INST Committee Report

       The Competition Tribunal was created in 1986 as part of the major reform of Canada’s competition law that saw the Combines Investigation Act replaced with the Competition Act. The Tribunal is a specialized court combining expertise in economics and law that hears and decides all applications made under Parts VII.1 and VIII of the Competition Act (including merger review, abuse of dominance and other reviewable trade practices). It is an adjudicative body, operating independently of any government department, and is composed of not more than four judicial members and not more than eight lay members. Judicial members are appointed from among the judges of the Federal Court, Trial Division, while lay members are appointed by the Governor in Council on the recommendation of the Minister of Industry.

       The Tribunal deliberates on complex questions of economics and law, and makes decisions affecting not only the rights and economic well-being of the parties, but having implications for businesses and consumers in Canada and abroad. In order to be able to adjudicate on these matters, the Tribunal is given the same powers found in a superior court of record, including the power to hear evidence, summon witnesses, order production and inspection of documents, enforce orders, and generally to do whatever is necessary to exercise its jurisdiction. Ultimately, these procedures serve one aim: to ensure that the Tribunal is able to gather the evidence it needs to make a just and correct decision on the facts of the dispute. The Tribunal does not gather evidence or facts; rather, it relies on the parties themselves (or more commonly, their lawyers) to collect and present the evidence it needs to make a decision. Parties adduce their evidence, each trying to prove their case. Parties are also given the opportunity to “test” their opponent’s evidence in cross-examination. This system — known as the “adversarial” model — is used commonly by Canadian courts as well as by other adjudicative bodies.

You should look going forward at opening up the system to allow participants more access to the Tribunal. I find it hugely ironic that in an act devoted to competition the Commissioner has a monopoly or near monopoly on access [John Rook, Osler, Hoskin & Harcourt,  65:10:45]

By and large, most and virtually all of the experience of the Tribunal is on the part VIII side, in particular mergers. Remember, in the 1986 amendments mergers were decriminalized, put into the non-criminal section, and given into the exclusive jurisdiction of the Competition Tribunal. [Stanley Wong, Davis & Company, 65:09:10]

       In the “adversarial” tribunal system, the Commissioner of Competition is one of the parties, initiating cases by making an application to the Tribunal. Therefore, the Tribunal and Bureau operate in a manner wholly independent and separate from each other. There is no sharing of resources or consultation on proceedings outside of the formal dispute resolution process. Indeed, this strict separation of functions is considered essential to preserve the integrity of the decision-making process. The Committee is aware that other jurisdictions (notably the European Union) employ a different model, one that fuses the role of investigator and adjudicator. The Committee is of the view that our current model is correct and appropriate, having regard both to the operational dynamics of our system of law, and to the requirements of the Canadian Charter of Rights and Freedoms. Moreover, the separation of functions in the adversarial system produces consistently good and just results. However, the system can be quite slow and procedurally intense. The proceedings are also frequently made more complex by the presence of multiple parties and interveners, as well as the need to consider interlocutory motions on issues of procedure. Contested proceedings often involve very complex issues of economics, i.e., determining market definition, market power, barriers to entry, etc. Parties will frequently retain many experts to address every facet of the economic debate. These experts may produce reports and may give evidence before the Tribunal that will be subject to cross-examination. At least in some measure, the high cost of proceedings before the Tribunal is attributable to what appears to be an increasing trend towards hiring more and more experts. Some witnesses, however, remarked on an increasing tendency of expert witnesses to advocate on behalf of their client, i.e., asserting conclusions of law, rather than limiting themselves to their proper role of assisting the Tribunal in arriving at correct findings of fact.

       The Committee is particularly aware that the high cost of Tribunal proceedings may discourage small and medium-sized enterprises from bringing meritorious cases to the Tribunal. The Committee heard little evidence on costs awards, but the Tribunal appears to have broad discretion in this regard; in fact, the Tribunal need not award any costs in a proceeding. Perhaps, the public would benefit from an expressed policy on costs awards. Accordingly, the Committee recommends

[T]he Tribunal doesn’t have a lot of experience. This body was created in 1986 and really started operating in 1987. The first contested case of mergers went in 1990. Now, we’ve not had that many cases. If you look at the experience of the United States or even the European Union, we don’t have a lot of cases, so the significance of every case is magnified. [Stanley Wong, Davis & Company, 65:09:10]

