This presentation by Paul Crampton, Chief Justice of the Canadian Federal Court and Member of the Competition Tribunal, was made during the discussion “Judicial perspectives on competition law” held at the 16th meeting of the OECD Global Forum on Competition on 8 December 2017. More papers and presentations on the topic can be found out at oe.cd/jpcl.

1. Evidence in Competition Law Cases:
Challenges for the Courts
Paul Crampton
Chief Justice, Federal Court
and Member of the Competition Tribunal (Canada)
(OECD, Global Forum on Competition, Paris, December 7-8, 2017)

2. Overview
1. Introduction
2. The investigative phase
3. The pre-trial phase
4. The adjudication phase
• Quantifiable effects, efficiencies & business justifications
• Qualitative effects, efficiencies & business justifications
2

3. 1. Introduction
3

4. 1. Canadian competition law adjudicative bodies:
• Civil matters (e.g., mergers, abuse of dominance, competitor
collaborations, vertical restraints, refusal to supply and non-
criminal deceptive marketing practices) are dealt with by the
Competition Tribunal
• Criminal matters (e.g., cartels, bid-rigging & intentional
misleading advertising) are dealt with by the superior courts,
(almost exclusively those in the provinces)
• Production orders and orders for oral examination are also
dealt with by the superior courts, (invariably the Federal Court)
o The judicial members of the Tribunal are all members of the Federal Court
• The Federal Court of Appeal accords deference to the Tribunal’s
findings on economic and other matters within its expertise
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5. 2. Test for mergers, abuse of dominance, (non-
criminal) competitor collaborations and several
other reviewable practices is:
• Substantial lessening of competition (SLC)
• Substantial prevention of competition (SPC)
• Analytical approach to SLC and SPC is essentially the same,
except:
o SLC assessment is upon whether new or increased market power has
resulted or is likely to result
o SPC assessment is upon whether existing market power has been
preserved or is likely to be preserved
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6. 3. Focus of SLC/SPC analysis is upon market power:
• Price and non-price dimensions of competition
• Anti-competitive effects typically must last at least 2 years
o They need not occur in the short term. But the further into the
future they are predicted to arise, the less reliable the predictions
may be considered to be
(Tervita Corporation v. Canada (Commissioner of Competition),
2015 SCC 3, at ¶ 68 [“Tervita”])
• Market definition is based on the Hypothetical Monopolist
approach (usually 5% price increase lasting approx. 1 year)
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7. 4. Tribunal and courts adopt the “but for” approach:
• Prices materially higher than in the absence of the merger or
challenged conduct?
• Non-price benefits of competition (e.g., quality, variety, service,
advertising, innovation) materially lower than in the absence of
the merger or challenged conduct?
• What constitutes “material” depends on the facts – the Tribunal
and the courts have been reluctant to embrace bright lines
• Focus can be on past, present or future
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8. 5. The “but for” analysis focuses on the relative
change in competition, rather than the absolute
level of competition
• E.g., in a recent case, the Tribunal accepted that the market for
real estate brokerage services in Toronto is very competitive in
many respects. However, it concluded that it would have been
substantially more competitive in the absence of the
challenged restrictions that TREB imposed on its brokers.
(Commissioner of Competition v. The Toronto Real Estate Board, 2016 Comp.
Trib. 7, at ¶¶ 570 and 639 [“TREB”]; aff’d 2017 FCA 236 at ¶ 86 [“TREB
FCA”].)
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9. 6. Effects must have occurred or be “likely” to occur:
• “Likely” means more probable than not (civil standard of proof)
• Conclusions must be based on evidence
• Facts typically trump theory
• The Tribunal will not base conclusions on mere possibilities or
unsupported speculation
• “Factual findings about what a company may or may not do
must be based on evidence of the decision the company itself
would make; not the decision that the Tribunal would make in
the company’s circumstances” (Tervita, at ¶ 77)
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10. 2. The Investigative Phase
10

11. Investigative Phase: Requests for Production Orders
Challenge: Finding the right balance between the
reasonable needs of the Competition Bureau and the
burden on businesses (or individuals)
• Test adopted by the Federal Court is whether the information
being sought is (i) relevant, and (ii) not excessive,
disproportionate or unnecessarily burdensome
• Competition Bureau has an elevated duty of full disclosure
when seeking production orders on an ex parte basis
11

