well as policies that prohibited brokers from capturing customer data from ICBC’s database in order to prepare quotes and process transactions on behalf of another insurance company. Although the Bureau determined that ICBC’s policies place some restrictions on how ICBC’s competitors conduct their business, the Bureau concluded that the policies were unlikely to prevent or lessen competition substantially as reasonable alternatives are available.

Gover Report on Section 11 Orders Released
On August 12, 2008, the Competition Bureau and the Department of Justice released a report on Section 11 orders under the Competition Act. The report was commissioned in response to the Federal Court’s decision to set aside a section 11 order that was issued on an ex parte in the Labatt/Lakeport case.

Brian Gover, an independent expert, was appointed to review, advise and provide recommendations on the Bureau’s Section 11 process and on the Bureau’s duty of disclosure when applying for Section 11 orders. Among the recommendations made in the report, Mr. Gover recommended that the Bureau engage in pre-application and post-service dialogue with respondents of s. 11 orders in order to reduce the burden of responding to s. 11 orders and to make the process more efficient.

Competition Bureau Releases Draft Bulletin on Efficiencies in Merger Review
On August 7, 2008, the Competition Bureau announced that it would be seeking comments from the public regarding its Draft Bulletin on Efficiencies in Merger Review.

The Bulletin, a supplement to the Merger Enforcement Guidelines, provides guidance on the Bureau’s approach to the enforcement of Section 96’s efficiency exception. The Bulletin identifies the type of information that would be helpful to the Bureau in its analysis of efficiency claims and clarifies the Bureau’s approach to efficiencies.

Criminal Charges Laid in Respect of Gasoline Cartel
On June 12, 2008 the Competition Bureau announced that charges were laid against 11 companies and 13 individuals in connection with conspiracies to fix gasoline prices in four cities within the province of Québec. The charges were made following an investigation by the Bureau into allegations of price-fixing at gas stations in Victoriaville, Thetford Mines, Sherbrooke and Magog.

Three companies and one individual have pleaded guilty for their part in the criminal conspiracies: Les Pétroles Therrien Inc, operating under the Petro-T banner, Distributions Pétrolières Therrien Inc., Ultramar Ltée. and Jacques Ouellet, an employee of Ultramar Ltée. Fines totaling approximately $2 million were imposed by the Quebec Superior Court against the three companies and $50,000 against Jacques Ouellet.

The Bureau indicated that investigations into potential price-fixing of retail gasoline in other markets in Canada are still ongoing.

Corrective Notice and Costs Ordered in Chimney Cleaning Products Case
On May 16, 2008, the Competition Bureau announced that the Competition Tribunal ruled on costs and the form and dissemination of a public notice in a case involving performance claims relating to chimney cleaning and conditioner products that were not supported by adequate and proper tests.

The Tribunal ordered Imperial Manufacturing Group (“IMG”) to pay the Bureau’s costs in the amount of $40,000 and to publish a corrective notice in both a national English and French newspaper.  This order is in addition to the previous ruling made in February 2008, which already required IMG to pay a $25,000 administrative monetary penalty for contravening the Competition Act.

Consent Agreement Reached in Respect of Superior Plus L.P.’s Acquisition of Irving Oil
On May 12, 2008, the Competition Bureau filed a consent agreement with the Competition Tribunal in respect of the proposed acquisition of certain assets of Irving Oil Limited and Irving Oil Marketing Limited (collectively, “Irving”) by Superior Plus L.P. (“Superior”).  Among other things, the consent agreement requires that Superior to divest Irving’s bulk propane storage tanks located in Corner Brook and Grand Falls, Newfoundland. 

The consent agreement resolves the Bureau’s concerns that the transaction would likely result in a substantial lessening or prevention of competition in the markets for retail propane and gas in Central and Western Newfoundland.  Interestingly, the Commissioner of Competition agreed with the parties that efficiency gains would likely arise from the transaction, but was of the view that such gains would be unlikely to offset the substantial lessening or prevention of competition. 

Jail Sentence and Pending Charges in Connection with Telemarketing Scam
On April 29, 2008 the Competition Bureau announced that a coordinated investigation with the U.S. Federal Trade Commission, the Toronto Strategic Partnership and the Service de Police de la Ville de Montréal has lead to a two-year conditional jail sentence and various pending charges in connection with a business directory telemarketing scam.

Paul Barnard, a senior manager at DataCom Marketing Inc. cooperated with authorities and pleaded guilty for his involvement in a telemarketing scam aimed at small and medium-sized businesses. Under the scheme telemarketers contacted over 50,000 businesses throughout Canada and the U.S. to update information for business directory listings that the companies were misled to believe they had previously ordered. It is further alleged that the telemarketers did not adhere to the telemarketing provisions of the Competition Act by failing to disclose the company which they were acting for, the price of the listings, the return terms and conditions, the purpose of the call and the nature of the product. Within a 10-year period the scam has cost victims each between $200 and $500 amounting to an estimated $150 million.

In addition to the jail sentence, the Ontario Court of Justice has sentenced Barnard with an order to complete community service and a life time prohibition from taking part in any telemarketing activity.

Charges are also pending against non-cooperating members Bernard Fromstein, Judy Neinstein, James Sharo, George Pavlopoulos and the two businesses of DataCom Marketing Inc. and DataCom Direct Inc.

Competition Bureau Seeking Comments on Draft Information Bulletin Regarding Sentencing and Leniency in Cartel Cases
On April 28, 2008 the Competition Bureau announced that it is seeking comments on its draft Information Bulletin on Sentencing and Leniency Recommendations in Cartel Cases.

The Bulletin establishes the Immunity Program for cartel cases and sets out the factors considered by the Bureau when determining sentencing recommendations and lenient treatment under the Competition Act. The Bureau asks that comments be submitted no later than July 25, 2008.

Search and Seizure Information Bulletin Published
On April 25, 2008 the Competition Bureau announced the publishing of an Information Bulletin on Sections 15 and 16 of the Competition Act. The Bulletin sets out the Bureau’s policies and procedures regarding the search and seizure provisions of the Competition Act and was published following public consultation on the previous draft version in 2007.

Prohibition Order Imposed Against Two Bio-insecticide and Insect Control Service Companies
On April 4, 2008 the Competition Bureau announced that it obtained a prohibition order preventing two bio-insecticide and insect control service companies and their CEOs from committing offences contrary to the conspiracy and bid-rigging provisions of the Competition Act.

The order was obtained following investigations by the Bureau into attempts made by GDG Environnement Ltée and La Société générale de foresterie Sylvico Inc. and their respective CEOs Jean-Guy Lanouette and Réjean Bergevin, to make arrangements with competitors in order to protect their market shares.

The prohibition order was issued without any admission of liability or guilt and requires the parties to implement and maintain measures that will ensure compliance with sections 45 and 47 of the Competition Act. Under the order all employees must be given notice of the new policy and that there be disciplinary action (including dismissal) for non-compliance.

Competition Bureau Seeking Comments on Multi-level Marketing and Pyramid Selling Information Bulletin
On April 1, 2008 the Competition Bureau announced that it is seeking public comments on the revised draft Multi-level Marketing (MLM) and Scheme of Pyramid Selling Information Bulletin.

The revised draft bulletin sets out the Bureau’s policies and procedure relating to the MLM and pyramid selling provisions and sets out the distinctions between MLM plans and pyramid selling schemes as outlined in sections 55 and 55.1 of the Competition Act. The Bureau asks that comments be submitted no later than June 30, 2008.

NHL Policies found not to be Anti-Competitive 
On March 31, 2008 the Competition Bureau announced that the NHL’s policies on ownership transfers and franchise relocations do not contravene the abuse of dominance provisions of the Competition Act.

The announcement follows an inquiry under the abuse of dominance provisions in response to media speculation surrounding the attempted acquisition of the Nashville Predators franchise by Canadian businessman Jim Balsillie. After conducting interviews, obtaining relevant documents and reviewing the NHL’s Constitution, By-Laws and policies, the Bureau found no evidence that the NHL was engaged in anticompetitive acts, recognizing that restrictions on relocation served a number of legitimate interests.

Deceptive Telemarketing Investigation leads to Four Arrests
On March 17, 2008 the Competition Bureau announced that four individuals were charged in connection with an alleged deceptive telemarketing operation for which the Bureau received 720 complaints.

