Canada is attempting to get a handle on the bewildering explosion in new payment technologies with a task force.

Canada’s Minister of Finance, Jim Flaherty, has announced the launch of a new Task Force for the Payments System Review.  As Flaherty commented, consumers today can make payments in “a bewildering number of ways, even by tapping a cell phone against a scanner.”

One of the Task Force’s main goals will be to figure out how to introduce these new payment technologies without compromising Canadian safety and efficiency or consumer protection.  The Task Force is gearing up to provide recommendations to the Minister by the end of 2011. 

The Task Force’s mandate includes: (1)”[i]dentify[ing] public policy objectives to be pursued in the operation and regulation of the payments system;” (2) “[i]dentify[ing] and assess[ing] the regulatory and institutional structures best suited to achieving those public policy objectives;” (3) “[a]ssess[ing] and report[ing] on the safety and soundness of the Canadian payments system;” (4) “[a]ssess[ing] the competitive landscape for current participants by identifying any potential barriers for new entrants and mechanisms to improve the competitive landscape of the domestic payments system;” (5) “[a]ssess[ing] the degree of innovation in the domestic payments system and report[ing] on the challenges and opportunities to bring new and innovative products to market in Canada;” and (6) “[a]ssess[ing] and report[ing] on whether consumers and merchants are well served by the domestic payments system.”

The Task Force is chaired by Patricia Meredith, a Professional Associate and Senior Adviser to financial services and technology companies with the consulting firm Monitor Group, an Adjunct Professor at York University’s Schulich School of Business, and former Executive Vice President of corporate strategy and member of the Senior Executive at Canadian Imperial Bank of Commerce.

While no one may be predicting China will be the antitrust powerhouse of the 21st Century, its days as an antitrust neophyte appear to be ending.

China’s National Development and Reform Commission (“NDRC”) of China has levied fines and administrative penalties against more than 20 producers of rice noodles.  This enforcement action represents the first application of Article 13 of China’s Anti-Monopoly Law against a price-fixing cartel.  According to media reports, the local Guangxi counterpart of the NRDC led the enforcement efforts.

The cartel involved competing rice noodle producers in the cities of Nanning and Liuzhou.  The first cartel began in November of 2009 in the city of Nanning and continued until January 2010.  During that time, competitors held a series of meetings that led 18 noodle producers to agree to increase prices of rice noodles. Soon thereafter, a second cartel formed in the nearby city of Liuzhou that lead 15 noodle producers to reach agreement to raise prices.  After consumer protests, the NRDC began its investigation, which eventually resulted in publication of China’s first public infringement decision under the Chinese Anti-Monopoly Law on March 30, 2010. 

The fines ranged from 100,000 RMB (approximately $14,700 U.S. dollars) to 800,000 RMB (approximately $117,800 U.S. dollars).  Reports have also indicated that some producers took advantage of China’s leniency program and only received warnings.  China’s Price Law also played a role as local enforcement agencies restored rice noodle prices to pre-cartel levels.

The Supreme Court of Canada has denied defendants leave to appeal from the British Columbia Court of Appeal’s certification decision in Pro-Sys Consultants Ltd. v Infineon Technologies AG – the DRAM price-fixing class action.

The B.C. Court of Appeal’s earlier decision certifying a class of direct and indirect purchasers of DRAMs (semiconductor memory chips also known as “dynamic random access memory”) remains therefore the definitive pronouncement on the law on class certifications in competition cases in Canada.  As previously discussed, the B.C. Court of Appeal’s decision lowered somewhat the threshold for class certification –allowing plaintiffs at the certification stage to show a “credible and plausible methodology” for addressing damages on a class-wide basis and finding that the certification judge had erred when he subjected plaintiff’s expert to “rigorous scrutiny.”

The B.C. Court of Appeal had found that it could be possible for plaintiffs to prove that the manufacturers benefitted from their wrongful conduct, and thus prove liability on a class-wide basis as a common issue.  The Court of Appeal had noted that guilty pleas to the conspiracy charges in the United States and manufacturers’ agreements to pay fines calculated as a function of the gross pecuniary gain they derived from the crime amounted to “admissions that they engaged in the wrongful conduct alleged by the appellant and that they obtained an unlawful benefit from that conduct.”

