Remarks by John Pecman, interim Commissioner of Competition

CBA Spring Speech

Toronto, Ontario

May 28, 2013


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Introduction

Thank you for welcoming me today.

As you know, I have been serving as Interim Commissioner for eight months now.

And while some days, those eight months feel like eight years, I have been humbled every day of those eight months by the privilege of serving Canadians in this role.

It is truly an honour.

Although I kid about those eight months feeling like eight years, it is true that each Commissioner comes to the role with his or her own ideas, goals and priorities.

I know that for my staff and colleagues at the Bureau, the considerable amount of work that has gone on at the Bureau in the last eight months, makes those eight months feel like eight years.

We have undertaken and accomplished so much during this time — and I must acknowledge their tireless efforts.

When I assumed the role of Interim Commissioner last fall, I consulted with my colleagues about the direction they envisioned for the Bureau, and how they saw us achieving that.

I took their input, and then took time to reflect and consider how we could best deliver on our mandate going forward. From this came my three priorities for the Bureau.

They are:

  • benefitting Canadians, through focused enforcement and through strategic regulatory interventions;
  • applying Canada's competition laws in a transparent and predictable manner; and,
  • building trust through enhanced collaboration.

Delivering on these priorities is how we will continue to ensure that Canadian businesses and consumers prosper in a competitive marketplace.

But this won't happen in isolation. This is precisely why I have spent the previous eight months, building toward greater collaboration with our stakeholders, like the CBA.

I have said this before but it bears repeating: I believe that successful collaboration is built on mutual trust, which begins with open lines of communication.

This is why I have made it my personal priority to build trust through collaboration between the Bureau and all its stakeholders.

I believe that transparency, certainty and predictability are essential to our future success.

So today, in this vein, I want to talk to you about some of the work we have done at the Bureau; some of the work we are going to do; and how we plan to work together, with stakeholders like the CBA, to get that work done.

But first, I want to begin by speaking about what underpins all of that — the law — and specifically, compliance with the law.

Compliance with law

Companies engaging in anti‑competitive activities face an increasing regulatory risk — not only in Canada but around the world.

They face stiff monetary penalties in the European Union. In the U.S., the risks go beyond fines: individuals face serious jail time for cartel offences.

The number of countries with competition laws is growing and, at the same time, we are seeing increasing and better cooperation between countries with competition laws through forums like the OECD, the ICN, ICPEN and regional competition networks.

And, it is now common for bilateral trade and cooperation agreements to expressly contemplate coordination between antitrust agencies.

In short, both the likelihood of detection and prosecution are increasing. And with increasing cooperation and coordination between agencies, there are fewer places to hide.

Even within Canada, as a result of the Bureau's focused and principled approach to enforcement, awareness of anti‑competitive activity has been heightened with Canadians and Canadian businesses, increasing the risk for non-compliant businesses.

Warren Buffet once said: "It takes 20 years to build a reputation, and 5 minutes to ruin it. If you think about that, you'll do things differently."

While it is clear that the legal and economic risks of non-compliance far outweigh any perceived advantages, in this age of real time, consumer driven communications, Mr. Buffett's advice is especially pertinent as the true risk of engaging in anti‑competitive behaviour is that it can, very quickly, demolish a reputation that took decades to build.

The reputational cost to non-compliant companies doing business in today's information age is compounded by two factors:

  • First, the impact of negative publicity is multiplied by the ability of social media and other tools to spread that information quickly.
  • And second, consumers are demanding a higher standard of corporate ethics from the companies with whom they do business.

Businesses, on the whole, want to comply with the law, and we have seen that first hand.

The incentives to do so are readily apparent. No company wants to be on the losing end of a negative news story — particularly if that story was entirely avoidable.

And despite what Oscar Wilde might have you believe about there being no "bad publicity" — there is no advantage to being this year's Enron.

Complying with the law offers businesses a competitive advantage in all important aspects — financial, reputational and in recruitment and retention.

We recognize this strong desire to comply and to support that, we want to ensure that companies understand very clearly what is expected of them by the law.

And so, we view compliance as a joint endeavour.

The Bureau promotes compliance through effective enforcement and by providing the tools that assist the corporate community in developing corporate compliance programs.

Businesses promote compliance by implementing corporate compliance programs and monitoring those programs to ensure that both the business and its employees comply with the law.

A credible and effective corporate compliance program is a crucial element of a good governance model and insurance against the reputational damage I just referred to.

In saying this, I want to underscore that, policies, procedures and training cannot and will not, on their own, ensure compliance.

In order to be effective, corporate compliance programs must be enacted, monitored and updated; otherwise, they are not worth the paper they are printed on.