Hiep Manh (Ty) Nguyen, Anh-Phong Vo, Byron Stezko and Cory Kornelson are accused of charging small and medium sized businesses for CD directories that they did not order. Under the operation the telemarketers would lead victims to believe that they were already customers of the company or that they would be provided with the product at no cost. The victims were then charged if they kept the CD or alternatively, if they returned the CD they were invoiced for a return fee. It is estimated that between January 2003 and February 2005, the operation generated proceeds of $9.3 million. 

Dentistry Profession Targeted for Study
On March 7, 2008 the Competition Bureau announced the launch of a new study into the dentistry profession.

The study follows the Bureau’s recent report on self-regulated professions (released in December 2007), which studied the accounting, law, optometry, pharmacy and real estate professions. In the previous report, the Bureau concluded that rules limiting advertising, setting service prices or limiting those who can offer professional services can have an adverse effect on competition.

The dentistry study will look to identify any restrictions that might adversely affect competition within the estimated $9.94 billion industry. 

Two Arrested in Alleged Secret Shopper Scam
On February 21, 2008 the Competition Bureau announced that a co-ordinated investigation by the Toronto Strategic Partnership has lead to the arrest of two individuals in connection with “The Advance Fee Lottery” and “Secret Shopper” scams.

Christopher Nduke and Alicia Obermuller are accused of mailing letters to U.S. residents stating that they had won a lottery or were selected as a secret shopper. Under the scheme, recipients were instructed to deposit enclosed cheques into their accounts and to wire a portion of the funds back to the operators. The cheques were counterfeits ultimately causing the recipients to fall victim to the scam for the monies wired to the operators.  It is estimated that the scams have defrauded Americans of at least $150,000.

Bureau will not Challenge Thompson Corporation’s Acquisition of Reuters
On February 19, 2008, the Competition Bureau announced that it will not challenge the Thompson Corporation’s (“Thompson”) acquisition of Reuters PLC (“Reuters”).

Both Thompson and Reuters are in the business of providing detailed financial information in electronic form. Of all the products supplied by both parties, the Bureau was mainly concerned with the lack of remaining competition capable of providing detailed financial data on companies and financial transactions.

As part of remedies negotiated with competition authorities in the U.S. and Europe, Thompson and Reuters ultimately agreed to divest copies of their databases in three categories (“Reuters Estimates”, “Thompson Fundamentals”, and “Reuters Aftermarket Research”) and related assets used to provide the information in electronic form. These divestitures, along with specific commitments made by Thompson to the Bureau regarding the implementation of the divestitures in Canada, alleviated the Bureau’s concerns with respect to the Canadian issues.

Competition Tribunal Upholds the Constitutionality of the Adequate and Proper Testing Provision
On February 11, 2008 the Competition Bureau announced that Imperial Brush Co. Ltd. and Kel Kem Ltd. (carrying on business as Imperial Manufacturing Group ("IMG")) was ordered by the Competition Tribunal to stop making certain claims in relation chimney cleaning and conditioner products.

The Commissioner of Competition made an application to the Tribunal for an order pursuant to s. 74.1 of the Competition Act following an investigation into the marketing practices of IMG. IMG denied the Commissioner's allegations, and as part of its defence, challenged the constitutionality of the adequate and proper testing provision. The Tribunal found that while s.74.01(1)(b) infringes freedom of expression guaranteed by s.2(b) of the Canadian Charter of Rights and Freedoms, it is justified under s.1 the Charter.

The Tribunal ruled that IMG engaged in reviewable conduct by making representations about performance and efficacy of its chimney cleaning and creosote conditioner products, which were not supported by adequate and proper tests as required by s.74.01 (1)(b) of the Act. The Tribunal issued a 10-year prohibition order requiring IMG to cease making representations relating to performance and efficacy of its products unless adequate and proper tests necessary to substantiate such statements were performed. In addition, the Tribunal ordered IMG to pay a $25,000 administrative monetary penalty and noted that following this case future breaches of the requirement for proper and adequate testing are likely to attract larger administrative penalties.

The Tribunal will soon be considering submissions from each party as to the nature, form and dissemination of a public notice, product recall/withdrawal and/or change in packaging, and the proper award of costs.

2007

Misleading Advertising of Gym Membership Fees Leads to Consent Agreement Requiring a $200,000 Administrative Monetary Penalty
On November 27, 2007, the Competition Bureau announced that it filed a 10-year consent agreement with the Competition Tribunal prohibiting Premier Fitness Clubs from making false or misleading representations in future promotional materials and requiring them to implement a new corporate compliance policy to cover its marketing practices. 

The consent agreement resolves the Bureau’s concerns arising from its investigation over some of Premier Fitness Clubs’ advertising practices that were employed from 1999 to 2004.  The Bureau determined that Premier Fitness Clubs, in some of its advertisements, did not adequately disclose additional fees that consumers would be obligated to pay, such as a mandatory “fitness assessment” fee, or the requirement to enter a one-year contract.  The advertisements, therefore, contravened the false or misleading representation provision of the Competition Act as the actual membership price was greater than what the advertisements led customers to believe.

The consent agreement also requires Premier Fitness Clubs to pay an administrative monetary penalty of $200,000, publish a corrective notice in three Ontario newspapers and display a corrective notice in its clubs and on its website.

Retailer Agrees to Remove Unsubstantiated Clothing Claims
On November 16, 2007, the Competition Bureau announced that Lululemon Athletica Inc. agreed to remove all unsubstantiated claims alleging therapeutic and or performance benefits from its VitaSea line of clothing products.  Claims were made that upon contact with moisture, the VitaSea fabric would release minerals and vitamins into the skin, which would reduce stress and provide anti-inflammatory, antibacterial, hydrating and detoxifying benefits. 

The Bureau noted in its press release that it is “watchful of increasing trends in the marketplace making claims about the use of sustainable fibres (e.g. bamboo, soybeans) and any related environmental, health, and therapeutic claims about their benefits…”

Under the Textile Labelling Act and the Competition Act, the Commissioner of Competition has jurisdiction to enforce unsubstantiated performance claims on textiles.

SEC Carbon Pleads Guilty to Conspiracy
On November 9 ,2007, the Competition Bureau announced that SEC Carbon, Ltd. of Japan plead guilty to participating in the graphite electrodes conspiracy.  SEC was involved in an international conspiracy between the world’s major graphite electrode manufacturers from 1992 to 1997.  The international conspiracy involved an agreement among the manufacturers to fix prices and divide markets.  SEC supported this conspiracy in Canada by not selling graphite electrodes to Canada.

SEC is the eighth party to be convicted in Canada for participating in the graphite electrodes cartel. SEC’s conviction concludes the Bureau’s investigation. 

Bayer Group Pleads Guilty to Conspiracy
On October 30, 2007, the Competition Bureau announced that the Bayer Group pled guilty to three counts under section 45 of the Competition Act in respect of its role in three international price fixing conspiracies in the rubber and chemicals industry. Bayer AG and Bayer Corporation were ordered to pay fines totalling $3.65 million for their participation in these cartels.  Significant fines have also been levied against several companies in respect of these cartels in the United States and Europe.

Competition Bureau Publishes New Information Bulletin on Confidentiality
On October 10, 2007, the Competition Bureau published a new information bulletin outlining its policies on the communication of confidential information. The bulletin updates a previous information bulletin published in 1995 on the same subject in order to provide more practical guidance and to reflect subsequent amendments to the Competition Act as well as increasing international cooperation between competition authorities. Consistent with the bulletin issued in 1995, the Bureau indicates that its general policy is to minimize the extent to which confidential information is communicated to other parties. 

The revised bulletin states that the Bureau’s discretion to communicate confidential information is limited to four circumstances: (i) communication to a Canadian law enforcement agency; (ii) communication for the purposes of administering or enforcing the Act; (iii) communication where the information has otherwise been made public; or (iv) communication authorized by the person who provided the information.  For the purposes of administering or enforcing the Act, the Bulletin explains that the Bureau may share information with: foreign law enforcement agencies; market participants such as customers; suppliers and competitors when obtaining information from them (taking care to refrain from or minimizing the communication of confidential information); industry, economic or legal experts retained by the Bureau; courts, when seeking authorization to use formal investigative powers or for the use of wiretaps; and the courts and Competition Tribunal when initiating and conducting formal proceedings pursuant to the Act.

According to the bulletin, the Bureau will be vigilant in avoiding the communication of confidential information unless it is specifically permitted by the Act, and even if it is permitted, will consider whether the disclosure is advisable or necessary.

Competition Bureau Publishes New Information Bulletin on
the Immunity Program
On October 10, 2007, the Competition Bureau released a revised Information Bulletin on the Immunity Program Under the Competition Act, along with revised Responses to Frequently Asked Questions. The two documents should be read together in order to understand the Bureau’s approach to recommending immunity. The new Bulletin and FAQs replace previous versions published in 2000 and differ in several respects.

