Introducing this month’s special focus on Competition & Antitrust law is Robert Russell, National Chair of the Competition and Foreign Investment Review Group at Borden Ladner Gervais. Here Robert discusses the latest legislative developments in the Canadian M&A landscape, including Competition Bureau procedures, the introduction of Administrative Monetary Penalties (AMPs), and changes to the Canadian Competition Act.
Robert also talks Lawyer Monthly through his low-key but outstanding thought leadership in the Canadian competition litigation sphere, touching on the works of the firm and the successes each client has witnessed, both in terms of the objective, and timely and cost effective service.
How does Canadian competition law compare to that of its neighbours, such as the US?
The Canadian Competition Act was amended in 2009 to align our cartel provision with that of most major jurisdictions. Prior to the amendments, a cartel agreement under Canadian law was subject to an effects test similar to merger analysis. As a result of the amendments, from 2010 onwards Canadian cartel law became ‘per se’. I often tell clients it is ‘per se per se’, because it is not subject to rule of reason analysis like in the US. As a fully codified area of law, cartel agreements are only subject to the ancillary restraints defence.
The second major change from the amendments was with respect to merger review. Canada introduced a new process whereby the Competition Bureau can make supplementary information requests, which have the effect of stopping the clock on the statutory requirements imposed upon the Bureau with respect to completion of merger reviews. Needless to say, this change concerned Canadian business leaders and lawyers because of its potential use to regularly delay the merger review process.
The third major change was the introduction of Administrative Monetary Penalties (AMPs) for certain civil offences under the Competition Act, particularly abuse of dominance. The Bureau has set its course to use the abuse provisions to litigate matters. This has resulted in increased activity regarding abuse matters before the Competition Tribunal (a specialized competition law tribunal or court).
How do you think Canadian M&A markets and businesses are faring following the global recession, and how are things changing in today’s markets landscape?
Canada didn’t suffer the impacts of most western countries in the Great Recession. That meant M&A activity stayed strong and even increased in some sectors as Canadian companies remained strong notwithstanding some downward pressures on exports.
More recently, the downward pressure on oil prices has heavily impacted the resource sector of the Canadian economy. This initially led to lower M&A activity in resources, but some bargain hunting is now starting to occur. Other sectors, such as manufacturing, have expanded due to increased export opportunities supported by a lower Canadian dollar.
What upcoming or newly established legislative developments should Canadian and foreign businesses be aware of?
Canada and Europe have just signed a wide-ranging free trade agreement. This will create the opportunity to diversify Canada’s trading relationships away from an overreliance on US trade. While Canada will continue to be the United States’ biggest trading partner, including its biggest foreign supplier of oil, Canada is taking steps to diversify its trading relationships to reduce its vulnerability to the ebbs and flows of the US economy.
Has antitrust & competition litigation increased in Canada in recent years? To what do you attribute this?
Antitrust litigation has increased dramatically since Canada adopted its immunity program for the criminal provisions of the Competition Act (cartels and bid rigging). There was a 3000% increase in activity in the cartel area for the period between 2000 and 2010, compared to 1990 to 2000.
As noted above there has also been a dramatic increase in abuse of dominance cases; these are very involved and expensive proceedings for clients.
Private competition litigation, particularly class action litigation, has also become an area of growing importance in Canada. Historically, Canadian class actions in the competition law area were commonly of a "follow-on" nature, and were initiated in response to an announcement of an investigation by a competition authority in Canada or elsewhere. In recent years, as the courts have diluted the standards for class certification in Canada, there has been a trend away from deferred follow-on class actions. Plaintiffs' lawyers frequently bring and aggressively pursue competition law class proceedings in the absence of convictions or even an investigation.
What challenges exist when litigation comes hand in hand with antitrust matters? How do you help your clients achieve the best outcome?
We have handled over 30 cartel matters over the last decade. Most of these cases also had follow-on class action proceedings. They are costly and involved proceedings often with very high potential damages. As noted below we have taken steps to dramatically control costs for clients in terms of e-discovery resources and the econometric analysis that is required to defend these cases.
