Speaking Notes for Melanie L. Aitken, Interim Commissioner of Competition

Competition Bureau

To the Northwinds Professional Institute 2009 Competition Law and Policy Forum Cambridge, Ontario

February 12, 2009

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Introduction

Thank you for your introduction, and for this opportunity to join you at the 2009 Competition Law and Policy Forum.

This is my first opportunity to speak to the competition community since being appointed Interim Commissioner in mid-January, but of course I know most of you well from my days in private practice, as well as in my most recent capacity as the Senior Deputy Commissioner of Mergers. I am very pleased to share with you this evening my perspectives on the current direction and enforcement philosophy at the Bureau.

It will likely take several months before the Government appoints a Commissioner of Competition for a full, five-year term. I can certainly appreciate that many of you are looking for signs of what our level of activity will be in the coming months, and where our priorities will lie.

Amendments

Naturally, there is no question that some of our attention will be absorbed by the competition components of the Budget Implementation Act introduced in the House of Commons last week. We had been looking forward to seeing how the Government would respond to the recommendations of Red Wilson's Competition Policy Review Panel. And now we are listening with interest to the ongoing Parliamentary debate. As you are no doubt aware, these amendments would change the Act in several important ways.

Most of the attention so far has been paid to the merger amendment, but we believe there are other important changes that will result in an improved Act that will bring more clarity to business, and will result in increased deterrence for those contemplating or engaged in illegitimate activity.

To name just a few, the proposed amendments would:

• introduce a dual-track approach to agreements between competitors, with a limited criminal anti-cartel provision and a civil provision to address other agreements that substantially lessen or prevent competition;
  
  
• repeal the provisions dealing with price discrimination and predatory pricing, replacing the criminal resale price maintenance provision with a new civil provision to address price maintenance practices that have an adverse effect on competition, and repeal all provisions dealing specifically with the airline industry; and
  
  
• introduce an administrative monetary penalty for cases of abuse of dominant position, and increase the maximum amount of administrative monetary penalties for deceptive marketing cases.

I can tell you that soon, we plan to make public draft guidelines on how the merger process would work, and similarly, on how the new cartel and civil agreements provisions would be enforced. These guidelines would be open for public consultation in the regular course, offering the Bar an opportunity to give us the benefit of practical advice to ensure the ensuing processes are as clear and efficient as possible.

Timing

What is before us in the coming weeks on the legislative front is to watch closely the important activity playing out in Parliament, which must follow its course.

At the same time, it is critical that we keep our eye squarely on the current economic environment and consider how we can most effectively discharge our mandate.

Needless to say, these are interesting times. These are challenging times.

In that regard, we are extremely fortunate that the Bureau is in a good state of preparedness to confront these challenges. Certainly, it remains a work in progress but, to my mind, the Bureau is unusually well-positioned in a number of ways to ensure that what should and must be done to protect the competitiveness of Canadian markets can be done. And, I should add, done effectively and efficiently, with a recognition of the tough economic times and the ever-increasingly global nature of our economy.

First, there is a much improved working relationship with the Bar, one of our key and valuable constituencies. While we do not, of course, agree on every issue, we ultimately have a shared purpose--a fair and competitive marketplace that will spur innovation. This willingness of so many of you to devote energy to thoughtful reflection, and to voice your views, allows us at the Bureau access to that valuable perspective.

As you know, I’m a believer. The joint endeavour to identify sound policy and procedures is a win-win-win situation – for the Bar, for your clients, and for getting the most out of our resources at the Bureau.

Second, and in considerable measure a function of my first point, the Bureau is completing a round of updating all of our guidelines and bulletins to reflect the most current antitrust thinking and to incorporate best practices. This work will bear fruit as we move forward: through increased clarity for business and consumers, and an ability to focus our enforcement efforts at the Bureau most meaningfully.

Third, the unprecedented level of cooperation and coordination with our peers in our key trading partner jurisdictions has positioned the Bureau to do so much more with less. This is true whether we are speaking about cracking down on unambiguously harmful cartels, working with merging parties to align and streamline reviews, or assessing other conduct.

