The Competition Bureau filed a complaint in Ontario Superior Court of Justice against Rogers Communications Inc. alleging that the advertising of its Chatr discount cell phone and text service violates the misleading advertising provisions of the Competition Act.  The Bureau is asking for an injunction to stop the advertising campaign and an administrative monetary penalty of $10 million dollars.

The Rogers ad campaign at issue claims that Chatr subscribers will experience “fewer dropped calls than new wireless carriers” and have “no worries about dropped calls.”  However, the Bureau’s two month investigation, prompted by competitor WIND Mobile’s complaint, found “no discernible difference in dropped call rates between Rogers/Chatr and new entrants.” 

Commissioner of Competition Melanie Aitken reiterated that the Bureau is taking misleading advertising “very seriously,” especially when the advertising discredits “new entrants attempting to gain a foothold in the market.”  A link to the Bureau’s press release is found here.

Of all the substantive areas of American law, antitrust is perhaps the one that most aggressively reaches foreign conduct.  Ever since the Second Circuit’s 1945 Alcoa opinion (United States v. Aluminum Co. of America, 148 F.2d 416), courts and Congress have recognized that foreign conduct, when it affects U.S. commerce, can violate U.S. antitrust laws.  Thus U.S. antitrust regulators sometimes seek evidence of foreign conduct as they weigh whether to bring charges.  A recent decision demonstrates the extent to which, in today’s globalized economy, courts will enforce such pre-lawsuit investigative requests by regulators.

The decision is the October 29, 2010 Order of the United States District Court for the District of Columbia in Federal Trade Commission v. Church & Dwight Co., Inc.  The U.S. Federal Trade Commission (“FTC”) is investigating Church & Dwight (“C&D”), the maker of Trojan condoms, for monopoly maintenance or attempted monopolization in the U.S. condom market – specifically by agreeing to provide retailers with rebates or discounts in exchange for certain display arrangements.  The FTC is considering whether such agreements, if they exist, violate Section 5 of the Federal Trade Commission Act.

The FTC served C&D with a subpoena and a Civil Investigative Demand (“CID”) for documents regarding C&D’s incentive programs for retailers.  C&D refused to comply.  Citing relevance and burden, it challenged several aspects of the requests, including one for documents from C&D’s Canadian subsidiary.  These documents were not relevant, C&D argued, because the FTC’s inquiry was limited to whether C&D monopolized condom sales or distribution “in the United States.”

The Court held that the Canadian evidence was relevant to the investigation.  First, the Court held, the relevance standard governing enforcement of the FTC’s requests is quite liberal: it is satisfied so long as the FTC’s relevance arguments are not “obviously wrong.”  Here, the FTC contended that the Canadian documents were relevant because they may reveal the effects of C&D’s sales practices on its market shares.  C&D has a far lower share in Canada than in the U.S., the FTC argued, and the Canadian documents may shed light on whether different sales practices in the two countries produced this result.  The Court sided with the FTC, finding its argument “not obviously wrong.”  In doing so, the Court observed that the Canadian subsidiary’s conduct could have helped C&D secure a monopoly in the U.S., or could otherwise shed light on the investigation.  In light of such possibilities “in a globalized economy,” the Court held, a federal regulator must be able to investigate foreign subsidiaries.

As to burden, the Court first held that C&D did not adequately show that the burden would be impermissible.  The Court held that C&D was required to show that the FTC’s inquiry would threaten to “unduly disrupt or seriously hinder” C&D’s business operations.  C&D offered no affidavit or other evidence to support such a finding.  The Court also suggested that C&D try to reduce the burden of producing Canadian documents by agreeing with the FTC on electronic search terms to use in screening them.

For companies with U.S. and foreign offices, Federal Trade Commission v. Church & Dwight Co., Inc. perhaps teaches a simple lesson: when an agency requests documents from the foreign office, legitimate burden objections will go further than relevance arguments in shielding foreign documents.  As this decision suggests – and many others spell out more fully – a company that can provide strong, detailed evidence of the burden that it would suffer from production of foreign documents may be spared from compliance.  As the ever-globalizing commercial world makes relevance challenges less and less compelling, a burden challenge may be the last best hope for a company seeking to shield its foreign documents from U.S. regulators.

