SENT BY: 5-21-97 ; l:lOPM ; BJV 298 3293...,COMPETITION TRIBLJNAL;# 8 THE COMPETITION TRIBUNAL IN nm MA ITER OF an application by 1he Diiector of Investigation and Research under sections 79 and 105 of the Competition Act, R.S.C. 1985, c. C·34;
AND IN THE MAT IER OF certain practices of the Publishers of Yellow Pages Telephone Directories in Canada;
AND IN THE MA TIER OF a Consent Order granted by the Competition Tribunal dated November 18, 1994;
r "' , -: ~ i:r '~-' 1 1997 ~' BETWEEN: ' 1 ••• ..:. .. . l . t ' ,\ · ' l: ;.~·~·· r·.:._:~~~~.::c TELUS ADVERTISING SERVICES INC. ~-· ·· r •. : ... ··"'·' c\;,T····-··· ,-·-··--.. j)-,-·· e-_,; - l i -·i. 1 -,_• J"' · \ I .It ., TELUS ADVERTISING SERVICES (EDMONTON) ---=---.i....p~ Applicant&
THE DIRECTOR OF INVESTIGATION AND RESEARCH. ANGLO CANADIAN TELEPHONE COMPANY, DIRECTWEST PUBLISHERS LTD., THE MANITOBA TELEPHONE SYSTEM MTAT HOLDINGS INCORPORATED, TELE-DIRECT (PUBIJCATIONS) INC., and TELE-DIRECT (SERVICES) INC.
Reapo~dents
AFFIDAVIT or MJCHAEI, J. TBEBILCOCK I, Michael Trebilcock, Professor of Law and Economics, of the City of Toronto, in the Province of Ontario, MAKE OATH AND SAY:
s:\c3\084\28791 \5\0038-S.doc
SENT BY: 5-21-97 ; l:llP~ ; BJV 298 3293~COMPETITION TRIBU~AL;# 9 2 1. I have been retained by TELUS Advertising Services Inc. and TELUS Advertising Services (Edmonton) Inc. to prepare a Competitive Impact Assessment Report analysing the likely competitive impact of the proposed variation of the CANYPS Consellt Order granted on November 18, 1994 that is the subject of this Application.
2. Attached hereto and marked as Exhibit "A" to this my Affidavit is a copy of my curriculum vitae.
3. Attached hereto and marked as Exlu'bit 11 8 11 to this my Affidavit is a copy of the Competitive Impact Assessment Report which I have prepared. The Report outlines my . expert opinion as a Professor of Law and Economics rcaardinl the likely competitive impact of the proposed variation of the CANYPS Consent Order granted on November 18, 1994 which is the subject of this application. SWORN fjEFORE ME at the City of ) 1b r~jo in the Province of ) · Ontario this 13 'tLitay of · . • 1997. ) I ) ,. .. -'") .. Notary PUblic in and for ·ihi '" Province of OntJrio
SENT BY: 5-21-97 ; l:llPM ; B,JV 298 3293...,COMPET IT I ON TR I BUNAL;# 10 CURRICULUM VITAE NAME: Michael John Trebilcock DATE OF BIRTH: t' September, 1941 CITIZENSHIP: Canadian MARITAL STATUS: Married: Five children DEGREES: LL. B (University of Cant.erbury, New Zealand) IL.M {University of Adelaide, South Australia)
EMPIDYMEN'r HISTORY: 1. Appointed full-time Tutor, Law School, University of Adelaide, January, 1963. 2. Appointed Lecturer in Law. Adelaide, January, 1964. 3. Appointed Senior Lecturer, Adelaide, January, 1967. 4. Barrister and SolicitOr of the Supreme Court of New 7.ealand; 1964 -5. Visiting Associate ·Professor of Law, McGill Law School 1969-1970. 6. Associate Professor of Law, McGill Law School 1970-1972. 7. Professor of I.aw, University of Toronto I.aw School, 1972-present. 8. Barrister and Solicitor of the High Court of Ontario, 1975-9. National Vice-President, Consumers Association of canada 1974-1975. 10. Chairman, Regulated Industties Program, Consumers Association of Canada, 1973-1975.
