Law Times

Page 10 SePtember 15, 2014 • Law Times www.lawtimesnews.com FOCUS Court gives useful guidance on investigatory requests Respondent lawyers allowed to make submissions at ex parte hearing By Julius Melnitzer For Law Times s the first substan- tive discussion of the s. 11 process under the Competition Act since 2008, the Federal Court's recent decision in The Commis- sioner of Competition v. Pearson Canada Inc. provides useful guidance for competition prac- titioners and their clients look- ing for clues to the court's ap- proach in response to requests for investigatory orders. "There's not a practitioner out there who hasn't received overly broad or unwarranted s. 11 requests from the bureau," says Chris Hersh of Cassels Brock & Blackwell LLP's Toron- to office. The Competition Act al- lows the commissioner to make these requests, a principal investigatory tool across a broad range of matters under the statute, on an ex parte ba- sis. Indeed, competition com- missioner John Pecman has recently stated that the bureau intends to rely more heavily on such investigatory orders in future inquiries. In a widely publicized deci- sion issued in 2008, the Federal Court of Canada set aside a s. 11 order issued in connection with the acquisition of Lake- port Brewing Income Fund by Labatt Brewing Company Ltd. The decision was critical of the Competition Bureau's process leading up to the issuance of the s. 11 order and triggered various changes to the manner in which it handles those types of applications. But in Pearson, a case that in- volved an investigation into al- legedly anticompetitive practices in the electronic book industry, a team of lawyers from Blake Cas- sels & Graydon LLP led by Cath- erine Beagan Flood sought and obtained leave to make submis- sions at the hearing. "It looks like Blakes mus- cled their way into the ex parte hearing and turned it into a contested proceeding," says Hersh. "It was clearly a tactic and a fairly aggressive one at that." Although Chief Justice Paul Crampton did allow the intervention, he also made it clear his decision constituted an exception to the normal rule. "Generally speaking, the more appropriate manner in which a respondent's con- cerns regarding the scope or duplicative nature of the draft order should be brought to the Court's attention is through the Commissioner, pursuant to the Commissioner's duty of full and frank disclosure," wrote Crampton. "It would then remain open to the respondent to bring a motion to deal with issues that subsequently arise, in the usual manner." However that may be and de- spite the fact that such hearings usually proceeded ex parte, the court did retain discretion as to whether to grant the investiga- tive order. In exercising that discretion, the court's focus was a relatively narrow one. Specifically, the fo- cus wasn't on whether the evi- dence disclosed that the com- missioner's inquiry was bona fide and that there was reason to believe grounds existed for making an investigatory order. Rather, the court had to accept that the commissioner was in fact making an inquiry and had provided full and frank disclo- sure; that the information or records described in the order sought were relevant; and that the scope of those documents wasn't "excessive, dispropor- tionate or unnecessarily bur- densome." Ultimately, in a 55-page deci- sion, Crampton rejected Pear- son's argument that the order sought was unnecessarily bur- densome. Instead, he concluded the court should grant the order. Hersh believes the decision makes sense. "I think that s. 11 applications shouldn't be turned into merits proceedings either by making them contested proceedings or by requiring the bureau to put in a lot of evidence at the investiga- tory stage," he says. Still, Hersh says the bureau will take careful note of Cramp- ton's affirmation that the affect- ed parties could question the or- der through a motion after the court issues it and, exception- ally, at the ex parte hearing. "I think the bureau will adapt to the guidance in this judg- ment, which is fairly balanced and consistent with the case law and the language of the statute, and be careful to draft orders that are not so broad as to attract the kind of litigation that arose here," says Hersh. "Even though the court granted the order sought, the case does leave the door open to challenges, either at the ex parte hearing or after the fact, when parties think the scope of the bureau's application is abusive," he adds. It's unlikely, however, that Pearson will reduce the bureau's resort to s. 11; indeed, it may well fuel such applications. "The bureau is encouraged by the result and sees the case as a positive development," says Anita Banicevic of Davies Ward Phillips & Vineberg LLP's To- ronto office. "Going forward, it intends to continue to rely on s. 11 orders to further its inquiries." LT Introducing the new CriminalSource ™ on WestlawNext ® Canada. Nothing else compares. The new CriminalSource™ is home to Canada's largest collection of case law, annotations, and commentary from criminal law experts – all presented to you in every search. 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