Competition Bureau Canada: Du Pont Performance
Elastomers Fined $4 Million for its Role in an International
Price Fixing Agreement
OTTAWA, ONTARIO--(Marketwire - July 19, 2007) - The
Competition Bureau announced today that Du Pont
Performance Elastomers L.L.C. (DPE) pleaded guilty and was
fined $4 million by the Superior Court of Justice in Ottawa
for its role in an international conspiracy to fix prices of
polychloroprene rubber. Under section 45 of the Competition
Act, it is a criminal offence to agree with competitors to fix
prices or share markets.
Polychloroprene rubber, a specific type of synthetic rubber,
is used in the manufacture of a wide range of consumer
products in the automotive, adhesive and construction
industries, such as hoses, transmission belts and cables. It
is also known as chloroprene rubber, polychloroprene, PCP
"The Competition Bureau protects consumers and
businesses against price fixing agreements and does not
hesitate to prosecute any business, whether located in
Canada or abroad, that engages in these illegal activities
affecting the Canadian market," said Denyse MacKenzie,
Senior Deputy Commissioner of Competition. "Price fixing
agreements harm Canadian businesses and consumers by
forcing them to pay higher prices for the goods and services
From August 1999 to April 2002, DPE and co-conspirators
agreed to fix the prices of polychloroprene rubber sold in the
North American market. Although it is difficult to quantify
the impact of this conspiracy on the Canadian market, the
sales of this product were approximately $50 million for the
relevant period and DPE's share of the market represented
approximately 70%. Copies of the documents filed before
the Superior Court of Justice are available on the
Competition Bureau's Web site or from the Court Registry
(Court file number 0730300).
The Competition Bureau is an independent law enforcement
agency that promotes and maintains fair competition so that
all Canadians can benefit from competitive prices, product
choice and quality services. It oversees the application of
the Competition Act, the Consumer Packaging and Labelling
Act, the Textile Labelling Act and the Precious Metals
The Competition Bureau
CBC News Online | May 26, 2004
What is it?
The Competition Bureau was set up by the federal government to ensure that the "Canadian
marketplace operates in a fair and competitive manner." Its job is to administer and apply the rules
and regulations contained in the following pieces of legislation:
• The Competition Act.
• The Consumer Packaging and Labelling Act.
• The Textile Labelling Act.
• The Precious Metals Marking Act.
What does it do?
Put simply, the Competition Bureau is there to respond to consumer complaints about issues such
as false advertising and unfair pricing practices. If enough people complain that a product does not
perform as advertised, the bureau may investigate.
Or, if there are complaints by individuals or companies that a company – or group of companies – is
trying to control the price of a product, the bureau may get involved. An example of this is the
periodic investigation the board conducts into collusion in the setting of gasoline prices.
It also often gets involved when one company buys another. An example would be when a media
company buys another media company. If the sale leaves the buying company with, for instance,
two television stations in the same market, the bureau might approve the sale only if the buying
company sells one of those stations.
The Competition Bureau also issues consumer warnings from time to time through news releases
and on its website. Examples of these are warnings about work-at-home schemes that promise
substantial income and "bait and switch" promotions, in which a store may advertise a certain
product as being on sale, but when you get to the store that product is "not available" and you are
encouraged to buy another – more expensive – model.
How is it organized?
The Competition Bureau is made up of seven branches:
• The Fair Business Practices Branch was set up to promote fair competition in the
marketplace by discouraging deceptive business practices and by encouraging the provision
of sufficient information to enable informed consumer choice. It is the largest branch of the
Competition Bureau. The vast majority of complaints – such as misleading advertising and
price-fixing – received by the bureau go to this branch.
• The Civil Matters Branch investigates competition cases that may wind up before the
Competition Tribunal, such as complaints that a company is abusing its dominant position in
the marketplace, or when a firm restricts which companies it will do business with.
• The Communications Branch publicizes the work of the bureau.
• The Competition Policy Branch advances the bureau's interests in international co-
operation, negotiations and policy development. It provides economic advice and expertise.
• The Compliance and Operations Branch is responsible for the development of the bureau's
compliance program, the enforcement policy, communications and public education.
• The Criminal Matters Branch investigates allegations of criminal offences including
conspiracy to fix prices, price discrimination and predatory pricing, price maintenance and
• The Mergers Branch deals with mergers of companies.
What is the Competition Tribunal?
It's the body that hears complaints the Competition Bureau decides require further investigation.
Normally, only the bureau decides which cases will go before the tribunal. But in a limited number
of situations – such as matters regarding refusal to deal, tied selling, exclusive dealing and market
restrictions – private parties are allowed to apply directly to the tribunal to be heard.
The tribunal has the power to impose fines and issue orders – such as forcing a company to publish
notices correcting its false advertising.
The tribunal can also issue interim orders against a company while a complaint is still being
What are some examples of decisions the bureau has released?