Procedurally, the most notable change is the elimination of the provisional guarantee of immunity (the PGI), which reduces the process to a single immunity agreement. The most notable substantive change is in respect of eligibility. Under the old program, the instigator or leader of the illegal activity was ineligible to receive immunity. The Bulletin now replaces the former “instigator/leader” test with a “coercion” test. Under the new coercion test, the Bureau will only disqualify an applicant where there is evidence that the applicant clearly coerced others to be party to the illegal activity. Overall, the Bulletin introduces welcome changes and brings Canada’s immunity program into better alignment with similar programs in other jurisdictions.

Competition Bureau Releases Independent Report Evaluating Merger Review
On October 2, 2007, the Competition Bureau released a report commissioned from CRA International, a prominent economic and financial consulting firm. The report evaluates the Bureau’s approach in three recent merger reviews. Each of the three cases raised significant competition issues, but were not found by the Bureau to warrant remedies or challenge before the Competition Tribunal. CRA evaluated the Bureau’s merger investigation process and sought to determine if the Bureau correctly predicted the competitive effects on the market. CRA concluded that for all three cases and given the information available at the time, the Bureau’s analysis was thorough, the economic reasoning was sensible and the analysis closely followed the Merger Enforcement Guidelines. That said, the report also indicated that the Bureau could make “incremental improvements” to its merger analysis, and in particular, relating to barriers to entry, countervailing market power, and the use of quantitative techniques.

Bogus Directories Scam
On October 2, 2007, the Competition Bureau announced that Luigi Arieh Rozin, operator of Government Policy Research Group Inc. pleaded guilty to violating the false and misleading representations provision of the Competition Act, following an investigation by the Bureau and its Toronto law enforcement partners.

The scam occurred between March 2006 and March 2007. Mr. Rozin solicited Canadians by fax to secure sales of various business directories on CD. The business directories included, the Ottawa Political Guide, the Provincial Governments Political Guide and the 2007 Federal Service Directory. Although victims were promised quarterly updates on CD, they received either a guide which was not updated, or a blank CD. 

The Ontario Superior Court fined Mr. Rozin $20,000, an amount exceeding the value of sales that he received from the scam. 

Japanese Company Pleads Guilty to Price Fixing
On September 19, 2007, the Competition Bureau issued a press release that a Japanese Company, Ibiden Co. Ltd. pleaded guilty to aiding and abetting a conspiracy to fix prices of isostatic graphite and was fined $50,000 by the Federal Court of Canada.  For the period of the conspiracy, Ibiden had sales of isostatic graphite block into Canada of approximately US$300,000.

In addition to Ibiden, two other companies, Toyo Tanso USA Inc. and Carbone of America Industries Corp. have pleaded guilty to anti-competitive conduct as a result of the Commissioner of Competition’s investigation into the isostatic graphite conspiracy. Toyo Tanso and Carbone of America faced fines of $200,000 and $300,000, respectively. 

The $50,000 fine Ibiden must pay is seemingly lenient given the seriousness of the offence, however, the circumstances of Ibiden’s early cooperation and assistance with the Competition Bureau’s inquiry led to the Commissioner supporting a lenient treatment. As a result of Ibiden’s conviction, the Bureau’s investigation into the isostatic graphite conspiracy is now concluded.

Sentencing in Deceptive Telemarketing Scam
On September 5, 2007, the Competition Bureau issued a press release that following a Bureau investigation, Oleg Alex Oks and Aleksandr Oks of Richmond Hill, Ontario both pleaded guilty to criminal charges of deceptive telemarketing under the Competition Act.  The Bureau estimates that the Oks’ deceptive telemarketing schemes defrauded Americans of more than US$5 million.  The schemes were operated from Toronto between January 1999 and September 2005 and included offering bogus pre-approved credit cards with up-front fees varying from US$199 to US$399 and offering a “free” computer with the purchase of Internet service with up-front frees varying from US$269 to US$299.  Despite having their bank accounts debited, none of the victims received the credit card or other promotion.

Oleg Oks, the principal director behind the scams, was sentenced to one year in jail and two years probation.  While Aleksandr Oks received a six-month conditional sentence and 12 months probation.

Toronto Telemarketing Operation Fined
On August 20, 2007, the Competition Bureau announced that the registered director of a numbered Ontario company that operated under the names Business Supply Centre and National Supply Centre has pleaded guilty on behalf of himself and the company to contraventions of the telemarketing provisions of the Competition Act. The Bureau alleged that telemarketers sold refilled and remanufactured toner and ink-jet cartridges to businesses, not-for-profit organizations, churches, schools and government agencies at inflated prices by creating the impression that they represented the purchasers' regular suppliers and by making false statements regarding price. In addition to a 15-month conditional sentence against the director, the Ontario Court of Justice prohibited the director and the company from engaging in any form of telemarketing for 10 years and imposed a fine of more than $800,000. Under the Competition Act's deceptive telemarketing provisions, it is a criminal offence, punishable on indictment by a fine in the discretion of the court and/or imprisonment for up to five years, for a person who engages in telemarketing to make a representation that is false or misleading in a material respect.

Competition Bureau Releases Independent Report on Dynamic
Efficiencies in Merger Review
On August 9, 2007, the Competition Bureau released a report prepared by CRA International, an economic and financial consulting firm, which proposes a framework for evaluating innovation concerns in merger review. The report, entitled "Innovation and Dynamic Efficiencies in Merger Review" and which is available on the Bureau's website, concludes that the current approach to merger review, as set out in the Bureau's Merger Enforcement Guidelines, "is not sufficient to fully capture dynamic competition." Recognizing the difficulties of incorporating innovation issues into merger review, including the absence of a settled economic model and the difficulty in measuring and quantifying innovation, the report's proposed five-part framework aims to address future goods markets or future innovations using currently available information. More particularly, the case-specific framework asks: "(1) Is innovation important in the industry in question? (2) Can affected future products and firms be identified? (3) Would the merging firms compete against each other in those future markets but for the merger? (4) Would the merger reduce the existing level of innovation? (5) Would the merger result in an increase in prices in the future market above what they would be without the merger?" The report concludes that where dynamic efficiencies are established, they should "be considered as a potential offset to static efficiency losses resulting from price and output changes". The independent report has not been adopted by the Bureau as policy.

Du Pont Elastomers Pleads Guilty to Price Fixing
On July 19, 2007, Du Pont Elastomers LLC pleaded guilty in respect of its participation in an international conspiracy to fix prices for polychloroprene rubber, the Competition Bureau announced. The Superior Court of Justice in Ottawa has fined Du Pont $4 million for its involvement.

The scheme spanned from August 1999 to April 2002. During this time, Du Pont and other companies conspired to fix prices for polychloroprene rubber (which is used to produce consumer products such as transmission belts and cables) in North America. Canadian sales for the rubber during this period are estimated to have been $50 million, with Du Pont holding about a 70% market share.

Grain Handling Remedies
OOn July 5, 2007 the Competition Bureau (the "Bureau") announced a series of actions intended to maintain and foster competition in the grain handling industry in Western Canada. In its press release, the Bureau stated that certain divestitures will alleviate concerns that recent mergers in the grain industry would lead to a substantial lessening of competition.

More particularly, Agricore United (the merged entity of United Grain Growers Ltd. and Agricore Cooperative) has divested its grain handling terminal in the Port of Vancouver to Alliance Grain Terminal Ltd., a consortium of prairie grain handling companies formerly known as Terminal West.

Saskatchewan Wheat Pool (SaskPool) has sold nine inland grain elevators and a port terminal elevator in the Port of Vancouver to Cargill Ltd. In addition, the Pacific Gateway Terminal Ltd. joint venture between SaskPool and James Richardson International (JRI) on the North shore of Burrard Inlet in Vancouver has been dissolved.

Finally, a new consent agreement between the Commissioner of Competition and JRI provides that JRI will sell two inland grain elevators in Glossop and Swan River, Manitoba. This agreement resulted from JRI's acquisition of certain Agricore United grain elevators from SaskPool.

Toner Telemarketing Scam
On June 12, 2007, the Competition Bureau announced that three individuals and corporations have been charged with deceptive telemarketing activities in Montreal. The accused allegedly targeted over 23,000 organizations, including businesses, not-for-profits, and government agencies across the country, generating over $10 million between 1999 and 2004.

