Canada: Competition Bureau

The year 2015–2016 saw transformational change at the Competition Bureau.

We navigated a significant transition in direction and approach, which involved a new organisational structure, governance and strategic plan. The focus of these changes is to transform the Bureau into a more open, collaborative and effective agency.

We shifted our operational approach towards fulfilling our mandate – enforcing Canada’s Competition Act – by focusing on collaboration, partnership, advocacy and outreach.

Activities at a glance

Guided by five strategic objectives, we worked hard to deliver on the commitments we made in our 2015–2016 Annual Plan: Protecting and Promoting Competition for the Benefit of All Canadians. As described in the Plan, the Bureau committed to ensure that Canadian businesses and consumers prosper in a competitive and innovative marketplace. In the following section, we report on our work in 2015–2016 against the five strategic objectives.

Increase compliance

The Bureau used all available enforcement tools to increase compliance with Canada’s competition laws. We worked diligently to prevent and deter anticompetitive or deceptive conduct that could threaten the health, growth or confidence in the Canadian economy. Enforcement tools used by the Bureau fall into two main categories:

• facilitating voluntary compliance – encouraging businesses and individuals to take action to comply or to maintain compliance with the Competition Act; and
• resolutions to non‑compliance – responding to, and resolving, alleged non‑compliance with the Act, through consent agreements, other consensual means or litigation.

Action in 2015–2016 to facilitate voluntary compliance (highlights)

• Our Corporate Compliance Programs bulletin, which is designed to help businesses of all sizes develop credible and effective compliance programmes, was updated. The updated bulletin pays special attention to the needs of small and medium-sized businesses and was viewed over 3,200 times.
• The establishment of a Compliance Unit positively impacted our ability to promote compliance.
• Twelve compliance presentations were given to Canadian stakeholders, ranging from law firms, business and trade associations, to academia and government officials. These delivered greater impact as a result of our relationships with international and domestic partners, including:
  • a corporate compliance workshop held jointly with the International Chamber of Commerce; and
  • a joint presentation, on bid-rigging and compliance programmes, with the Bureau’s Cartel Directorate to the City of Saskatoon and other local procurement authorities.
• The Compliance Unit shared best practices with foreign anti-trust agencies and promoted the Bureau as a leader in corporate compliance internationally.
• Our reach was extended through the use of new media, which delivers pertinent information in a format that is easy to consume.
  • Our compliance video was viewed over 8,000 times.
  • Our website’s Corporate Compliance Portal offers resources to assist businesses and trade associations recognise and prevent anticompetitive conduct, including establishing effective compliance programmes within their organisations. The Portal was visited more than 3,800 times.
  • We published 64 publications over the course of the year, including information bulletins, videos, position statements and enforcement guidelines.
• Updated Intellectual Property Enforcement Guidelines (IPEGs) were released, following an exhaustive and unprecedented consultation process that involved experts, stakeholders, other law enforcement agencies (including international partners) and the public. The updated IPEGs clarify our approach to conducting investigations of alleged anticompetitive activities that relate to intellectual property and make it easier for stakeholders to operate within the law. Main revisions to the guidelines include addressing patent settlements, product switching, and the conduct of patent assertion entities and standard essential patent owners.

All of these resources provide businesses and individuals with the tools that they need in order to understand their obligations under the Competition Act, and be able to operate productively within the law. The positive uptake that we saw in 2015–2016 mitigates some of the requirement for enforcement action by the Bureau and represents an effective use of Bureau’s resources.

Action in 2015–2016 to resolve non‑compliance (highlights)

• 299 investigations and examinations commenced;
• 16 matters were active before the Competition Tribunal (Trinunal) or courts;
• Five consent agreements were signed and implemented;
• 24 alternative case resolutions were employed;
• Eight guilty pleas were heard in cartel cases;
• Two matters were referred to the Public Prosecution of Service of Canada;
• $5.75 million in administrative monetary penalties were applied; and
• $7.34 million in restitution was returned to consumers.

In addition, the Bureau completed 221 merger reviews, including 65 complex reviews, and met the service standards for timely review in 85 per cent of complex review cases and 96 per cent of non-complex review cases.

