COMPETITION LAW COMPLIANCE POLICY AND GUIDELINES
The Board of Directors of the Mechanical Contractors Association of BC (the “MCABC;’) has adopted the following policy (“Policy”) to ensure that all activities of the MCABC operate in compliance with the Competition Act, R.S.C. 1985, c. C-34 (the “Act”).
It is the MCABC’s policy to comply with the Act in letter and spirit. This policy applies to all members of the MCABC and to employees of the MCABC. Members are reminded that the Act applies to all business activities in Canada, including the actions and activities conducted by or under the auspices of trade associations such as the MCABC.
TRADE ASSOCIATIONS & COMPETITION LAW ISSUES
Trade associations, including MCABC, provide a legitimate platform for competitors to cooperate.
They undertake several beneficial functions such as lobbying policy makers, government relations, public education, and joint promotion of the industry. However, the very nature of associations that bring competitors together creates a risk of anti-competitive activities. Trade associations may be used to assist in implementing anti-competitive agreements and collective· actions, raising competition law issues. The most concerning is when associations provide a forum for competitors to agree on competitively sensitive matters such as pricing, customers, territories, market shares, terms of sales, and advertising restrictions, leading to anti-competitive behavior and raising concerns under the Act. As a result, MCABC members and representatives on committees must be aware of the application of competition law and potential risks and should avoid any conduct that violates the Act. It is important to note that MCABC’s activities as a trade association are distinct from the business of its members, who also have their responsibilities to ensure compliance with the Act.
The Act is administered and enforced by the Commissioner of Competition (“Commissioner”) and the Competition Bureau (“Bureau”). The Commissioner is an appointed independent law enforcement official. The Bureau is an independent enforcement agency that is mandated to protect and promote competition for the benefit of Canadian consumers and businesses.
The Act contains both criminal and civil provisions aimed at preventing certain advertising practices and sets out certain prohibitions on how competitors may de·al with each other, as well as how businesses treat their suppliers and customers. Specifically, the Act addresses, among other things, conspiracy (such as price fixing), bid rigging, price discrimination, predatory pricing, discriminatory promotional allowances, double ticketing, multi-level marketing and pyramid schemes, price maintenance, bait and switch selling, sale above advertised price, mergers, refusal to deal, consignment selling, exclusive dealing, tied selling, market restrictions, abuse of dominant position, delivered pricing and specialization agreements.
The area of greatest concern for a trade association are competitor collaboration issues. Anti competitive agreements among actual or potential competitors are the most serious competition criminal offence in Canada.
With very limited exceptions in the case of certain joint ventures and strategic alliances, an offence is committed when one party agrees with a competitor or a potential competitor to:
- Fix, maintain, increase or control the price for supply of a product or service;
- Allocate sales, territories, customers or markets for the product or supply of a product or service;
- Fix maintain, control, prevent, lessen or eliminate the production or supply of a product or service; and
- Beginning June 23, 2023, fix, maintain, decrease or control wages or other terms of employment or to refrain from hiring or trying to hire one another’s employees.
These activities are strictly prohibited even if there is no negative impact on competition, even if competitors believe that prices will be lower or markets will be more competitive and even if there is no market impact.
In addition, a prohibited criminal agreement does not have to be express, or in writing. It can involve an implicit understanding. It can be assumed or inferred from information exchanges and/or parallel conduct. Therefore, it is. important to ensure that members do not create the appearance of wrongdoing.
Contravening the Act has significant legal, financial, and reputational consequences for associations and their members.
Consequences can include:
- Fines against the MCABC and member firms of up to $25 million;
- Fines of up to $25 million and/or jail of up to 14 years for individuals;
- Use of investigative powers, such as wire taps and search warrants;
- Disruption of business and distraction from business efforts;
- Prohibition or prescriptive orders to ensure compliance;
- Civil claims for damages; and/or
- Reputational damage to the MCABC and member firms.
Beginning June 23, 2023, fines will no longer be capped and will be set at the discretion of the court.
The following guidelines are provided to MCABC members to help ensure that meetings and activities of MCABC members do not lead to breaches of the Act. These guidelines apply at both formal and informal meetings. Please keep in mind that the Act is complex, and these guidelines do not cover all contingencies. Please consult legal counsel if you have questions about the Act or these guidelines.
- Seek or accept, discuss or exchange commercially sensitive information with competitors or potential competitors (defined widely) concerning matters such as:
- Product pricing, pricing strategies, discounts, and credit terms1;
- Discussions that may have the purpose or effect of allocating customers;
- Terms of employment and wages;
- Refraining from· “poaching” employees; and/or
- Individual confidential future business strategies and plans.
- Obtain a copy of the agenda prior to participating in a MCABC meeting.
- Keep minutes of the meetings which clearly indicate the participants and the matters discussed and which follow the agenda of the meeting.
- Confine discussions to the immediate subjects for which the meeting was convened.
- Review the minutes provided by MCABC and report any mistakes.
- Be alert to discussions that may raise competition law concerns. If improper discussions arise, members should voice their concerns, and if necessary, leave the meeting and have their departure noted for the minutes and report the incident to MCABC.
- Seek legal advice if a particular situation gives rise to competition law concerns or questions – even silence can be construed as approval.
- Seek legal advice before discussing potentially sensitive competition issues.
1 Price is defined broadly to include discounts, rebates, allowances, price concessions or any other advantage ih relation to the supply of a product or service.
RESPONSIBILITY FOR COMPETITION LAW COMPLIANCE
MCABC’s Chief Executive Officer will act as MCABC’s Competition Compliance Officer for MCABC. While the Compliance Officer oversees general compliance with and is responsible for the implementation of the Policy, ongoing responsibility for compliance with the Policy and Act rests with each and every MCABC employee, MCABC Director and Committee Member and MCABC Member. Awareness of and compliance with the Policy and Act protects not only MCABC, but also its members.
INDIVIDUAL MEMBER GUIDELINES/ COMPLIANCE GUIDELINES
As a trade association, MCABC’s activities are distinct from the business of MCABC members, who also have their own responsibilities for ensuring compliance with the Act. MCABC and its members consider it appropriate that members individually and independently develop and maintain their own competition law compliance programs and conformity policies and guidelines in accordance with the competition laws applicable to the Member. Nothing in this Policy abrogates the independent and individual obligations of each MCABC Member in that regard.
Adopted by the Board of directors of the Mechanical Contractors Association of British Columbia on the 29th day of March, 2023.