The telemarketers phoned companies and allegedly persuaded them to believe they were dealing with their regular suppliers. The accused created an impression of cost savings as they encouraged companies to purchase cartridges before a supposed imminent price increase. The telemarketers omitted information such as the price of the merchandise and the purpose of the calls. According to the victims interviewed, clients were then invoiced at three to four times higher than the rate paid to usual suppliers for toner cartridges.

Sentencing in Telemarketing Case
On May 29, 2007 the Competition Bureau announced that Michael Mouyal of Montréal was fined $1,000,000 and received two years probation, 240 hours of community service and a 10-year prohibition order for his participation in a telemarketing scam. The Québec court's sentence was rendered following an investigation by the Competition Bureau under the deceptive telemarketing provisions of the Competition Act. Other individuals and corporations participating in the scam plead guilty and were sentenced earlier.

Over a 6-year period, the scam generated over $136 million in deceptive sales from not-for-profit organizations, businesses and government agencies in Canada, the U.S. and the U.K. Using call centres that were operated from Toronto, Montréal and St. John's, the scam entailed telemarketers misrepresenting themselves as their victims' regular supplier of office supplies or business directories calling to renew their orders. As a result of the false representation, businesses were misled to order and receive overpriced office supplies or useless business directories.

Private Parties at the Competition Tribunal - Sears, Dior and Givenchy
On February 23, 2007, Sears Canada Inc. ("Sears") applied to the Competition Tribunal (the "Tribunal") under section 103.1 of the Competition Act (the "Act") for leave to apply under section 75 of the Act for an order requiring Parfums Christian Dior Canada Inc. ("Dior") and Parfums Givenchy Canada Ltd. ("Givenchy") to continue supplying Dior and Givenchy products to Sears.

Dior and Givenchy stopped supplying Sears in January, 2007, citing distribution problems. In its Statement of Grounds and Material Facts, Sears alleges that Dior and Givenchy are "refusing to deal" in contravention of section 75 of the Act.

More particularly, Sears claims that it is substantially affected in its business by the alleged refusal to deal and stands to lose the majority of a $16 million per year business. Sears claims that it is willing and able to meet the usual trade terms of Dior and Givenchy, and that it is impossible to obtain adequate supplies of their products other than through Dior and Givenchy themselves. Sears further alleges that Dior and Givenchy are attempting to confer monopolies to individual retailers in particular retail segments. Dior and Givenchy are expected to respond to Sears' allegations.

The application for leave is to proceed on March 14, 2007 at the Tribunal. Dior and Givenchy have agreed to resume supply to Sears until at least May 4, 2007.

Competition Bureau Settles Auto Body Price Fixing and Price Maintenance Case
On February 16, 2007, the Competition Bureau announced that Canada’s Director of Public Prosecutions has reached a settlement with six auto body repair shops in Fort McMurray, Alberta, which are alleged to have engaged in price fixing and price maintenance with respect to labour rates for auto body repair services. Under the terms of a Federal Court order, the six companies are prohibited from engaging in any communication or exchanging any information with each other relating to the pricing of products or services supplied to customers or insurance companies. The six companies are also prohibited from entering into any agreement or arrangement with other auto body repair firms in Fort McMurray relating to the pricing of products or services. The six companies have agreed to publish a corrective notice and to implement a competition compliance program.

Under the Competition Act’s conspiracy provision, it is a criminal offence, punishable by fine of up to $10 million and/or imprisonment for up to five years, to fix prices. It is also a criminal offence, under the Act’s price maintenance provision, punishable by unlimited fine and/or imprisonment for up to five years, to attempt to influence upward or discourage the reduction of the price at which another person supplies a product or service, and to refuse to supply a person because of that person’s low pricing policy.

2006

Record Fine Levied Against B.C. Man for Lottery Offences
On December 13, 2006, the Competition Bureau announced that Tom Taylor was fined $225,000 and ordered to perform 100 hours of community service for offences under the Criminal Code relating to direct-mail lottery schemes. The schemes, which targeted residents in the U.S., U.K., Australia and New Zealand, led consumers to believe they had better chances of winning significant amounts of money by purchasing shares of lottery tickets, rather than purchasing tickets directly from authorized vendors. Between 1995 and 2002, the schemes netted $47 million. Everyone who conducts or operates a lottery scheme that has not been authorized by a government body commits an offence under the Criminal Code and is liable to imprisonment for up to two years.

Telecom Companies May be Subject to Monetary Penalties for Abuse
On December 7, 2006, the Minister of Industry introduced Bill C-41 in Parliament, a bill that would allow the Competition Tribunal (the "Tribunal") to order administrative monetary penalties ("AMPs") of up to CDN$15 million in cases where the Tribunal finds that a "telecommunications service provider" (as defined in the Telecommunications Act) has engaged in an abuse of dominance. An abuse of dominance occurs where the Tribunal finds that one or more persons who substantially or completely control a class of business in Canada or in a part of Canada, have engaged or are engaging in a practice of anti-competitive acts that has, or is likely to have, the effect of preventing or lessening competition substantially in a market.

In a press release issued the same day, the Minister of Industry expressed the view that "[a]llowing the Competition Tribunal to impose financial penalties will safeguard against anti-competitive behaviour that could ultimately harm consumers and promote timely and voluntary compliance in the telecommunications industry."

Bill C-41 further provides that in determining the amount of an AMP, the Tribunal shall consider: (a) the gross revenue from sales affected by the practice; (b) any actual or anticipated profits generated by the practice; (c) the financial position of the entity against which the order is made; (d) the history of compliance with the Competition Act by the entity; and (e) any other relevant factor.

The Competition Act already provides that the Tribunal may order domestic airlines to pay AMPs for abuses of dominance. In this regard, it seems likely that Bill C-41 will be criticized on the grounds that it contemplates the insertion of yet another industry-specific provision into the Competition Act, which is intended to be broad-based legislation of general application.

Major Canadian Cigarette Manufacturers Agree to Remove "Light" and "Mild" from their Cigarette Packaging
The three major cigarette manufacturers in Canada, Imperial Tobacco Canada Limited, Rothmans Benson & Hedges Inc. and JTI-Macdonald Corp., have agreed to stop using the descriptors "light", "mild" and variations thereof on their cigarette packaging at the request of the Competition Bureau. The three manufacturers will collectively phase out these descriptors on a total of 79 brands of cigarettes and 18 varieties of fine-cut tobacco during the period beginning December 31, 2006 and ending no later than July 31, 2007.

The tobacco companies have helped Canada joined the ranks of countries including Australia and members of the European Union by agreeing to voluntarily discontinue the use of "light" and "mild" from their cigarette packaging in advance of expected regulations mandating their removal.

The Bureau is seeking similar agreements with a number of smaller Canadian tobacco manufacturers who also describe their cigarettes as "light" or "mild."

Available at the Competition Bureau website.

Bid-Rigging Charges Laid Against Quebec Traffic Light Suppliers
On October 30, 2006, the Competition Bureau announced that two Quebec-based suppliers of light-emitting diode (LED) traffic lights, along with two of their directors, have been charged with bid-rigging under section 47 of the Competition Act. The Bureau alleges that, following a call for tenders by Quebec City for the supply of LED traffic signals, Electromega Limited and Tassimco Technologies Canada Inc. agreed to share the Quebec City contract. It is a criminal offence under section 47 of the Act for a person to agree with another not to submit a bid in response to a call for tenders and for two or more bidders to submit tenders arrived at by agreement or arrangement if, in each case, the agreement or arrangement is not disclosed, in advance, to the person calling for tenders. Persons convicted of bid-rigging are liable to a fine in the discretion of the court and/or to imprisonment for up five years. (October 2006)

Taxi Conspiracy Case Takes Detour
On October 18, 2006, the Attorney General of Canada filed an application challenging a provincial court decision to discharge the accused in the St. John's Taxi case. The accused had been charged with conspiracy under section 45 of the Competition Act (the "Act"). Arguments at the Newfoundland Supreme Court will begin on October 30, 2006.

On September 18, 2006, the preliminary inquiry judge of the Provincial Court of Newfoundland and Labrador ruled that there was not enough evidence to proceed with prosecution, and therefore ordered that the accused be discharged and not be committed to stand trial.