There is little merit to having a perfectly written compliance policy that is not being abided by senior management, let alone employees at the ground level.

Successful compliance begins with a corporate culture that instils compliance as one of its fundamental values. That culture must start at the very top, with senior management actively and visibly participating in and promoting compliance.

We want businesses to do this, as do you and we know through our outreach and discussions that the majority of businesses want to comply.

We know that our goals are aligned. And so, it falls to us now to work together to achieve our shared objective of greater compliance with competition law.

Collaboration

And on that note, it seems to me that this is the ideal time to talk about some of the changes that have occurred at the Bureau within the previous year.

Of those changes — the most significant, and the one I am going to touch on now, is our approach to collaboration.

This can only be achieved if we work together — which is where collaboration comes into the picture.

When I speak about collaboration, as it relates to our stakeholders, like the CBA, it is about working together on the development of the practices, policies and procedures that inform our work.

And, as you may know, we have moved forward on doing so with the CBA in a number of areas, through Bar/Bureau Working Groups, including:

  • Updating our Immunity and Leniency FAQs, to reflect developments and to respond to feedback; and
  • E-evidence, where we are working on ways to streamline electronic document production during Bureau investigations.

We will continue to engage with the CBA to discuss areas of interest for both the Bureau and the Bar.

For example, we recently held a roundtable discussion with the Merger Sub-Committee, where revised Merger review processes were announced and discussed — helping enhance predictability of our reviews for businesses as they consider transactions.

Similar roundtables took place yesterday with the Criminal Matters and Fair Business Practices sub-committees and will take place in the near future with the Civil Matters sub-committee.

Changes in approach

This more collaborative approach is not limited to our relationship with our stakeholders.

In an effort to foster a greater culture of collaboration and to further empower the Bureau's management team, greater authority has been delegated to our Deputy Commissioners.

For example, Deputy Commissioners now have delegated authority to commence inquiries.

A few months ago, several committees at the Bureau were reinstituted, including the Enforcement and Policy Committee, the Bureau International Committee and the newly created Human Resources Committee, all of which are intended to move us toward adopting a cross-Bureau approach in key areas.

Another Bureau initiative aimed at enhancing collaboration between the Bureau and the businesses is the establishment of sector days where companies are invited to provide us with first-hand knowledge of the nature of competition in their sectors and what forces are shaping change in the marketplaces they operate in.

These sector days are a further step in building that crucial dialogue between the Bureau and the drivers of Canada's economy.

Recently, we began to proactively seek out areas where we can advocate in favour of increased competition — incrementally increasing our use of strategic regulatory interventions.

As the regulated sector represents a quarter of our economy — there is a potential to have an immediate and significant impact on the market by increasing competition in these areas.

Our first intervention came in March of this year when we made a submission to the CRTC consultations on the wireless code of conduct.

Our approach to these interventions is evolving and we are considering all options within the regulated sector.

Shortly we will be actively seeking feedback from our stakeholders, including the CBA, and we will be open to hearing all thoughts on how we approach these interventions going forward.

Bureau without borders

Having reviewed many of the recent changes at the Bureau, I would like to speak to you briefly about the vision that this change is building towards — about my vision for the Bureau.

My vision is to see a Bureau without borders — one where our enforcement reach is not strictly limited by resources or constrained by international or domestic jurisdictional boundaries.

A Bureau where we collaborate with our stakeholders, like the CBA and cooperate with our enforcement partners to strengthen our capacity and broaden our reach.

I recognize that tearing down those walls, and building the kind of Bureau I am referring to, like Rome, won't happen in a day.

But, I believe that the way to achieve this is by working with our partners in the spirit of collaboration I referred to earlier, with a more inclusive and open approach — one that is about promoting confidence and increasing compliance with competition law.

By now you are likely asking yourselves, through what means, do we expect to deliver on this Bureau without borders.

Transparency initiative

And today I am pleased to announce a critical first step through the Bureau's Transparency Initiative which is intended to promote the development of a more efficient and responsive agency, while providing Canadians with more opportunities to learn about our work. Further details of which will be published on our website later today.

This highly important initiative will see us disclosing information about Bureau operations in a more fulsome and proactive manner.

I am pleased to share with you today some initial details about our Action Plan for the Transparency Initiative, which will build on the Bureau's existing transparency mechanisms in a way that is both consistent with Canada's Open Government strategy and appropriate for a law enforcement agency.

The primary objectives of the Action Plan are:

  • To promote the Bureau's overarching policy commitment to transparency and accountability.
  • To identify future transparency initiatives and guidance.
  • And, to increase the quality and quantity of available information about the Bureau's activities.

