On November 20, 2012, the C.D. Howe Institute’s Competition Policy Council—a group comprised of top-ranked academics and practitioners active in competition policy—published a report calling for the Competition Bureau to clarify the scope of the Regulated Conduct Doctrine (“RCD”) and characterizing it as a “back door route to cartels”. The RCD is a legal doctrine enshrined in section 45(7) of the Competition Act which immunizes regulated entities from prosecution in circumstances where their conduct would otherwise be illegal under the Act. It was described by Grange J.A. in R. v. Independent Order of Foresters:

“The doctrine simply means that a person obeying a valid provincial statute may, in certain circumstances, be exempted from the provisions of a valid federal statute. But there can be no exemption unless there is a direction or at least an authorization to perform the prohibited act.”

The Council met on November 8, 2012 to discuss the soundness and policy implications of the RCD, with its roundtable discussions culminating in the November 20 report. The Council concluded that the Bureau’s published bulletin on the doctrine was vague, and recommended that the Bureau refine its view of Competition Act enforcement in regulated sectors.

The Council further voiced concern that, in the merger review context, firms pursuing pro-competitive mergers may be required to seek the approval of two regulatory agencies - first the regulator, and then the Bureau - adding costs and uncertainty to the entire process. Nevertheless, the Council recommended that the Bureau opine on the economic effects of mergers within regulated industries by explicitly identifying the economic costs and inefficiencies of anti-competitive behaviour that is protected by provincial and federal legislation.