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Report on Developments and Enforcement of Competition Policy and Laws in the Western Hemisphere

Submitted by the OAS Trade Unit to the FTAA Working Group on Competition Policies

Canada: Report on Developments and Enforcement of Competition Policy and Laws
April 1, 1995 to March 31, 1996

III. Regulatory and Trade Policy Matters

Within the Bureau, economists of the Enforcement Economics Division provide advice and analysis regarding economic issues in a number of enforcement areas, including cases, interventions and enforcement policy. Internal economists help develop the economic theory of the case at hand; assist officers within the Branches in analysing the importance of particular evidence given the theory of the case; and, assist in preparing for litigation before the courts or Competition Tribunal. A similar role is played in respect of interventions before regulatory bodies. In total, Branch economists were involved in some 40 cases and regulatory interventions over the fiscal year. In one of these interventions, a Branch economist appeared as an expert witness for the Director of Investigation and Research. Economists were also called upon to help in the analysis, development and implementation of enforcement policies for the Bureau as a whole, and in reviewing any requirements for legislative reform.

Issues raised by network economics, particularly in respect of telecommunications, were an important area of research and policy development over the course of 1995/96. In particular, the Bureau hosted the Telecom and Antitrust Symposium which brought together leading antitrust, economic and telecommunications experts to reflect on competition policy and regulation. The discussions also stressed the importance of network economies and vertical integration issues for competition policy's application to the telecommunications sector.

Independent economic research continues to form an integral part of enforcement economics within the Bureau. To maintain and enhance internal economists' credibility, economists are encouraged to present research papers at outside seminars and conferences, to collaborate on research projects with outside academics and to submit papers and research to journals for publication. Internal working papers and other less formal contributions which develop and clarify Bureau internal policies are also encouraged. Economists within the Bureau undertook research in a number of areas; including, the empirical analysis of past resale price maintenance cases, exclusive contracting, and horizontal concentration in the central Canadian cement industry.

In the area of regulatory interventions, the electricity sector was an important focus of the Bureau's competition advocacy work during the year. The Bureau participated in two major reviews of the scope for pro-competitive reforms that were conducted at the provincial government level: the British Columbia Utilities Commission Electricity Market Structure Review, mentioned in last year's report; and a subsequent in depth study by an ad hoc Advisory Committee on Competition in Ontario's Electricity System. In its submissions to these review bodies, the Bureau put forward a case for major market-opening reforms as the most effective means for ensuring efficient and low-priced electricity supply in the respective provinces.

The Bureau's submissions incorporated a number of recommendations relating to elements of market structure and regulation in the electricity sector. These pertained to such matters as: (i) the structural requirements for effective competition among generators; (ii) the potential adoption of competition at the retail distribution level; (iii) the appropriate relationship between regulation and competition law disciplines; (iv) ways to ensure competing electricity suppliers of equal access to transmission and distribution facilities; and (v) mechanisms for ensuring the reliable and efficient operation of electricity systems under competition.

The report of the B.C. Utilities Commission, released in September 1995, endorsed key views expressed in the Bureau's submissions. In particular, it supported the adoption of wholesale competition where generators would compete to supply distribution utilities. Under this market structure, a competitive power pool would be created into which generators would bid electricity, generation assets would be transferred to separate corporations from those holding transmission and distribution assets, and B.C. Hydro's generating assets, where feasible, would be divested. The report of the Advisory Committee on Competition in Ontario's Electricity System was released in July 1996. It put forward detailed recommendations for implementing competition in the provincial electricity industry, initially at the wholesale and subsequently at the retail level of the market. The Committee's recommendations are currently being studied by the responsible Ministry of the provincial government, the Ministry of the Environment and Energy.

IV. International Affairs

Internationally, the growing number and complexity of cross-border cases, especially with the U.S., highlight the international dimensions of the Bureau's enforcement activities and underline the need for enhanced international cooperation, consultations, coordinated enforcement actions where appropriate, and conscious efforts at dispute avoidance. As part of regular bilateral consultations, the Director and Bureau officials met with the Assistant Attorney General, United States Department of Justice, Antitrust Division, and the Chairman of the Federal Trade Commission, twice during the year. The discussions focused on ways and means to enhance bilateral cooperation on enforcement matters within the framework of the Mutual Legal Assistance Treaty and the 1995 Canada-US Agreement on the Application of their Competition and Deceptive Marketing Practices Laws.

