The 2014 Canadian Competition and Foreign Investment Law Year in Review
The 2014 Year in Review is a summary of the major developments in Canadian competition and foreign investment law last year. We also look ahead to 2015 and consider how the events of 2014 may impact business activity this year.
A Year of Firsts
2014 was a year of firsts and historic decisions across the competition law landscape. In the Tervita merger case, the Supreme Court of Canada issued its first decision on the “prevention” of competition test and provided guidance on the efficiencies defence. Class actions alleging an international price-fixing conspiracy of dynamic random access memory (DRAM) were settled for $80 million, representing the second largest recovery in Canadian competition class action history. In a landmark decision, the Supreme Court ruled that wiretap evidence from a criminal price-fixing investigation must be disclosed to class action plaintiffs. Breaking new ground, a U.S. court ordered a company located in the U.S. to disclose information to assist the Canadian Competition Bureau in a misleading advertising case in Canada. For the first time, a Canadian was extradited to the United States to face criminal antitrust charges. In another first, an individual was sentenced to 15 months in jail for breaching a consent agreement (an agreement that is entered into with the Bureau to resolve the Bureau’s concerns). Impacting pharmaceuticals, the Bureau issued its preliminary views on how Canadian competition law could apply to pharmaceutical patent litigation settlements.
These, and other top stories, are covered in more detail in this 2014 Year in Review:
Cartel enforcement continues to be a top priority for the Competition Bureau. Numerous guilty pleas, fines and charges for bid-rigging and price-fixing were secured in 2014 — including the continuation of the Bureau’s enforcement actions in the auto parts industry, which is the Bureau’s largest bid-rigging investigation to date. Also, a number of important decisions were released in 2014. For detailed discussion see full version (PDF).
Mergers (Competition Act)
We cover the Supreme Court of Canada’s decision in Tervita Corporation et al v. Commissioner of Competition, as well as emerging trends in merger review from 2014 which are expected to continue into 2015. Behavioural remedies and the review of non-notifiable transactions were just some of the stories last year which highlight regulatory risk under the Competition Act. These and other events in 2014 underscore the benefits of concluding early competition analysis in appropriate circumstances. Furthermore, the Bureau’s efforts to deepen and expand collaboration and cooperation with antitrust regulatory agencies around the world will continue to shape merger review for multinational companies into 2015. For detailed discussion see full version (PDF).
Mergers (Investment Canada Act — Foreign Investment Review)
The Canadian government has been steadily increasing its focus on national security and rejecting mergers due to national security concerns. This has been a concern for foreign investors (especially state-owned enterprises) and Canadian businesses, especially in light of the dearth of guidance with respect to the types of transactions that are likely to be prone to national security attention. However, this may change with new amendments to the Investment Canada Act that allow for the public dissemination of information relating to national security reviews. For detailed discussion see full version (PDF) .
Abuse of Dominance
In 2014, the Competition Bureau continued to pursue abuse of dominance investigations and litigation. The Competition Tribunal’s redetermination of the Bureau’s application against the Toronto Real Estate Board (TREB), expected in 2015, may redefine the scope of abuse of dominance, making an already nebulous area of the law potentially more uncertain. For detailed discussion see full version (PDF).
A story which garnered a significant amount of attention in 2014 was the introduction of the Canadian government’s Price Transparency Act to target “unjustified” cross-border price discrimination. Under the proposed legislation, the Competition Bureau will be empowered to investigate and “expose” gaps between U.S. and Canadian selling prices. Although, the proposed law is not intended to set or regulate prices in Canada (nor does it provide for penalties or other remedies), should it become law, targeted companies will be exposed to the time and expense of responding to the Commissioner of Competition’s investigation and will have to contend with reputational risk associated with the Commissioner’s inquiry and public report. For detailed discussion see full version (PDF).
In 2014, companies and individuals that were found to have contravened the false or misleading representations provisions of the Competition Act were ordered to pay significant administrative monetary penalties (AMPs) and an individual was sentenced to prison for his role in deceptive telemarketing. Also, new amendments to the Competition Act (introduced under Canada’s Anti-Spam Legislation or CASL) which contain serious consequences for false or misleading electronic messages came into force last year. Significantly, the Chatr/Rogers decision was released in 2014 and it provides guidance on determinations of AMPs. For detailed discussion see full version (PDF).
Changes to the Competition Act have been proposed which would expand the Commissioner’s investigative powers to compel information from persons outside of Canada. New rules will come into force in 2015 with respect to data preservation and production orders against third parties which will provide the Bureau with an additional investigatory tool. For detailed discussion see full version (PDF).
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