The St. John's Taxi case began in July 2004, following an investigation by the Competition Bureau (the "Bureau") into an alleged agreement to lessen competition in bidding for taxi-service contracts in St. John's. Charges under the Act's conspiracy provision (section 45) were laid against six taxi companies and seven individuals. The Bureau alleged that, between 1992 and 2004, the taxi companies had agreed not to compete with each other for contracts to supply taxi services to institutional and commercial facilities in St. John's. (October 2006)

Tribunal Rules on Weight Loss Claims
Following an application made by the Competition Bureau in June 2005, the Competition Tribunal held that Gestion Finance Tamalia, a company operating a chain of weight-loss clinics known as Centre de Santé Minceur, and its president, violated deceptive marketing practice provisions of the Competition Act. Representations were made to the public in respect of the performance and effectiveness of a weight-loss method that included a weight-loss device (Cellotherm) and several weight-loss products (Cure de départ, Noctoslim and Nopasim). The Tribunal concluded that numerous representations were false and misleading and issued an order prohibiting the company and its president from engaging in deceptive marketing practices for a period of 10 years. The Tribunal also imposed administrative monetary penalties of $50,000 and $20,000 against Gestion Finance Tamalia Inc. and its president, respectively. (October 2006)

Competition Bureau puts brakes on deceptive marketing
On September 28, 2006, the Competition Bureau (the "Bureau") filed a consent agreement with the Competition Tribunal prohibiting Econoco Inc. and its directors from making misleading representations to the public about the Econopro, which had been marketed as a fuel-saving and emission-reducing device. The Bureau stated that it was unaware of any credible scientific evidence that products such as the Econopro can significantly improve fuel efficiency.

The consent agreement requires that Econoco Inc., its president and its former vice-president stop all representations concerning Econopro or similar products for a period of 10 years unless adequate and proper tests are carried out; inform consumers of the consent agreement through a public notice in newspapers; and pay an administrative monetary penalty of $15,000. (September 2006)

Bureau Finalizes Bulletin on Merger Remedies in Canada
On September 22, 2006 the Competition Bureau (the "Bureau") published its Information Bulletin on Merger Remedies in Canada (the "Bulletin"). The Bulletin sets out the Bureau's current policy on merger remedies. The Bureau has also said that it will soon publish an outline of a consent agreement in order to facilitate settlements between merging parties and the Bureau. While the Bulletin covers all aspects of the Bureau's merger remedies policy, a few of its more notable features are noted very briefly here.

The Bulletin emphasizes the Bureau's preference for structural remedies over behavioural remedies and notes that most structural remedies involve a divestiture of assets. It strongly encourages merging parties to arrive at "fix-it-first" solutions that resolve competition concerns prior to or simultaneous with closing. The Bulletin notes that where there is uncertainty as to the viability of a remedy, the Bureau may require a "crown jewel" provision whereby additional assets must be added to the divestiture package. A crown jewel provision is only triggered during the trustee sale period, which occurs only after the merging parties have had between three to six months to divest the asset package. The Bulletin states that, as much as possible, the assets comprising the crown jewel will relate to the competitive harm in question.

With respect to mergers involving competition authorities in multiple jurisdictions, the Bureau may rely on remedies initiated through formal proceedings in foreign jurisdictions where the assets subject to the divestiture are primarily located outside of Canada. The Bureau will only do so if it is satisfied that actions taken by foreign authorities are sufficient to resolve competition issues in Canada.

The Bulletin is available on the Bureau's website. (September 2006)

Prohibition Order Issued Against Sotheby's and Sotheby's (Canada) Inc.
On August 28, 2006, the Federal Court of Canada issued a prohibition order under the Competition Act against U.S.-based Sotheby's and Sotheby's (Canada) Inc. in connection with an alleged international price-fixing conspiracy involving auction services. The Commissioner of Competition alleged that, beginning in April 1993 and continuing until February 2000, executives at Sotheby's and Christie's International agreed to fix and implement a non-negotiable rate schedule governing commissions charged to consignors at auctions held outside of Canada. Although the Commissioner did not find any evidence that the conspiracy affected auctions held in Canada, the Commissioner determined that it may have affected Canadians who participated as vendors in international auctions subject to the fixed commission rates. Under the terms of the court's order, Sotheby's and Sotheby's Canada, including their directors, officers and employees, are prohibited from committing an offence under the Act's conspiracy and foreign directives provisions (sections 45 and 46) and from doing any act or thing directed towards the commission of such an offence. The prohibition order also requires Sotheby's and Sotheby's Canada to implement and maintain various measures to ensure compliance with the Act and the order. Finally, Sotheby's and Sotheby's Canada are required to pay the Commissioner's investigative costs, up to a maximum of $800,000. (August 2006)

Commissioner Confirms Gasoline Conspiracy Investigation in Quebec:
Commissioner of Competition confirmed on June 2 that the Competition Bureau is investigating allegations of price fixing between competitors in the retail gasoline industry in local markets in the province of Quebec. The announcement follows several visits by police and Bureau officials to service stations and offices of various gasoline companies, many in the Sherbrooke-Victoriaville area. Under section 45 of the Competition Act, it is illegal for competitors to have an agreement to substantially lessen or prevent competition in a relevant market. While as of yet no charges have been laid in this matter, the Commissioner confirmed that the Superior Court of Quebec had granted search warrants based on evidence that there are reasonable grounds to believe that price fixing has occurred. The gasoline industry has been the subject to price-fixing allegations, particularly in recent years with the dramatic increase in gasoline prices, although no national conspiracy has been proven. (June 2006)

Competition Bureau Issues Backgrounder on Whirlpool's Acquisition of Maytag
On May 31, 2006, the Competition Bureau issued a technical backgrounder summarizing its conclusion that no grounds exist to challenge Whirlpool Corporation's acquisition of Maytag Corporation. The "laundry segment" (washers and dryers) was the Bureau's primary area of concern, where the parties' combined Canadian share exceeded 35%, both in the segment as a whole as well as for top-load machines. For purposes of its analysis, the Bureau concluded that top-load and front-load washers constituted separate product markets, and that sales of "house brands" should not be attributed to the manufacturer, on the basis that house brands are owned and controlled by retailers that make all pricing and marketing decisions.

Notwithstanding the parties' shares, the Bureau concluded that the transaction would not result in a substantial prevention or lessening of competition in Canada. Effective competition would remain from North American and offshore manufacturers with established brand names, given low to medium barriers to entry. The Bureau also concluded that major retailers would continue to have countervailing buyer power. Finally, the Bureau determined that, in light of industry dynamics, coordinated behaviour among remaining firms would be unlikely. (May 2006)

Trustee Appointed to Implement Divestiture Under Port Terminal Consent Agreement
On May 12, 2006, the Competition Bureau announced that a trustee has been appointed to sell Agricore United’s AUV grain handling terminal in the Port of Vancouver, a divestiture which Agricore United previously agreed to with the Bureau under a 2002 consent agreement. The Commissioner of Competition had required the divestiture of one of two port terminals in order to address competition concerns from the 2001 merger of United Grain Growers Limited and Agricore Cooperative Limited. The initial sale period for divestiture of a terminal was extended ten times by the Commissioner, until the Commissioner refused any further extensions in August 2005. Appointment of a trustee was made possible after Agricore United abandoned its application to the Competition Tribunal to rescind the consent agreement on the basis of changed circumstances. The trustee has four months to sell the terminal. (May 2006)

Bureau Will Not Challenge Boston Scientific-Guidant Merger
On May 11, 2006, the Competition Bureau (the "Bureau") announced that it will not challenge the acquisition of the Guidant Corporation ("Guidant") by Boston Scientific Corporation ("Boston Scientific"). Pursuant to a consent order signed with the US Federal Trade Commission (the "FTC") and commitments made to the European Commission (the "EC), Boston Scientific proposed to divest Guidant's vascular intervention and endovascular businesses, including intellectual property, to Abbott Laboratories ("Abbott"). To limit links between the parties, Abbott will sell its equity position in Boston Scientific. The Bureau believes that the divestiture to Abbott resolves potential competition concerns in Canadian markets for medical devices used to treat coronary artery disease. In making its determination, the Bureau consulted with the EC and FTC, as well as customers and competitors. As noted in the draft "Information Bulletin on Merger Remedies in Canada", issued by the Bureau in October 2005, the Bureau may, in certain circumstances, rely on the remedy actions taken by foreign agencies to resolve competition issues in Canada (May 2006).

Bureau Lays Charges in Telemarketing Matter
Following an investigation conducted with the assistance of the Service de Police de la Ville de Montréal (SPVM), the Bureau announced on March 30, 2006 that criminal charges have been laid against four individuals and their companies (Merchant Supply International (MSI) and International Merchant Supply (IMS)) in connection with a deceptive telemarketing scheme operated out of Quebec. Between January 2000 and February 2004, telemarketers contacted small and medium businesses in Canada and the United States and falsely claimed to be their regular suppliers of various office supplies. The telemarketers also claimed that an increase in the price of these supplies was imminent. As a result of the false representations, the victims of the scheme received office supplies which they would not otherwise have ordered. It is estimated that the scheme generated approximately $7.8 million in revenue (March 2006).