In November 2003, HMV Canada filed a complaint against electronics retailer Best Buy Canada and
TGA Entertainment over the distribution of the Rolling Stones Four Flicks DVD set. HMV argued a
deal between Best Buy and TGA making Best Buy the only retailer to carry the product contravened
the Competition Act by denying access to supply of a product and reducing competition at the retail
level. The bureau dismissed the complaint, ruling that lots of Rolling Stones material was available
at many retailers.
On May 31, 2002, the Competition Tribunal found that an Edmonton-based company – PVI
International – made false or misleading claims about a "gas-saving" device it sold. The company
claimed the Platinum Vapour Injector saved drivers up to 22 per cent in fuel costs. The tribunal
ordered the company's two owners to pay fines of $25,000 each. It also ordered the company to
stop making its claims about the product for 10 years.
In the spring of 1996, following a series of gasoline price increases, several people complained to
the board that there was a national conspiracy to fix gas prices. The board investigated and
concluded that retail gas prices across the country rose in accordance with the rise in the price of
crude oil. The board also found that "while gasoline prices may arguably respond quicker to crude
oil price increases than decreases, the response is so quick that any cost to consumers was
negligible. Third, there are competitive reasons for similar pricing in local markets and evidence
gathered in these inquiries suggest that gasoline markets are competitive."
High gasoline prices is one of the most common complaints the bureau deals with. It has
investigated the issue several times – and has always concluded that market forces are responsible
for fluctuations in the price of gas.
Between Oct. 26, 1999, and March 30, 2000, the bureau fined several international drug and
chemical companies almost $7 million for their involvement in an international price fixing scheme
involving bulk vitamins.
Competition Bureau Canada: Telemarketer Fined $1 Million
30 May 2007
The Competition Bureau announced today that Michael Mouyal, 53,
of Montreal, has been fined $1,000,000 for his role in a deceptive
telemarketing scam that generated over $136-million in deceptive
sales during a six-year period. In addition, Mr. Mouyal received two
years probation, 240 hours of community service and a 10-year
prohibition order. Mouyal operated the scam under a number of
names -- Commercial Business Supplies; Merchant Transaction
Supplies; Merchant Supply Services and International Business
The Court of Quebec at the Palais de Justice in Montreal rendered
the sentence, following an investigation by the Competition Bureau
under the deceptive telemarketing provisions of the Competition Act.
The scam operated from boiler rooms in Toronto, Montreal, and St.
John's, Newfoundland and Labrador.
As part of the scam, not-for-profit organizations, businesses and
government agencies in Canada, the United States and the United
Kingdom were contacted by telemarketers who claimed to be their
regular supplier of office supplies or business directories and were
calling to renew previous orders from the victims. The scam was
based on creating the false and misleading impression that a
previous business relationship existed between the telemarketing
operation and its victims. Businesses would then receive overpriced
office supplies or virtually useless business directories that they
would not have ordered were it not for the false and misleading
"Everyone is a potential target of deceptive telemarketing," said
Raymond Pierce, Deputy Commissioner, Competition Bureau.
"Individuals engaged in deceptive telemarketing are warned that the
Bureau will continue to combat this criminal activity through rigorous
investigation and prosecution of those involved."
The following individuals and corporations have already plead guilty
and were sentenced: Justin Pold, 39, Montreal; Randolph Misiurak,
41, Montreal; Stephane Ouellet, 42, Montreal; Charles McCulloch,
39, Toronto; Francois Lefort, 38, Montreal; 153595 Canada Inc.;
162013 Canada Inc.; 162014 Canada Inc.; 174440 Canada Inc.;
M.M. International Business Directories Ltd.; and 3350550 Canada
The Competition Bureau is an independent law enforcement agency
that promotes and maintains fair competition so that all Canadians
can benefit from competitive prices, product choice and quality
service. It oversees the application of the Competition Act, the
Consumer Packaging and Labelling Act, the Textile Labelling Act and
the Precious Metals Marking Act.
COMPETITION POLICY AND LAW IN CANADA
1889 – Act for the Prevention and Suppression of
Combinations Found in Restraint of Trade –
established a criminal offence
1910 – Combines Investigation Act / Restrictive Trade
1986 Competition Act and Competition Tribunal Act
Purpose is to maintain and encourage competition in
Canada and to promote the efficiency and
adaptability of the Canadian economy….
Competition Tribunal - a quasi-judicial commission
with authority to seize documents, examine
witnesses, order written statements, and make
decisions about cases brought before it (up to 4 judges
from Federal Court + 8 other members for a 7-year
term). 3-5 members hear every application to
tribunal. Decisions can be appealed to Federal Court
Competition Bureau, with Commissioner of
Competition (formerly Director of Investigation and
Research) – initiates inquiries and conducts
- collusive arrangements (conspiracy)
- resale price maintenance
- bid rigging
- misleading advertising
- price discrimination
- predatory practices
- mergers and monopolies
- refusal to deal
- abuse of dominant position
many “reviewable practices”
small number of cases relative to U.S.
Penalties: fines, imprisonment, loss of tariff
protection, loss of patent protection, prohibition
orders, divestiture (mergers)
Fines historically low
Now detailed enforcement guidelines on some
issues: mergers, price discrimination, abuse of
dominant position, etc.