[W]hen we talk about truncating the procedures or having special procedures for the Tribunal, we should not forget that what we’re dealing with is commercial litigation within a certain sphere. We have a lot of history in our courts, if not in our Tribunal, on how to manage those things, and we have various models, not only in Canada, but in other jurisdictions like the U.S., where they have started to manage commercial litigation more effectively and more efficiently. [Robert Russell, Borden, Ladner & Gervais, 59:09:10]  

In a lot of the thinking about what sort of process we want to have in the Tribunal, there is typically an attempt to impose a full-blown traditional trial model. That kind of enforcement activity is not appropriate in a public law enforcement context. [Jack Quinn, Blake, Castles & Graydon, 59:12:30]

       Many of the witnesses appearing before the Committee, both in the context of the study in June 2000 leading to the Interim Report and during our most recent roundtable meetings, expressed a measure of dissatisfaction with the Tribunal adjudicative process. At the same time, however, witnesses were quick to point out that the system is, on balance, a very good one, and not in need of major reform. The timeliness of interim relief as well as the time required to reach decisions were two problems identified. Furthermore, the costs of bringing a case to the Tribunal appear to many to be excessive, owing in some part, it seems, both to an overly procedural discovery process, as well as to the lengthy lists of expert witnesses the parties are permitted to call to give evidence.

Timeliness

       With respect to the criticism that the Tribunal fails to provide interim relief in a timely way, the Committee anticipates that this problem will be addressed in great measure by the new powers conferred on the Tribunal in section 103.3 of the Act by Bill C-23. The new powers will permit the Tribunal to make an interim order to prevent certain anticompetitive practices. The legal test for the granting of the order is quite low — the Commissioner is not required to show that competition will be irremediably harmed, but merely that a person is likely to be eliminated as a competitor, or that a person is likely to suffer a significant loss of market share, revenue or other irremediable harm.

       The Committee believes that granting any manner of relief — interim or final — merely on the grounds that  a competitor is losing revenue (something which happens all the time, and which is not, in itself, evidence of any anticompetitive activity) represents a serious departure from the well-established and important principle that competition law aims at protecting competition, not competitors. However, the relief contemplated here is temporary and is meant to allow the Commissioner to prevent a competitor from suffering immediate and irreparable harm, i.e., being forced out of the market. So, although the interim order may, on occasion, result in inefficiency by protecting an uncompetitive competitor, this impact will, in any case, be temporary. The Commissioner or applicant will still be required ultimately to prove the substantive elements of the relevant section in order to get an order in the final result.

[O]ur ability to get good enforcement in the sense of formal proceedings does depend in part on streamlining and improving the Competition Tribunal proceedings without undermining the ability of people to make a defence for the particular activity they have. … [A]n administrative tribunal, an expert tribunal, would be a much more useful structure. [Neil Campbell, McMillan Binch, 59:11:25]

[T]he Tribunal decisions have taken far too long. … The most recent consent case, which was done with agreed statements of facts and a high degree of collegiality among counsel on both sides, took something like 18 months on a consent basis. It took 18 to 20 months on a merger. [Stanley Wong, Davis & Company, 59:11:30]

       Still, the Committee is concerned that setting the bar for interim relief so low may prompt the Commissioner to seek interim relief in cases of questionable merit, with perverse results on competition. In a normal civil proceeding, this would be less likely to occur because the party who applies for the injunction does so subject to an undertaking that, if he loses the case in the final result, he will have to pay the damages accruing to the other person as a result of the injunction. This rule is designed to prompt the party seeking the injunction to take a hard look at the merits of the application. However, this important disincentive does not appear to exist in the Competition Act. Moreover, even if such a rule were implemented, it would not necessarily have the desired effect, since the damages payable by the Commissioner to the injured party would be payable out of government revenues, not out of the Commissioner’s own pocket (as would be the case with a private litigant in normal civil proceedings). As such, the Commissioner has very little “downside” to seeking an interim order and there is little to make the Commissioner accountable for his decision to seek interim relief.

       In addition to the issue of the timeliness of interim relief, there is also the issue of the timeliness of final relief, the Tribunal’s final order. In the case currently before the Tribunal involving the Commissioner’s allegation of abuse of dominance by Air Canada, we see that interim relief was swift. The final resolution of the matter, however, appears to be a long way off. The Commissioner issued a section 104.1 order on 12 October 2000 and extended it for a further 30 days on 31 October 2000. The Tribunal subsequently extended the order to 31 December 2000. The Committee is disturbed to learn that the hearing is not scheduled to commence until fall 2002. Justice delayed is justice denied. We believe that the resolution of this matter is important for all Canadians.