Competition Bureau Releases Technical Backgrounder on Quebecor/Sogides Merger
On March 6, 2006, the Competition Bureau issued a technical backgrounder summarizing its review of Quebecor Media Inc.'s acquisition of Sogides Ltée. The Bureau concluded in December 2005 that, subject to a consent agreement addressing possible information exchanges, the transaction would not result in a substantial lessening or prevention of competition in the publishing and distribution of French-language trade books, due to significant remaining competition and low barriers to entry. With respect to entry barriers, the Backgrounder states that low barriers to entry exist for the establishment of new publishers, and that the transaction may provide opportunities for smaller publishers to grow, due to their ability to react quickly to industry trends. Although entry barriers for distribution were found to be higher, with distributors needing a solid reputation to attract and retain publishers, the Bureau concluded that barriers were not insurmountable. With respect to remaining competition, the Bureau determined that competition from other distributors in Quebec, coupled with short-term contracts, would prevent an exercise of market power by Quebecor/Sogides. The Bureau concluded that competition from large Quebec publishing firms, as well as French and European publishers, would prevent a reduction in the number and variety of books offered to consumers. (March 2006)

Competition Bureau Files Consent Agreement Resolving Concerns Over Fine Paper Merger
On March 1, 2006, the Competition Bureau filed a consent agreement with the Competition Tribunal which resolves its concerns arising from the acquisition by PaperlinX Canada (“PaperlinX”) of the paper merchant business of Cascades Fine Paper Group Inc (“Cascades”). PaperlinX announced its intention to acquire this business on November 17, 2005. The consent agreement requires PaperlinX to divest Cascades’ fine paper merchant business in Alberta and British Columbia. The Bureau’s stated goal through the consent agreement is to ensure that customers will benefit from competitive prices and choice in the market for fine paper. In reviewing the merger, the Bureau consulted with printers, distributors and office paper users (i.e., businesses, governments and institutions) in order to analyze the impact on competition in the fine paper industry. (March 2006)

Consent Agreement Filed in Fabutan Matter
On February 28, 2006, the Competition Bureau announced that it had filed a consent agreement with the Competition Tribunal requiring Fabutan and its President to cease from making representations regarding unproven health benefits of indoor tanning, and to pay an administrative monetary penalty. Fabutan had made representations linking indoor tanning with reduced risk of certain cancers, heart and cardiovascular conditions, and osteopororis — and promoting tanning as useful in treating seasonal affective order and stimulating the metabolism. While the agreement recognizes that indoor tanning can stimulate production of vitamin D in the body, any statement concerning a relationship between UV-B, Vitamin D and possible health benefits must now be accompanied by a disclaimer regarding the potential harmful effects of UV-B. A disclaimer is also required for any representations that link moderate tanning with protection against sunburn. The Bureau had previously filed an application for a Tribunal Order in connection with this matter in March 2005. (March 2006)

$100,000 Administrative Monetary Penalty Levied Against Operators of Online Resumé Distribution Services
On February 22, 2006, the Competition Bureau announced that, under the terms of a consent agreement filed with the Competition Tribunal, Matthew Hovila and Strategic Ecomm Inc. have admitted to contraventions of the deceptive marketing practices provisions of the Competition Act and agreed to pay an administrative monetary penalty of $100,000. The Bureau alleged that Hovila and Strategic Ecomm made false and misleading representations on two employment-related websites regarding the number of companies to which consumers' resumés were forwarded, their relationships with potential employers, the efficacy of their services, the validity of a money-back guarantee, and their endorsement by a third-party watchdog. The Bureau also alleged that Hovila and Strategic Ecomm made false testimonials and exaggerated ordinary selling price claims on the websites with respect to resumé distribution services. As part of the consent agreement, Hovila and Ecomm have agreed to discontinue the allegedly offending conduct and publish corrective notices. (February 2006)

Bureau Releases Immunity Program Consultation Paper
On February 7, 2006, the Competition Bureau (the "Bureau") issued the Immunity Program Review - Consultation Paper. The Bureau formally launched its Immunity Program (the "Program") in 2000, which is one of the Bureau's most effective ways to detecting and investigate criminal activity prohibited by the Competition Act. Enterprises and individuals can apply under the Program to report their criminal activities and eliminate their potential liability under the Act for competition offences. According to the Consultation Paper, questions have arisen since 2000 with respect to certain aspects of how the Program operates, and how the Program can continue to function at levels of optimal effectiveness. The Bureau is seeking input from all stakeholders on how to best address several issues related to the Program, including confidentiality, the oral application process, restitution, revocation of immunity and the possible creation of a formal leniency program. The deadline for responding to the Consultation Paper is May 10, 2006. (February 2006)

Record $37.5 million in fines in domestic fine paper conspiracy
On Monday, January 9, the Competition Bureau announced that Cascades Fine Papers Group Inc., Domtar Inc. and Unisource Canada, Inc. each pleaded guilty to violating section 45 of the Competition Act for their roles in a conspiracy to lessen competition in the domestic paper merchant business. The companies were sentenced to individual fines of $12.5 million. The fines and guilty pleas were the culmination of a Bureau investigation that began in 2002, which revealed that the three companies agreed to avoid competing with one another in the carbonless sheet markets in Ontario and Quebec. Carbonless sheets are used by commercial printers in the manufacture of forms and receipts. The $12.5 million fine includes $10 million for the companies' conduct in Ontario - the first time the maximum fine has been imposed in a domestic conspiracy - and $2.5 million for the companies' behaviour in Quebec. In discussing the fines, the Commissioner of Competition stated: "These record fines reflect the serious nature of this criminal behaviour and put corporate executives and employees on notice that they are accountable for their actions." In connection with each sentence, the court also issued a prohibition order, which requires that key personnel involved in the conspiracy be removed from the fine paper business, and that the companies fulfill specific competition law compliance obligations over the next five years (January 2006).

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2005

Grain Handling Joint Venture Challenged By Bureau
On November 10, 2005, the Bureau filed an application with the Competition Tribunal challenging a proposed grain handling joint venture between the Saskatchewan Wheat Pool ("SWP") and James Richardson International Limited ("JRI"). In its press release, the Bureau stated that it was concerned that the transaction would remove a competitive alternative from the grain handling industry and result in a less competitive market for grain handling services at Canadian West Coast ports. The Bureau reviewed the proposed joint venture, which was announced in April 2005, and concluded that the transaction would substantially lessen competition in the market for grain handling services. The Bureau is also seeking an interim order to prevent SWP and JRI from jointly marketing their grain handling services in the Port of Vancouver until the Tribunal has issued its decision. (November 2005)

Government Proposes Amendments to Bill C-19
On October 27, 2005, the Government of Canada introduced two additional amendments to the Competition Act in Bill C-19. The amendments would increase the maximum fines available under the Act's criminal conspiracy provision (section 45) from the current $10 million to $25 million. In addition, the Competition Bureau would be empowered to conduct marketplace inquiries on the state of competition in any sector of the Canadian economy. In furtherance of this power, the Bureau's ability under section 11 of the Act to obtain a court order for the production of documents or oral examinations would apply to persons likely to have information relevant to a marketplace inquiry. The amendments to Bill C-19 were tabled before the House of Commons Standing Committee on Industry, Natural Resources, Science and Technology, which is currently examining the draft legislation. (November 2005)

Competition Bureau Will Not Challenge Proctor & Gamble's Acquisition of Gillette
On September 30, 2005, the Competition Bureau announced that, in light of divestitures required by the U.S. Federal Trade Commission (FTC) and the European Commission, it will not challenge The Proctor & Gamble Company's (P&G) US$57 billion acquisition of The Gillette Company (Gillette). The Bureau's competitive concerns in Canada in the oral care markets for battery powered toothbrushes and teeth whitening products were resolved under a consent agreement with the FTC, which requires P&G and Gillette to divest: (i) Gillette's Rembrandt at-home teeth whitening business within three months; (ii) P&G's Crest SpinBrush battery-powered and rechargeable toothbrush business to Church & Dwight, Co., Inc.; and (iii) Gillette's Right Guard men's antiperspirant/deodorant business within four months. The Bureau concluded that these divestitures would preserve competitive options for Canadian consumers. (October 2005)