As these statistics show, the Bureau continues to punch above its weight with the volume of work that it has done in 2015–2016 to increase compliance with Canada’s competition laws. But the results extend further than that, and include benefits to the broader community of stakeholders in competition law in Canada.

The Bureau’s work on the e-books case, for example, resulted in improved guidance on the Competition Tribunal’s consent agreement process. An e-book publisher, Kobo, had challenged a consent agreement between the Bureau and four major e-book publishers, which raised questions about the Tribunal’s jurisdiction to rescind or vary consent agreements upon request by third parties. To gain clarity on this issue, the Commissioner filed a reference question with the Tribunal. After considering the issue, the Tribunal issued a reference decision, concluding that its jurisdiction to assess challenges by third parties is limited. This decision provides clarity not only to the Bureau, but also to other stakeholders involved in competition law in Canada.

The Bureau also participated in its first ever mediated settlement with the Tribunal in the Parkland Fuel Corporation (Parkland) and Pioneer Energy (Pioneer) merger. Parkland is an oil and gas company that operates or supplies close to 700 retail gas stations in Canada under the Fas Gas Plus, Race Trac Gas and Esso brands. The company had proposed to acquire an additional 181 corporate gas stations from Pioneer, plus 212 supply agreements in Ontario and Manitoba. When the Bureau reviewed this proposed merger to assess the effect on competition, it concluded that the parties’ post‑merger market shares in these communities would be between 39 and 100 percent; and as these markets become more concentrated, the likelihood of price coordination between remaining retailers increases. The Bureau therefore sought an injunction requiring that Parkland preserve and operate the acquired Pioneer assets independently in these communities until the Tribunal reached a decision on the matter.

In order to resolve this complex matter, the Commissioner of Competition (Commissioner) agreed to negotiate with Parkland via mediation. The Bureau welcomes mediation as an additional tool for reaching mutually agreeable resolutions that achieve desirable competitive outcomes in an efficient manner. The move was also well-received by the broader stakeholder community, with lawyers commenting that mediation could be a useful tool that quickly resolves disputes that threaten to delay merger closings and speculating about whether mediation could be the way of the future when it comes to merger challenges under the Competition Act. The consent agreement between the Commissioner and Parkland is the first of its kind reached through mediation.

Empower Canadians

The Bureau produced a greater number and variety of awareness and outreach activities to empower Canadians in 2015–2016. The aim of these activities was to support an environment of competitive prices, greater product choice and informed decision-making. Highlights include:

• 135 presentations were delivered to stakeholders.
• Visibility was increased with an expanded social media presence:
  • 981 tweets, up 61 per cent compared to 2014–2015;
  • double the number of Twitter followers; and
  • 13,880 social media hits in total.
• 86 announcements were released, including four consumer advisories.
• The Bureau’s website, a central resource for Canadians on competition matters, was visited over 695,000 times.

Promote competition

The Bureau actively promoted and advocated for a more competitive marketplace in 2015–2016, emphasizing smart regulation that does not unduly limit – or even restores – competitive forces in markets while achieving legitimate regulatory objectives. Highlights include:

• 25 advocacy initiatives, including a white paper on the modernisation of taxi regulations in Canada that was cited by regulators in their decision-making.
• Four formal submissions to regulators, including submissions on:
  • A wholesale code to govern commercial arrangements between television service providers – cable and satellite companies – and television channel owners;
  • A service model that allows consumers to purchase online video‑on‑demand services without also being required to purchase additional services – such as a TV service or an Internet connection – from a specific service provider; and
  • Encouraging competition for new and innovative payment methods in Canada’s retail payment systems.

The Bureau also focused on increasing its outreach efforts to promote and increase compliance with Canada’s competition laws and to facilitate greater awareness and understanding of our work. This includes an increase in the number of presentations to corporate stakeholders across Canada, and educational presentations on bid-rigging to provide procurement authorities with the tools necessary to prevent and detect bid-rigging and other cartel activity. Statistics are provided above, under ‘empower Canadians’.

