The Canadian Competition Bureau (the “Bureau”) and its Five Eyes counterparts have formed an international working group to share intelligence on potentially anticompetitive conduct impacting global and domestic supply chains in Canada, the United States, the United Kingdom, New Zealand and Australia.
The working group plans to meet on a regular basis to identify attempts by competitors to use supply chain disruptions[1] as a cover for price-fixing and/or other collusive conduct, including bid rigging, use of market allocation agreements, etc.
The Antitrust Division of the United States Department of Justice (the “DOJ”) indicates that the international working group is only one aspect of its overall initiative to investigate collusive supply chain schemes. In particular, as part of its domestic initiative, the DOJ in partnership with the Federal Bureau of Investigation has announced that it is prioritizing existing investigations of alleged collusive conduct and is also taking measures to proactively investigate such alleged conduct in a variety of industries impacted by supply chain disruptions ranging from agriculture to healthcare.
With rigorous intelligence gathering efforts underway by the Bureau and its global counterparts, the formation of the international working group signals the prospect of an approaching wave of increased enforcement.
The Bureau’s approach to assessing competitor collaborations is set out in its Competitor Collaboration Guidelines (“Guidelines”)[2]. It is worthy of note that more than a decade after being released in 2009, the Guidelines were updated for the very first time less than a year ago.
Although the core tenets of the Guidelines remain unchanged, and the changes are modest at best, the Bureau clarified that in order to be considered “competitors”, it is not necessary for the parties to compete in respect to the product or service that is the subject of the agreement; it is sufficient for the parties to compete generally. Further, the Bureau also indicates that it will focus on the substance of the agreement as opposed to the structure.
It is important to monitor developments within this space, particularly in light of the federal government’s pledge to significantly increase the Bureau’s budget to support enhanced enforcement capacity[3].
Should you have any questions regarding the information noted above, please do not hesitate to contact the authors of this article.
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[1] Supply chain issues including transportation constraints, disruptions to routine business operations and difficulty in obtaining raw materials result in increased costs of production and shipment, which in turn lead to higher prices for consumers.
[2] Note, although the Guidelines provide general, yet helpful guidance on the Bureau’s approach in assessing collaborations between competitors, the Guidelines are not law and are not binding on the Commissioner of Competition or the Director of Public Prosecutions.
[3] The federal government has pledged to increase the Bureau’s budget by $96 million over the next five years, with an additional $27.5 million budget increase to follow.
