Clarity is key to competitive collaboration guidelines

  • October 22, 2020

Competitors compete – it’s the nature of business. So when they decide to collaborate, onlookers can be justified in suspecting collusion.

But sometimes competitors collaborate for legitimate business reasons. And the Competition Bureau’s Competitor Collaboration Guidelines exist to draw a bright line between criminal and non-criminal conduct under the Competition Act.

The CBA’s Competition Law Section has commented on draft revisions to the guidelines published earlier this year, meant to reflect relevant enforcement experience of the Bureau and decisions of the Competition Tribunal since the Act was amended in 2009.

The Section says by providing some much-needed clarity to businesses, the guidelines promote compliance with the law. As such, the Section encourages the Bureau to avoid adding qualifications to or otherwise diluting prior enforcement positions.

Some of the qualifications added to the guidelines have limited utility, the Section says in its submission. “(T)he Bureau’s concerns can be addressed by clarifying that agreements will be assessed on their substance and that sham agreements, designed to appear legitimate but whose actual purpose is to engage in cartel conduct, cannot benefit from the enforcement guidance in the CCGs.”

The Section presents a total of 15 recommendations to improve the draft guidelines. They call for the retention of helpful examples, clarifying language in various instances and providing further guidance about the circumstances under which the Bureau would consider particular actions criminal.

For example, the Section notes that under the current analytical framework the Bureau first determines whether to assess an agreement between  competitors under the two provisions dedicated to such agreements, or under other provisions of the Act, and then decides which of the two provisions, 45 and 90.1, is more appropriate, reserving section 45 for “naked restraints” on competition. The draft revised guidelines put the relevant dichotomy between section 45 and all “civil provisions in Part VIII of the Act.”

“The presentation in the draft revised guidelines of a high level dichotomy that includes all civil reviewable conduct provisions (including section 90.1) in contrast to section 45 may introduce unwanted uncertainty, especially when abuse of dominance under section 79 provides for very significant administrative monetary penalties,” the Section writes.

“(I)t would be useful for the Bureau to confirm that the concept of ‘joint abuse of dominance’ in practice will be reserved for collaboration between competitors that has such an exclusionary or other targeted purpose against one or more competitors.”

Instead of adding qualifications to the “clear, intuitive and internally consistent guidance” about when it will apply section 45, which the Section argues is unnecessary, the Bureau should add a clearer general provision to the guidelines “indicating that the Bureau’s analysis does not apply to sham arrangements, whose underlying and overriding purpose is to fix prices, allocate markets, or restrict output among competitors. This is consistent with the Bureau’s existing framework, to determine whether the agreement is undertaken to further a legitimate collaboration, strategic alliance or joint venture or whether the agreement is a ‘naked restraint’ on competition.”