In this presentation, John Blakney gives a comprehensive overview of the legislation relevant to competition law issues involving not-for-profit organizations.

1. COMPETITION LAW CONSIDERATIONS FOR
NOT‐FOR‐PROFIT CORPORATIONS
Presented by: John Blakney, Partner at FMC LLP
Phone: +1 613 783 9602
Email: john.blakney@fmc‐law.com
1

2. • Competition law issues are not exclusively of relevance to trade/industry
associations. Many not‐for‐profit organizations have members, and
directors, that represent competing business.
• Competition law issues and compliance are therefore relevant to any not‐
for‐profit corporation which can provide a vehicle for the exchange of
information among competing business interests.
• Such exchanges may provide evidence of, or constitute, a prohibited
arrangement under the Competition Act, or the competition laws of other
jurisdictions, and involve a not‐for‐profit association in a Competition
Bureau investigation.
• There is extensive competition law jurisprudence and enforcement
experience from Canada, the U.S. and the E.U. relating to trade/industry
associations acting as both “facilitating mechanisms” for anti‐competitive
arrangements among their members, as well as direct participants or
protagonists in such arrangements.
• 2009 Competition Act amendments have increased the need for such
associations to be aware of relevant provisions of the Act.
2

3. • For associations, the principal 2009 amendments to the Competition Act are:
– Strict criminal law prohibition against any price, market allocation or production
allocation agreement or arrangement between two or more competitors (no market
share threshold and no effect on competition needs to be shown).
– All (other) agreements or arrangements among competitors are subject to Competition
Bureau investigation if there are reasonable grounds to believe that they may lessen
competition substantially in any market in Canada.
– Previous express “defences” for collective industry action, such as standards‐setting,
have been removed.
– “Competitor” now expressly defined to include potential competitors.
– Resale price maintenance moved from the criminal prohibitions to the civilly reviewable
practice category.
– Confirmation that the existence of any unlawful agreement among competitors can be
inferred from the circumstances (i.e. conduct of the parties and inferences from
communication) without evidence of an express agreement among the parties.
• Helpful Competition Bureau Guidance on these revisions: “Competitor
Collaboration Guidelines” (December 2010).
3

4. • In any competition investigation into competitor arrangements
trade/industry associations are often subject to searches or
formal information requests.
• Many associations have adopted binding Competition Law
Compliance Codes for (a) their members and directors, and (b)
their employees, and have re‐examined these measures taking
into account the 2009 amendments.
• The 2009 revisions raise the legal exposure and stakes for
associations that may have become actual, albeit unwitting
participants, in a prohibited arrangement among competitors.
• New exposures have arisen for other non‐trade associations in
which two or more competitors participate.
4

5. • The Competition Bureau has traditionally encouraged trade/industry and
like associations to be vigilant about the possibility of becoming a
facilitating mechanism and to proactively adopt conduct standards to avoid
such situations.
• Extensive Canadian enforcement activity relating to self‐regulating
profession/service organizations.
• Accordingly, the Bureau published a Draft Information Bulletin on Trade
Associations for consultation (September 2008) prior to the 2009
amendments.
• Extensive responses from associations and the legal community. Not yet
finalized ‐ probably never will be ‐ due to subsequent changes to the Act
and other subsequent formal guidance.
5

6. • General guidance in the Draft Bulletin is still relevant and
useful. Important topics include:
– Information sharing and data collection restrictions;
– Agenda and meeting controls, including legal counsel involvement;
– Association membership conditions and fees as a barrier to entry or
mechanism to enforce anti‐competitive arrangements;
– Defined role for legal counsel;
– Service fee guidelines: confidential price data as a facilitating
mechanism;
– Self‐regulation and standard setting organizations (even more
germane now under the revised Act with the deletion on the express
standards setting defence);
– Provides a number of benchmarks for self‐regulatory organizations to
avoid Competition Act issues.
6

7. • The Draft Bulletin also provided express support for Voluntary Codes of Conduct:
“Voluntary codes are beneficial in that they establish benchmarks for responsible behaviour, address
industry‐specific problems or needs, promote a high standard of professionalism, and convey a
positive image to the public. They also improve relations with the public or government and lessen
the need for government intervention, regulation and litigation.
“Voluntary codes which do not create competition concerns are characterized by the explicit
commitment of the leadership, acceptance by members, a clear statement of objectives,
expectations and responsibilities, transparency in development and implementation, regular flow of
information, effective, transparent dispute resolution and meaningful inducements to participate.
The key is to ensure that the codes are voluntary and achieve the objectives of the association only
through the willing cooperation of members.
“However, voluntary codes that speak to prices that members charge for services, mandate levels or
types of services or restrict member advertising may raise competition issues. While associations
may feel compelled to put in place voluntary codes for their members, they should be aware of the
potential impact that such policies may have on the competitive aspects of their members’ activities.
For example, voluntary codes should not be used in a way that could negatively affect consumers by
significantly raising prices or limiting product choice. Likewise, voluntary codes that encourage or
mandate certain prices or fees, prescribe levels of service, restrict advertising or impose association
membership criteria (i.e. the exclusion or expulsion of members) could be viewed as forms of anti‐
competitive agreements.)” (page 11)
7

8. • Such voluntary codes can benefit from the binding written compliance opinion procedure and
protection of the Act(s.124.1), particularly if internal sanctions or penalties for non‐
compliance are involved;
• The Draft Bulletin also outlines the elements of an effective trade association competition law
compliance program (pages 12 and following).
8

9. • With the revised Act, the Competition Bureau has increased
the incentives for corporations and associations to adopt
express competition law compliance programs both for
members and association employees.
• 2010 “Bulletin on Corporate Compliance Programs” advises
that the Bureau may take such programs positively into
account in relation to:
– In immunity and leniency applications;
– Sentencing;
– Elections to request civil remedies;
– Decisions to chose the civil or criminal regime;
– Where due diligence is a defence;
– In electing to preserve a consent order or non‐contested resolution.
9

10. The preceding presentation contains examples of the kinds
of issues companies dealing with competition law for not‐
for‐profit corporations could face. If you are faced with one
of these issues, please retain professional assistance as each
situation is unique.

11. Thank You
John Blakney
john.blakney@fmc‐law.com
+1 613 783 9602