Case Documents

CT-2016-015 THE COMPETITION TRIBUNAL IN THE MATTER OF the Competition Act, R.S.C. 1985, c. C-34, as amended;

AND IN THE MATTER OF certain practices of Vancouver Airport Authority relating to the supply of in-flight catering services at Vancouver International Airport;

AND IN THE MATTER OF an application by the Commissioner of Competition for one or more orders pursuant to section 79 of the Competition Act.

BETWEEN: COMMISSIONER OF COMPETITION Applicant

-and-VANCOUVER AIRPORT AUTHORITY Respondent

MEMORANDUM OF FACT AND LAW OF THE COMMISSIONER OF COMPETITION TO THE RESPONDENT'S MOTION CHALLENGING PUBLIC INTEREST PRIVILEGE

PART I: OVERVIEW 1. Vancouver Airport Authority ("VAA") seeks to overturn more than two decades of jurisprudence on a well-established point of law. VAA challenges the ability of the Commissioner of Competition (the "Commissioner") to assert claims of public interest privilege, on a class basis, in the context of the Competition Act, R.S.C. 1985, c. C-34, as amended (the "Act").

2. A class-based public interest privilege is important to the Commissioner fulfilling his mandate under the Act. This mandate, recognized by the courts, r~quires cooperation from market contacts, including customers, suppliers and competitors of the person under inquiry. Public interest privilege is an important tool to as,sure market contacts that their identity and competitively sensitive information will be protected where possible.

3. Contrary to VAA's claims, the fact that public interest privilege is class-based does not, on its face, interfere with VAA's right to a fair hearing. In accordance with the practice of Competition Tribunal (the "Tribunal"), VAA will have sufficient opportunity to obtain further information from the Commissioner and challenge, if it elects to do so, any claims asserted by the Commissioner. VAA's motion is premature.

4. VAA provides no compelling reason for deviating from well-established law and Tribunal practice. The motion should be dismissed.

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PART II: SUMMARY OF FACTS 5. The Commissioner applied to the Tribunal on September 29, 2016, seeking to remedy the abuse of a dominant market position by VAA in excluding and denying the benefits of competition to the in-flight catering marketplace at Vancouver International Airport (the "Application").

6. Pursuant to the scheduling order of Justice Gascon dated December 20, 2016, as amended by further orders dated February 13, 2017 and February 16, 2017 (the "Scheduling Order"), the Commissioner served VAA with the Commissioner's Affidavit of Documents on February 15, 2017 (the "Affidavit"). 1 7. Schedule C to the Affidavit lists 9,906 records over which the Commissioner asserts one or more claims of privilege, including public interest privilege. The Commissioner asserts public interest privilege over third party information, whether this information is found in internal Competition Bureau records or is from third parties' records.

8. In the Affidavit, the Commissioner's representative stated that once an appropriate confidentiality order is in place the Commissioner may delist certain records over which public interest privilege was claimed.

9. On February 23, 2017, VAA indicated to counsel for the Commissioner that it disputed the Commissioner's claim of public interest privilege and demanded that the Commissioner produce the documents over which public interest privilege was claimed. 2 1 Affidavit of Kelly-Ann Webster, sworn February 28, 2017, Tab A [Webster Affidavit]. 2 lbJd., Tab B. -3-

10. On February 24 and 28, 2017, counsel for the Commissioner explained to VAA that the Commissioner would waive privilege over a number of documents if an appropriate confidentiality order were in place. The Commissioner would maintain a claim of public interest privilege over the remainder but would provide a summary of third party information pursuant to well established Tribunal practice. 3 11. The Commissioner is waiving privilege over certain information in this case prior to when it is normally mandated by the Competition Tribunal Rules (the "Rules") 4 because this information may be the subject of expert evidence.

12. In light of the jurisprudence and Tribunal practice, representatives of the Commissioner have already spent significant time summarizing information from third parties, which may hurt or help the Commissioner's Application, with a view to providing the summary to VAA. 5 13. VAA has refused to set the dates for discovery. Regardless, the Commissioner intends to provide the summary about a month before discovery. 6 14. Despite receiving assurances from Commissioner's counsel that the Commissioner intended to follow typical Tribunal practice, VAA has prematurely brought this motion.

