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Sept 17, 2012

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PAGE 8 FOCUS ON Competition Law Competition Bureau shows new swagger Amended laws, new staff among reasons for enforcement push T BY JUDY VAN RHIJN For Law Times range from large commercial en- tities to smaller family businesses. Commissioner Melanie Ait- he Competition Bu- reau has been flexing its new enforcement muscles with a string of prosecutions that kin has clearly identified a re- newed focus on enforcement as being the essence of her mandate and has built up the internal ca- pacity by attracting strong legal talent. Cases include the first legal challenges under the 2009 amendments to the Competition Act that dealt with areas such as the new civil competitor collabo- ration provisions, the civil price- maintenance provisions, and the improved criminal enforcement regime for cartels, all of which made 2012 a marquee year for competition law jurisprudence. Andrew Roman of Miller Thomson LLP attributes the cur- rent activity to a combination of testing out the new powers granted in 2009 and an increased confidence in the area. "I' they are 20-per-cent gutsier and otherwise they are just testing the scope of the new law, d say He points to the problems the bureau had applying the old law. "They were losing a lot of cases. Now, cases that might have been considered losers are possible winners because the laws have been strengthened. " he says. Thomson, is sure the new arriv- als at the bureau are driving the enforcement agenda forward with their strong litigation and enforce- ment backgrounds. "There has been a definite increase and re- newal since 2009 that reflects how well the commissioner has been able to attract senior counsel with Eric Dufour, also of Miller " significant litigation talent," he says. However, Rob Kwinter of brought by the attorney gen- eral, Blake Cassels & Graydon LLP views the increased legal ac- tivity with caution. "The ulti- mate goal of the Competition Bureau is not to win cases but to create an environment where the Canadian econ- omy functions as competi- tively as possible. Companies need to know what the law is and when it will be enforced. Uncertainty has a chilling ef- fect on competitive behav- iour. prosecution so far this year, one that has rocked the boat rather than settled it, involved the sale of a relatively small family-owned business in Northern British Co- lumbia. In Commissioner of Com- petition v. CCS Corp., the bureau sought the unravelling of the sale of the Babkirk hazardous waste landfill site to its only competitor. For the first time, it relied solely on the ground that the sale would lead to a substantial prevention of competition. This was also the first merger challenge since 2005 and was noteworthy for involv- ing a completed transaction that was below the monetary value for premerger notification pur- suant to the Competition Act. While the Competition Tribunal refused to grant an order for the dissolution of the transaction, which would have meant the family would have had to return the money it had reinvested and spent building a new home, it did order CCS to divest the asset. Roman was shocked by the a period of uncertainty aſter new laws take effect but hopes this period will end with the unfolding jurisprudence. Probably the most startling " He notes there's always decision. "Most people selling the family business and retiring Dufour finds this the most interesting of the year's " vision has been decriminal- ized, so the commissioner brought it directly before the Competition Tribunal and applied for a remedy. " he says. "Now the pro- cases. "Hopefully, we will get a decision that gives us greater insight into the new provision," he says. Another prosecution in- 'I'd say they are 20-per-cent gutsier and otherwise they are just testing the scope of the new law,' says Andrew Roman. would not expect to be faced with a long and expensive trial and at the end to have the sale set aside and be forced to oper- ate a business they don't want to operate anymore. The tribunal gave no weight to the interests of the people involved. has been a perception that small family businesses are off the ra- dar. "That' Kwinter confirms that there " Most people generally assume, incorrectly, that notification is a threshold. That isn't the way the act operates." He believes the misperception s an education issue. has arisen because of the com- missioner' of limited resources. "The merger area has historically not targeted smaller cases. The commissioner considers the overall impact a particular case has, and larger businesses will have a larger im- pact, but its mandate is anything that reduces competition." Kwinter concedes that s previous allocation remedy in the case is unusual but again points out the act provides that mergers can be subject to challenge for up to the unusual target, 2012 has seen a number of firsts involving the new powers from the 2009 amendments. The conviction aſter a plea of guilty in a matter involving Domfoam Interna- tional Inc. and Valle Foam Indus- tries (1995) Inc. on Jan. 6, 2012, was the first application of the amended conspiracy provisions. The price-fixing conspiracy relat- ed to polyurethane foam resulted in a fine of $12.5 million. Another first is the prosecu- a year aſter their completion. "The usual course is that they would try and intervene before the transaction closes," he says. While this is old law with an tion under the amended price- maintenance provisions of Visa and Mastercard, a matter heard in May and currently under re- serve. The commissioner has ap- plied to strike down certain cred- it-card system rules imposed on merchants that allegedly reduce competition and increase costs. Kwinter' the case. "Prior to the changes, this was a criminal offence and the case would have had to be s firm is involved in Foreign investment promises fall short BY JUDY VAN RHIJN For Law Times Even with the review into the China National Offshore Oil Corp.'s purchase of Calgary-based oil company Nexen Inc. now F oreign investment practitioners believe there's little likelihood of an increase in the transparency of foreign investment reviews despite previous government prom- ises and ongoing calls from opposition groups. underway, closed-door decisions look likely to remain the norm for the foreseeable future. Calling the $15.1-billion takeover a "huge case with significant ramifications," NDP natural resourc- es critic Peter Julian has in recent weeks been seeking hearings and a public record of the government' its decision on Nexen. If the Nexen shareholders vote to accept the deal on Sept. 21, s consultations in making CNOOC will hold 100-per-cent control over the Long Lake oil- sands project outside Fort McMurray, Alta. It already owns 35 per cent though its purchase of OPTI Canada Inc. in November 2011. Julian wants the government to take this opportunity to finally define what the foreign investment review' of net benefit to Canada means. As a result, he's calling for guide- s primary test lines and an open and transparent review process. The investment law bar has no expectation this will happen even though memories are clear of a promise made by former industry minister Tony Clement to issue guidance in some form or another on how the government makes decisions on those issues. There was some expectation that Bill C-38, the budget legislation that included the government' ments to the Investment Canada Act, would contain that type of guidance. But Sandy Walker, a competition lawyer at Fraser www.lawtimesnews.com s latest slate of amend- See Gov't, page 9 sult of an increased law enforce- ment focus, not the change in the law, to prove an effect on competi- tion, which was always difficult, particularly to a criminal stan- dard. Now it' "Previously, the bureau had " says Kwinter. dard in the U.S. In theory, that makes bringing the application easier, but the practical reality is that it has not made any tre- mendous difference. s closer to the stan- driver in price-fixing cases as the availability of immunity pro- grams through which govern- ments encourage participants in cartels to come forward by offering lenient treatment and immunity. He notes that more than 100 countries now have these programs. "In the last five years, we have definitely seen an increase in their use, Kwinter identifies the key " foreign-ownership restrictions, and will result in a monopoly on 10 important transborder routes and reduced competition on an- other nine routes. This will be the first trial under the civil competi- tor collaboration provisions. "The Air Canada case is the re- volving the new laws finds Air Canada in the spotlight for its proposed joint venture with United Continental Holdings Inc. The bureau views the plan as an abuse of dominance. It says it will amount to a merger, which is prohibited under the September 17, 2012 • Law timeS "The bureau is currently deal- ing with a very large number of these cases." Other decisions to watch for " he says. over the remainder of 2012 in- volve allegations of misleading advertisements against Rogers and the case against the Toron- to Real Estate Board for alleged abuse of dominance in relation to its management of the mul- tiple listing service. Dufour has no doubt that the enforcement push will continue. "With the talented individu- als now working behind the scenes, the bureau now has the capacity, confidence, and forti- tude to move forward. " LT

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