We will accomplish these objectives through a number of different initiatives, for example:

  • By continuing to consult on important issues, including the development of new bulletins and guidelines.
  • By publishing information about the outcome of our inquiries.
  • And by, developing guidance on investigation and stakeholder communications.

In keeping with our focus on collaboration, we are developing stronger working relationships with regulators, who have shared responsibility with respect to particular industry sectors, to provide additional clarity and predictability for the business community.

We will also actively solicit external expertise and perspectives to better inform the application of our policies and practices.

Cooperative approach to enforcement

Another means by which we are hoping to build this Bureau without borders is by adopting a cooperative approach to enforcement.

We are, and will continue, to work co-operatively with both domestic and international enforcement partners.

We are developing "pick up the phone" relationships with our counterparts in other agencies.

The goal here is to increase our own expertise, to increase the effectiveness of our enforcement activities, and the enforcement activities of our partner agencies at home and abroad.

We are also undertaking this approach in our mergers branch — which is continually seeking ways to improve the effectiveness and efficiency of its merger review process.

This year, the Branch undertook a review of its process for reviewing mergers in the upstream oil and gas sector, as a significant portion of the Bureau's merger reviews occur in this industry sector.

This review was undertaken to provide greater clarity to stakeholders as to the type of information required by the Bureau and to identify ways in which the Bureau could find efficiencies around time and information requirements.

The Bureau is building trust and increasing certainty in its approach to move toward a "fix it first" environment in mergers that will see companies approach us in advance of a merger review with their potential competition issues and possible solutions.

We are also increasingly moving toward providing greater visibility into the economic analysis we undertake in the course of our reviews.

This facilitates greater dialogue between the parties and advances the ultimate goal of expediting the entire process.

And, this approach is proving to be a demonstrated success, as we have witnessed in recent transactions reviewed by the Bureau.

Through increased transparency related to our reviews, we were able to reach consensus on key points, specifically on areas related to methodology and assumptions.

Another way in which we are adopting this approach is by encouraging "self reporting" of offences. And we know, from extensive experience with our Immunity and Leniency programs, that this is an effective tool.

On that same theme, I am pleased to share with you that today we will be launching an important initiative that the Criminal Matters Branch has been working on: The Criminal Cartel Whistleblowing Initiative.

Again, full details regarding this initiative will be available on our website.

This initiative is a way for members of the public to provide information to the Bureau regarding possible violations of the criminal cartel provisions of the Act.

Anyone who has reasonable grounds to believe that a person has committed, or intends to commit, a criminal offence under the Act, may notify the Bureau of the particulars of the matter and may request that his or her identity be kept confidential.

The Bureau will keep confidential the identity of a person who has made such disclosure and to whom an assurance of confidentiality has been provided.

The Bureau will also ensure that any information provided by a whistleblower that is communicated to other law enforcement agencies does not reveal the identity of the whistleblower.

We believe that this initiative will support increased reporting of anti‑competitive behaviour, while ensuring the protection of individuals who come forward with such information.

Case update

I have said quite a lot about cooperation and collaboration today, and while this is clearly a priority, I want to make it clear that, as an independent law enforcement agency, our job, first and foremost, is the principled enforcement of the Act.

Although we attempt to resolve matters consensually, when an agreement cannot be reached, we will not hesitate to seek a remedy before the courts.

On that note, we have seen a number of enforcement matters brought forward this year and I would be remiss if I did not highlight some of these.

Only a few weeks ago we witnessed both a Bureau milestone and the effectiveness of our Immunity and Leniency program, when a Japanese supplier of motor vehicle components was fined $30 million by the Ontario Superior Court of Justice for its participation in a bid-rigging conspiracy.

This fine is the largest ever ordered by a court in Canada for a bid-rigging offence.

We also recently filed applications against Direct Energy and Reliance in respect of abuse of dominance in the residential Water Heater market, and the litigation against Bell, Rogers, Telus and the CWTA for misleading advertising related to premium texting services continues.

Also notable was our success in the CCS/Tervita landfill case. The parties have recently sought leave to appeal the decision to the Supreme Court, a decision we will continue to vigorously fight.

Conclusion

I have spoken extensively today about change at the Bureau.

When you undertake broad change — it is always with the purpose of building toward something. You simply don't initiate change without an end goal in sight, without some kind of vision for where that change is going to take you.

It is my belief that, with collaboration as our foundation, the change we have initiated will support us as we build a Bureau without borders.

And it is my sincere hope that you, the members of the CBA will join us as our partners in building that Bureau.

Thank you.

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