3 Ibid., Tab C & Tab D. 4 Competition Tribunal Rules, SOR/2008-141 [Rules], Book of Authorities ("BOA"), Tab 24. 5 Webster Affidavit, supra note 1, Tab C & Tab D. 6 Ibid. -4-

PART Ill: ISSUES IN DISPUTE 15. This motion raises the issue of whether the Tribunal should reject well-established law and practice:

a. Public interest privilege is class-based in the context of the Act, which has been repeatedly and recently accepted by the provincial courts and the Federal Court of Appeal;

b. It has developed to support the Commissioner's particular mandate;

c. This common law privilege is not inconsistent with section 37 or 38 of the Canada Evidence Act, R.S.C. 1985, c. C-5 ("Canada Evidence Act'); and

d. It does not interfere with VAA's right to a fair hearing.

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PART IV: SUBMISSIONS A. Public interest privilege is class-based in the context of the Act, which has been repeatedly and recently accepted by the provincial courts and the Federal Court of Appeal

16. Public interest privilege protects against the disclosure of information possessed by government where such disclosure is not in the public interest.7

17. Class privilege results in a prima facie presumption that a class of documents are not subject to disclosure, because there are overriding policy reasons to preserve their confidentiality. 8 18. The Federal Court of Appeal, the Ontario Superior Court of Justice, the Supreme Court of British Columbia, and the Tribunal have recognized a class-based public interest privilege in the context of the Act:

a. The Federal Court of Appeal, in D&B, upheld a decision that the Director of Investigation and Research did not need to produce records, including "statements, notes material and correspondence obtained or prepared by the Director, his staff or his counsel" from meetings with industry participants, because they were subject to public interest privilege. Justice Strayer recognized that the records constituted a "privileged class" that "should be protected in order to enable that agency to obtain necessary information." 9 7 Canada (Commissioner of Competition) v. Rogers Communications Inc., 2013 O.N.S.C. 5386 at para. 11 [Rogers], BOA, Tab 4; and Canada (Commissioner of Competition) v. Air Canada, 2012 Comp. Trib. 21 at paras. 3-6 [Air Canada], BOA, Tab 2. 8 R. v. Gruenke, [1991] S.C.J. No. 80 at pg. 17, BOA, Tab 20. 9 Canada (Director of Investigation and Research) v. D & B Co. of Canada Ltd., [1994] F.C.J. No. 1643 at paras. 1, 3 & 4 (F.C.A.) [D&B], BOA, Tab 11. See also Hillsdown (Canada) Ltd.

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b. The Ontario Superior Court of Justice, in Rogers, found that "[p]ublic interest privilege in the context of the Act has developed in its own unique way" and on that basis all documents created or obtained by the Commissioner in the course of an inquiry were presumptively protected by a class privilege. 10 c. The Ontario Superior Court of Justice, in Toshiba, stated that the "documents created or obtained during the course of an investigation by the Commissioner are subject to a well-established public interest privilege which is not easily displaced". 11 d. The Supreme Court of British Columbia, in Pro-Sys, remarked that "public interest privilege in the context of the Act has developed in its own unique way" and is a "well-established principle" for many years. 12 e. The Tribunal, in UGG, acknowledged the "existence of a privileged class based on the public interest attaching to the Commissioner's investigative materials", and described the rationale as being "to encourage information providers to be forthcoming and candid". 13 f. The Tribunal, in Air Canada, recognized the "existence of a class of documents, created or obtained during the course of [an investigation], protected by public interest privilege". 14 v. Canada (Director of Investigation and Research), [1991] F.C.J. No. 1021 (F.C.A.), BOA, Tab 17. 10 Rogers, supra note 7 at para. 15, BOA, Tab 4. 11 Commissioner of Competition v. Toshiba of Canada Ltd., 2010 O.N.S.C. 659 at para. 27 ~Toshiba], BOA, Tab 7. 2 Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2016 B.C.S.C. 97 at para. 25 [Pro-Sys], BOA, Tab 18. 13 Canada (Commissioner of Competition) v. United Grain Growers Ltd., 2002 Comp. Trib. 35 at paras. 39, 40 & 60 [UGG], BOA, Tab 8. 14 Air Canada, supra note 7 at para. 3, BOA, Tab 2. -7-

g. The Tribunal, in Washington, stated that it "would be difficult to argue against the existence of the privilege". 15 h. The Tribunal, in Nutrasweet, accepted the argument that "documents created at the investigative stage" fall within a public interest privilege. 16 i. The Tribunal, in Sears, stated that public interest privilege "is supported by the policy considerations that the Commissioner must be able to obtain information from the relevant industry in performing his function under the Act". 17 19. In summary, multiple courts have recognized that the unique nature of the Commissioner's mandate (which is described further below) justifies approaching public interest privilege as a class-based privilege.

