On Thursday, September 4, 2008, the Canadian Bar Association - National Competition Law Section (CBA or the Section) sent a short - and in places critical - response to the report by Mr. Brian Gover to the Commissioner of Competition and the Deputy Minister of Justice regarding the Competition Bureau's practices in obtaining court orders for the production of information and documents under section 11 of the Competition Act.
The Report (dated June 19, 2008 and publicly released on August 12, 2008)1 had been commissioned by the government2 in response to the Federal Court's decision to set aside a section 11 order that had been issued ex parte in the Labatt/Lakeport merger inquiry3. The Court had found the Commissioner's affidavit evidence used to obtain the order to have been "misleading, inaccurate and incomplete." While her officials asserted that this conclusion was unfounded, the Commissioner and the Deputy Minister of Justice nonetheless asked Mr. Gover, a private practitioner with Stockwoods LLP, to review and advise on the standard of disclosure required in ex parte applications under the Competition Act, as well as on the Bureau's section 11 process generally.
In its response to the Report, the CBA Competition Law Section welcomed Mr. Gover's recommendation that the Bureau should, as a matter of course, engage in pre-application and post-service dialogue with respondents of section 11 orders with a view to tailoring the order, to determining the respondent's record-keeping practices, to identifying and seeking to limit the number of custodians who are required to search for information and records and to limiting the time period for which records and information are required. According to the Report, the civil branch already engages in such dialogue, but the mergers branch is reluctant to do so, while the practice is mixed in the criminal branch in this regard.
The CBA also welcomed Mr. Gover's recommendations that the criminal branch should refrain from seeking section 11 orders in furtherance of a criminal inquiry against a person who is a suspect in that inquiry (due to constitutional concerns); that all section 11 orders contain language permitting the Commissioner to "read down" the scope of the order (presumably pursuant to the consultative process mentioned above); and that counsel to the Commissioner, as well as the affiant, should personally attend all section 11 proceedings.
The CBA Section took issue, however, with a number of "positions, assertions and proposals" in the Report, describing them as "unfounded or controversial" and saying that they did not reflect sufficient consultation with the private competition bar and Canadian business community, or accurately represent the CBA's position regarding section 11.
With respect to the consultations with the private bar, Mr. Gover's report reveals that he met with the current and past Chairs of the Section. According to the Section's letter, however, there was only one such meeting, which lasted an hour, and during which key sections of the Report, among them his criticisms of the Labatt decision and proposed amendments to the Competition Act in areas other than section 11 (such as giving the Commissioner the power to issue U.S.-style "second requests" and to toll the waiting periods in merger cases) were not discussed. According to the Section, Mr. Gover also seriously misstated the Section's position when he claimed that the private bar's main concern is the existence of section 11 itself. To the contrary, the Section's key concerns are said to be the lack of notice to respondents and the over-breadth of orders.
The Report does point out that, while the Commissioner need only assert the existence of an inquiry and a belief that the respondent has relevant information in its possession (and need not prove that she has reasonable grounds for either), she has a duty as an ex parte applicant to provide a description of the nature of the alleged conduct that is the subject of the inquiry, and this description must be sufficient for the Court to judge the relevance of the information sought. With respect to relevance, Mr. Gover criticized the Federal Court's judgments in Labatt4 and Air Canada5, stating that "it is not for the Court to determine whether there is another source that would be more effective or efficient." Rather, Mr. Gover's view is that, given that section 11 is intended as an investigative tool, potential relevance ought to be the standard, giving a fairly high degree of deference to the Commissioner with respect to the scope of the order. That said, he acknowledges that the Commissioner, as an ex parte applicant, has a duty to disclose any facts known to the Bureau that may explain the position of the respondent regarding the scope of the order and the relevance of the material sought.
On balance, while the Report may have fanned some flames, it essentially endorses the Bureau's new procedure for review of all section 11 applications by three senior Bureau and Justice officials, and appears to go a long way toward addressing the Section's key concerns by calling on the Bureau to engage in both pre- and post-order dialogue with respondents (which implies that at least informal notice should be the norm in civil cases), and by permitting Bureau officers to narrow the scope of the order once issued (if consultations reveal a narrower scope to be appropriate). The Report also advocates that one judge should ideally have carriage of all section 11 orders in a single case, the better to manage the process.
In the end, actions speak louder than words. If the Bureau implements Mr. Gover's recommendations, one suspects a Labatt-style situation will not soon repeat itself, and both the bar and the Bureau will be much happier (if happy is the right word in the context of litigation) with the section 11 process.