l l. Member, Academic Advisory Panel, Department of Consumer and Conx*atf Affairs, . 1973-197S. ffW is bf\ibit..!/.:l:.~ .. rcf..rr.t a. wt tt.-afiida. .. it o/.)/\.\r.:ka.it.l.1f~b1lc.t'.~J:.i ... 12. Chairman, Consumer Re~h Council, 1975-1976. sworn befGrf: me, this ..... ).,'}.~,, ........ . day of .... ,&){. ..................... ir/(f,-J. ~'(k2...( ...;. . ~,-.- ; ..... ~ .• Q.f"l"C r • ,.<..,
SENT BY: 5-21-97 1: llPM BJV 298 3293~COMPETITION TRIBLINAL;#ll 2 13. Research Director, Professional Organization~ Committee, Government of Ontario, 1976 to 1980.
14. Participant, Summer Institute, Economics for Law Professors University of Rochester, 1974.
15. Fellow in Law and Economics, University of Chicago Law School 1976. 16. Member of the Presidential Advisory· committee on Institutional Strategy (PACIS), University of Toronto 1982-1983.
17. Acting Research Direct.or; Institute of National Affairs, Papua New Guinea, 1982. 18. Lay Member - Canadian Competition Tribunal 1987-89. 19. Visiting Professor, Yale Law School, January to June, 1985. 20. University Law School Committees (at various times); Admissions Committee, Curriculum Committee, Graduate Committe.e, Hiring Committee.
21. Director, Laidlaw Foundation, 198S ~ 22. Member, Research Board, University of Toronto 1986 - 1988 23. Elected Fellow of Royal Society of canada, 1987. 24. Recipient, University of Toronto Teaching Award, 1986 25. Winner of the Walter Owen Prize for Best English Legal Text in C8nada; 1986-1988 for The Common Law of Restraint of Trade. 26. Appointed Univenity of Toronto Professor, 1990. 27. Recipient of the 1990 Joint Award of the Canadian Law Teachers Association and Law Refonn Commission of Canada for outstanding contributions to legal research
and law reform.
28. Member of the Research Council of the Canadian Institute of Advanced Research (1982 - 1986).
29. Director, Law and Economics Programme, University of Toronto Law School, 1976 to present.
5-21-97 ; l:llPM; BJV 298 3293~COMPETITJON TRIBDNAL;#l2 SENT BY: 3 30. Chairman, International Business and Trade Law Programme, University of Toronto Law School, 1988 -
yRAQUATE SUPEBVISJON 2S LL.M's since 1969 8 Ph.D's
GBADUATE COJJMES TAUGHT Alternative Approaches to Legal Scholarship ( l 98S-) The Public Policy--Making Process (Department of Economics, 1982-198S) Social Regulation (Osgoode Hall Part-time LL.M., 1987) International Trade Regulation (Osgoode Hall Part-Time LL.M., 1990). LL.B. COURSES TAUGHT AT VARIOUS TIMES Commercial law; Corporate Law: Contract Law; Competition Law; Government Regulation; Social Security Law; F.conomic Analysis of Law; International Trade Regulation; The Limits of Freedom of Contract; Debtor - Creditor Law; Consumer Protection Law.