The Tribunal process needs to be streamlined and improved quite dramatically. … There have been four contested mergers before the Competition Tribunal. The average time the Bureau has dealt with those transactions has been about eight and a half months … [and] the average was 19 months from the start until the remedy. [Margaret Sanderson, Charles River Associates, 59:11:20]

By having a rules committee, you don’t have to have a wholesale set of rules drafted, which may take five years to do, because this is a complex area. You have an incremental process to move the rules along with the change in the law, with the change in procedures, with the change in technology that allows us to adapt to that. [Robert Russell, Borden, Ladner & Gervais, 59:09:35]

       Owing to its “high stakes” proceedings, the Tribunal aims to ensure that the procedures it implements are sufficient so that litigants receive the appropriate degree of procedural fairness. “Procedural fairness” refers to the rights and obligations that flow from a party’s right to have “due process” (as it is called in the United States) in an quasi-judicial adjudicative setting. Procedural fairness, at a minimum, usually involves the right of a party to tell his story to an impartial (i.e., unbiased) decision-maker; and the right to expect that the decision-maker will act in accordance with applicable laws. If the decision-maker does not act according to his legal authority, then the party would have a right to apply to a court for judicial review (reconsideration of the issue by a court).

       The essential question of procedural fairness is: how far does it go? Does it permit the rule maker (in this case, the Tribunal) to make rules limiting the scope of examination for discovery, or the time to complete it? What about time limits on presenting one’s case? Or limits on the number of expert witnesses one can call to give evidence? Indeed, can “corners be cut” at all without prejudice to the rights of parties?

       By providing the appropriate degree of procedural fairness, the Tribunal aims to ensure that parties appearing before it are able to present their case adequately. Traditionally, each party has the right to determine how best to present its case; courts are generally reluctant to intervene unless it is absolutely necessary.

       When it comes to the question of procedural protection, there cannot be said to be any definitive answer to the question: “how much is enough?” As a general rule, the “higher the stakes” for the parties, the higher the degree of procedural protection to which they should be entitled. For example, proceedings which could lead to jail time would attract the highest degree of procedural fairness (that of a criminal court, with the criminal procedures, rules of evidence and a “beyond a reasonable doubt” burden of proof). At the other end of the continuum, small civil matters (such as licensing decisions) would warrant a lesser degree of procedural protection. However, “small stakes” for a large firm may, in fact, be very “large stakes” for a small firm. For that reason, procedural protections must also address the concerns of small business.

The lawyers always argue for more protections, more safeguards, more hearings, and more redeterminations. [Jack Quinn, Blake, Castles & Graydon, 59:12:30]

Whichever side of a case we’re on, we can be unhappy. We always do that in the courts, but nobody has ever suggested we abolish the courts or limit the powers of the courts in their area of jurisdiction. We seem to have a tendency every time somebody doesn’t like a decision of the Tribunal to immediately say, gee, now shouldn’t they do something less? [Stanley Wong, Davis & Company, 65:09:15]

       Questions of “how much fairness is enough?” seldom admit easy answers. As an example, it would seem reasonable to suggest that a person is entitled to be put on notice if a legal proceeding is commenced against him. It offends our sense of justice to think that a court proceeding could take place — and an order made against a person — without that person having any notice or chance to respond. Indeed, the right to notice is an important principle often reiterated by civil courts. For that reason, courts generally permit applications without notice (ex parte) only in exceptional circumstances.

       But when we pursue the idea of the “right to notice” a little further, it becomes less clear. First, giving “notice” of a proceeding is meaningless if the person being put on notice (the respondent) can do nothing to influence the outcome of the proceeding. For the notice right to have any kind of meaning or purpose, there must at least be some opportunity to affect the outcome of the proceeding. This is done by permitting the respondent to challenge the evidence upon which the applicant seeks to rely. But to do that, the defendant will need to have some way of “discovering” the applicant’s case, and so the discovery process becomes necessary. And what will be done if one party refuses to disclose the information the other requests? There must be some way to compel the parties to disclose their documentary evidence. Also, there must be a procedure in place to allow the parties to settle disputes over the proper procedures to apply in a proceeding. This is done by way of motions. Each of these motions must be properly resolved on their merits. Furthermore, the respondent should be given the opportunity to present evidence on his own behalf, and this will likely involve hiring expert witnesses. In this way, the simple right to notice may develop into an extensive set of procedural and substantive entitlements. The adversarial process produces results that are consistently fair and just, but frequently at very high cost.