20. Once a privilege is recognized as a class-based privilege, there is a heavy onus on a party attempting to override it. 18 In the context of the Act, this onus has been described as a requirement to demonstrate "compelling circumstances" or "a more compelling competing interest", such as an impairment of a respondent's ability to answer the case against it, although it would be "difficult to conceive of a situation" where this would be the case. 19 Relevance is not sufficient to outweigh the considerable public interest at stake. 20 15 Canada (Director of Investigation and Research) v. Washington (1996), 71 C.P.R. (3d) 13 at p. 2 (C.T.) [Washington], BOA, Tab 14. 16 Director of Investigation and Research v. The Nutrasweet Company, [1989] C.C.T.D. 54 at ~ara. 16 [NutraSwee~. BOA, Tab 12. 7 Canada (Commissioner of Competition) v. Sears Canada Inc., 2003 Comp. Trib. 19 at para 35 [Sears], BOA, Tab 5. 18 LL.A. v. A.B., [1995] S.C.J. No. 102 at para. 65, BOA, Tab 1; and Air Canada, supra note 7 at para. 7, BOA, Tab 2. 19 UGG, supra note 13 at paras. 51-54, BOA, Tab 8. 20 Washington, supra note 15 at para. 9, BOA, Tab 14. -8-

21. VAA has provided no evidence of compelling circumstances or a compelling competing interest in this case that would warrant overriding a class-based public interest privilege.

B. Public interest privilege has developed in the context of the Commissioner's particular mandate

22. Public interest privilege in the context of the Act has developed in a unique way. 21 23. In order to fulfill his mandate, the Commissioner requires cooperation from market contacts, including customers, suppliers and competitors of persons under inquiry. To gain this cooperation, sources of information must be satisfied that their information will be kept in confidence, and that their identities will not be exposed, unless they are called as witnesses. 22 This is true whether the information is provided voluntarily or pursuant to a section 11 order. 23 24. The Commissioner publicly recognizes that maintaining confidentiality is fundamental to his ability to pursue his responsibilities and essential to the integrity of the Competition Bureau, as a law enforcement agency. The Act recognizes this requiring that the Commissioner conduct inquires in private. 24 Inquiries continue after an application has been brought to the Tribunal.

21 D&B, supra note 9 at para. 4, BOA, Tab 11; Rogers, supra note 7 at paras. 18-19, BOA, Tab 4; Pro-Sys, supra note 12 at para. 25, BOA, Tab 18; and Air Canada, supra note 7 at ~aras. 3-6, BOA, Tab 2. 2 Rogers, supra note 7 at paras. 17-18, BOA, Tab 4; D&B, supra note 9 at para. 2, BOA, Tab 11; and Air Canada, supra note 7 at paras. 3-6, BOA, Tab 2. 23 Director of Investigation and Research v. Canadian Pacific Ltd., 1997 Canlll 27 (C.T.), BOA, Tab 10. 24 The Act, s. 10(3), BOA, Tab 23. -9-

25. Even when disclosure of confidential information is permitted, pursuant to section 29 of the Act, the Commissioner considers whether disclosure is advisable or necessary in the circumstances, and maintains a policy of minimizing disclosure. 25 26. Much of the information that the Commissioner gathers over the course of an inquiry is competitively sensitive and confidential. It can remain so many years later, and even where there have been significant changes in the relevant industry. 26 27. The disclosure of competitively sensitive information from third parties, particularly to respondents who can be competitors or have other commercial relationships, can frustrate one of the goals of the Act: the promotion and protection of competition.

28. In abuse of dominance applications, or mergers, customers may be at the commercial mercy of the respondent. Protecting the customers' identity through public interest privilege claims reduces the risk of witness intimidation and protects the public interest in an effective investigative process.