Bureau Participates in Telemarketing Boiler Room Arrests
On September 27, 2005, the Bureau announced that coordinated action between Canadian and American law enforcement agencies (including the Competition Bureau) has led to charges under the Competition Act and Criminal Code against the operators of a telemarketing scam based in Toronto and Calgary. The victims, mainly American citizens with poor credit history, were offered Visa or MasterCard credit cards in exchange for an upfront fee, bank account information and other personal information. While the victims' bank accounts were debited, they did not receive the credit cards. The scam, which led to the shutdown of boiler rooms in Toronto and Calgary, allegedly defrauded Americans of more than US$12.5 million. Charges have been laid against two individuals who since 2001 have operated their corporations under various names, including Pacific Liberty, Pacific Liberty Group, Atlantic One Info Services Group, Liberty Sun Info Services, C&B Communications Group, Liberty Wide Info Services, Nationwide Credit Services and Sky Rise Marketing. (September 2005)

Criminal Charges Laid in Respect of Alleged Cancer Treatment Claims
On August 2, 2005, the Competition Bureau announced that Michael Reynolds and John Armstrong had been charged with ten counts each under the Competition Act of knowingly or recklessly making materially false or misleading representations to the public regarding the efficacy of their alleged cancer treatment. The Bureau alleges that the two principals of the now-defunct CSCT Inc. made unsubstantiated representations on their web site, at seminars, in health care magazine articles and advertisements and in telephone communications that their treatment could selectively kill cancer cells without harming healthy cells. The pair were also charged with one count each under the Criminal Code of defrauding the public of money exceeding $5,000. If convicted, they could face imprisonment of up to five years under the Competition Act and/or a fine in the discretion of the court, and imprisonment of up to ten years under the Criminal Code. (August 2005)

Competition Tribunal Rescinds Consent Agreement
On January 10, 2005, RONA Inc. (RONA) filed an application with the Competition Tribunal (Tribunal) asking that it rescind a consent agreement filed on September 3, 2003. The consent agreement was aimed at resolving the Commissioner of Competition's concerns that RONA's acquisition of Réno Dépôt and The Building Box "big box" home improvement stores from Kingfisher plc (Kingfisher) would substantially lessen competition in Sherbrooke, Quebec. The consent agreement included a requirement that RONA divest, to an independent third party, the Réno Dépôt store in Sherbrooke. RONA's January 10th application was made pursuant to s. 106 of the Competition Act, which allows a consent agreement to be rescinded in circumstances where "the circumstances that led to the making of the agreement or order have changed and, in the circumstances that exist at the time the application is made, the agreement or order would not have been made or would have been ineffective in achieving its intended purpose." According to RONA, Sherbrooke was unique among the geographic markets examined by the Competition Bureau in its 2003 examination of the RONA-Kingfisher transaction insofar as it was the only market where Home Depot was not present as a competitor. Had it been present, RONA submitted that Sherbrooke would have been indistinguishable from other geographic markets, in which case it would not have agreed to divest a store in that market. With Home Depot's subsequent confirmed intention to expand into Sherbrooke, RONA argued that a material change of circumstances had occurred and that the consent agreement should therefore be rescinded. In a decision dated May 30, 2005, the Tribunal agreed and ordered that the consent agreement be rescinded. (July 2005)

Competition Bureau Seizes 15,000 Pairs of Sunglasses
On July 8, 2005, the Competition Bureau announced that it had seized 15,000 pairs of sunglasses imported from China in order to protect consumers from false or unsubstantiated claims. In May 2005, Bureau officials inspected a shipment of sunglasses intended for Gift Cave Corp, an Edmonton-based wholesaler. Although the glasses were labelled "Made in Canada" and "UV400 protection", Gift Cave was unable to provide documentation substantiating either of these claims. The Bureau seized the glasses for the misleading "Made in Canada" claims pursuant to the Consumer Packaging and Labelling Act, which requires that pre-packaged consumer products bear accurate and meaningful labelling information. Failure to substantiate the "UV400 protection" claims raised additional concerns under the deceptive marketing practices provisions of the Competition Act. The sunglasses were released from seizure after Gift Cave removed the offending claims from its labels. (July 2005)

Bureau Applies for Tribunal Order In Connection With Weight-Loss Claims
On June 28, 2005, the Competition Bureau announced that it had filed an application for an order from the Competition Tribunal to prohibit certain claims made by five Quebec companies and their president, Sylvan Leblanc, regarding the effectiveness of an advertised weight-loss method. Leblanc and the companies (Gestion Finance Tamalia, Gestion Lebski, La Société de Financement Vanoit, Maigrissimo and 9083-8434 Québec), operate a chain of weight-loss clinics known as Centre de Santé Minceur. In marketing the weight-loss method, the Quebec companies claimed that certain weight-loss products (Cellotherm, Cure de départ, Nocto Slim and Nopasim) could, among other things, induce weight-loss in specific areas, reduce fat in certain areas and burn off fat during the night. In its application, the Bureau alleged that the companies' claims violated the deceptive marketing practices provisions under section 74 of the Act. Section 74 prohibits false or misleading representations, as well as statements regarding the performance or efficacy of products that are not based on adequate and proper tests. The Bureau's application also requested that the Tribunal order the Quebec companies to publish a corrective notice regarding the allegedly misleading claims, and to pay an administrative monetary penalty. Leblanc and the Quebec companies have 30 days to respond to the Bureau's application. (June 2005)

More Sentences Result From Bureau's Deceptive Telemarketing Investigation
On June 20, 2005, a Quebec court sentenced the last of 11 people involved in a deceptive telemarketing prize-pitch scam that was conducted through two Montreal-based companies, Alexis Corporation (3636135 Canada Inc.) and 3587932 Canada Inc. The scam took place over a five-week period and targeted consumers in Australia. The Bureau's criminal investigation into the matter began after it received numerous complaints between May 2000 and June 2001, in which telemarketers were allegedly telling consumers that they had won lucrative prizes of up to $20,000. In order to receive these bogus prizes, however, the consumers were required to purchase a promotional item, such as a Columbus map, Sirius Flagship or Napoleon Collectible. The telemarketers are alleged, among other things, to have misled the consumers about the quantity and value of the prizes. The Bureau's investigation, which used wiretaps in the gathering of evidence, resulted in 11 people pleading guilty to offences under the deceptive telemarketing provisions of the Competition Act. In addition to the sentences, the court's decision authorized the Bureau to return over $18,000 in cheques seized during the investigation to 14 of the scam's victims. (July 2005)

Bureau Issues Consent Agreement for Cineplex Acquisition of Famous Players
On June 13, 2005, a consent agreement was registered with the Competition Tribunal that resolves the Competition Bureau’s concerns regarding the acquisition of Famous Players, which is controlled by Viacom, by Cineplex Galaxy, which is controlled by Onex. The Bureau concluded that the exhibition of first run motion pictures is a distinct product market, and that there are substantial barriers to entry in the industry. To ensure that there is no substantial lessening and/or prevention of competition in any of the local markets where the parties were competing, Cineplex has agreed to the divestiture of 35 theatres in Victoria, Vancouver, Calgary, Edmonton, Lethbridge, Saskatoon, Winnipeg, London, St. Catharines, Kitchener, Hamilton, Kingston, Ottawa, Toronto, Gatineau, Montréal and Québec City. According to Gaston Jorré, the Senior Deputy Commissioner of Competition, these theatres account for 284 screens with box office revenues of about $100 million. Once the transaction has closed (and until the divestitures have been completed), an independent manager will be appointed to manage ticket prices, concession prices and film bookings at all 35 theatres. If Cineplex Galaxy is unable to sell the assets, a trustee will be appointed to complete the sales. (June 2005)

$1 Million Fine Imposed in Graphite Electrode Conspiracy
On May 12, 2005, the Competition Bureau announced that Mitsubishi Corporation, a former part-owner of the graphite electrode manufacturer UCAR International Inc., was convicted and fined $1 million by an Ontario court for aiding and abetting the implementation in Canada of an international price-fixing conspiracy. Between 1992 and 1997, members of the cartel agreed to restrict their production capacity, divide world markets and fix the prices of graphite electrodes. A former Mitsubishi manager arranged transportation to conspiracy meetings and acted as a translator for the cartel’s members. Canadian prices for graphite electrodes used in steel production nearly doubled during the conspiracy. Previously, three other corporations, including UCAR and two of its former executives, were fined nearly $24 million for their roles in the cartel. (May 2005)

Bureau Concludes No Evidence of Price Fixing in Gasoline

On May 4, 2004, in response to numerous complaints, the Competition Bureau launched an examination of the Canadian petroleum market to determine whether increases in retail gasoline prices in the spring and summer of 2004 resulted from a breach of the Competition Act and, in particular, focused on whether increasing gasoline prices were the result of a conspiracy among the integrated gasoline refiners/retailers to fix prices, or whether another explanation such as worldwide or North American supply and demand changes caused the increases. The Bureau announced on March 31, 2005 that it had concluded its 11-month investigation, and had found no evidence to suggest that rapid price increases last spring and summer were the result of a national price-fixing conspiracy. Indeed, the Bureau concluded that retail gasoline pricing behaviour in major Canadian centres was consistent with independent pricing action taken by businesses in response to normal market forces. The Bureau concluded that high crude oil prices and low gasoline inventories caused by a shortage of refining capacity in North America were largely responsible for the sharp increase in retail and wholesale gasoline prices. The Bureau's full report, entitled "Gasoline Empirical Analysis", is available on its website. (April 2005)

Administrative Monetary Penalty and Costs Ordered Against Sears Canada Inc.