The difficulty is if we insist too much on this full due process system, which takes tremendous time, and for which we have this judicial model … [S]ometimes you wonder, is this process really designed to get to the truth? If we could solve that side of things, that would go a long way to dealing with questions of independence and so forth. [Margaret Sanderson, Charles River Associates 59:12:00]

       Out of consideration for principles of procedural fairness, the Tribunal aims to provide more, rather than fewer, procedural protections. This means that parties are generally given the time they need to complete the proceeding “in the fullness of time,” without strong direction from the Tribunal. As well, parties will often agree to timetables for dealing with cases, production of documents, etc., and these time frames may be quite lengthy in complicated cases.

       The Committee shares the concerns of those who complain that Tribunal proceedings are long and expensive. Commentators focused on several areas where procedures could be improved:

• the time in which the steps in the proceeding must be completed;
  
  
• the time allocated for, and the scope of, examinations for discovery; and/or
  
  
• the amount of expert evidence the parties may adduce.

       The Tribunal currently has authority, under section 16 of the Competition Tribunal Act, to make general rules (subject to the approval of the Governor in Council) regulating the Tribunal’s practice and procedure. Those rules currently exist in the Competition Tribunal Rules,¹¹which set out a complete code of procedure for the adjudication of disputes before the Tribunal, including the substantive steps the parties must complete and the time within which the steps must be completed. The steps in the proceeding include the exchange of pleadings, discovery, the pre-hearing conference, granting of interim relief, applications by interveners, interlocutory motions and the hearing itself.

Frankly, many of my colleagues … fought tooth and nail, saying, “Well, that’s not justice. Justice means you can have as many witnesses as you want, you can plead as long as you want, and you can get whatever adjournments you want.” I think the hesitancy on the part of the Tribunal to do more is because there’s this view of a private bar to say the model is like court. [Stanley Wong, Davis & Company, 59:12:20]

       The Tribunal is aware of these criticisms and has made, and continues to make, constructive efforts to address them. Most notably, the Tribunal established a Tribunal-Bar Liaison Committee in 1997 comprised of Tribunal members, members of the Competition Law Section of the Canadian Bar Association and the General Counsel of the Department of Justice’s Competition Law (who represents the Commissioner of Competition). The Liaison Committee reviews Tribunal procedures to determine how they might be refined and improved. At the time of drafting of this report, a number of procedural improvements are anticipated. One set of procedures will replace The current discovery process — traditionally the part of the process that takes the most time and results in the most interlocutory litigation — will be replaced with the following set of procedures:

• a reciprocal obligation upon the parties to deliver a disclosure statement setting out a list of the records upon which they intend to rely at the hearing;
  
  
• will say” statements of non-expert witnesses who will be appearing at the hearing;
  
  
• a concise statement of the economic theory in support of the application.
  

       Moreover, the new procedures will permit certain information provided by the respondent to be read into evidence rather than having the witness testify.

       Equally important, the new procedures will depart from the traditional model of permitting each party to adduce all of its expert evidence in turn. Instead, the Tribunal will group experts on a particular issue together in panels. Each expert will make a statement setting out his opinion, which will then be subject to cross-examination by the other experts, rather than by their lawyers. Counsel will still have the right to question experts in a limited manner. Apparently, this approach has been used in Australia with some success reported.

       The Committee is also aware that the Tribunal-Bar Liaison Committee is preparing a discussion paper to explore the possibility of creating similar rules with respect to mergers. These amendments would relate to electronic filing and hearing, attempting to limit the number of witnesses to be called at the hearing, and the introduction of time limits (four months or less from the date of filing of the notice of application) for the issuance of reasons and orders by the Tribunal. The new procedures are aimed not only at reducing the time for the matter to be resolved, but also to bring a greater degree of certainty to the proceedings, which will ultimately benefit the parties in conducting their affairs.