The decision is available here.

Today, the European Commission conditionally cleared a $1.76 billion (1.2 billion euro) acquisition by Unilever, an Anglo-Dutch company, of the Sara Lee Corporation household and body care division.  The clearance required a divestiture of Sara Lee’s Sanex brand and other related business in Europe due to a concern about anticompetitiveness in certain deodorant markets. 

“We had to ensure that the transaction would not lead to increased prices for consumers,” said Joaquín Almunia, the EC Vice President of Competition Policy.  “As Unilever offered a strong and clear-cut remedy to address the competition concerns in a number of deodorant markets, the Commission was able to clear the merger.” 

The investigation into the potential merger lasted five months, and the EC noted that Unilever had a “particularly strong” position in the European deodorant market due to its Axe, Dove, and Rexona brands.  The EC was particularly concerned about the merger’s possible effects on deodorant markets in Belgium, the Netherlands, Denmark, Ireland, Spain, Portugal and the United Kingdom. 

The EC noted that the merger could “remove an important competitive force and would likely have led to price increases.”  Thus, the Commission concluded that the divestiture of the Sara Lee Sanex brand and related business in Europe “offers a clear and workable remedy, sufficient to restore competition in all markets where the Commission had concerns.”   Unilever employs 163,000 people worldwide and sells a range of products that includes cosmetics, food, tea, and other goods.  Sara Lee employs 33,000 people worldwide and sells products that include, among other things, packaged food products, shoe polish, deodorant, and other products.

The parties notified the Commission of the proposed merger on April 21, 2010, and the Commission opened an investigation into it on May 31, 2010.

Last week, Italy’s competition enforcement agency, the Antitrust Authority, levied penalties against MasterCard and several Italian banks totaling more than $8.4 million for artificially raising interchange fees and passing those increases onto merchants and customers.  Interchange fees are fees paid by merchants to the banks that issue the debit or credit card to their customers (the “issuing” banks). 

After a 15-month investigation, the Antitrust Authority accused MasterCard and several issuing banks of using licensing agreements to raise and keep interchange fees high.  In addition, the merchant banks entered into agreements that prevented them from comparing MasterCard’s fees to those of other credit cards.  During this time, Visa’s interchange fee was 30% below MasterCard’s fee.

In addition to fines, MasterCard’s issuing banks will now have to provide a financial justification for their interchange fees, and the issuing banks might have to renegotiate their merchant contracts.

While the three most important things about real estate may be location, location and location, Canadian antitrust enforcers are telling real estate brokers that competition is also important.

The Competition Bureau of Canada has entered into a consent agreement with the Canadian Real Estate Association (CREA) settling the Bureau’s claims that the rules imposed by the CREA limited consumer choice and prevented innovation in the market for residential real estate services.

CREA is a trade association whose membership includes more than 100 Canadian real estate boards and approximately 90% of licensed real estate brokers in Canada.

In February 2010, the Canadian Commissioner of Competition made an application to the Competition Tribunal alleging that CREA had “substantial and complete control over the supply of residential real estate brokerage services throughout Canada” through the Multiple Listing Service (MLS).  The application sought to enjoin “exclusionary restrictions” by CREA that were affecting real estate brokers and agents who sought to provide less than a full package of brokerage services.

According to the Commissioner, MLS was the “only comprehensive listing of homes for sale in Canada,” with no adequate substitutes.  CREA imposed restrictions on the use of the MLS and required that its members periodically certify compliance with CREA’s rules and regulations.

Some of the alleged exclusionary restrictions required listing realtors to always act as agents for property sellers, disallowed agents from merely posting property information on the MLS system without using MLS’ other services, and provided that only the listing realtor’s name and contact information appear in publicly accessible websites.  The Commissioner determined that these rules restricted the ability of consumers to choose real estate services, while forcing them to pay for services they did not need.  The rules also allegedly prevented real estate agents from offering more innovative service and pricing options to consumers.