Competition Bureau, OSC to share information
Agreement signals trend toward increased formal cooperation between regulators
A recent memorandum of understanding between the federal Competition Bureau and the Ontario Securities Commission signals a trend towards increased information-sharing between regulators, although the enhanced cooperative effort will not necessarily lead to joint investigations.
The distinction between assistance and a joint investigative effort is unclear in the recent memorandum of understanding (MOU) signed Nov. 25 by the Bureau and the OSC. In an effort to strengthen cooperation between the agencies on matters of mutual interest or concern, the agreement will include assistance on investigations, litigation or enforcement action, sharing intelligence, and engaging in joint education or advocacy initiatives.
Brian Facey, a competition lawyer at Blake, Cassels & Graydon LLP, says the Bureau under Commissioner John Pecman has been effective in timing its investigations with other agencies, “not getting out ahead of them, not lagging behind, but trying to make sure that they are consistent in terms of timing, process and substance.”
Other MOUs signed by the Bureau include agreements with the CRTC and the Department of Public Works and Government Services in 2013, the Market Surveillance Authority in Alberta in February this year, the Canadian Intellectual Property Office in April, and the Competition Commission of India on Dec. 1.
“I think we're seeing this trend toward more frequent and more formal cooperation amongst regulatory and law enforcement agencies,” says Kelley McKinnon, a partner at Gowling Lafleur Henderson LLP, who held senior roles at both the Competition Bureau and the Ontario Securities Commission. “They've all realized that misconduct crosses jurisdictions. ... If one agency sees something that they think is troublesome but it doesn't fall within their mandate, they are more likely now to refer it to another agency then they might have been a few years ago.”
There's also some concern as to whether the two agencies will perform “joint” investigations despite having different mandates. “Sometimes people look at an announcement like this and say, ‘Are they going to be doing joint investigations in the future?'” says McKinnon.
Joint investigations are used by agencies with similar mandates, such as the OSC and SEC, to avoid duplication of, for example, interviews of respondents in a case involving securities fraud or other matters involving litigation or enforcement. When two agencies share the same mandates, however, agencies will often hand off an investigation to a lead jurisdiction. McKinnon offers two reasons:
“One, agencies are smarter these days about not wasting their resources by duplicating what another agency is doing. Second, there is recognition of a fairness issue for the respondents in a proceeding. You can't expect a respondent to be defending the same complaints about the same conduct in two different countries at the same time.”
When cooperating agencies have different mandates, however, matters are unlikely to be handled jointly. “When you get something like the Competition Bureau and the securities commission, they've got distinct statutory mandates,” McKinnon says. “If you have two agencies with two different issues – different concerns under the law – that's where you're less likely to see one agency deferring to another, because they've each got their own mandate.”
In some transactions, however, the mandate of the OSC and Bureau could overlap. “It's rare but – as we saw in the Maple [acquisition of TMX Group] transaction – possible that the OSC will also have a public interest mandate over a merger,” Facey says. “So while the Bureau cares only about competition ... the OSC has a broader public interest mandate.”
The MOU only states that the agencies will “assist” each other on matters of mutual interest or concern. McKinnon says that this notification initiative is a courtesy and will help the agencies avoid tripping over each other on the same case.
Joint investigations between distinct agencies are rare not only because each agency has a unique set of policies, but also because of stringent confidentiality rules. As such, the MOU states that the regulators would not share information if it were to “contravene any relevant legislation, policies or guidance documents.”
When she was Senior Deputy Commissioner of the mergers branch of the Competition Bureau, McKinnon says there was a perception from some that different agencies looking at the same case were not communicating with each other. The ultimate goal of the entities involved was to avoid duplication and cost, she says.
In especially tough cases, two agencies can completely diverge on views — for instance, when the Bureau and the Canadian Radio-television and Telecommunications Commission clashed over Astral's proposed acquisition of Telemedia's radio stations. The Bureau argued for divestitures of French-language radio stations, while the CRTC argued the transaction was competitive as is. In 2006, the same two agencies reversed views when CTVglobemedia Inc. looked to acquire CHUM Ltd.
Paul Collins, a competition lawyer at Stikeman Elliott LLP, says the possibility of joint investigations taking place will depend on the facts. “I think it's going to depend. It's going to be very fact-specific,” he says. “You're going to have the Competition Act as a law of general application, and then you have the specific, and there's clearly going to be some elements of overlap.
“If you look at the jurisdiction of the CRTC or the OSC … certain aspects of their jurisdiction and oversight pertain to the impact on competition in that particular sector, whereas other aspects would have nothing to do with competition and there would be no overlap. ... And so I think it's just going to depend on the nature of the issue and whether one would take a backseat to the other or whether they would work collaboratively in sort of arm-and-arm with not a clear lead.”