12. • The Federal Court has been sensitive to the Commissioner’s
need to investigate, and make a case in the Competition
Tribunal, if necessary
• This includes obtaining information necessary to conduct “but
for” analysis, e.g.:
o Extensive data sets
o Information pertaining to a reasonable period pre-dating the
merger or challenged conduct
o Information pertaining to adjacent geographic areas
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13. • However, the Court has rejected requests that it considers
to be excessive, disproportionate or unnecessarily
burdensome, e.g.:
o Information for all 10 Canadian provinces, in reviewing a
merger in a provincial market
o Information for all airline routes of both parties, in reviewing a
limited code-sharing agreement
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14. • The Court has also indicated that it will not grant requests
for information relating to the entire United States, where
only a few “representative states” would suffice for its
analysis
• More generally, the Court has emphasized that it “will be
vigilant to ensure that the Commissioner is not embarking
on a ‘fishing expedition’”
• The Court has also sometimes given businesses more
time than the Commissioner requested, to respond to the
production orders
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15. 3. The Pre-trial Phase
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16. Proactive case management
Challenge: To limit the issues and evidence to what is
proportionate and reasonably necessary to decide case
• The Tribunal has placed a strong focus on proactive case
management. This has included:
o Placing limits, and streamlining the scope of, discovery
o Requiring pre-filed witness statements and expert reports
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17. Proactive case management (cont’d)
o Requiring pleadings to include a concise statement of the
economic theory of the case
o Requiring parties to file an agreed statement of facts
o Requiring parties to identify the parts of opposing party’s
expert evidence that are admitted
o Holding case management conferences regularly to narrow
issues and settle interlocutory matters
o Tribunal’s Rules streamline the treatment of expert evidence
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18. 4. The Adjudicative Phase
18

19. Challenge: Finding the right balance between:
• the reasonable needs of (i) businesses and (ii) the
Competition Bureau, as well as between
• (i) procedural fairness and (ii) efficiency and expediency:
o Burdens, presumptions and adverse inferences
o Evidence relating to quantifiable anti-competitive effects,
efficiencies and business justifications
o Evidence relating to non-quantifiable anti-competitive effects,
efficiencies and business justifications
19

20. Commissioner’s burdens
• Establishing SLC/SPC
o Market definition – however, “precision” is not necessary, including
with respect to the “base” price used in the SSNIP assessment
o Unlikelihood of timely and sufficient entry
o The “but for” counterfactual scenario
• Demonstrating the other statutory elements
• If the efficiency defence is raised, the Commissioner must
quantify the anti-competitive effects, to the extent reasonably
possible. A range of estimates, supported by a sensitivity
analysis, may well suffice
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21. Respondent’s burdens
• Establishing that the efficiencies likely to result from the merger
will be greater than, and will offset, the likely anti-competitive
effects of the merger
• Establishing the legitimate business justifications for an alleged
anti-competitive practice
o Establishing “some” justification will not necessarily suffice
o A legitimate justification requires more than simply the respondent’s
self interest
o Rather, it “must be a credible efficiency or pro-competitive rationale
for the conduct in question, which relates to and counterbalances
the anti-competitive effects and/or subjective intent of the acts”
(Commissioner of Competition v Canada Pipe Ltd, 2006 FCA 233,
at ¶¶ 73 and 90-91 [“Canada Pipe FCA”]) 21

