Antitrust & Competition Update

Sheridan Scott Joins Bennett Jones

Bennett Jones LLP is pleased to announce that Sheridan Scott has joined the firm's antitrust and competition group as a partner. Sheridan recently completed a term as Canada's Commissioner of Competition (2004-2009).

Prior to her appointment with the Competition Bureau, Sheridan was the Chief Regulatory Officer of Bell Canada and held senior positions with the CBC and the CRTC. She is a member of the Law Society of Upper Canada and clerked under Chief Justice Bora Laskin at the Supreme Court of Canada. In 2007, she was elected Chair of the International Competition Network Steering Group, a global network of antitrust agencies. In 2008, Sheridan received a special recognition award from the Canadian New Media Awards for her contributions to the new media industry. In 2005, she was named one of Canada's 100 Most Powerful Women by the Women's Executive Network and she received the Distinguished Alumni Award from the University of Victoria.

Bennett Jones has one of the leading competition practices in Canada and the addition of Sheridan will allow the firm to provide unparalleled service to clients in the competition/antitrust area.

Budget Bill Moves Quickly in Senate

On February 6, 2009, the Canadian government introduced Bill C-10, An Act to implement certain provisions of the budget tabled in Parliament. Bill C-10 includes several significant amendments to the Competition Act and Investment Canada Act which are generally consistent with the recommendations to the Government of Canada in the Competition Policy Review Panel's report, Compete to Win, released in June 2008. Speaking on behalf of the Minister of Finance, the Honorable Gordon O'Connor explained that the proposed amendments “will modernize the Investment Canada Act to encourage foreign investment and to make sure that new investments do not jeopardize Canada's national security. There are new provisions to the Competition Act to protect consumers from anti-competitive behaviour as well as unscrupulous business practices, and much more.”

On March 4, 2009, Bill C-10 received third reading in the House of Commons and was introduced into the Senate for debate. On March 12, 2009, Bill C-10 was passed by the Senate and it received Royal Assent the same day.

Bill C-10 includes the following significant amendments, which for the most part came into force immediately on March 12, 2009 (other than as noted below):

Competition Act

• Introducing a new ‘per se' criminal offence of conspiracy to address ‘hard core' cartel arrangements similar to the U.S. and a civil conspiracy provision to address other arrangements which prevent or lessen competition substantially (these provisions come into force on March 12, 2010).
• Instituting a two-stage merger pre-notification and review process similar to the U.S. process and concurrently increasing the financial thresholds that trigger the merger pre-notification requirements from CDN$50 million to CDN$70 million in assets in Canada or gross revenues from sales in or from Canada.
• Decriminalizing the price discrimination and predatory pricing provisions.
• Instituting administrative monetary penalties for abuse of dominant position of up to CDN$10 million dollars for an initial order and CDN$15 million for subsequent orders.

Investment Canada Act

• Increasing the review threshold for direct acquisitions of Canadian businesses by WTO investors to CDN$600 million immediately and gradually to CDN$1 billion (requires proclamation by Order-in-Council to come into force).
• Introducing a new “national security” review for investments, independent of the transaction review process, allowing the Federal Cabinet to take any measures that it considers advisable in order to protect national security, including prohibiting non-Canadians from implementing an investment or requiring divestiture where the investment has already been implemented (came into force on February 6, 2009).

Bid-rigging Charges Laid

The Competition Bureau recently laid charges against individuals and companies accused of rigging bids to obtain Government of Canada contracts for information technology (IT) services.

Following an investigation that began in 2005, the Bureau found evidence indicating that certain IT services companies had been secretly coordinating their bids in an illegal scheme to defraud the government by winning and dividing contracts, while blocking out competitors not part of the conspiracy. There was evidence of criminal activity for contracts worth approximately $67 million in 10 competitive bidding processes for IT services to be provided to Canada Border Services Agency, Public Works and Government Services Canada, and Transport Canada.

The Competition Act prohibits bidders from colluding on prices and makes it a criminal offence for two or more bidders to secretly agree that one party will refrain from bidding, or to agree on the bids they will submit, without informing the party issuing the call for bids of these arrangements. Penalties for bid-rigging can include a fine and/or prison sentence of up to five years.

Bureau Not Challenging Lakeport Acquisition

The Competition Bureau recently announced that it won't be challenging the transaction involving the acquisition of Lakeport Brewing Income Fund by Labatt Brewing Company Limited. This brings to an end an investigation by the Bureau which has lasted almost two years.

In February 2007, the Bureau announced that it would be conducting an investigation into the proposed acquisition of Lakeport by Labatt. After the Bureau failed to obtain an injunction to hold separate the companies while it conducted the investigation, the deal was closed in March 2007. Nevertheless, the Bureau continued its investigation until recently when it was announced that there was insufficient evidence to establish that the proposed acquisition would substantially lessen or prevent competition.

Bennett Jones LLP represented the Commissioner of Competition in litigation arising out of Labatt's acquisition of Lakeport.

XL Foods and Lakeside Merger Not Challenged

In a recent statement, the Competition Bureau announced that it will not be challenging at this time the acquisition by XL Foods Inc. of Lakeside Farm Industries, the Canadian subsidiary of Tyson Foods, Inc.

In June 2008, it was announced that XL Foods Inc., the largest Canadian owned and operated beef processor in Canada, would acquire Lakeside, a diversified agribusiness involved in cattle feeding, slaughtering and processing, as well as retail fertilizer production and farming.

The investigation of the transaction by the Bureau included interviews with over 50 industry participants in western Canada. The Bureau also obtained investigatory orders requiring the production of documents and information obtained from all major industry participants. It is expected that the transaction will be completed by mid-March 2009.