Remarks by John Pecman, Commissioner of Competition
October 24, 2013
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Thank you for inviting me to join you here today. You know, I truly can’t underscore how important it is for us at the Bureau to get out of that office tower in Gatineau to hear about and discuss important issues with our stakeholders — including the people in this room.
I know how much work goes in to organizing events like this — so thank you. Thank you for inviting Kelley and I to join you today.
Priorities — 4Cs
When I come to events like this, and I ask "what do you want me to speak about", the first thing they say is "we’d like to hear about your priorities".
Well, for the last year, I’ve been talking about how my priorities relate to enforcement and advocacy, to applying our laws in a transparent and predictable manner, and to building trust through collaboration.
These priorities are well captured by what I like to call the "4Cs":
- Communication; and
The first "C" is compliance — with a focus first on shared compliance.
Now, you may be wondering what is meant by shared compliance. Shared compliance is really about the roles that we all play in ensuring compliance with the Competition Act and other legislation enforced by the Bureau. And by "all" I mean the Bureau, the legal community and the business community.
- The Bureau promotes compliance through a wide variety of tools, including publications, advocacy, suasion and enforcement.
- The legal community promotes compliance by making clients aware of their obligations under the Act.
- And, the business community promotes compliance by putting in place, and following, credible and effective compliance programs.
Through shared compliance, we can achieve immeasurably more than we ever could do alone, to the benefit of consumers, business and the economy. It helps ensure fair play in the marketplace, which levels the playing field and results in increased economic development.
As part of advancing shared compliance, the Bureau will be updating and rebranding the Conformity Continuum and the Compliance Bulletin.
The Conformity Continuum explains our approach to the administration and enforcement of our Acts: the Competition Act, the Consumer Package and Labelling Act, the Textile Labelling Act, and the Precious Metals Marking Act. Its purpose is to provide a fulsome description of the methods we use to obtain compliance with these laws. It is meant to provide businesses and individuals with the right knowledge to support compliance.
The Compliance Bulletin lays out measures that can be taken by businesses to prevent or mitigate their risk of contravening the Acts, and to detect contraventions, if and when they occur. It also provides tools to support businesses in developing credible and effective compliance programs.
As we move forward with changes to these important documents, we will be establishing a working group to solicit views on our approach and will be consulting with stakeholders like you.
While our first goal is to promote compliance, we will vigorously enforce our legislation in the case of non-compliance. In other words, strong enforcement will be the stick to ensure that compliance occurs.
My second "C" is collaboration — back to that theme of working together.
This really ties in to a theme I’ve speaking about for some time and that is: building a Bureau without borders. So, this is about continuing to work with our partners and stakeholders toward building a Bureau where our reach is not strictly limited by resources or jurisdictional boundaries.
How does this happen?
Well, by working through our seven law enforcement partnerships, such as the Toronto Strategic Partnership, the Alberta Partnership, the Vancouver Strategic Alliance and the Atlantic Partnership, and with other law enforcement agencies, such as the RCMP, the OPP and the Toronto Police Service. We are also moving toward greater collaboration with other partners and stakeholders, such as the Unité permanente anticorruption (UPAC), which is responsible for investigating corruption and related conduct in the Quebec public system.
We have recently signed MOUs with CRTC and Public Works, which will see us collaborate, work together and have a guiding document that shines a light on that. We are working on an MOU with the Canadian Intellectual Property Office, which is housed in the same building as us; this relationship will be very timely and important given emerging IP issues.
Internationally, we will continue to deepen our relationships and cooperation on trans-border investigations with our traditional partners across the globe and will also look to working much more closely with emerging agencies, particularly in Latin America.
As you can see, collaboration is a big piece in my view. It’s building toward us becoming an integrated enforcer — an enforcer that does not operate in a silo but works with other agencies, other partners at all levels.
The third "C" is communication.
What I mean by this is that we’re increasing the level of communication and outreach from the Bureau to our stakeholders and partners. So, in the coming months you are going to see more of our Deputy Commissioners and Assistant Deputy Commissioners out on the road, talking about what we do, promoting who we are and really increasing that public’s understanding of our role.
It goes back to what I said earlier. If you’re spending all your time in an office in Gatineau, you can’t get an understanding of what the real issues are. We want to know what those issues are and we are going to push forward with this.
The Bureau’s role in advocacy also fits in here. We will continue to advocate for open markets, in areas of our economy which are still regulated and where open markets will work, we will continue to advocate.
