The recent clarification of the powers of the federal Commissioner of Competition to assert privilege over documents is an opportunity for more efficient and fair proceedings in the future, say lawyers who practise in the competition field.
The recent clarification of the powers of the federal Commissioner of Competition to assert privilege over documents is an opportunity for more efficient and fair proceedings in the future, say lawyers who practise in the competition field.
For more than two decades, the federal agency had claimed a “class privilege” over all documents in a Competition Bureau investigation other than those of the respondent or those that were publicly accessible.
But in a ruling earlier this year, the Federal Court of Appeal concluded this was a legal error and the commissioner did not have a public interest class privilege, overturning a decision of the Competition Tribunal.
The Federal Court of Appeal relied heavily on R. v. National Post, a 2009 Supreme Court decision that found there was no blanket or class privilege for reporters protecting a confidential source.
“The Supreme Court has set the threshold for finding new class privileges as high as can be,” wrote Justice David Stratas, with justices Richard Boivin and John B. Laskin concurring.
“The extremely high threshold for the recognition of class privileges means that to date only four have been recognized — legal professional privilege, litigation privilege, informer privilege and settlement privilege,” the ruling stated.
“Due to the breadth and generality of a class privilege, it can be blunt, sweeping and indiscriminate in operation and, thus, can work against the truth-seeking purpose of a court or administrative proceeding. A case-by-case or document-by-document privilege — tailored and case-specific as it is — can be more consistent with the truth-seeking purpose,” stated Stratas.
The appellate court also rejected the argument that third parties might be less willing to assist if there was not the right to a blanket privilege.
It also noted that the commissioner was claiming a unique power.
“At the hearing of this appeal, we asked the parties whether any other regulator, competition or otherwise, domestic or foreign, has found it necessary to assert the sort of class privilege the commissioner seeks here.
The parties were unable to identify even one. Nor is this Court aware of any,” wrote Stratas.
Julie Rosenthal, a partner in the litigation group at GoodÂmans LLP in Toronto, says the requirement for the commissioner to assert privilege on a document-by-document or group-of-documents basis will change the dynamic in Competition Act enforcement proceedings.
“This decision will result in fairer fights. It also could make settlements more likely,” she suggests.
The challenge to the claim of class privilege was brought by the Vancouver Airport Authority, which is alleged to have acted in an anti-competitive fashion by permitting only two in-flight caterers to operate at the airport.
The commissioner was originally willing to release 2,000 of the 11,500 documents in his possession as a result of the Competition Bureau investigation.
Eventually, there was an agreement to release all but 1,200 documents on the basis of a public interest class privilege.
Rosenthal, who is co-counsel for the Airport Authority, says her client complied with the rules and provided its relevant documents in a timely fashion.
“We got back almost nothing because of [the claim of] public interest privilege. How can we defend a case?” asks Rosenthal.
The Federal Court of Appeal ultimately sent the matter back to the Competition Tribunal in accordance with its ruling on privilege.
Shortly after the decision was issued, the commissioner announced that he would not seek leave to appeal to the Supreme Court. As a result, future proceedings will be heard with any disputes on the privilege of documents being litigated on a case-by-case basis.
Nikiforos Iatrou, a partner at Weir Foulds LLP in Toronto, says it may lead to “proper discovery” of documents between parties in these proceedings.
“It is a good ruling to get more facts on the table. More documents will see the light of day,” suggests Iatrou, chairman of the firm’s Competition Group and a former counsel to the commissioner.
What is not yet clear is how the federal agency will apply the ruling on a procedural basis in terms of disclosure of documents, observes Andrew Little, a partner at Bennett Jones LLP in Toronto and former general counsel at the Competition Bureau.
“The question is whether you will get more documents earlier in the process and more than what the commissioner will rely on or will there still be fights about what is disclosed?” says Little. As a result of the Federal Court of Appeal ruling, however, he adds, “If privilege attaches [to a document], they are going to have to be able to justify it.”
At the same time, Little says, this is an opportunity for improvements to the pre-hearing process, including earlier timelines for the production of documents.
“Their mandate, which they take very seriously, is to do things expeditious and fairly, without compromising fairness,” says Little.
Both Little and Iatrou note that this will require a change in the “front-end” approach in a Competition Act investigation.
“They will now have to weed through the documents. They cannot just put them in the privilege bucket,” says Iatrou.
“The competition bar has for a long time been calling for more focused requests [for documents]. It is costly to our clients to respond to broad bureau requests. Now that the costs will have to be borne by the commissioner, maybe the incentive has changed. Maybe it will inspire greater scrutiny of the breadth of the questions,” says Iatrou.
“The reality is there is time and money to be saved,” he adds, pointing out that there is already a public perception that these types of cases move too slowly.