RESEAB.CB FUNDING PBOGRAMME GRANTS 'Connaught Seed Grant to Law and F..oonomics Programme, 1976-1980 ..•.•••. $140,000 Donner Foundation Grant to Law and Economics Programme . . . . . . . . . • . . . $150,000 Connaught Gran.t to l..ega1 Theory and Public Policy Programme, 1985 - •.•••. $80_(>,000 Olin Grant to Law and &:onomics Programme, 1989 - .••......•••..... $330,000 PROJEcT GRANTS CWITH omus> Crown Corporations in Canada (Ontario Economics Council 1978) $ 30,000
5-21-97 ; 1:12PM BJV 298 3293....,COMPETITION TRIBL!NAL;#l3 SENT BY: 4 Federalism and the Canadian ~nomic Union (Ontario Economic Council and Canada· U.S. Law Institute 1980) $ 80,000
The Choice of Governing Instrument (Economic Council of Canada 1980) $ 80,000
The Political Economy of Business Bailouts (Ontario Economic Council 1984) $ 80,000
The Political Economy of Economic Adjustment (Macdonald Royal Commission, 1985) $ 15,000
Adjusting to Trade (Economic Council of Canada, 1988) $ IS,000
Medical Malpractice (Federal-Provincial Health Care Task Force, 1988) S SS,000 American Law Institute, Tort Reform Project $ 80,000
PUBUCAIWNS: BOOU; A Casebook on Corommy Law, (Sweet and Maxwell, U.K. 1977) with H.R. Hahlo The Profe5sjons and Public Policy (University of Toronto Press, 1978) with Slayton (eds.). Handbook on Consumer Riahti in Anada (C.B.C., 1978; reviled edition forthcoming) ProfeasionaJ. Re&ulation (Ontario Govt. Printer, 1979) with Tuohy and Wolfson. Debtor and Ca:ditor Casebook, (University of Toronto Press, 1982) with Reiter, Laskin, Springman and Gertner. Lawyers and the Consumer Interest Evans and Trebilcock (eds.) (Butterworths, 1982). federalism and tbe Ca.nBdiln F.conomjc Union edired with Prichard, Whalley and Courchene, (University of Toronto Press, 1983).
5-21-97 ; 1:12P~ BJV 298 3293...,COMPET I Tl ON TR IBLJNAL ; # 14 SENT BY: 5 The Political fpmomy of Business Bailouts with Chandler, Quinn. Halpern and Gunderson, (Ontario Economic Council, 1986).
The Political Economy of E.oonomic A4justment; The Case of Declinin& Sectors, (Macdonald Royal Commission, Research Monograph. 1986).
The Common I..a.w of Restraint of Tride: A Y&al and Economic Anab'sis (C&rswcll, Toronto, 1986) (winner of Walter Owen Pri~).
Canadian Competition Policy: A J.e,gal and F.conomic Ana]ysjs (with Dunlop and McQueen) (canada Law Book Co., 1987).
&aulatinc Traffic Safety (with Friedland and Roach) (University of Toronto Press. 1990) Ira.de and Transitions (with Chandler and Howse) (Routle.dge, 1990. The Law and F&onomics of Coropetitjoo Pol~ (Fraser Instinite., 1990) (v.ith Mathewson and Walker, eds.)
Fajr Elehan&e: Refonnina Trade Rem.ed~ Llws (C.D. Howe. 1990) (with York, eds.) The Limits of Freeclom of Contram (Haryard University Press, 1993). Eulorin1 the Domain of Accident I..aw: Tak.in& the Facts Serioos!y (with Dewees and Duff) (Oxford University Press, forthcoming, 1995).
Intema.tional Trade Rgulatjm (with Howse) (RouUedge, 1995) Untipished Bm;ioess: R.eformine TnM1e Remedy Y,ws in North Amerlg (With BOddez) (C.D. Howe, 1993) .
CHAPfERS IN BQQKS "When is a Consumer Protection Bill not a Consumer Protection Bill?•, (1971 Wainwright Lecture Collection).
"The Consumer in the Post-Industrial Market-Place", in Lindgreen and Mason (eds.), ~ C.Or:poration aud hustralian Sociel}', (Law Book Co. of Australia, 1974).
"The Consumer Int.crest and Rqulatocy Reform", in Doem (ed.), The R(iulatory Process.in Canada (Macmillan, 1978).
5-21-97 ; 1:12PM BJV 298 3293-.COMPET IT I ON TR !BUNAL; # 15 SENT BY: 6 "Problems of Economic Integration in a Decentralized Federation", (with Shiroky)t in Iht c.anadian Confederation at the Cross-roads (Fraser Institute, 1978). "Economic Analysis of Commercial Law~, (with Prichard) (Annual Commercial Law Workshop Volume, 1978).
"Markets for Regulation", (with Waverman, Prichard), in Goyemment Re&ulatioq (Ontario F.conomic Council, 1978).
"Interprovincial Restrictions on the Mobility of Resources•. (with others) (Ontario F.conomic Council, 1977).
