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Conflict in the Competition Bureau: Abuse of the Public Interest
Report calls for end to "undue influence" of corporate lawyers
The federal Justice Department's weak and ineffective conflict of interest rules have led to close ties between corporate lawyers and the Competition Bureau, according to a Democracy Watch report released last week. Revolving Doors: The Undue Influence of Corporate Lawyers on the Competition Bureau details how the Attorney General of Canada and the Bureau Commissioner have repeatedly appointed lawyers from a few corporate law firms - instead of government lawyers - to assist or represent the Commissioner in competition law cases. The same lawyers or their law firms have also represented corporations in competition law cases being decided by the Bureau, sometimes at the same time the lawyers were representing the Commissioner.
"Corporate lawyers working for the Competition Bureau is a classic tale of letting the fox into the henhouse" said Duff Conacher, Coordinator of Democracy Watch. "Clear rules need to be enforced to prevent this ongoing abuse of the public interest." The report examines seven specific cases and calls on the Attorney General to undertake specific measures to end the conflict of interest.
Summary of Revolving Doors: The Undue Influence of Corporate Lawyers on the Competition Bureau
The Attorney General of Canada ("AGC") and the Commissioner have been misusing the power conferred by section 21 of the Competition Act (the "Act") since the coming into force of the Act on June 19 1986 by repeatedly appointing outside lawyers to assist or represent the Commissioner before the Competition Tribunal in antitrust cases, instead of lawyers from Industry Canada's Legal Services/Competition and Consumer Protection Law Division - a specialized unit within the Department of Justice Canada ("DJC") that was created to provide legal services to the Commissioner. These appointments of outside lawyers have been made in contravention to the DJC's Civil Litigation Desk Book which contains the Department's policy concerning the conduct of litigation.
Section 21 of the Act has been used to implement a revolving door process between the Bureau of Competition, the DJC and a few large corporate law firms. The AGC's and the Commissioner's practice of appointing outside lawyers pursuant to section 21 of the Act has brought the administration of the Competition Act into disrepute because it disregards the rule of law and the public interest.
This report provides details of the following five major competition law cases, summarized below, in which outside lawyers were used in ways that raise serious questions about the weakness and lack of enforcement of the DJC's conflict of interest and litigation rules:
Warren Grover, a lawyer practising with Blake Cassels & Graydon since 1963, negotiated the draft agreement for Imperial Oil Ltd.'s takeover of Texaco Canada with Bureau Commissioner Calvin Goldman in 1989. At the same time, Grover was representing Goldman before the Competition Tribunal in a case against Nutrasweet. Goldman practised law at Blake Cassels & Graydon from 1976 until he was appointed Commissioner in 1986. Before the Tribunal, Imperial Oil was represented by John Howard, a lawyer from Blake Cassels & Graydon. Imperial Oil's takeover of Texaco was approved without any negative consequences for Imperial Oil, and the Commissioner won his case against Nutrasweet.
During a period of time in 1989 overlapping with the situation outline above, Commissioner Goldman filed an application before the Competition Tribunal to review the merger of Asea Brown Bovery Inc., Westinghouse Canada Inc. and Transelectrix Canada Inc. Westinghouse Canada Inc. was represented before the Tribunal by John W. Brown and John J. Quinn, lawyers with Blake Cassels & Graydon.
In August 1987, the Attorney General of Canada appointed Neil Finkelstein, a lawyer with Blake Cassels & Graydon, to assist Commissioner Goldman in a case involving three Quebec rendering companies. In 1991, Finkelstein and two other lawyers from Blake Cassels & Graydon represented two Ontario rendering companies in a merger case before the Competition Tribunal, while the Quebec companies' case was still being considered by the Tribunal. In 1992, the Tribunal ruled against the Commissioner and then-Commissioner Howard Wetston dropped the case against the Quebec companies.
On November 29, 1990 the Commissioner filed an application before the Competition Tribunal against Southam Inc. aimed at undoing merger transactions completed by Southam with respect to community newspapers. The Commissioner was represented by Stanley Wong, a lawyer with Davis & Company. On March 25, 1991 the Commissioner filed an abuse of dominance complaint before the Competition Tribunal against Laidlaw Waste Systems Ltd. Laidlaw was represented by Kerry D. Sheppard and A.G. Henderson, lawyers with Davis & Company.
In February 1995 the Attorney General of Canada appointed Robert S. Russell, a lawyer with Borden & Elliott, to assist then-Commissioner George Addy in reviewing two related mergers in the shipping container industry. Mr. Russell represented the Commissioner before the Competition Tribunal until the case lapsed on March 31, 1998. On December 9, 1998 Loblaw completed the purchase of all of Provigo's shares. Loblaw was represented by Robert S. Russell during the review of the takeover by the Bureau, which was approved on August 12, 1999 by new-Commissioner Konrad von Finckenstein.
This report also provides details of the following two competition law cases, summarized below which raise serious questions about bias on the part of the Commissioner of Competition:
On April 4, 1994 the Commissioner filed an abuse of dominance application before the Competition Tribunal against D & B Companies of Canada Ltd. The application was filed following a complaint by a competitor, Information Resources Inc. Information Resources Ltd. represented by former Commissioner Calvin S. Goldman, among other lawyers. D & B Companies was represented by Randal T. Hughes and John F. Rook, among other lawyers. Hughes and Rook both represented the Commissioner before the Tribunal in the 1988-89 Gemini case, which dealt with the integration of airline computer reservation systems. Hughes also represented the Commissioner before the Tribunal in the 1991 case against two Ontario rendering companies, outlined above. Mr. Rook also worked with the government division that provided services to the Bureau in the mid-1980s, and later represented two companies before the Tribunal.
In 1987, the Attorney General of Canada appointed Yves Bériault, a lawyer with McCarthy, Tétrault (Montreal) to represent the Commissioner before the Tribunal in the matter of ADM Agri-Industries Ltd. Mr. Bériault had also represented the Commissioner in a case in 1987. The ADM case was completed in August 1998. Only five months later, in January 1999, Mr. Bériault represented Les Entreprises PEB Ltée. on a competition conspiracy charge laid by the Attorney General of Canada.
The ongoing practice of corporate lawyers revolving in and out of Canada's competition law enforcement agencies must be ended to protect the rule of law and the public interest. We therefore call on the Attorney General of Canada to undertake the following measures:
The Department of Justice Canada and the Competition Commissioner must stop systematically using outside lawyers.
Litigation and conflict of interest rules must be strengthened to prevent even the appearance of conflicts of interest or bias in all cases.
Outside lawyers should be appointed only when special circumstances warrant.
Should special circumstances warrant the appointment of outside lawyers, the Attorney General of Canada and the Competition Commissioner must take every appropriate measure to prevent the occurrence of even an appearance of a conflict of interest.
Get More/Do More
For more information, visit Democracy Watch's website at www.dwatch.ca or contact:
Duff Conacher, Coordinator of Democracy Watch
P.O. Box 821, Stn. B
Ottawa, Ontario
K1P 5P9
Tel: (613) 241-5179
Fax: (613) 241-4758
E-mail: dwatch@web.net
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