Bilateral meetings were also held during the year with the Directeur Général of France's Direction générale de la Concurrence, de la Consommation, et de la Répression des Fraudes (DGCCRF), the President and other officials of Mexico's Comisíon Federal de Competencia, the Director General and other senior officials of the UK's Office of Fair Trading, the head of the Directorate General IV in the European Union (responsible for competition policy in the European Union), and with competition officials from Japan, Venezuela and Chile. In these meetings, matters of bilateral interest, including the desirability and feasibility of enhanced cooperation between the respective competition authorities, were discussed. Discussions are also continuing on developing a Canada-European Union competition accord on cooperation and coordination.

At the case level, there was growing number and complexity of notifications and requests for assistance and other interactions between the Bureau and foreign competition authorities. During the fiscal year, the Bureau received 23 notifications from foreign competition authorities and sent 9 notifications to foreign authorities or governments under the Canada-US Agreement and the Revised OECD Recommendation. The majority of the notifications were with the United States.

Pursuant to the North American Free Trade Agreement (NAFTA) Chapter 15, Article 1504, the Working Group on Trade and Competition met twice during the year, in Ottawa on September 21, 1994, and in Mexico City on March 27-28, 1995. The Working Group continued its on-going work on examining the interrelationship between trade and competition policy within the framework established by the provisions of the NAFTA. During 1994-95, the Bureau also monitored and contributed to the discussions on the role of competition policy in trade liberalization within the emerging Asia Pacific Economic Cooperation (APEC) area, the Free Trade Area of the Americas (FTAA), and several emerging sectoral agreements such as those on telecommunications , energy and investment. Multilaterally, the Bureau continued to participate actively in the work of the OECD's CLP and Trade Committees, focussing on the interrelationship between trade and competition policies, on competition and regulation and on international cooperation. As well, it participated actively in the Intergovernmental Group of Experts on competition policy of the United Nations Conference on Trade and Development (UNCTAD). The Bureau has also been providing technical assistance for many years, both bilaterally and in support of UNCTAD and OECD multilateral programs. During the past year, technical assistance was provided to Venezuela, Vietnam, China, Malaysia, Ukraine, Lithuania, Latvia, and Estonia.


Table 1
Information and Compliance Data

  Misleading Advertising
and Deceptive Marketing
Other Sections
of the Act
  1994-95  1995-96 1994-95  1995-96 1994-95  1995-96
Inf. Requests (public) 25,087 1,379 26,466
Oral Advisory Opinions *605 100 *705
Written Advisory Opinions *380 39 *419
Media Contacts 129 188 317
Speeches, Seminars
and Consultative Meetings
50 33 83

* Estimates required due to lack of full data availability in a system changeover

Table 2
Selected Activities of the Bureau of Competition Policy

(Excluding Misleading Advertising and Deceptive Marketing Practices)

  1991-92 1992-93 1993-94 1994-95 1995-96
Number of Complaints, Examinations and Inquiries
  Total complaints 1,023 1,197 1,282 1,658  
  Examinations (two or more days of review)1 114 168 772 74  
  Applications for inquiries under Section 9 1 6 6 11 7  
  Inquiries in progress at year end 1 54 47 50 41  
Disposition of Matters
   Inquiries formally discontinued 0 8 28 16  
   Matters referred to the Attorney
   General of Canada
7 5 6 7  
   Matters referred where further action is not warranted 3 0 2 2 0  
   Prosecutions or other proceedings commenced 5 6 8* 3  
   Applications to the Competition Tribunal 0 1 1 5  
         - Mergers 0 1 0 2  
         - Other Reviewable Practices 0 0 1 3  
Representations before regulatory bodies 6 7 7 11  

* Revised figure.
1. Refers to civil and criminal matters only. See comparable statistics for the Merger and Marketing Practices Branches.
2. Examinations in 1992-93 and years prior were defined by 2 or more days of review. In 1993-94, only criminal matters which warranted further review based on case screening criteria adopted by the Criminal Affairs Branch were recorded as examinations.
3. May include matters referred during previous years.

Table 3
Civil Matters - Selected Activities

  1993-94 1994-95 1995-96
Number of Complaints, Examinations and Inquiries
Total complaints/information contacts 507 331 456
Examinations commenced
(two or more days of review)
21 21 28
Application for inquiries under section 91 2 5 4
Inquiries in progress at year end 8 10 13
Written Advisory Opinions 2 0 4
Disposition of Inquiries
Inquiries resolved by Alternative Case Resolution 2 2 3
Applications to the Competition Tribunal 1 3 3