The final "C" is Canadians — which refers to our goal of strengthening the Bureau to ensure that Canadian consumers and businesses continue to prosper in a competitive and innovative marketplace.
Last week’s Speech from the Throne spoke directly to the importance of healthy competition for both Canadians and the Canadian economy. In it, as you may know, the government announced that it would be taking further action to protect consumers and end price disparity.
We are pleased to see the government move forward with this approach: promoting consumer welfare is well aligned with the direction other prominent competition agencies are taking. And we are most certainly looking forward to working with the government to advance this priority.
I want to come back to shared compliance for a moment. As I stated earlier, our vision of shared compliance is one in which we all recognize our collective responsibility for compliance, and where businesses make competition law considerations an integral part of business decisions as part of their overall social corporate responsibilities.
In order to accomplish this, we are looking at three pieces:
The first is building our own internal expertise in corporate compliance and ethics. We are presently looking at what kind of approaches we should take, and where we should be looking to bolster our capacity in this regard. We are examining the possibility of a Bureau officer serving as an internal liaison on compliance issues. At this point we are envisioning a person who would serve as a source of expertise on corporate compliance and ethics in the Bureau.
We are also looking to our partners in other enforcement agencies for current data on corporate compliance behaviour in their respective jurisdictions.
The second piece is about collaboration — clearly a recurring theme at the Bureau. Here, we will be looking at bringing together a working group that will include internal Bureau representatives, subject matter experts and stakeholders. The goal here will be to explore what kind of guidance the Bureau will provide. We will look at standards of conduct that will promote competitive behaviour and the use of risk-based tools to illustrate competition risks. We will also be holding roundtable discussions on compliance and ethics programs.
Finally, the last piece is around enforcement. The Bureau will be looking at incentives to reward credible and effective compliance programs, as well as how to ensure effective deterrence of anti‑competitive behaviour. We will be examining the possibility of independent compliance monitors and Bureau responses to reports of misconduct.
I know we have a number of people with us today from trade and industry associations and so I am going to touch briefly on some things that will be specific to you.
I understand how trade and industry associations provide a forum for different people from the same industry to interact, to network, and to develop educational programs and public relations campaigns. These are just a few of the many benefits — and I know there are more. But this forum brings together competitors which, by its very nature, heightens the risk of violating the Competition Act, unless preventative measures are put in place.
I know that most associations are particularly sensitive to this fact, and take steps to minimize risks arising under the Act. I also know that we are often asked to give associations direction on how to avoid non-compliance. Here are the three best pieces of advice I can give to associations and their members:
- Develop a corporate compliance program, update it on a regular basis, train your employees to ensure they understand it and then, enforce it.
- Avoid improper communications with competitors on prices, output, markets and customers, as well as on bids. I don’t think I need to underscore how timely that last bit is.
- And finally, if you are uncertain about something you are planning to do — seek legal advice. Your counsel will be pleased to give you that advice — that’s their job.
Exchanging competitively sensitive information can raise significant legal issues, regardless of whether it takes place around a boardroom table or at a cocktail reception — so, exercise caution at industry networking events.
Here are a few additional things that will attract the Bureau’s attention:
- Sanctioning or discriminating against members that do not adhere to recommended fee guidelines or other rules with respect to competitively important considerations.
- Using association rules to establish prices, mandate levels of service, restrict advertising, or to exclude viable competitors from the market.
- Making materially false or misleading representations to the public in promoting the business interests of the association’s members.
Without getting to "in to the weeds" here — these are all things that are well known, and are fairly plain, and, as I indicated earlier, if you have doubts — please seek out some advice. There are plenty of folks who are well qualified to offer legal advice to guide you away from any possibly illegal and potentially embarrassing situations.
On a final note on this, I would like to just reiterate what I said earlier, that while we are looking first to shared compliance, if that does not happen, we will not hesitate to follow through with enforcement. I have spent a lot of time talking about the proverbial carrot and I want to make sure that no one forgets about the stick.
So what we’re saying is that out of the gates, we are working toward prevention and cooperation, that is our first goal, and our ideal, but that does not mean we are setting aside enforcement in favour of playing nicely with those who run afoul of the Competition Act.
Make no mistake — the Bureau is on the beat.
Our enforcement branches are working flat out.
And it’s reflected in our numbers.
In our most recently completed fiscal year, we had 67 formal inquiries in progress and initiated 130 preliminary examinations. We presently have 22 cases which are either before the courts or the Tribunal and 81 active major enforcement investigations.
