Court File No. CT-2012-003 THE COMPETITION TRIBUNAL IN THE MATTER of the Competition Act, R.S.C. 1985, c. C-34 as amended, and the Competition Tribunal Rules SOR/94-290;
AND IN THE MATTER OF an application to the Competition Tribunal by the Commissioner of Competition for an order pursuant to subsections 79(1), 79(2) and 79(3.1) of the Competition Act regarding certain water heater return policies and procedures of Direct Energy Marketing Limited;
AND IN THE MATTER OF the filing and registration of a consent agreement pursuant to section 105 of the Competition Act.
B E T W E E N : THE COMMISSIONER OF COMPETITION Applicant - and -
DIRECT ENERGY MARKETING LIMITED
CONSENT AGREEMENT WHEREAS the Commissioner has made an application to the Tribunal pursuant to subsections 79 (1), 79(2) and 79 (3.1) of the Act, alleging that Direct Energy abused a dominant position in the Residential Water Heater Rental Business in Ontario through exclusionary water heater return policies and procedures;
AND WHEREAS following an investigation, the Commissioner concluded that Direct Energy substantially or completely controlled a market and had engaged in a practice of anti-competitive acts which had the effect of preventing and lessening competition substantially in a market;
Respondent
2 AND WHEREAS Direct Energy has sold its Residential Water Heater Rental Business in Ontario and is no longer engaged in the Residential Water Heater Rental Business in Ontario;
AND WHEREAS the Commissioner maintains and Direct Energy denies the Commissioner’s allegations and conclusions;
AND WHEREAS the Commissioner and Direct Energy have agreed to settle the Commissioner's Application on the terms set out herein;
AND WHEREAS Direct Energy attorns to the jurisdiction of the Tribunal and the courts for the purposes of this Agreement and any proceeding initiated by the Commissioner relating to this Agreement;
AND WHEREAS the Commissioner and Direct Energy agree to the immediate registration of this Agreement with the Tribunal, pursuant to section 105 of the Act;
AND WHEREAS IT IS AGREED AND UNDERSTOOD THAT only for the purposes of this Agreement, including execution, registration, enforcement, variation or rescission, including in any proceedings under section 106 of the Act, Direct Energy does not contest the Commissioner's conclusions or that the circumstances that led to the making of this Agreement are as specified herein, but Direct Energy does not accept the Commissioner’s allegations and nothing in this Agreement will be taken as an admission or acceptance by Direct Energy of any facts, allegations or conclusions for any other purpose;
THEREFORE, the Parties agree as follows: I. DEFINITIONS 1. Whenever used in this Agreement, the following words and terms have the following meanings:
(a) “Act” means the Competition Act, R.S.C. 1985, c. C-34, as amended; (b) “affiliate” means, in relation to another person, control of or by that person or that both persons are controlled by the same person;
(c) “Agreement” means this Consent Agreement, entered into by Direct Energy and the Commissioner pursuant to section 105 of the Act;
(d) “Commissioner” means the Commissioner of Competition, appointed pursuant to section 7 of the Act, or any person designated by the Commissioner to act on his behalf;
(e) “control” means “control” as defined in subsection 2(4) of the Act, and also includes the ability to materially influence the economic behaviour of a person;
3 (f) “day” means a calendar day; (g) “Direct Energy” means Direct Energy Marketing Limited and the business names under which it operates, and includes its directors, officers, employees, agents, successors and assigns; and its affiliates, joint ventures, divisions, groups, committees and task forces, and the respective directors, officers, employees, agents, predecessors, successors and assigns of each of the foregoing;
(h) “Effective Date” means the date on which this Agreement is recorded by the Tribunal as having been registered, pursuant to section 105 of the Act;
(i) “including” and “includes” mean including but not limited to; (j) “Parties” means the Commissioner and Direct Energy together, each of which separately being a “Party”;
(k) “person” means any individual, sole proprietorship, partnership, joint venture, firm, corporation, association, trust, unincorporated organization or other business or government entity, and any subsidiaries, divisions, groups or affiliates thereof, whether acting alone or in concert with another person;
(l) “record” means “record” as defined in subsection 2(1) of the Act; (m) “Re-enter the Residential Water Heater Rental Business” means to establish or acquire a Significant Interest in a business engaged in the Residential Water Heater Rental Business;
(n) “related to”, “relating to” and “in relation to” mean in whole or in part constituting, containing, concerning, pertaining to, discussing, describing, analyzing, identifying or stating;
(o) “Residential Water Heater Rental Business” means the supply of residential water heaters for rent and the supply of related services, including installation, maintenance, repair and disconnection services, to water heater rental customers in Ontario;
(p) “Significant Interest” in a business means the ability to materially influence the economic behaviour of the business;
(q) “Tribunal” means the Competition Tribunal, established by the Competition Tribunal Act, R.S.C. 1985, c.19 (2nd Supp.), as amended; and
(r) “water heater” means an electric or natural gas-fuelled water heater of any design type, including conventional and power-vented units and tank and tankless units, installed for residential use and not for any commercial, industrial, institutional or any other non-residential use.
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II. APPLICATION 2. The provisions of this Agreement apply to: (a) Direct Energy; and (b) the Commissioner.
III. TERM 3. Unless otherwise agreed to by the Parties, and subject to any order of the Tribunal or a court, the Parties shall be bound by the provisions of this Agreement for a period of ten (10) years from the Effective Date.