CONSPIRACY AND BID-RIGGING
“ to prevent, limit or lessen, unduly, the
manufacture or production of a product or to
enhance unreasonably the price thereof”
1886 – 2000 52 prosecutions. 41 guilty pleas or
convictions. Fines of $178 million.
Driving schools, pharmacies, ambulances, feed
additives, fax paper, etc.
Also participation in international cartels
Tacit collusion is not, at this point, illegal
Many strategic alliances are not a problem. See
1995 document on “Strategic Alliances under the
- refers to sales to one firm at one price and to one
of its competitors at a different price. Competitor
in same product and geographic market
- criminal law
- only 3 convictions since 1984; fines from $15K to
- recommended to be included in civil review
- criminal indictment; up to 2 years in jail
- engaging in a policy of pricing too low, in order
to substantially lessen competition or eliminate a
- only 2 cases taken through to trial; but 550
complaints from 1980-1990. 382 complaints from
1994-1999 but no formal enforcement
- Hoffman-LaRoche (drugs – giving out Valium for
free to hospitals) and Consumers Glass (glass
containers – disposable plastic cup lids deterring
There are predatory pricing enforcement
Two stage process of judgement
1. determine whether predatory pricing could have
anticompetitive effects: define the market; look at
market shares and concentration ratios, look at
conditions of entry (cost advantage of incumbent,
2. look at prices in relation to costs: is P < AVC?
(unreasonably low unless clear justification); is
P>AVC but <AC (depends on circumstances)
Moving to considering “avoidable costs”. If P < VC
+ avoidable product-specific fixed costs then….
Works better for multi-product firms
Recommended for civil review proceedings
ABUSE OF DOMINANT POSITION
Reviewable Practices – Competition Tribunal
When Does the Competition Act Apply?
The abuse of dominant position sections of the Competition
Act may apply when all of the following criteria are met:
• The dominant firm or firms have market power — that is
the ability to set prices above competitive levels.
Relevant factors affecting market power include: the
existence of barriers to entry, such as tariffs or
government regulations that limit competition; a lack of
substitute products; a lack of possible competitors; and
a low level of innovation in the industry.
• The dominant firm or firms engage in anti-competitive
acts — business practices that are intended to reduce
competition. These practices include: buying up a
competitor's customers or suppliers; using "fighting
brands" (discount brands) to discipline or keep out
competitors; cutting off essential supplies to rival
companies; using long-term contracts to stop
customers from changing suppliers; and overstepping
authority granted by intellectual property rights such as
trade-marks and patents.
• The anti-competitive acts have substantially lessened
competition, or are likely to do so. This can happen
when anti-competitive acts eliminate a rival or prevent
such things as a rival's entry into a market, potential
competition, product innovation and lower prices.
The Competition Act's abuse of dominant position sections
do not penalize a company that has captured a dominant
share of the market because of its better performance. For
additional detail regarding the Bureau's approach to
enforcing these provisions, please refer to the Enforcement
Guidelines on the Abuse of Dominance Provisions, available
on the Bureau's Web site.
Look at list of acts (on handout) considered to be
“Abuse of Dominant Position”
(a) independent gas stations that get gas from
(c) using rival’s plant as a base point for freight
(d) Imperial Oil and Shell – low-end retail outlets
to discipline price-cutting independents in
1960’s and 70’s
(j) and (k) introduced after Air Canada took over
Canadian Airlines; refers to things like – operating
routes at below avoidable costs, pre-empting
airport facilities, or using a loyalty marketing
program to prevent entry or expansion of a rival.
Nutrasweet and Laidlaw as examples of abuse of
Acquisition of the whole or part of a business
which is a competitor, a supplier or a customer if
the merger is likely to lessen competition
Tribunal can order that merger be dissolved or
order it not to proceed
Tribunal must look at more than concentration
ratios or market share
Should also consider:
(a) competition from foreign suppliers
(b) whether the business taken over was likely to
(c) availability of substitutes
(d) barriers to entry
(e) extent of effective competition after the merger
(f) nature and extent of change and innovation in
(g) whether or not there are offsetting efficiency
gains from the merger (which would otherwise
be unavailable) - draw diagram
- 3 year time period after merger
- notification of a merger is necessary (in
advance) if assets or gross revenue exceed $400
million or acquired firm has assets or gross
revenue > $35 million
- some mergers under other government
- e.g. , banks, financial institutions, sometimes
Defining a market for purposes of considering
effects of a merger
Market is defined along product and geographic
Product – Include firms that are producing close
demand or supply substitutes (explain)
Geographic – does an increase in price in one
location affect the price in another? If so, both are
in the same market.
DECEPTIVE MARKETING PRACTICES
- false or misleading representations
- deceptive telemarketing
- deceptive notice of winning a prize
- double ticketing
- operating a multi-level marketing plan
- pyramid selling
Criminal indictment, but also civil process to issue
court orders to stop (e.g., bait and switch, sales
above advertised price, misrepresentations)