I would urge that the Tribunal continue to maintain a broad and flexible discretion to manage cases in both the parties’ and the public interest. I am concerned about the attempt by the rules and by members of the Tribunal to think that this can be done by fixed rules, which mostly relate to the timing of when things should be filed and the like. In my judgment that is simply tinkering at the edges of substance. [John Rook, Osler, Hoskin & Harcourt, 65:10:45]

In my judgment, the Competition Tribunal is now managing its caseload very effectively, and recent litigation before the Tribunal evidences that. That’s not to say that there won’t be long cases in the future; indeed there will be. If there are, I don’t believe this committee should engage in hand-wringing over that process. It’s in the nature of litigation. [John Rook, Osler, Hoskin & Harcourt,  65:10:45]

       The Committee commends the Tribunal for its timely and thoughtful reforms, and encourages it to continue the process. However, the Committee cautions that any contemplated limits on the right of a party to present its case fully and fairly must always be approached with special consideration for established principles of fairness and justice. Restricting the number of witnesses that a party may call, for example, or the amount of time within which the party must complete their submissions, always runs the risk of creating the reality or appearance of injustice.

       The Committee has assessed several possible options to address the issue of perceived shortcomings in Tribunal proceedings. We could, for example, recommend that the government amend the Competition Tribunal Act to impose procedural limits on Tribunal proceedings; or we could recommend that the government amend the Act in order to require the Tribunal itself to change its rules to create limits on its proceedings.

        The Committee, however, believes the first option is problematic for several reasons. The Committee has no direct experience with, and no particular expertise in, the conduct of Tribunal proceedings. Furthermore, the Competition Tribunal Act clearly anticipates that Parliament originally intended for the Tribunal to determine its own procedures, and it appears to be actively engaged in doing so. For these reasons, the Committee does not find that there is a compelling reason to depart from this model.

       The second option would impose an obligation on the Tribunal to make rule changes, but would leave the consideration of how exactly to do so in the hands of the Tribunal. Again, however, it is clear that the Tribunal already has the necessary authority under its statute to impose case management procedure, and is actively considering ways of doing so.

  [Y]ou have to be able to say to the parties, “I want experts on this issue and this issue, and you'd better file experts in this area,” instead of saying, “You do what you want, you do what you want, and then you can reply and you can reply.” That is not case management in this area. This is one where you have to be extremely aggressive, running the case from the first day it comes into the Tribunal. The Tribunal can do that without amendment to the process. Every time you have amendment, it leads to more jurisprudence about what it really means. The framework is good enough for the Tribunal to make these changes.  [Stanley Wong, Davis & Company, 59:12:20]

       Ultimately, the Committee believes that the Tribunal is in the best position to enunciate the rules governing its procedures. For that reason, the Committee recommends:

Balancing the Incentives: Damages, Court Costs and Fines

       The relief available to a prospective applicant is a critical factor in determining whether to proceed with a case to the Tribunal. Although, with the adoption of Bill C-23, the right to bring a private action before the Tribunal will exist in a limited sense, the incentives contained in Bill C-23 are clearly designed more to discourage than to encourage the applicant to commence private proceedings. The absence of any remedy of damages is the most obvious incentive against litigating cases. Denying the plaintiff what would be, in most civil cases, the most important available remedy might reasonably be expected to have an impact on the decision of whether or not to start an application, i.e., is the remedy (an order) worth the time, effort and expense? The possibility of damages awards is also an important deterrent to anticompetitive behaviour. Currently, the only relief available to the applicant is a cease and desist order of the Tribunal, or in some cases, an order for divestiture. But there is no right to sue for damages.

I believe that administrative penalties and damages are something that are necessary to make our Act effective. Currently, abuse of dominance is a provision that can be read this way: do it until you’re told not to. And what’s the cost of that? The advice we have to give is that it’s not unlawful until the tribunal says so. Of course, the clients can potentially read into that, do it until they say no. [Robert Russell, Borden, Ladner & Gervais, 65:09:35]

       The right to sue for damages is a fundamental right accorded to plaintiffs in civil proceedings throughout the world. It is an injustice that applicants in Tribunal proceedings should be denied the same fundamental right as any other litigant to claim restitution for the losses they have sustained as a result of another person’s anticompetitive conduct. The ostensible reason for the policy is that providing a damages remedy would lead to a rash of litigation, as has been the case in the United States and that this, in turn, would cause business to leave Canada, oppressed by the high cost of defending vexatious lawsuits.