IV. OBLIGATIONS OF DIRECT ENERGY 4. Direct Energy shall pay an administrative monetary penalty in the amount of one million dollars ($1,000,000).
5. The payment referred to in paragraph 4 shall be made within 10 days of the Effective Date, by certified cheque or wire transfer payable to the Receiver General for Canada.
6. In the event that Direct Energy Re-enters the Residential Water Heater Rental Business at any time within ten (10) years of the Effective Date, Direct Energy shall do the following before commencing any such business:
(a) provide the Commissioner with 60 days advance written notice of its intention to Reenter the Residential Water Heater Rental Business;
(b) establish, and thereafter maintain, a corporate compliance program in regard to the Residential Water Heater Rental Business, which shall be consistent with the Commissioner's Information Bulletin on Compliance Programs published in 2015, as revised from time to time; and
(c) subject to any legally recognized privilege, within thirty (30) days of having received a written request from the Commissioner, Direct Energy shall, forthwith and without restraint or interference:
5 (i) provide to the Commissioner certified true copies of any records in the possession or under the control of Direct Energy related to any matters referred to in this Agreement as are requested by the Commissioner, such response to be accompanied by an affidavit certifying that all requested records have been provided, and with any copying services to be provided by Direct Energy at its sole expense;
(ii) respond to any written questions from the Commissioner related to any matters referred to in this Agreement, such response to be accompanied by an affidavit certifying its accuracy and completeness; and
(iii) provide to the Commissioner a sufficient opportunity to interview directors, officers, managers or employees of Direct Energy in relation to any matters referred to in this Agreement;
it being understood that nothing in this section shall be construed so as to derogate from any protections afforded by section 29 of the Act.
V. NOTICES 7. Notices, reports and other communications required or permitted by the Commissioner and Direct Energy pursuant to any of the provisions of this Agreement or in any proceedings arising herefrom before the Tribunal or the courts shall be in writing and shall be considered to be given if dispatched by personal delivery, registered mail or facsimile transmission to the Parties as follows:
a. If to the Commissioner: Commissioner of Competition Competition Bureau Place du Portage, Phase I 50 Victoria Street Gatineau, Québec K1A 0C9 Facsimile: (819) 953-5013
With a copy to: Executive Director and Senior General Counsel Competition Bureau Legal Services Department of Justice Place du Portage, Phase I 50 Victoria Street Gatineau, Québec K1A 0C9
6 Facsimile: (819) 953-9267 b. If to Direct Energy: General Counsel Direct Energy Marketing Limited 12 Greenway Plaza, Suite 250 Houston, Texas 77046 Facsimile: (713) 621-5648
With a copy to: McCarthy Tétrault LLP 66 Wellington Street West, Suite 5300 TD Bank Tower, PO Box 48 Toronto, Ontario M5K 1N2
Facsimile: (416) 868-0673 Attn.: Mr. Donald Houston or to such other street address, individual or electronic communication number or address as may be designated by notice given by any Party to the other Party in accordance with the provisions of this section. Any notice, report or other communication given by personal delivery will be conclusively deemed to have been given on the day of actual delivery and, if given by registered mail, on the fifth (5 th ) day following the deposit thereof in the mail and, if given by electronic communication, on the day of transmittal thereof if given during the normal business hours of the recipient and on the day during which such normal business hours next occur if not given during such hours on any day. If the Party giving any notice, report or other communication knows or ought reasonably to know of any difficulties with the postal system that might affect the delivery of mail, any such notice, report or other communication may not be mailed but must be given by personal delivery or by electronic communication.
VI. GENERAL 8. The recitals of this Agreement are integral to, and deemed to be a part of, this Agreement. 9. The headings in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.
10. This Agreement shall be governed by and interpreted in accordance with the laws of Ontario and the laws of Canada applicable therein.
7 11. Computation of time periods contemplated by this Agreement shall be in accordance with the Interpretation Act, R.S.C. 1985, c. 1-21. For the purposes of this Agreement, the definition of “holiday” in the Interpretation Act shall be deemed to include a Saturday.
12. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral, with respect to the subject matter hereof.
13. The Parties may mutually agree to amend this Agreement in any manner pursuant to section 106 of the Act. Other than in respect of the term of this Agreement, the Commissioner may extend any of the time periods under this Agreement within which any action must be taken.
14. Nothing in this Agreement precludes Direct Energy or the Commissioner from bringing an application under section 106 of the Act (or a successor or equivalent provision under the Act) to rescind or vary this Agreement. For greater certainty, the Tribunal shall retain jurisdiction for the purposes of any application by the Commissioner or Direct Energy to rescind or vary this Agreement pursuant to section 106 of the Act.
15. In the event of a dispute regarding the interpretation, application or implementation of this Agreement, including any decision by the Commissioner pursuant to this Agreement or any alleged breach of this Agreement on the part of Direct Energy, any of the Commissioner or Direct Energy may apply to the Tribunal for directions or a further order.
16. In the event of any discrepancy between the English language version of this Agreement and the French language version of this Agreement, the English language version of this Agreement shall prevail.
17. This Agreement may be executed in counterparts, each of which shall constitute an original instrument and all of which taken together shall constitute one and same the instrument.
DATED this 28th day of October, 2015
[Original signed by Jeanne Pratt for:] John Pecman Commissioner of Competition
Direct Energy Marketing Limited [Original signed by Len Diplock] Per: Len Diplock, Vice President of Corporate Development