"The Consumer Interest and the Regulatory Process", (with Prichard and Wavennan), in Duggan and Dorvall (eds.), Consmner Pmtectiou J,,,aw and Theo.[)' (Law Book Co., 1980). ·crown Corporations: The Calculus of Instrument Choice•, (with Prichard) in Prichard (ed.), Public Entctprjse in Canada, (Buttetworth, 1983).
"An Approach to Framing ReguJat.ory Policies for the Professions•, (with Tuohy and Wolfson) in Rottenberg (ed.), °"ugation ycensure, (American Enterprise Institute, 1980).
"Reeulating the Quality of Psychotherapeutic Services~', (with Shaul) in Dewees (ed.), Quality Rc&ulati.OOt (1983): also in Journal of Law and Human Behaviour, (1983). "Policy Options in Quality Regulation", (with Dewees), in Dewees (ed.), Quality Rqulation, (1983).
"Comparative Advertising", in Evans and Trebilcock (cds.)1 Lawyers and the Consumer Interest, (ButteIWorths, 1982) • . •ucensure in Law 11 , (with Reiter) in Evans and Trebilcock (eds.), l..aw.yers and~ Consumer Interut. (Butterworths, 1982). "Crown Corporations in Canada", (with Prichard) in Chandler and Atkinson (eds.),~ PQlicy MakjOf: in Canada, (University of Toronto Press, 1982).
"Customary Land law Reform in Papua New Guinea", Adelaide Law School Centenary _ Essays, {1983). "Federalism and the Ganadian Economic Union ti~ in Bakvis and ChandJer (eds.) FMemliUD and the Role of the State (University of Toronto Press, 1987).
"Can We Become Better Losers? The Political Economy of Economic Adjustment", in Maslove and Winer (eds.), KllO!;;kin~ on the Back Doo.r (1.R.P.P. 1987).
5-21-97; 1:12PM ; BJV 298 3293...,COMPETITION TRIBU~AL;#l6 SENT BY: 7 "Economic Analysis of Law" jn Devlin (ed.), Stydje5 in Canadian Leial Theory (Carswell, 1990).
"The Evolution of Competition Policy: A Comparative Perspective" in Mathewson, Trebilcock and Walker (eds.), The Law and F.coomnics of Competition Policy {Fraser Institute, 1980).
•Throwing Deep: Trade Remedy Laws in a First-Best World" in Trebilcock & York (eds.), fair Bxchanae: Reforming Trade lleme<Jy Laws (C.D. Howe, 199). ACADEMIC ABTICLq "Finders Keep - How True Today?" [1962] N.Z.L.J. 276. "Scope of the Defence of Provocation in New zea.Iand Law" [1963] N.Z.L.J. 619. •Section 260: A Critical Examination" (Income Tax) (1964) 38 Australian Law Journal 237 (discussed and applied by the New l.ealand Supreme Court in I.ewis y. Commissioner of In1and Revenue, [196S] N.Z.L.R. 634). "Taxation of Assigne.d Income" (1963) 4 The Australian Lawyer 121 and 14S. "Company Contracts' (1966) Vol. 2, No. 3 Adelaide Law Review 310. "Rights on a Bill of Exc~ge" (19~) Vol. 2, No. 3 University of Tasmania Law Review 270.
1 • Effects of Alternations t.o Articles of Association• (1967) Vol. 31, No. 2 The Conveyancer (U.K;.) 95.
"Re-opening Hire-purchase Transactions" (1968) 41 Australian Law Journal 424. "The Liability of Company Directors for Negligence" (1969) U.K. Modern L.R., September issue.
"Company Law Problems in Family Tax Companies" 1969 Australian Law Journal, January, February, March issues. · •When does a Settlement 'Talce Effect'? .. (Succession Duty) (1969) 42 Australian Law Journal 308.
"Reform of the Law Relating to Consumer Credit• - (1970) Vol. 7, No. 4, Melbourne University Law Review 315.
5-21-97; 1:13PM ; BJV 298 3293...,COMPET IT I ON TR !BUNAL;# 17 SENT BY: 8 "Consumer Protection in the Affluent Society", (1970) 16 McGill L.J. 263. "Protectin& Consumers Against the Purchase of Defective Merchandise", (1971) 4 Adelaide L.R. 12 .