The Bureau has been active in a number of key economic sectors, such as telecommunications, financial, transportation, retail, real estate, and oil and gas.
So, where enforcement is concerned — there is no slowing down. Our staff are working tirelessly to ensure that those who engage in anti‑competitive behaviour are held accountable.
And you can also expect that we will continue to strengthen our investigation techniques and to use all of the tools that we have at our disposal to enforce the Act in a consistent and transparent way.
Use of S.11
One of those very essential tools is the use of section 11 orders. Section 11 orders are used by the Bureau to compel the production of relevant documents, written returns and oral testimony.
These subpoena powers are essential because they ensure that the production of evidence is required by the courts and is subject to serious sanctions if it is not complied with fully.
I know that many of you in this room will be aware that last fall I committed to increasing our use of section 11 orders. At that time, I outlined the rationale behind this decision. Essentially, this important investigative procedure enables the Bureau to protect the integrity of our serious investigations.
I’d like now to update you with regard to the direction we are taking with these orders and some of the work we have undertaken.
We are regularizing our approach with a view toward having a more consistent approach to the crafting and content of section 11 applications for civil matters.
And, in the spirit of the transparency I continually talk about, I want to share some information with you in regard to that change in approach.
To begin with, this new approach will be better for all parties.
It will mean that we apply the same framework for information being sought, the same approach to the explanation of circumstances.
It will also allow us to more clearly understand what information the subject of an order previously had in its possession and why it no longer has this information.
This new approach will see an improvement in clarity of the purpose of a section 11 order.
We will be improving the specs, which means that the specific information and documents required to produce will be more targeted to the investigation.
I want to be clear here: this does not mean that we will be demanding more or less information, simply that the information request will be more focused on the investigation.
For example, it makes little sense to ask a senior agent of the company to produce documents relating to consumer complaints, when that information is better requested from the Director in charge of consumer complaints.
Finally, we will not be employing pre-issuance dialogue in every case and instead, will do so only in those cases where it is helpful to the process of obtaining information.
This is about being more efficient, to the benefit of all.
Section 11 orders are a key investigative tool for the Bureau and we intend to use them to their fullest extent, including increasing the use of oral examinations under oath.
I know that many of you in this room will be aware that our Mergers Branch has been very busy of late.
Earlier this week we announced that we had reached a Consent Agreement with Sobeys Inc. to resolve concerns related to Sobeys’ proposed takeover of Safeway Inc. that preserves competition for the retail sale of groceries in Western Canada.
We also announced that we will not challenge the proposed acquisition by Cineplex Inc. of 24 movie theatres from Empire Theatres Ltd. The decision came after Cineplex withdrew plans to acquire two additional theatres from Empire in light of competition concerns we identified.
I won’t discuss either of these cases further, as we have the very capable Kelley McKinnon here, who is the Senior Deputy Commissioner of our Mergers Branch and who will be speaking momentarily. But what I will say about these cases is that they are excellent examples of how we can achieve results through cooperation and of the shared compliance that I spoke to earlier.
You may also be aware that we recently decided not to appeal to the Tribunal’s ruling in the credit cards case. We will instead direct our efforts toward identifying alternate means of addressing the competition issues in the supply of credit card services in Canada.
We remain hopeful of working collaboratively with Visa, MasterCard and others to achieve a result that is beneficial to both Canadian consumers and merchants alike.
Finally, you may be aware that last month we launched a public consultation to gain insight from Canadians about where they believe the Bureau could play a targeted role in advocating for greater competition.
This is part of what I spoke to earlier about our role in advocating for more competitive markets in Canada.
We will continue to advocate to regulators and policy makers that they regulate only where necessary and that they rely on market forces as much as possible to achieve the benefits of competition.
The deadline for feedback is November 8th, at which point we will gather the input that we have received and assess potential projects. So, on that final note, I would like to encourage anyone here with ideas to put forward to do so. Our website has greater details, for those interested.
Before I pass this off to Kelley, I want to thank you for your time this evening. And, if I can leave you with one message it is this: our door is open. We want to work with you in building shared compliance, we know that you want to work with us and we know that things work better when we all pull together in the same direction. Having said this, when it comes to companies, organizations and individuals who engage in anti‑competitive behaviour — know this: we will remain vigilant in our pursuit of those whose actions contravene our Act.
Thank you and I look forward to your questions and comments.
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