       The Committee is fully aware of the many differences that exist between the Canadian and U.S. approaches to antitrust enforcement, and we are of the view that the differences are so fundamental that no meaningful comparison can be drawn between the two. In addition to permitting treble damages to the successful plaintiff, the U.S. approach also contains other incentives to encourage litigation including, for example, civil jury trials and costs awards that overwhelmingly favour the plaintiff. For that reason, the Committee is firmly of the view that there is no merit to the argument that creating a right of damages in Tribunal proceedings would have an adverse impact on the business environment. In fact, quite the opposite could occur. Creating a fair system in which all persons and enterprises are able to protect their rights and economic interests would tend to attract investment, not drive it away. This conclusion is supported by the United States experience where, despite having the most litigious antitrust regime in the world, investment still flocks to the business environment of the United States ahead of any other in the world.

       Moreover, the argument is not borne out by the experience of ordinary civil courts in Canada. Our courts routinely assess and awards damages in civil cases, and there is absolutely nothing to suggest that the availability of the remedy has led to a rash of strategic litigation in those venues. For the same reason, there is nothing to support the position that permitting applicants to claim for damages before the Tribunal would result in a significant increase in litigation, particularly if the relief is limited to “single damages,” i.e., the actual provable loss. The threat of strategic litigation would also be kept in check by the Tribunal’s new cost rules, as well as its power of summary dismissal and to refuse leave to commence an application.

But unless we have significant penalties, we have no teeth in these provisions. We simply litigate, and litigation can be a tool in itself to draw things out until the damage is done, until the competitor disappears from the landscape. Only with the threat of significant penalties with these sorts of provisions will we have true deterrents in our economy. [Robert Russell, Borden, Ladner & Gervais, 65:09:35]

[A]dministrative penalties and damages to parties that are harmed. Without that, we don’t have teeth in this legislation for important reviewable matters. If you put a company out of business today, all that will be said to you is, you shouldn’t have done it. That’s not a good enough deterrent. If you’re going to abuse your dominant position in this country, you should be called to pay for damages to the party, costs for the proceedings, and penalties because the public interest has been affected. We need those teeth. [Robert Russell,  Borden, Ladner & Gervais, 65:10:45]

       The Tribunal is composed of very experienced members of the judiciary and experts in economics, who certainly have the necessary expertise to assess damages. The Committee does not recommend under any circumstances the consideration of treble damages, such as are available to litigants in the United States, and which is said to have led to the growth of a massive antitrust litigation industry in that country.

Historically, Canada’s antitrust legislation has been principally concerned with the public interest in competition as opposed to the private interests of individual competitors. If you amended the legislation … to afford a litigant the right to damages, I think the implications would be quite profound … I think inevitably where you would end up is that the Tribunal would become a court like any other, only it would be a specialized court. So a lot of thought has to be given on whether it is in the public interest to migrate the legislation in that direction. [John Rook, Osler, Hoskin & Harcourt, 65:10:55]

       With the adoption of Bill C-23, the Tribunal will now have the authority to award court costs to a successful litigant. This is also expected to have an impact on the prospective applicant’s decision of whether to take a case to the Tribunal, although it cannot be said to be a strong incentive either way. The spectre of having to pay a successful defendant’s cost would tend to deter an applicant not strongly convinced of the merits of his case, certainly as much as the prospect of recovering costs would tend to encourage it. Furthermore, at least some cases, it is anticipated, will not obtain the leave of the Tribunal required to bring an application under sections 75 and 77, which is another possible disincentive to commencing an application.

       The Committee also found considerable support among witnesses for giving the Tribunal the authority to levy administrative monetary fines as a further deterrent to egregious anticompetitive conduct. Although the threat of damages is certainly an effective deterrent, fines would be a useful additional remedy in situations where: (1) an award of damages would not, in itself, be a sufficient deterrent; (2) the victims of the conduct could not be easily ascertained, for example, where the loss has been shared by a large number of consumers; or (3) where the losses of each is too minimal to make a damages award a practical remedy.

       Administrative penalties, in order to have any effect, would have to be large enough to deter anticompetitive behaviour. In fact, to deter the conduct in the future, the penalty must be greater than the profit that the abusive firm might realize as a result of its anticompetitive conduct. For that reason, there should be no ceiling placed on the size of the potential fine that the Tribunal might levy. The size of the fine should be left to the discretion of the Tribunal, having regards to the profits realized by the abusive party and such other factors as it considers correct in the circumstances of the case.