On April 1, 2005, the Competition Tribunal announced its cost award order against Sears Canada Inc. in connection with its January decision that Sears breached the misleading advertising provisions of the Act when they advertised discounts on certain tires across Canada. Pursuant to the order, Sears Canada Inc. must pay a $100,000 administrative monetary penalty as well as $387,000 towards the Competition Bureau's legal costs, for a total of $487,000. Furthermore, the order also prohibits Sears Canada's automotive business division from engaging in similar representations for a period of 10 years. The $100,000 administrative monetary penalty awarded represents the maximum penalty that can currently be imposed on a corporation following an initial finding of reviewable conduct. Parliament is currently considering amendments to the Act which would significantly increase such penalties (up to $10 million) to better deter similar deceptive marketing practices. (April 2005)

Competition Bureau Seeks Remedy for Alleged Deceptive Marketing Practices by Fabutan Sun Tan Studio

On March 31, 2005, the Competition Bureau filed an application with the Competition Tribunal alleging that Fabutan Sun Tan Studios and its president, Douglas McNabb, are making representations to the public regarding the health benefits and risks of indoor tanning that are false or misleading in a material respect, and statements regarding the performance and efficacy of indoor tanning services which are not based on adequate and proper tests, contrary to section 74.01 of the Competition Act. According to the application, the representations and statements were made on Fabutan's website and in printed promotional materials available at Fabutan's Canadian network of corporate-owned and franchised sun tan studios. The representations allegedly imply that moderate indoor tanning is a treatment for vitamin D deficiency and seasonal affective disorder, stimulates the metabolism, and prevents or reduces the risk of skin cancer, heart or cardiovascular disease, osteoporosis and sunburn. The Bureau is requesting the Tribunal order Fabutan to cease making these representations, publish a corrective notice and pay an administrative monetary penalty (a fine).

Advisory Panel of Experts to Examine Efficiencies under the Competition Act

On March 18, 2005, the Commissioner of Competition appointed an advisory panel of experts to look at the role of efficiencies under the Competition Act. The appointment of the Advisory Panel on Efficiencies is part of a three-pronged national consultation process launched by the Competition Bureau. In September 2004, the Bureau issued a consultation paper entitled the Treatment of Efficiencies in the Competition Act. This paper was the subject of submissions and roundtables. In October 2004, the Bureau hosted an international roundtable that included participants from the US, the EU, the UK, Australia and Mexico. The stated mandate of the Panel is to "assess the role that efficiencies should play in the administration of the Competition Act in the context of Canada's evolving economy". The Chair of the panel is Marcel Côté, the founding partner of Secor Consulting. Jalynn Bennett and Dr. Roger Gibbins are the two other panelists. The Panel will provide a written report to the Commissioner of Competition in June 2005.

Competition Bureau Appeals Abuse of Dominance Decision

On March 7, 2005, the Competition Bureau announced that it has filed an appeal in Federal Court in respect of the Competition Tribunal's decision in the abuse of dominance and exclusive dealing case brought against Canada Pipe Company Ltd. in 2002. At issue in the case was a loyalty program that offered rebates and purchase discounts to distributors who stocked exclusively Canada Pipe's cast iron drain, waste and vent pipe and fittings. Although the Tribunal accepted the Bureau's allegation that Canada Pipe held a dominant position in the relevant markets, it concluded that the loyalty program was not an "anti-competitive act" within the abuse of dominance provision of the Competition Act. The Tribunal also held that the program did not prevent or lessen competition substantially, and was not likely to do so. The Bureau's position is that the Tribunal erred in arriving at the latter two of these findings.

Fifth Guilty Plea in Graphite Electrode Conspiracy

The Competition Bureau announced on March 2, 2005 that Robert J. Hart, a former executive of UCAR International Inc. (UCAR), pleaded guilty and was fined $50,000 by the Federal Court of Canada for his role in an international price-fixing conspiracy that affected the production of Canadian steel.  Between 1992 and 1997, members of the international cartel agreed to restrict their production capacity and to fix the prices they would charge for graphite electrodes in world markets. During this period, Canadian prices for graphite electrodes used in steel production nearly doubled.

Mr. Hart, a U.S. citizen and former Senior Vice President and Chief Operating Officer of UCAR, is the second individual and the fifth party to plead guilty in Canada to participating in the graphite electrodes cartel. Mr. Hart shared information concerning pricing, customer accounts and sale volumes with competitors, and directed UCAR representatives to eliminate discounts and raise prices in Canada in concert with other members of the conspiracy. Mr. Hart pleaded guilty to similar charges in the United States in 1999, where he agreed to serve nine months in jail and to pay a fine of $1 million.

GoodLife Settles Deceptive Marketing Matter With Bureau

On February 9, 2005, a consent agreement was filed with the Competition Tribunal that concluded the Competition Bureau's investigation into the advertising practices of GoodLife Fitness Clubs Inc. GoodLife operates over 90 fitness facilities across Canada, and regularly promotes its business in newspaper ads, flyers, billboards and storefront signs. In its investigation, the Bureau found that representations made in GoodLife's ads regarding the price of fitness memberships failed to provide adequate disclosure of additional mandatory membership fees, contrary to the deceptive marketing provisions of the Competition Act. Pursuant to the consent agreement, GoodLife has agreed to: adequately disclose all additional membership fees in its ads; ensure that its future ads conform with the misleading advertising and deceptive marketing provisions of the Act; establish and maintain a corporate compliance policy with an emphasis on advertising practices; publish a corrective notice; and pay a $75,000 administrative monetary penalty. The consent agreement is effective for 10 years (February 2005).

Microcell Acquisition Approved by Competition Bureau

On November 3, 2004 the Competition Bureau announced that, following a thorough review, it had cleared the proposed acquisition of Microcell Telecommunications Inc. by Rogers Wireless Inc. The Bureau's decision was based on a number of findings, in particular that the transaction would neither create or enhance unilateral market power in the mobile wireless market, nor increase the likelihood of coordinated behaviour among the major cell phone companies. The Bureau also found that the merger would not hinder the development of competitively-priced new and innovative products and services, or the rapid rate of product and service innovation. In the course of its review, the Bureau considered Microcell's history of offering innovative, competitive products, such as flat-rate price plans, per-second billing and its City Fido plan in Toronto and Vancouver, but ultimately concluded that Microcell would face "significant challenges" in maintaining its position as competitors move forward with the next generation of cellular service offerings. Stikeman Elliott LLP Competition/Antitrust lawyers representing Microcell were Paul Collins and Debbie Salzberger.

Tribunal Issues Decision Against Sears 

Following an application by the Commissioner of Competition that began in July 2002, the Competition Tribunal has held that Sears Canada Inc. employed deceptive marketing practices by inflating the potential savings on five lines of all-season tires offered in advertisements. Specifically at issue were representations made in the ads regarding the regular selling price of the tires (e.g., "Save 45% - Our lowest prices of the year on Response RST Touring '2000' Tires"). The Tribunal found that these advertisements were misleading because (i) Sears did not sell a substantial volume of these tires at the regular price featured in the ads, and (ii) Sears did not offer these tires in good faith at the advertised regular price for a substantial period of time. The automotive business division of Sears was prohibited from engaging in deceptive marketing practices for a period of 10 years. The issue of costs and an appropriate administrative monetary penalty will be determined at a later hearing. In its decision, the Tribunal also upheld the constitutionality of the ordinary price provision of the Competition Act. (January 2005)

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