ACEC-ONTARIO COMPETITION LAW COMPLIANCE POLICY AND GUIDELINES
The Board of Directors of Association of Consulting Engineering Companies – Ontario (“ACEC-ONTARIO”) has adopted the following policy to ensure that all activities of the Association operate in compliance with the Competition Act (the “Act”).
It is ACEC-ONTARIO’s policy to comply with the Act in letter and spirit. This policy applies to all members of ACEC-ONTARIO, when engaged in ACEC-ONTARIO sponsored activities, and to employees of ACEC-ONTARIO.
Members are reminded that the Act applies to all business activities in Canada, including the actions and activities conducted by or under the auspices of trade associations such as ACEC-ONTARIO.
2. TRADE ASSOCIATIONS & COMPETITION LAW ISSUES
As a trade association, ACEC-ONTARIO’s activities are distinct from the businesses of ACEC-ONTARIO members, who also have their own responsibilities for ensuring compliance with the Act.
Trade associations such as ACEC-ONTARIO are legitimate forums for cooperation among competitors. Trade association activities generally do not raise issues under the Act and they perform many beneficial functions for their members, including government relations, public education, joint promotion of the industry, lobbying policy makers, etc. However, the very nature of trade associations, as they bring together competitors, creates a risk that they could be used, directly or indirectly, as a vehicle for anti-competitive activities. In particular, trade associations could be used to assist in the implementation of anti-competitive agreements and other collective actions that raise competition law issues.
Of greatest concern is where an association provides a forum for competitors to agree on competitively sensitive matters. Trade association activities on subjects such as pricing, customers, territories, market shares, terms of sales and advertising restrictions can lead to anti-competitive behaviour and can raise concerns under the Act. For these reasons, members and their representatives on ACEC-ONTARIO committees, on the Board, or when engaged in other ACEC-ONTARIO-sponsored activities, must be aware of the application of competition law and potential risks relating to their (and ACEC-ONTARIO’s) activities and must therefore be careful to avoid conduct which could be in violation of the Act. Even compliant acts which simply give the appearance of violating the Act can attract unnecessary controversy and cost.
3. OVERVIEW OF THE ACT
The Act applies to all business activities in Canada, including the actions and activities conducted by or through ACEC-ONTARIO. The Act is administered and enforced by the Commissioner of Competition and the Competition Bureau. The Commissioner is an appointed independent law enforcement official. The Act contains both criminal and civil provisions aimed at preventing certain anti-competitive practices and sets out certain prohibitions on how competitors may deal with each other, as well as how businesses treat their suppliers and customers. Specifically, the Act addresses, among other things, conspiracy (such as price fixing), bid-rigging, false or misleading advertising, double ticketing, multilevel marketing and pyramid schemes, price maintenance, bait and switch selling, sale above advertised price, mergers, refusal to deal, consignment selling, exclusive dealing, tied selling, market restrictions, abuse of dominant position, delivered pricing or specialization agreements.
The areas of greatest concern for a trade association are competitor collaboration issues.
Anticompetitive agreements among actual or potential competitors are the most serious competition criminal offence in Canada. With very limited exceptions in the case of certain joint ventures, an offence is committed when one party agrees with a competitor or a potential competitor to:
- Fix, maintain, increase or control the price for supply of a product or service;
- Allocate sales, territories, customers or markets for the product or supply of a product or
- service; or
- Fix, maintain, control, prevent, lessen or eliminate the production or supply of a product or
As well, regarding bid-rigging conduct, agreements between competitors on bids (including any agreement or arrangement not to submit bids or to withdraw a bid) may constitute an offence under the Act. These activities are strictly prohibited even if there is no negative impact on competition, even if competitors believe that prices will be lower or markets will be more competitive.
In addition, a prohibited criminal agreement does not have to be express, or in writing. It can involve an implicit understanding. It can be assumed or inferred from exchanges of information and/or parallel conduct. Therefore, it is important to ensure that ACEC-ONTARIO members do not create the appearance of wrongdoing. Violating the Act has significant legal, financial and reputational consequences for ACEC-ONTARIO and its members.
Consequences can include:
- Fines against ACEC-ONTARIO and member firms of up to $25 million (or potentially even higher for bidrigging or multiple charges) and/or jail of up to 14 years for individuals;
- Criminal records for convicted individuals that may negatively impact future travel and
- employment opportunities;
- Administrative monetary penalties for non-criminal reviewable conduct against ACEC-ONTARIO and member firms of up to $10 million;
- Use of investigative powers, such as interviews of key persons, wiretaps and search warrants;
- Disruption of business and distraction from business efforts;
- Civil claims for damages, often by way of class actions; and
- Very significant reputational damage to ACEC-ONTARIO and member firms.
The following guidelines are provided to ACEC-ONTARIO member firms to help ensure that ACEC-ONTARIO meetings and activities do not lead to breaches of the Act. These guidelines apply at both formal and informal meetings. Please keep in mind that the Act is complex, and these guidelines do not cover all contingencies. Please consult your own legal counsel, or bring your questions or concerns to ACEC-ONTARIO Management, if you have questions about the Act or these guidelines.
- Seek or accept, discuss or exchange commercially sensitive information with competitors or potential competitors (defined widely) including plans or information with respect to bids, pricing, territories, customer allocation or output restriction.
- In particular, do not engage in any of the following activities or participate in discussions,
- agreements or information-sharing activities relating to:
- Fixing, maintaining, increasing or controlling the price of a product or service. Price is defined broadly to include discounts, rebates, allowances, price concessions or any other advantages in relation to the supply of a product or service.
- Examples of potential competition law violations include: agreements between competitors or potential competitors to establish methods to determine prices or agreeing to the use of a price list for negotiations with consumers.
- Allocating sales, territories, customers or markets.
- Examples of potential competition law violations include: agreements among competitors or potential competitors not to compete for customers based on territory, type of service/product, or other criteria.
- Output restrictions regarding fixing, maintaining, controlling, preventing, lessening or eliminating the supply of a product or service.
- Examples of potential competition law violations include: agreements regarding quotas for products or agreements to reduce the quantity or quality of products or services.
- Agreeing or arranging to submit a bid, proposal, tender or quote, or agreeing not to submit a bid, that was arrived at as part of an agreement with one or more other bidder, or withdrawing a bid.
- Examples of potential competition law violations include: agreements amongst potential bidders to submit bids at prearranged amounts or agreements amongst potential bidders to allocate which types of customers or projects they will bid on.
- Obtain a copy of the agenda prior to participating in a ACEC-ONTARIO meeting, and review it in advance to ensure you have no concerns about the topics to be discussed. If you do have concerns, raise them at the outset, and competition law advice will be obtained before the discussion occurs.
- Keep minutes of the meetings which clearly indicate the participants and the matters discussed and which follow the agenda of the meeting.
- Confine discussions to the immediate subjects for which the meeting was convened.
- Review the minutes provided by ACEC-ONTARIO and report any mistakes.
- Be alert to discussions that may raise competition law concerns. If improper or
- questionable topics arise, members should voice their concerns, and if necessary leave the meeting and have their departure noted for the minutes and report the incident to the ACEC-ONTARIO at ACEC-ONTARIO.
- Seek legal advice if a particular situation gives rise to competition law concerns or questions
- Even silence can be construed as approval.
- Seek legal advice before discussing potentially sensitive competition issues.
Approval Date: June 20, 2019
Effective Date: June 20, 2019
Next Scheduled Date for Review: June 2022