       Accordingly, the Act must provide the optimum mix of incentives to promote compliance with the Act and to encourage meritorious cases to come forward. The Committee was presented with two options:

 I think there is a need to review the whole scheme as to what we’re trying to do … [I]n Bill C-23 there’s now a penalty of $15 million in the airline situation. I think that’s too hasty. I appreciate there are all sorts of political considerations, but … you need to look more generally at what principles you want enshrined in the act to deal with reviewable matters. … [I]t’s not a question of what we can do to stop the big business. When you have these penalties in place, they will apply equally to smaller businesses. [Stanley Wong, Davis & Company, 65:10:15]

        It is not clear whether the creation of the new right of private access, as well as the Bureau’s new procedures to hear references and to summarily dismiss applications, will actually achieve the desired objective of encouraging positive litigation. The Committee is not convinced that these narrow reforms will, in themselves, strike the right balance. For this reason, the Committee recommends:  

Jurisprudence — Bringing Cases

       There was a broad consensus among witnesses that simply not enough cases are being brought to the Tribunal. This is not to suggest that litigating disputes is to be encouraged for its own sake; however, bringing cases to the Tribunal will lead, over time, to the development of judicial interpretation that will ultimately serve to clarify the meaning of, as well as improve compliance with and enforcement of, the Act. The challenge for lawmakers is to create a system in which good cases (i.e., cases with merit) may be brought. At the same time, we must be careful that we do not encourage frivolous, vexatious or strategic litigation.

Parliament should ask itself, how much of the public resources we have to allocate amongst many valuable objectives can we afford to put into this kind of adjudication? [Jack Quinn, Blake, Castles & Graydon, 59:12:30]

We just have to open up to the possibility of allowing private actions, possibly including damages or at least cost awards for some of these other offences. [Tom Ross, University of British Columbia, 59:12:45]

[W]e should be focused on … what are the right, economically sound designs of the law, and the jurisprudence should follow. [Neil Campbell, McMillan Binch 59:12:15]

       The Committee is satisfied that the new Tribunal powers created by Bill C-23 are well designed to discourage frivolous litigation. However, whether the reforms will function to encourage good cases to come forward is far from clear.

       Many disputes will undoubtedly be resolved by the Tribunal’s new power to hear references.¹² At the same time, it is reasonable to anticipate that some cases will be dealt with summarily under the Tribunal’s new powers of summary judgment. Cases obviously devoid of merit will be “stopped at the gate” by the Tribunal’s right to deny leave to commence the application.

       The Committee expects that the new right of private access to adjudicate disputes under sections 75 and 77, created by Bill C-23, will add to the Tribunal’s caseload, as private individuals look to the Tribunal for protection from anticompetitive business practices. However, owing to the non-availability of any remedy in damages, the Committee does not anticipate the flood of litigation that some opponents of private access have predicted. Still it is anticipated — indeed, hoped — that stakeholders will use the legislation in good faith to assert their rights before the Tribunal and protect their civil rights and, more generally, to protect healthy competition.

       On the subject of references, the Committee heard several criticisms of Bill C-23. That bill contemplates that the Commissioner alone, or both parties if they agree, may direct a reference to the Tribunal on a question of law, mixed law and fact, jurisdiction, practice or procedure. The Commissioner may, of his own accord, refer these matters (except for a question of mixed law and fact), but a responding party may not. The Committee does not find any compelling policy justification for this apparent inequity and the Committee, therefore, recommends:

Tribunal Resources

       The Committee heard little evidence on the adequacy of the Tribunal’s resources. However, some witnesses did point to a shortage of economist members in some cases, and this has reportedly resulted in occasional delays in cases proceeding in a timely fashion. We anticipate that the Tribunal’s current budget may need to be increased in order to deal with cases brought by private parties after the adoption of Bill C-23. How many new cases will result remains to be seen. At the same time, it is possible that the power to grant summary judgment and to hear references may result in a greater number of cases being resolved short of a full-blown hearing, and this may result in some saving of resources.

       In any case, the Committee is of the view that the Tribunal itself is in the best position to determine its resource requirements and that the current budgetary process provides the means to address this issue. For this reason, the Committee does not feel the necessity to comment on the adequacy of the Tribunal’s current budget. The Committee intends to monitor the operation of the Tribunal as part of our oversight of the operation of Canada’s competition law framework.

The Competition Tribunal Act

       The Committee heard that subsection 12(1) of the Act, as it is written, does not reflect current Tribunal practice. That section states that questions of law shall be determined only by the judicial members, while questions of fact or mixed law and fact shall be determined by both judicial and lay members.