Time will tell whether the decision will result in more competition class action proceedings in Canada – a country where there have been very few contested competition class action certification hearings to date.

The Bundeskartellamt, Germany’s version of the U.S. Department of Justice Antitrust Division, has announced it is fining eight coffee roasters 30 million euros ($35.9 million) for illegally fixing the price of wholesale coffee sold to bulk customers such as restaurants and hotels.

Bundeskartellamt President Andreas Mundt spoke strongly about the need for antitrust regulation, saying that “cartels … are highly damaging to society and therefore have to be rigorously prosecuted” and noting that “coordinated price increases for consumer goods such as coffee have a direct impact on consumers’ wallets,”

The Bundeskartellamt is  assessing a fine for the German Coffee Association (GCA) and 10 employees.  The eight coffee roasters (Tchibo GmbH, Kraft Foods Außer Haus Service GmbH, J.J. Darboven GmbH & Co. KG, Melitta SystemService GmbH & Co. Kommanditgesellschaft, Luigi Lavazza Deutschland GmbH, Seeberger KG, Segafredo Zanetti Deutschland GmbH and Gebr. Westhoff GmbH & Co. KG) include local units of two U.S. companies, Kraft Foods Inc. and Luigi Lavazza SpA. 

According to the Bundeskartellamt’s investigation, from at least 1997 through mid-2008, a group of directors and sales managers at the roasters within the GCA coordinated price hikes and cuts – but mostly hikes – for roasted coffee supplied to restaurants, caterers, hotels, vending machine companies and other bulk consumers.

The Bundeskartellamt has a Leniency Programme, which allows for fines to be waived or reduced for cartel members who report price-fixing or cooperate.  It was a leniency filing from cartel member Alois Dallmayr Kaffee OHG that triggered the Bundeskartellamt’s investigation in the first place, and it has escaped a fine as a result.  Two other coffee makers – Melitta and Darboven – cooperated with the investigation and have apparently received reduced penalties as a result, though the amount of the fines for each cartel member have not been released.  The GCA has admitted liability and said it regretted the infringement in a separate statement.

German law allows the Bundeskartellamt  to fine member companies up to 10 percent of their revenues from the previous fiscal year if they uncover a cartel in the course of an investigation.  With the potential for such a mammoth fine, it is not surprising that six of the companies and their employees have already agreed to settle the regulator’s claims instead of fighting. 

This week’s activity is part of increased scrutiny the Bundeskartellamt has placed on the coffee industry in Germany in recent years.  Though this investigation has only been underway since 2009, the Bundeskartellamt already fined three of the coffee roasters (Tchibo, Melitta and Alois Dallmayr) and six of their employees approximately 159.5 million euros in December based on a similar price-fixing cartel in the retail sector that allegedly ran from early 2000 until July 2008.  A separate investigation into cappuccino makers based on similar price-fixing suspicions remains underway, and is expected to be completed soon.

The European Commission has unveiled new draft rules for horizontal cooperation agreements as part of the EC’s Horizontal Guidelines and Research & Development and Specialization Agreement Block Exemption Regulations (BERs).

The new rules aim to clarify when companies’ horizontal agreements will be deemed to restrict competition and when such agreements will qualify for an exemption.  The rules include a new chapter on information exchange, and substantial revisions to the standardization chapter.  The revised rules also aim to prevent disputes over licensing fees charged by companies for their intellectual property rights once they become the standard.

Key issues addressed in the revised Horizontal Guidelines include:

• An assessment of information exchange between companies;
• Guidance on standard terms in the chapter on standardization;
• Clarification of the application of the competition rules to agreements between joint ventures and their parents; and
• Elimination of the “center of gravity test” which previously defined which parts of the guidelines were applicable to an agreement.

Key issues addressed in the revised R&D and Standardization Agreement regulations include:

• Disclosure of relevant intellectual property rights and readjustment of the “hardcore” restrictions;
• Introduction of a second market share threshold for specialization and joint production agreements pertaining to products used for internal consumption; and
• Clarifications to the notion of “potential competitor”, with the introduction of a three-year timeframe for future market entry.

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