Section 11: Good, Bad And Ambiguous

The Competition Bureau has recently implemented a policy of using its section 11 investigative powers to assist in all inquiries into reviewable practices. Section 11 orders can be a powerful investigative tool, but past experiences illustrate that this approach is not without downside. Section 11 can increase the litigiousness from the very beginning of a file and lead to protracted and expensive proceedings. It may also force the Bureau to disclose its allegations fairly early in the inquiry process, making it more challenging to adjust the scope and focus of the inquiry. In this note, we review some of the key cases relating to the Bureau's historical use of its section 11 powers and examine the implications of this new policy, and whether, on balance, it is likely to benefit the Bureau.

1. INTRODUCTION

   Section 11 of the Competition Act allows the Commissioner of Competition (Commissioner) to apply for court orders to gather information to assist in his or her Inquiries. The scope of information which may be gathered under section 11 is broad and the Commissioner's powers are significant. Over the years various issues and disputes have arisen with respect to the Commissioner's use and attempted use of the section 11 powers, and these are explored below.

   Recently, the Commissioner has implemented a policy of using section 11 powers to assist in all reviewable practice Inquiries which he undertakes. This is a new approach for the Competition Bureau (Bureau). Previously, section 11 powers had been used in some cases, but other information gathering techniques, including the voluntary production of information, have also been used fairly extensively as an alternative to use of formal section 11 powers. In this note we examine the implications of this new policy and whether, on balance, it is likely to benefit the Bureau in the long run.

2. OVERVIEW OF SECTION 11 POWERS

   Section 11 of the Competition Act1 (the Act) is one of the principal investigative tools available to the Commissioner. The other main tools include the ability to obtain search warrants (section 15 of the Act); search computer systems (section 16 of the Act); and intercept electronic communications (conduct wiretaps) with respect to certain offences under the Act.2 While not unique, section 11 grants the Commissioner broad and, for the Commissioner, a very efficient mechanism to gather information.

   Within section 11 the Commissioner is granted three broad investigative powers. One is to require attendance of persons to be examined under oath or affirmation with respect to matters relevant to an Inquiry which the Commissioner is undertaking (section 11(1)(a)). Secondly, section 11 allows for orders that persons produce records and documents specified in the order relevant to an Inquiry by the Commissioner (section 11(1)(b)). In addition to being required to produce records in the possession of a Canadian entity, section 11(2) provides that if records are sought from a corporation, the order can be extended to affiliates of the corporation, whether in Canada or abroad. This application of the provision has been subject to challenge3 but the issue remains undecided. Finally, pursuant to section 11(1)(c), persons may be ordered to provide a written return under oath or affirmation, answering questions relevant to the Commissioner's Inquiry.

   Therefore, under section 11, a person who has information - but not necessarily, or even usually, the subject of an investigation - may be ordered to attend and answer questions under oath, provide relevant records, including records from affiliates abroad, and answer questions relevant to the Inquiry.

   In addition to the breadth of the information gathering available under section 11, and the fact that it applies not merely to those who are the subject or target of an Inquiry, but to anyone who is likely to have information relevant to the Inquiry, the circumstances under which section 11 orders may be issued by the court are also broad. Whenever the court is satisfied that the person has or is likely to have relevant information and that an Inquiry is being made under section 10 of the Act, the order may be granted. Under section 10, Inquiries must be initiated whenever any six persons resident in Canada apply for an Inquiry into a matter. Inquiries must also be initiated whenever the Minister of Industry directs the Commissioner to inquire into a matter. As well, Inquiries may be commenced whenever: (a) the Commissioner has reason to believe that a person has contravened an order under the Act (including orders prohibiting use of intellectual property rights (section 32), injunctions (section 33), prohibition orders in conjunction with convictions (section 34), or orders under Parts VII.I or VIII); (b) the Commissioner has reason to believe an offence under Parts V or VI of the Act (essentially, all the substantive offences) has been or is...