       Distinguishing questions of law from questions of fact or mixed fact and law often presents difficulties, particularly in a statutory regime that is driven by market forces. The Tribunal, in its practice, does not preclude lay members from expressing opinions on questions of law. In one case, in fact, the appeal court affirmed the dissenting opinion of a lay member on an issue of the Tribunal’s jurisdiction.

       The Committee believes that there is no compelling reason to maintain the artificial and somewhat unwieldy distinction between questions of fact and question of law or mixed fact and law in Tribunal proceedings. Accordingly, the Committee recommends:

  We all benefit from having a reasoned decision. Not only will the complainant benefit, members of the public will benefit by understanding the way the Bureau is applying the law in a particular situation. You get an accountability benefit from seeing what the Bureau has done or has not done. [Neil Campbell, McMillan Binch 59:11:25]

In private litigation, the parties have the freedom to spend as much money on their cases as they think their interests bear, so there’s a natural competition in spending money on cases. Part of the resistance to the bureau bringing more cases has been the amount of money they consume. This is simply saying that the process becomes a kind of pearl without price. [Jack Quinn, Blake, Castles & Graydon, 59:12:30]

  I think there is a general support for the idea that Tribunal proceedings should start and finish in six months, including a four-month period for adjudication and two months to write the decision. My sense is that the Tribunal itself is predisposed to pursue that and obviously requires the cooperation of the parties as well as sufficient resources. I understand one of the problems with delay in the past has been that there have been insufficient judicial resources. [Stanley Wong, Davis & Company, 65:09:25]

 I do not think just throwing more money there will solve the problem. If we kept the model we have today … you can have a situation such as the Superior Propane case where the Commissioner can lead ten economists as experts. … I think we have to change this process, or the quantity of resources that will have to be devoted to it … [W]hat the general taxpayer would view is a reasonable allocation, given competing and highly desirable goals for government policy. [Margaret Sanderson, Charles River Associates, 59:12:35]

One area that in my judgment would add a lot of accountability, particularly in merger cases, is if a merger is before the Tribunal the reference power that exists in Bill C-23 should be amended to permit the respondent to bring an application to the Tribunal for a

Automatic Right of Appeal

       Section 13 of the Competition Tribunal Act creates an automatic right of appeal¹³ from any decision or order of the Tribunal, including interim (temporary) orders.¹⁴One exception exists to this automatic right of appeal: an appeal on a question of fact alone may only be brought with leave (permission) of the Court. This approach reflects a principle known as judicial deference. It is based on the notion that the Tribunal, with its specialized expertise and full hearing of the evidence, is in a better position than the appeal court to determine evidence-based findings of fact. But should the idea of deference extend to questions of law as well?

Judicial members have the exclusive right to decide on questions of law and then all other questions decided by the entire panel. …  [I]t’s a bit awkward for the Tribunal to operate in that way … in reality the Tribunal members probably look at everything together [Stanley Wong, Davis & Company,  65:09:15]

       Judicial members of the Tribunal are judges of the Federal Court. It is evident to the Committee that, with such a depth of legal knowledge and experience, the Tribunal warrants a very high degree of deference on matters of law. Moreover, it has been clearly shown that lay members of the Tribunal can, and do, comment meaningfully on issues of law in Tribunal decisions. For this reason, the Committee believes that the principle of deference should extend to the Tribunal not only in questions of fact alone, but equally in questions of law of general application and laws specific to competition proceedings.

       It is important to be clear that requiring a party to obtain leave to appeal does not deprive the party of its right to appeal. It simply requires that the appellant first convince the Court of Appeal that there is sufficient merit to the appeal to warrant a hearing. The Court of Appeal might, if it finds no merit in the appeal, summarily dismiss it without the necessity of going through a full appeal proceeding. In this way, many proceedings might be abbreviated without sacrificing principles of procedural fairness. Accordingly, the Committee recommends:

Right now there is an automatic right of leave to appeal except on questions of fact. I know of no skillful lawyer who can’t at least make a question of mixed fact and law to launch an appeal. This, I think, unnecessarily delays the adjudicative process, given that the purpose of the Tribunal is to be a specialized Tribunal. [Stanley Wong, Davis & Company, 65:09:15]

It is not good for the system to have a very prolonged period for adjudication of appeal and subsequent appeal because, certainly in the merger context, very few mergers will be held up. That is, mergers that were not completed would not wait. [Stanley Wong, Davis & Company, 65:09:15]