22. Presumptions
• Market share above 50% gives rise to prima facie presumption of
dominance
• Market share of 25% is “well below” a level that would give rise
to a prima facie presumption of no dominance
• In the absence of barriers to entry, even a very large market
share will not support a finding of market power
• A firm with market power will be deemed to have intended the
effects of its actions
(TREB, at ¶ 274; TREB FCA, at ¶ 56)
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23. Adverse inferences (1)
• May be drawn if evidence that is readily available is not
adduced. For example:
o Adverse inferences were drawn against two of the Commissioner’s
witnesses for failing to provide evidence pertaining to their own operations
(TREB, at ¶¶ 657-658)
• In TREB, the Tribunal declined to draw an adverse inference in
relation to the Commissioner’s failure to conduct empirical
assessment that would have required “a huge outlay of effort” for
something that may not “have been particularly reliable or
particularly informative” (TREB, at ¶¶ 653-656)
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24. Adverse inferences (2)
• The Tribunal observed that “as a statutory authority, the
Commissioner has to be prudent with, and make difficult
decisions regarding the allocation of, the limited public funds
available for administering and enforcing the Act at any given
time” (TREB, at ¶ 656)
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25. Adverse inferences (3)
• However, this reasoning was rejected on appeal. The Federal
Court of Appeal held:
“The fact that the Commissioner has limited funds to spend may be a
reality, but it is of no relevance to a determination of whether or not an
adverse inference should be made” (TREB FCA, at ¶ 106)
• The FCA also rejected the Tribunal’s reliance on expert evidence
as to the usefulness of pursuing such an empirical assessment
• The issue of usefulness is one to be assessed by the Tribunal
• However, the FCA upheld the Tribunal’s decision to not draw an
adverse inference from the Commissioner’s failure to conduct
the empirical assessment in question.
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26. Dealing with expert evidence at trial (1)
• Evidence typically is treated as “read-in”
• Use of “chess-clock” typically results in parties conducting only a
limited direct examination of their experts
• Experts required to acknowledge in writing
o Their duty to assist the Tribunal impartially; and that
o This duty overrides any duty they may have to a party to the proceeding
o Not complying with such duty of neutrality and independence
impacts the credibility and reliability of expert evidence
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27. Dealing with expert evidence at trial (2)
• Recurring issues/concerns with expert evidence at the Tribunal:
o Evidence based on weak/questionable assumptions
o Evidence not based on a robust factual foundation
o Evidence too high level and too theoretical
o Experts who are too evasive
o Experts who are unable or unwilling to identify the shortcomings of
their assumptions or factual foundations
o Foreign experts who are unfamiliar with Canadian law
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28. Dealing with lay witnesses at trial
• Generally, the evidence of lay witnesses is limited to facts of
which they are aware
• There are also some limited circumstances in which lay
witnesses can give opinion evidence (TREB FCA, at ¶¶ 78-81)
• However “… lay witnesses cannot testify on matters beyond their
own conduct and that of their businesses in the “but for” world.
Lay witnesses are not in a better position than the trier of fact to
form conclusions about the greater economic consequences of
the “but for” world, nor do they have the experiential
competence”
(TREB FCA, at ¶ 81(emphasis in original))
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29. Quantifiable effects (1)
• The Commissioner is not required to quantify anti-competitive
effects, except in a merger case, when the efficiencies defence
is invoked (Tervita, at ¶ 166; TREB FCA, at ¶¶ 99-101)
• For the purposes of establishing an SLC or SPC, the
Commissioner simply has to demonstrate that the lessening or
prevention of competition has been, is, or is likely to be
“substantial”, i.e., materially higher prices, or materially lower
levels of non-price competition, than would have existed “but for”
the merger or challenged practice
29

30. Quantifiable effects (2)
• It is the Commissioner’s choice to rely on quantitative or
qualitative evidence (TREB, at ¶¶ 469-471, TREB FCA, at ¶ 117)
o But the evidence still has to meet the balance of probabilities
standard
o The Tribunal has observed that it is difficult to prove a case primarily
on the basis of qualitative evidence
30

31. Quantifiable effects (3)
• The Commissioner is not required to provide historical data
comparing a past level of competition with the level existing at
the time of the hearing
(TREB, at ¶ 482; Canada Pipe FCA, at ¶ 55)
• The Commissioner is free to focus instead on future effects
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32. Quantifiable effects (4)
• In a merger case where the efficiency defence is raised, the
Commissioner will be required to estimate the extent of the likely
anti-competitive effects, so that the respondent knows the case it
has to meet (Tervita, at ¶¶ 124, 131)
• Precise estimates are not required
• Given that the deadweight loss (DWL) is at the heart of the
assessment of anti-competitive effects, it will not suffice for the
Commissioner to estimate a particular price increase, such as
10% (Tervita, at ¶ 132)
• An estimate of the DWL is required
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33. Quantifiable effects (5)
• The Commissioner is required to provide a range of market and
own-price elasticities, in order to permit the Tribunal to have
more confidence regarding the range of likely effects of a
merger, beginning with the DWL (Tervita, at ¶¶ 132-134 and
139)
• Failure to at least estimate quantifiable effects will not result in
those effects being assessed on a qualitative basis (Tervita, at
¶¶ 100,124 and 128)
• This appears to be so even with respect to the prevention of the
benefits of future competition which defy competition, e.g., in a
monopoly maintenance case (Tervita, at ¶¶ 20 and 166)
• The Commissioner must ground estimates in evidence that can
be challenged and weighed (Tervita, at ¶ 125) 33