1. Refers to six-resident application to the Director for inquiry.

Table 4
Criminal Matters - Selected Activities

 : 1993-94 1994-95 1995-96
Number of Complaints, Examinations and Inquiries
Total complaints/information requests 775 1048 968
Examinations commenced1 56 53 55
Application for inquiries under section 92 9 2 2
Inquiries in progress at year end 42 31 24
Disposition of Inquiries
Matters referred to the Attorney General of Canada 6 7 4
Matters where charges were laid 8 3 4
Matters where Attorney General declined to proceed or withdrew charges 4 2 0 1
Matters before the courts 4 12 16 14
Disposition of prosecutions (findings of guilt, guilty pleas, acquittals, stay of proceedings, orders of prohibition) 4 7 16 8
Other Activities
Examinations resolved by information contacts 14 23 16
Written Advisory Opinions 30 28 14
Mutual Legal Assistance Treaty (MLAT) Requests 2 2 3
Searches 4 5 4

1. Examinations in 1992-93 and years prior were defined by 2 or more days of review. In 1993-94 and 1994-95, only matters which warranted further review based on case screening criteria adopted by the Branch were recorded as examinations.
2. Refers to six-resident application to the Director for inquiry.
3. Alternative Case Resolutions include; investigative visits, orders on consent and written undertakings.
4. May include matters referred during previous years

Table 5
Merger Examinations

  1992-93 1993-94 1994-95 1995-96
Examinations commenced 1 (2 or more days of review) 204 192 193 228
Notifiable transactions 62 65 74 100
Advance ruling certificate requests 125 124 139 142
Examinations Concluded
As posing no issue under the Act 198 185 183 198
With monitoring only 4 1 2 4
With pre-closing restructuring 0 0 0 0
With post-closing restructuring/undertakings 0 0 0 0
With consent orders 0 0 0 0
Through contested proceedings 2 0 1 0
Parties abandoned proposed mergers in whole or in part as a result of Director's position 3 2 3 3
Total examinations concluded 2 207 188 189 215
      Advance ruling certificates issued 3 101 114 106 120
      Advisory opinions issued 3 27 10 11 10
Examinations ongoing at year end 31 35 39 52
Total examinations during the year 238 223 228 267
Applications and Notices of Application before Tribunal
Concluded or withdrawn 2 0 1 1
Ongoing 1 2 1 2

1. Includes notifiable transactions, advance ruling certificate requests and examinations commenced for other reasons. Some examinations commenced may arise from notifications and advance ruling certificate requests in relation to the same transactions.
2. Includes advance ruling certificates and advisory opinions issued and matters which have been concluded or withdrawn before the Competition Tribunal.
3. Included in "Total examinations concluded".

Table 6
Misleading Advertising and Deceptive Marketing Practices Offences: Selected Activities

  1991-92 1992-93 1993-94 1994-95 1995-96
Number of complaints, examinations and inquiries
Total complaints received 15,130 13,657 2 11,000 2 8,500 2 6,751
Number of files opened 14,557 11,095 2 10,500 2 8,145 2 324
Applications for inquiries under section 9 4 0 5 2 5
Inquiries commenced 82 41 46 38 8
Disposition of Inquiries
Completed examinations/inquiries 407 196 399 349 278
Information contacts 1,511 1,174 6543 7623 86
Inquiries formally discontinued
      Cases involving undertakings 4 2 3 38 10 9
      Other cases 1 10 3 16 10
Undertakings received 24 20 5 4 4
Matters referred to the Attorney General of Canada 55 16 36 23 7
Matters where further action is not warranted 5 9 19 2 0 3
Prosecutions commenced 5 44 18 29 22 7
Prohibition orders without conviction 4 1 2 0 0 1
Prosecutions concluded 5,6
      Convictions 43 29 11 24 14
      Non-convictions 7 44 22 15 8 4
Total Fines $1,353,400 $692,700 $200,700 $1,407,400 $879,850

1. See also activities related to Information and Compliance Programs. Competition Bureau Regional Offices were closed during the year and all Marketing Practices activities consolidated at Headquarters. Many figures will therefore show a considerable difference from the previous year's.
2. These figures are estimates. They are accurate within 5 percent.
3. Prior year statistics included written, oral and in-person information contacts. This year's statistic includes only written contacts.
4. Discontinued inquiries involving undertakings are reported for the fiscal year in which they were discontinued. Accordingly, these may not coincide with the actual number of undertakings received in any given fiscal year.
5. May include matters referred during previous years.
6. These statistics were not reported prior to fiscal 1990-91 on a "prosecution" basis.
7. This includes conditional and absolute discharges, withdrawals, stays of proceedings, etc. It should be noted that charges against some of the accused are often withdrawn after other accused in the same case have pleaded guilty. Accordingly, there is some overlap.

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