The work of competition authorities is important in any economic environment, but never more so than when the economy is retracting. These are times when the stakes are higher. For companies and consumers, timely, transparent and predictable application of the law is arguably more important than ever. Staying true to competition principles is not a luxury, to pursue only when there is a perception we can afford it; quite the contrary. In tough times, we need to be vigilant to ensure that lasting harm to competition does not result from unscrupulous exploitation of vulnerable consumers and business, or even a well-meaning but misguided relaxation of standards.

I am grateful for the good timing that has allowed the Bureau to be in such a strong position to grapple with the challenges that lie ahead.

So, let me start with the first strength—relations with the Bar.

Relations with the Bar

I dare say that the collaborative work in the area of enforcement guidance reveals our relationship at its best. True, one might be discouraged if one took to heart some of the animated, uniquely Canadian "dialogue of compromise", about what some believe our competition laws ought not to be able to address. But I remain confident that we share a desire to ensure that markets in Canada are competitive, fair, transparent and predictable, encouraging innovation and choice. Plays for short-term strategic advantage are to be expected. But, fundamentally, what I see is healthy pressure brought to bear so as to always be testing the appropriate scope and tools for competition enforcement, rather than any genuine desire to abandon antitrust principles.

Reflective of our shared appreciation for the value of constructive debate was the October 2007 endorsement of a protocol with the Canadian Bar Association. The protocol clarifies our rules of engagement with the Bar on matters of enforcement policy, and has already led to a more open dialogue. We have an improved dynamic, and have largely, on both sides, left behind a tone that often frustrated our ability to communicate effectively. Through the hours spent together debating tough but important issues, we now have a more nuanced understanding of one another’s perspectives. Work continues under the auspices of this initiative, including working groups and "quiet consultations". As many of you know, as participants, this work includes formulating recommendations on production orders, hostile transactions and leniency, to name a few.

This shows us at our best, working together for the betterment of the law and its application, and reminds us that whatever the distractions and debates of the day, there is always a way forward. I will be on the lookout for opportunities to engage in open discussion with the Bar, to continue our collaboration.

Rigorous and Transparent Enforcement Documents

We have substantially completed a round of reviewing all of our enforcement guidelines and bulletins. We have reflected in these documents the most current thinking and best practices, informed by what jurisprudence there is, on a range of issues--from predatory pricing to sentencing and leniency to abuse of dominance. We have also created and consulted on a number of new guidance documents, including those related to trade associations and efficiencies in merger review.

Many of you have consulted extensively with us on these important documents. Let me note how invaluable that contribution is, and how much we appreciate your collaboration.

International Cooperation

To address what I believe is a third pillar to our readiness, a word about our international strengths.

We have established and intend to continue to build upon our strong partnerships within the international competition community. By reaching out to lend a hand, or to accept one, we enhance our capacity to conduct effective investigations and reviews, and dramatically improve the output of our enforcement efforts.

Among the innovations of which we are most proud is our preparedness to acknowledge that, in the mergers context and in certain circumstances, there is enormous value to integrating our remedies with others’. Specifically, where we at the Bureau are satisfied that a remedy designed and/or implemented in another jurisdiction will adequately address Canadian issues, we will agree to support or use as a starting point the remedies agreed to in those jurisdictions.

We see real value, in the sense of efficiency, but most importantly in terms of effectiveness, in implementing coordinated and, where appropriate, less formally memorialized, resolutions. Recent examples where we have been fortunate to be able to work closely with our US and other international counterparts include the Dow/Rohm and Haas and Thomson/Reuters resolutions.

More generally, we are very gratified that, in virtually every international matter, among the first steps is to contact one another to explore how we can cooperate. The recent experience concerning our respective reviews of the Google/Yahoo! agreement demonstrated the novel ways in which international cooperation can significantly improve the efficiency and effectiveness of our decisions. To my mind, the key is that trusting relationships have been developed—for which I commend the Bureau staff and, in particular, those at the US agencies and the European Commission.

International co-operation is proving as important in cartel investigations, where we integrate our investigations, where allowed by law and where appropriate. This co-operation has become easier and more natural as the result of the regular bilateral meetings we now have with U.S., EU and Japanese cartel investigators.