The Bureau played a leadership role in the prevention of fraud in Canada and internationally through its role as Chair of the Fraud Prevention Forum, a group of more than 125 private sector firms, consumer and volunteer groups, government agencies and law enforcement organisations committed to fighting fraud. The group hosts Fraud Prevention Month each year. This year’s campaign, ‘Recognize, Reject and Report Fraud!’, featured a series of events and a multimedia communications blitz aimed at equipping Canadians with information they need to be informed and confident consumers. The Bureau used both traditional and new media to reach consumers and businesses, and leveraged its partners and their contacts to reach new audiences. Here are a few examples:

• The ‘Too Good to be True’ (#2G2BT) Twitter chat provided consumers with information and tips on how to avoid becoming the victim of subscription traps, free trial scams and other types of common scams.
• A short YouTube video, presented jointly by the Bureau and the Ontario Securities Commission, highlighted some of the most common investment scams.
• The third annual Anti-Cartel Day, held during Fraud Prevention Month, helped businesses to detect and prevent price-fixing and bid-rigging.

As a result of these efforts, the Bureau had the highest number of contacts with consumers in the six years of Fraud Prevention Month. The Fraud Prevention Month hashtags, #FPM2016 and #MPF2016, were used more than 14,000 times by more than 4,500 participants on Twitter, which resulted in more than 56 million impressions for all tweets and retweets.

Collaborate with partners

International cooperation, multilateral fora and domestic partnerships are tremendously important in today’s open, increasingly globalised and digital economy.

The Bureau has cooperation instruments in place with 13 international jurisdictions, including Australia, Brazil, Chile, the European Union, India, Japan, New Zealand, the People’s Republic of China, the Republic of Korea, Mexico, Taiwan, the United Kingdom and the United States. Of these, two separate memoranda of understanding with Chinese antitrust authorities came into effect in 2015–2016.

Work done in 2015–2016 also resulted in the signing of an MOU with the New Zealand Commerce Commission. This MOU is the Bureau’s first second-generation cooperation instrument, which will enhance co-operation in cross-border competition enforcement in terms of information sharing and the provision of investigative assistance during international investigations.

The Bureau also collaborates with domestic law enforcement agencies, and other domestic agencies, to promote competition and to expand opportunities for Canadian participation in world markets, including the Canadian Intellectual Property Office (CIPO), the Canadian Radio-television and Telecommunications Commission (CRTC), the Director of Public Prosecutions (DPP), the Market Surveillance Administrator of Alberta, Ontario Government Consumer Services, the Ontario Provincial Police (OPP), the Ontario Securities Commission (OSC), the Privacy Commissioner, Public Services and Procurement Canada (PSPC) and the Royal Canadian Mounted Police (RCMP). Of these, the agreements with CIPO, the OSC and the Ontario Government Consumer Services came into force in 2015–2016.

In 2015–2016, these domestic and international partnerships resulted in:

• collaboration with domestic partners on 28 investigations;
• collaboration with international partners on 19 investigations;
• meetings with 15 competition authorities; and
• participation in 17 meetings and workshops organised by international organisations.

The following important and high-profile matters are examples of cases that benefitted from the Bureau’s international agreements:

Staples/Office Depot

The Bureau coordinated its efforts with the United States Federal Trade Commission (FTC) and the European Commission throughout its review of the Staples/Office Depot merger. The review of this global merger demonstrates how the Bureau works closely with international counterparts to ensure that competition in Canada is protected. The Bureau’s cooperation with the FTC on this case culminated in the filing of simultaneous challenges to protect competition on both sides of the Canada–US border.

Google

The Competition Bureau conducted an investigation into anticompetitive clauses in certain types of contracts used by the data company, Google, which negatively affected advertisers. This followed an investigation by the FTC into the same matter, which resulted in Google agreeing to change their contract terms and conditions in order to restore competitiveness to the US marketplace. However, Google’s commitments to the FTC did not specifically address competition concerns in Canada, nor did they apply to both its English-language and French-language terms and conditions. In response to the Bureau’s concerns, Google agreed not to reintroduce the restrictive clauses in Canada and not to introduce any other clauses that may have the same effect, in either its English-language or French-language contracts.