34. Unquantifiable effects and efficiencies (1)
• Qualitative effects such as a reduced level of quality, service,
variety or innovation, are assessed subjectively. The same is
true of qualitative efficiencies (Tervita, at ¶¶ 125 and 144)
• But the subjective balancing of qualitative anti-competitive
effects and qualitative efficiencies must be objectively
reasonable (Tervita, at ¶¶ 146 and 150)
• “For the Tribunal to give qualitative elements weight in the
analysis, they must be supported by the evidence, and the
reasoning for the reliance on the qualitative aspects must be
clearly articulated” (Tervita, at ¶ 147)
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35. Unquantifiable effects and efficiencies (2)
• This subjective balancing exercise takes place after the
balancing of quantifiable effects and efficiencies
• In TREB FCA, the Tribunal’s reliance on mainly qualitative
evidence to assess anti-competitive effects and “substantiality”
was upheld
• The FCA found that the Tribunal did not err in concluding that
“the additional innovation developed by full information VOW
brokerages was not only helpful in their attempts to compete but
was ‘forcing traditional brokers to respond’ to this new type of
competition”
(TREB FCA, at ¶¶ 126-127)
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36. Appendix A – Additional case references
36

37. Additional Case References
• Analytical framework for mergers and abuse of dominance:
o Tervita, at ¶¶ 44-79 and 91-101.
o Commissioner of Competition v. CCS Corporation, 2012 Comp. Trib. 14, at ¶¶
58-60, 92-94, 119-130, 261-265, 281, 308-309 and 360-409 [“CCS”] [Note: CCS
Corporation subsequently changed its name to Tervita].
o TREB, at ¶¶ 115-132, 163-212, 270-318 and 456-485.
o TREB FCA, at ¶¶ 54-71 and 86-92.
o Canada Pipe FCA, at ¶¶ 36-44, 57-58 and 63-95.
• Burdens of proof:
o Tervita, at ¶¶ 122 and 136.
o TREB FCA, at ¶¶ 48 and 87.
o Canada Pipe FCA, at ¶ 34.
o CCS, at ¶¶ 232-233.
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38. Additional Case References (2)
• Presumptions:
o Prima facie presumption of dominance above 50% (TREB, at ¶ 194).
o Prima facie presumption of no dominance below 25% market share
(Commissioner of Competition v. Tele-Direct (Publications) Inc., (1997) 73 CPR
(3d) 1 at 217).
o In the absence of barriers to entry, even a very large market share will not
support a finding of market power (TREB, at ¶ 195).
• Adverse inferences:
o TREB, at ¶¶ 470 and 653-658.
• Production orders:
o Commissioner of Competition v. Pearson Canada, 2014 FC 376, at ¶¶ 42-46.
o Commissioner of Competition v. Indigo Books & Music Inc., 2015 FC 256, at ¶¶
39 and 56.
o Commissioner of Competition v. Bell Mobility Inc., 2015 FC 990, at ¶¶ 15-56.
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39. Additional Case References (3)
• Requirement to quantify (where reasonably possible) adverse
effects of a merger when efficiency defence raised:
o CCS, at ¶ 243 and 285.
• Requirement to provide a range of estimates of market and own-
price elasticities, in merger cases when efficiency defence raised
o CCS, at ¶¶ 244-245.
o Commissioner of Competition v. Superior Propane Inc. (2000), 7 CPR (4th) 385
at ¶ 261.
• Assessment of non-quantifiable effects and efficiencies:
o CCS, at ¶¶ 247-248 and 316-317.
o TREB, at ¶ 471.
o TREB FCA, at ¶¶ 99-101.
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