Perhaps there are some nationalists who would prefer a completely separate course of action in Canada concurrent with the U.S. investigation. Or those who would prefer that we waited until the other agency had played its hand. I am absolutely convinced that would be a mistake, for which Canadian consumers and business would pay dearly.

We will continue to work closely with our American and other international colleagues to perform better investigations, and to design ultimately better and more effective remedies, by implementing measures that take appropriate account of what is being required elsewhere.

Enforcement

Finally, I would like to take a moment to speak about enforcement.

Specifically as to cartels, always our first enforcement priority, we have made significant progress in our international efforts. And we intend to continue our integrated investigative approach to this harmful criminal activity. At the same time, it is important that we get our Sentencing and Leniency Bulletin 'right'. We need to ensure that we have a practical document, accessible by domestic and international players and advisors alike. We also want to ensure that we provide incentives for parties to come in and co-operate with the Bureau’s investigation.

While the large fines from international cases can make for some impressive totals, cracking down on domestic cartels can have a very powerful impact not only on the specific markets affected, but in deterring others by demonstrating that we are ‘on the beat’, and deeply concerned about detecting and stopping such illegal activity in our own backyard.

This is critical work for us in making competition work for Canadian businesses and consumers. To that end, we will continue to focus on priority areas such as domestic cartels and, in particular, bid-rigging—an area we reasonably fear may see an up tick in activity in view of the likely significant increase in public infrastructure spending.

As to criminal conduct, ours is a simple message: While this is often painstaking work, we will not hesitate to take action where we find clear evidence that the Act has been violated.

On other fronts, as to where I see the Bureau headed, I believe we need to bring responsible cases to court or to the Competition Tribunal. While we must always be measured, we should not be paralyzed by the fear of losing. Jurisprudence brings clarity. It sharpens the lines, marking the bounds of acceptable conduct.

Whether we win or lose, provided the case is responsible, we will achieve three objectives that are important to us, important to you, Canada’s competition advisors, and important to Canada’s competition framework.

First, we shed light on the issues before the courts. This alone will help deter anti-competitive conduct.

Second, we clarify and provide transparency. Guidelines on complex enforcement issues can only go so far. Greater clarity and transparency comes from jurisprudence.

Third, we demonstrate that we have the will to enforce the law. There is no substitute for this will as a deterrent to individuals and companies to refrain from anti-competitive conduct and practices.

To my thinking, we are well prepared, and the time is right.

We know that, in the current economic environment, there will be a particular temptation to attempt anti-competitive behaviour. We need to deter that. And, we anticipate more mergers involving firms with claims of financial distress, which may or may not satisfy the conditions associated with a legitimate failing firm defence. Here, we must be clear, timely and decisive. However, at the very time we seek to deliver on those imperatives, we expect some in the competition community will urge the Bureau to somehow ‘lighten’ antitrust scrutiny in this time of economic crisis, abandoning principled application of the standards in our Act.

This is an important message I would like to leave with you. From my perspective, there is only one starting point. Canada’s Competition Act is, with certain limited exceptions, a law of general application, capable of accommodating both ordinary and extraordinary market conditions. Accordingly, just as the Competition Act applies during times of prosperity to prevent conduct that deprives markets of the innovation, efficiency and productivity that would otherwise be fostered, it is of equal, or greater, importance during times of economic hardship.

I assure you that there will be responsiveness; there will be flexibility; and there will be creativity and hard work to help Canadian businesses and consumers weather these conditions and rebound. But 'competition lite' is no option; we would be abandoning Canadians just when the long-term health of our economy most depends on us.

Conclusion

In a global marketplace, Canada’s ability to attract investment, encourage competitive companies, and innovate will depend, in part, on our ability to enforce the rules and advocate the policies that make the marketplace competitive and honest.

In so doing, we will continue to depend on the Bar’s knowledge of, and concern for, the principles of competition law to make the process work for business, the economy writ large, and ultimately for the public interest, the raison d’etre of the Act.

For the reasons I mentioned earlier, I believe the Bureau is well prepared to confront the challenges before us. We are ready and are committed to remaining at the forefront of competition policy. We will be responsible in our thinking, and appropriately thorough in our assessment and enforcement. We will be part of putting Canada and Canadians in a position to "Compete to Win".

Thank you.