Champion excellence

The Bureau focused on continuous improvement and tangible results in 2015–2016, and promoted a culture of excellence founded on openness, collaboration and engagement. Highlights include:

• Implementation of the Bureau’s realignment and new governance structure.
• A new performance measurement framework began being built, which better captures and reflects the results and outcomes of our work.
• Began development of a talent management framework.
• Contributions to departmental and government-wide initiatives related to information technology, information management, finance and human resources.

Looking forward to 2016–2017

The 2016–2017 fiscal year will build upon the changes that were implemented in 2015–2016 and continue the agency’s evolution toward a more open, collaborative and effective agency.

Guided by the five strategic objectives and the 2016‑2017 Annual Plan: Strengthening Competition to Drive Innovation, the Bureau has identified 10 areas of focus for the coming year:

Increase compliance

• Support innovation in the digital economy by deterring anticompetitive conduct that impedes new entrants, products and services and by stopping deceptive marketing practices in e-commerce.
• Raise awareness throughout the procurement community and among potential bidders about bid-rigging related to infrastructure spending, given increasing public-sector investment:
  • Deliver a minimum of thirty bid-rigging/compliance presentations to targeted audiences.
  • Use data screening mechanisms to detect potential bid-rigging.
• Increase small and medium-sized businesses’ awareness of the importance of complying with the statutes administered by the Bureau:
  • Leverage membership networks of small and medium-sized businesses associations to expand reach.
  • Engage in targeted outreach with small and medium-sized businesses across the country to promote the adoption of corporate compliance programmes.

Empower Canadians

• Provide timely and accurate warnings to reduce the risk of Canadian consumers being victims of civil and criminal deceptive marketing:
• Partner with domestic enforcement agencies to develop a Consumer Deceptive Marketing Advisory System (CDMAS).
• Increase the Bureau’s use of social media and other digital engagement capabilities.

Promote competition

• Foster innovation through a pro-competitive approach to regulation:
  • Undertake a market study of technology-led innovation and emerging services in the Canadian financial services sector.
  • Complete three competition promotion/advocacy pieces pertaining to new forms of competition.
• Strengthen our analytical frameworks and address competitive implications through workshops with stakeholders:
  • Address markets impacted by innovative technologies, services and business models by hosting a workshop that examines emerging competition issues.
  • Host a workshop related to Anti-Cartel Day.

Collaborate with partners

• Facilitate more transparent interaction with other domestic regulators and enhance our ability to effectively administer labelling statutes by concluding additional memoranda of understanding.
• Enhance and strengthen our network of international partners to address anticompetitive activity and deceptive marketing practices that cross borders and to promote convergence in competition law policy:
  • Support trade liberalization efforts of the Government by engaging in competition related cooperation with competition authorities in the Asia Pacific region and other regions as well as at least two technical cooperation and capacity-building projects.
  • Fulfill Canada’s free trade treaty obligations by advancing negotiations of competition-related cooperation instruments.
  • Inform and advance competition policy by focusing our participation in multilateral international fora on topics related to efficiencies, innovative business models, the digital economy, market studies and the evaluation of the impact of competition authorities’ activities.

Champion excellence

• Deliver a talent management strategy focused on planning, attracting, growing, engaging and retaining talent at all levels of the organisation.
• Undertake concrete actions to build and sustain a healthy, respectful and supportive work environment and improve internal communications focused on continuous engagement:
  • Implement activities in the Bureau’s Action Plan in response to the 2014 Public Service Employee Survey.
  • Build a respectful, healthy and inclusive workplace and mental health awareness through ongoing dialogue.
  • Foster a strong culture of diversity and inclusiveness and commitment to the use of both official languages through ongoing activities and new initiatives.

With the Bureau’s priorities and objectives for 2016–2017 publicly available to Canadian consumers, other stakeholders and the general public, the alignment between the Bureau’s annual activities, its strategic goals and strategic vision has never been more transparent. In 2016–2017, the agency will continue to focus on continual improvement and results in order to ensure that businesses and consumers prosper in a competitive and innovative marketplace.