29. The Commissioner thus has an additional public policy reason to protect competitively sensitive information, including through the application of class-based public interest privilege where appropriate.

30. Whether other investigative or enforcement agencies, if any, enjoy a class privilege is therefore irrelevant. The courts and the Tribunal have recognized that a class-based public interest privilege applies in the context of the Commissioner's particular mandate. 25 Competition Bureau, Information Bulletin on the Communication of Confidential Information Under the Competition Act (September 30, 2013), BOA, Tab 26. See also Competition Bureau, Information requests from private parties in proceedings for recovery of loss or damages (March 8, 2017), BOA, Tab 27. · 26 Chapters Inc. v. Davies, Ward & Beck LL.P., [2001] O.J. No. 206 at paras. 32-37 (C.A.), BOA, Tab 16.

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C. The common law privilege is not inconsistent with section 37 or 38 of the Canada Evidence Act

31. The processes under section 37 and 38 of the Canada Evidence Act have no bearing on the common law privilege asserted by the Commissioner.

32. The process under section 37 of the Canada Evidence Act exists in parallel with the common law regarding public interest claims. It is a separate proceeding brought by the Crown and a separate means by which public interest privilege may be asserted. 27 33. The Crown may assert common law privileges that may be class-based or on a case-by-case basis. Where disclosure is ordered, the Crown may object, pursuant to section 37 of the Canada Evidence Act, on the grounds of a specified public interest. 28 34. Section 38 of the Canada Evidence Act is simply irrelevant. The provision relates to matters of international relations, national defence and national security, which have no relevance in the current proceeding with VAA.

35. Moreover, section 38 of the Canada Evidence Act also exists in parallel with the common law. When assessing a claim under section 38 of the Canada Evidence Act, a judge will consider any privilege or public interest immunity claim that is raised. 29 27 R. v. Basi, 2009 S.C.C. 52, [2009] 3 S.C.R. 389 at para. 50 [Bast], BOA, Tab 19; R. v. Pilotte (2002), 163 C.C.C. (3d) 225 at para. 42 (O.N. C.A.), BOA, Tab 21; and R. v. Richards ~1997), 34 O.R. (3d) 244 at para. 7 (O.N. C.A.), BOA, Tab 22. 8 Basi, supra note 27, BOA, Tab 19. 29 Canada (Justice) v. Khadr, 2008 S.C.C. 28, [2008] S.C.R. 125 at para. 38 [Khadtj, BOA, Tab 15.

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D. Public interest privilege does not interfere with VAA's right to a fair hearing

i. Tribunal practice and the Rules 36. The Tribunal's practice and the Rules balance a respondent's right to a fair hearing with the Commissioner's obligation to fulfill his mandate to enforce the Act.

37. This practice starts with the Commissioner delivering an affidavit of documents pursuant to the Rules. The affidavit lists all of the documents relevant to matters at issue in the application. 30 In the affidavit, the Commissioner may claim that certain records are protected by public interest privilege.

38. If the Commissioner asserts public interest privilege, the Commissioner must provide the respondent with a summary, containing the facts favourable and unfavourable to the Commissioner's application. 31 All efforts are taken to ensure that the facts are provided without identifying the source of the information. Typically, the summary is provided before oral discovery. 32 39. The respondent then examines for discovery the Commissioner's representative. 33 The usual rules of discovery apply: the respondent can seek admissions from the Commissioner as well as information about the position the Commissioner intends to take at the hearing of the application. The Commissioner may refuse questions on the grounds

30 Rules, supra note 4, Rule 60, BOA, Tab 24. 31 Air Canada, supra note 7 at para. 6, BOA, Tab 2. See also Director of Investigation and Research v. Canadian Pacific Ltd. (1997), 78 C.P.R. (3d) 421 (C.T.), BOA, Tab 9. 32 Commissioner of Competition v. The Toronto Real Estate Board, 2012 Comp. Trib. 8 at ~ara. 7, BOA, Tab 6. 3 Rules, supra note 4, Rule 64, BOA, Tab 24. - 12 -

that they seek information that is protected by privilege, including solicitor-client, litigation and public interest privilege.