.. Private Law Remedies for Misleading Advertising" (1972) 22 University of Toronto L.J. "Manufacturers• Guarantees", (1972) 18 McGill L.J. 2. "Market Considerations in the Fonnulation of Consumer Protection Policy" (1973) 23 University of Toronto Law Journal 396 (with Cayne).
"Winners and Losers in the Modern Regulatory System: Must the ConsumeT Always Lose? .. , (197.S) 13 Osgoode Hall L.J. 417.
"The Pathology of Credit Breakdown", (1976) 22 McGill L.J. 417 . .. Regulators and the Consumer Interest", (1977) 2 canadian Business L.J. 101. Class Actions and Private Law Enforcement", (with Prichard) (1978) 27 U.N.B.L.J. 5. ttThe Doctrine of Inequality of Bargaining Power", (1976) 26 University of Toronto L.J. 3S9. . "An Economic Approach to the Doctrine of Unconscionability" in Reiter and Swan (eds.) E.ssays in ~ LaW of Contrag (Butterworths, 1979). "A Consumer Perspective on the Anti-Dumping Act" (with Quinn 1979 Canada-U.S. Law Journal.
"Judicial Control of Standard fonn Contract: An Economic Analysis" (with Dewees), (in Veljanovski and Bum>ws, eds.).
"A Tax Credit for Public Interest Groups" (with Engelhart), (Canadian Taxation 1982). "An Economic Analysis of Cost and Fee Rules and Class Actions .. (with Dewees and Prichard) (1981) 10 Journal of legal Studies. University of Chicago, 155) .
.. An Economic Analysis of Limited Liability in COfPOration Law" (with Halpern arJd Turnbull), (1980) 30 University Toronto L.1. 117.
"The Deregulation Debate", (1979) 10 Canadian Marketer 9.
SENT BY: 5-21-97 ; 1:13PM ; BJV 298 3293~COMPETITION TRIBUNAL;#18 9 "Compensation, Transition Costs and Regulatory Change" (with Quinn) (1982 University of Toronto L.J.).
"The Choice of Governing Instrument" (with Hartle) (The International Review of Law and :Economics, U.K., 1982). "Lawyers Advertising" (with Hudec) (the University of Western Ontario L.R., 1982). •'fhe Administration of the Federal Huardotis Products Act" (with Shaul) (the Canadian Busine~ Law Journal, 1982).
•The Prospects of Law and Economics: A Canadian-Perspective", (1983) 33 J. Leg. Ed. 288.
•Regulatory Reform and the Political Process .. , (with Hartle) (1982) 20 Osgoode Han L.J. 643. . "hoducts Liability and the Allergic Consumer - A study in the Problems of Framing an Efficient UabiUty Regime (with Rogerson) (1986), University of Toronto Law Journal.
•communal Property Rights: The Papua New Guinean Experience•. (1984) 34 University of. Toronto L.J. 3n.
•The Law and .Economics of Contract Modifications" (with Aivazian and Penny), (1984) 22 Osgoode Hall L.I. 173.
"Restrictive Covenants in the Sale of a Business", (1984) International Review of Law and Emnomics.
•Economic Mobility and Constitutional Refomi", (1987) University of Toronto L.J. 268 (with Lee).
"The Social Insurance-Deterrence Dilemma of Modem North American Tort Law", (1987) 24 San Diego L.R. 929.
•The Role of Insurance Considerations in the Choice of Efficient Civil Liability Rules•, (1988) Yale 1. L. &. and Org. · •incentive Issues in the Design of No-Fault Compensation Schemes•, (1988) University of Toronto Law Journal. · "The Case for Free Trade", (1988) 14 Can. Bus. L. J. 387. "The Future of Tort Law: Mapping the Contours of the Debate", (1989) 15 Can. Bus. L.J.
SENT BY: 5-21-97 ; 1:13PM ; BJV 298 3293~co~ETITION TRIBUNAL:#l9 10 •punitive Damages: Divergence in Search of a Ratioaale*, (with Chapman) (1989) 40 Alabama L. Rev. 741.
•An Empirical Analysis of lhe Application of Canadian Antidumping Laws: A Swch for Normative Rationales", (with Hutton), (1990) 24 J. World Trade 123.
