Proposed Amendments to the Conspiracy Provisions

Presentation by Richard Taylor
Assistant Deputy Commissioner of Competition
Criminal Matters Branch
Competition Bureau

Annual CBA Conference

October 2-3, 2003

(PDF: 3089 KB)

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Background

• Government committed to a Competition Act that meets today's challenges and fosters an innovative and competitive marketplace
• Ten years since the initial Warner-Trebilcock paper on s. 45 reform
• Proposed amendments to conspiracy provisions informed by stakeholders and public
• Complex and important debate; discussion paper released June 2003

Today's Business Environment

• Firms compete in a globalized market
• Strategic alliances among competitors increasingly important
• Concern that s. 45 chills pro-competitive alliances which have efficiency benefits

Objectives in Reforming Section 45

• Maintain effective enforcement against hard core cartel agreements
• Address impediments to pro-competitive alliances
• Provide certainty and predictability
• Increase the compatibility of Competition Act with competition frameworks in other major jurisdictions

Consultations Point to:

Two track approach:

1. Hard core cartel conduct = per se criminal offence without a competition test
2. Other strategic agreements = reviewed under a civil regime with a SLC test

Overall Proposal

Dual Track Provision:

• Criminal per se provisions for egregious conduct
• New civil provisions with a SLC threshold
• Carve outs
• Safety nets

Track #1 - Criminal Per Se Offences

• If purpose or effect of agreement to:
  
  
  • Fix prices;
  • Allocate customers or markets;
  • Reduce output;

cartel behavior constitutes criminal offence, without competitive test.

Track #2 - New Civil Strategic Alliance Provision-s. 79.11

• Only Commissioner may file application with Tribunal
• Test re: substantial prevention or lessening of competition in market looks at similar factors applied to mergers
• Tribunal may prohibit agreement and impose AMPs
• No duplicate proceedings to s. 45, s. 79 or s. 92

Carve Outs

• To avoid per se conspiracy over-reach:

Ancillary restraints defence

• Block exemptions

Ancillary Restraints Defence

• Accused must establish, on balance of probabilities, that ‘per se' side agreement is:
  
  
  • ancilliary to a principal agreement;
  • necessary to implement principal agreement; &
  • that no less restrictive alternative available to implement principal agreement.
• No criminal liability flows from ancilliary agreement unless court finds principal agreement alone per se anti-competitive
• Provides safe harbour from strategic litigation (s. 36)

Block Exemptions

• Exempts any class of agreements from per se conspiracy provisions of s. 45(1)
• Exemptions by industry sector or activity
• GIC order on recommendation of Ministers of Industry and Justice; on the advice of Commissioner

Safety Nets

• To provide predictability to stakeholders:
  
  • new clearance certificates
  • binding written opinions

Clearance Certificates

• Can apply to Commissioner for clearance certificate; voluntary process similar to ARCs
• Civil track: Whether grounds to apply to Tribunal for order against a strategic alliance?
• Whether written opinions?

s. 36 Civil Cause of Action

• Continues to apply to per se criminal cartels
• Will apply to s.79 abuse cases including anti-competitive, Track 2 strategic alliances
• Covers loss or damage suffered plus costs of proceedings
• Any court of competent jurisdiction

Housekeeping Matters

• Should current s. 45 defences be repealed?
• Transitional provisions for existing agreements

Next Steps

• November/December 2003: National Round Tables
• Early 2004: Public Policy Forum Report