40. If, after reviewing the summary and obtaining discovery from the Commissioner, the respondent believes that the summary is deficient or improperly shields information, the respondent can ask a member of the Tribunal (not sitting on the application) to review the underlying documents to ensure that they have been properly summarized. 34 In addition, the respondent may bring a motion to override public interest privilege if there is a more compelling competing interest. 35 41. Regardless, the Rules require the Commissioner to disclose, before the application is heard, his case in chief, including witness statements, expert reports, and a list of the documents to be relied upon. 36 If the Commissioner wants to rely upon information before the Tribunal protected by public interest privilege, the privilege will be waived on the relevant information. 37 ii. The Commissioner has acted consistently with Tribunal practice and the Rules

42. The Commissioner has acted in accordance with Tribunal practice and the Rules. As described above, the Commissioner served VAA with the Affidavit on February 15, 2017, which is before the deadline set in the Scheduling Order. 38 34 Commissioner of Competition v. Direct Energy Marketing Limited, 2014 Comp. Trib. 17 at ~ara. 11 [Direct Energy], BOA, Tab 3. 5 Ibid., at para. 14, BOA, Tab 3; Sears, supra note 17 at para. 40, BOA, Tab 5; and UGG, supra note 13 at paras. 51-52, BOA, Tab 8. 36 Rules, supra note 4, Rules 68 and 77, BOA, Tab 24. 37 Direct Energy, supra note 34 at para. 15, BOA, Tab 3; and Director of Investigation and Research v. Superior Propane Inc. (1998), 85 C.P .R. (3d) 188 at para. 8 (C.T.), BOA, Tab

13. 38 Webster Affidavit, supra note 1, Tab A. - 13 -

43. In addition, with Tribunal practice in mind, representatives of the Commissioner have already spent significant time summarizing third party information for the purpose of providing it to VAA prior to discovery. 39 Once the Commissioner provides the summary of third party information, the respondent and the Tribunal will be in a position to assess whether public interest privilege should be overridden in this case.

44. This practice is fair. VAA has provided no evidence to support its vague allegation that the process is somehow unfair. Before discoveries, VAA will have both a complete listing of documents over which public interest privilege is asserted as well as a summary of their contents. Before the hearing of the Commissioner's Application, VAA will have copies of all documents on which the Commissioner intends to rely.

45. The Commissioner notes that asserting privilege is not and cannot be inherently unfair; it is a right provided by law. An assertion of privilege becomes unfair if its foundation cannot be tested. In this case, VAA can test the Commissioner's assertion of public interest privilege on the basis of the Affidavit and the summary of third party information. Once VAA receives a summary, it can ensure any information is not being improperly shielded by arranging for a member of the Tribunal to review the underlying records. 40 This logic holds true whether the Commissioner asserts privilege over 10 or 10,000 records.

46. The protections provided to VAA do not stop with this review. The jurisprudence is clear that VAA can bring a motion arguing that the facts of this particular case provide a compelling reason to override the proper claim of public interest privilege. 41 39 Ibid., Tab D. 40 Direct Energy, supra note 34 at para. 14, BOA, Tab 3; Sears, supra note 17 at para. 40, BOA, Tab 5; and UGG, supra note 13 at paras. 51-52, BOA, Tab 8. 41 Ibid., BOA, Tab 3, 5 & 8. - 14 -

47. Finally, VAA will receive the disclosure of records that the Commissioner intends to rely on and that were protected by public interest privilege, prior to the hearing.

48. VAA has provided no reason why the process, if followed in this case, will lead to an unfair result. VAA has provided no basis for the Tribunal to reject the well-established process and design a new process for this and all future cases.

E. Update on Confidentiality Order 49. In his direction of March 9, 2017, Justice Gascon directed that we provide a report to the Tribunal regarding the parties' discussions with regard to the confidentiality order and the Commissioner's intention to waive privilege over a number of records. On consent, the parties filed with the Tribunal on March 10th their proposed draft confidentiality order. Once the Tribunal has issued a confidentiality order, the Commissioner is in a position to immediately waive privilege and produce 8,513 documents to VAA.

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PART V: ORDER SOUGHT 50. The Commissioner respectfully requests that the motion be dismissed in its entirety with his costs of the motion.

ALL OF WHICH IS RESPECTFULLY SUBMITTED THIS 17TH DAV OF MARCH, 2017

Department of Justice Canada Competition Bureau Legal Services Place du Portage, Phase I 50 Victoria Street, 22nd Floor Fax: 819.953.9267