We have also represented clients in two of the largest abuse cases to emerge over the past 4 years. Again here, significant e-discovery resources and econometric analysis are required to defend these cases.
We represent clients in both follow-on class actions arising cartel investigations and in a wide variety of other antitrust class actions, such as those alleging false or misleading representations. We are counsel in a vast majority of the competition class action proceedings in Canada.
As noted below, we have invested heavily in e-discovery and forensic capabilities. This also assists in merger cases where there is a secondary information request. Recently, we completed the merger review in the largest retail merger in Canadian history; a secondary information request, which was predicted by the Bureau to require 3 to 4 months, was completed by our group in 6 weeks thanks to our in-house resources and capabilities.
Since you joined the firm, how have you helped push the boundaries of the firm’s competition team?
Competition/Antitrust law in Canada is built on a litigation model much like the US. Whether it is merger analysis, abuse proceedings or cartel agreements, there are potential litigation outcomes that must be dealt with right from the start. I started our competition group in 1986 based on the principle that the best way to ensure good outcomes for the client is to be prepared for litigation from the outset and negotiate with the Competition Bureau on the basis that we all, including the Bureau, must be able to prove our view of the matter in either a court of law or before the Competition Tribunal. Unsupported opinions have no place in Canadian competition law. The evidence, whether factual or econometric, matters from day one. That is a position I have maintained both in acting for private sector clients, as well as a number of retainers on behalf of the Competition Bureau.
As a result we have built a team of lawyers that is just as capable in cartel defence work or in merger review work. While the work streams are different, the econometric analysis and document management aspects are very similar, whether it is a cartel investigation or a contested merger with a secondary information request from the Bureau. For this reason we have invested in our professional expertise, not only in terms of the legal aspects of competition law, but also the econometric analysis that is required.
We have also supported secondments of our lawyers with the Competition Bureau as well as taking on significant retainers to prosecute both merger cases and cartel cases on behalf of the Bureau.
Finally we have invested in our own team of forensic paralegals that are involved in investigative work as well as e-discovery and forensic recovery of documents.
You also write and speak publically on the matter of competition law; how do you believe this contributes towards your thought leadership in this legal segment?
Antitrust/Competition law is an area of law that is constantly expanding. As Canada’s modern competition law regime only came into effect in 1986, the law is not fully developed. This requires antitrust professionals to think outside of the box, without the guidance of a large body of case law to guide them. For that reason, writing and continuing education play an important role in shaping our thinking and advice to our clients.
Do you have a mantra or motto you live by when it comes to helping your clients?
“It begins with service” – Service has both a dimension of timeliness and results. I often tell young lawyers that you need to think of yourself like a plumber. We are service providers; we not only need to fix the pipe, we need to do it in a timely and cost effective manner.
What do you feel you couldn’t live without?
My family.
What motivates you most about your role?
I believe competition law is the most interesting and rewarding area of law. I am extremely fortunate to have established my career in this area.
Acting for Loblaw Companies Limited, Canada`s largest grocery retailer, in respect of all competition matters related to its CAD $12.4 billion acquisition of Shoppers Drug Mart. This was, and continues to be, the largest retail merger in Canadian history. Due to the significant cross-country presence of these major retailers and their overlap in terms of store locations (1,200 overlapping stores in 800 markets), and a good number of products, the transaction was strongly opposed both in the media and in submissions to the Competition Bureau. BLG secured clearance of the deal with only 18 store divestitures.
Acting for Loblaw Companies Limited, including its Shoppers Drug Mart subsidiary, in responding to an investigation launched by the Canadian Competition Bureau under the abuse of dominance provision of the Competition Act regarding certain Loblaw’s supplier practices and policies.
Acting for Reliance Comfort Limited Partnership in defence of an abuse of dominance proceeding before the Competition Tribunal brought by the Commissioner of Competition regarding certain of Reliance’s practices in its water heater rental business.