"Trade Restrictive Policies and Democratic Politics: A Proposal for Refonn (with Chandler and Howse) (1990)~ 1 Public Law 234.
"Smaller or Smarter Government?" (with Howse and Prichard) (1990) 40 Univ. Toronto L.J. 498.
"Making Hard Social Choices; Lessons From the Auto Accident Compensation Debate", (with Chapman) (1992) 44 Rutgers L. Rev. 78.
"The Efficacy of the Tort System and its Alternatives: A Review of the Empirical Evidence", (with Dew=) (1992) 30 Osgoode Hall L.J. 57.
"The Role of Private Ordering in Family Law: A Law and Economics Perspective" 1 (with Keshvani) (1991) 41 U. of Toronto L.J. 5. 11 Rethinking Anti-Competitive Conspiracy Law•, (with Warner), McGill L.J. (forthcoming). "Protecting the Employment Barpin• (with Howse) U. of Toronto L.J. (forthcoming). "Taking Stock: Consumerism in the 19'JOs", (1991) 19 Canadian Business L.J. 412. "The Medical Malpractice Crisis: A Comparative Empirical Perspective", (with Dewees and Coyte) (1991) 65 Law and Contemporary Problems 217.
"Reforming Trade Remedy Law in North America• (with Boddez) (1994) Minnesota J. of Global Trade.
"Choice of Policy Instrument in the Provision of Public Infrastructure" (with Daniels) in Mintz (ed.) Infrastructure· and Competitiveness (John Deutsch Institute, 1994).
"Testing the Limits of Pre.edom of Contract: Commercialization of Reproductive Technologies and Materials• (with Martin, Lawson and Lewis) (1995) Osgoode Hall L.J. (forthcoming).
"The Canadian Internal Trade Agreement• (with Behboodi) in Schwanen and Trebilcock, The Internal Trade Aaroomrnt (C.D. Howe, forthcoming, 1995). ·voice and Exit in New Zealand Health Care Reforms· (University of Auckland Research
SE~T BY: 5-21-97; 1:14PM BJV 298 3293....,COMPETITION TRIBUNAL;#20 11 Journal). "Can Governments Be Reinvented?'' in Boston (ed.) The State in an Age of Cootractin~ Out (1995).
"The Prospects for Reinventing Government" (C.D. Howe Institute, Toronto, 1994). PIJIIJSHtD ACADEMIC REPQRTS Member, Adelaide Law School Committee, Report to the Standing Committee of Australian Commonwealth an~ State Attomeys·General on ~e law relating to Consumer Credit and Moneylending. (140 pp.) (South Australian Government Printer, July 1969). Repon (under contract) to the Canadian Minister of Consumer and Corporate Affairs on "The Problems of Product Quality in the Consumer Marketplace", (180 pp.) (1971).
Position Paper (under contract) for the National Council of Welfare, ~s and the Poor, (1973).
A Study pn Consumer Mis)eadin& and Unfair Trade Prl(;ticea, (Information Canada, 1976) with others (2. vols.).
Three papers on Good Faith in Contracting, Unconscionability, and Disclaimer Clauses for the Ontario Law Refonn Commission 1973-1974.
"The Scope of Section 260 of the.Income Tax Assessment Act" • 1967 South Australian Annual Convention of the Taxation Institute of Australia.
Land Policy in Papua New Guinea, (with Knebeh) (published by the Institute of National Affairs, Port Moresby, 1981).
Public Entemrise in J>apua New Guinea, (Institute of National Affairs, 1982). The Role of the Private Sector in &he Economic Deyelqpment of Papua New Guinea (Institut.e of Natural Aft'airs 1983).
The Choice of Govmtin& Insttument (with Hartle, Prichard and Dewees), F.oonomic Council of Canada, 1982.
Public StrateJY aru;i the canadian Motion Picture Induslr_y (with Lyon). Ontario Eoonomic Council, 1982.
Policzy QRtions in~ Rqulation of Asbestos-Related Health Bawds (with Tuohy), Royal
SENT BY: 5-21-97; t:14PM BJV 298 3293~COMPETITION TRIBuNAL;#21 12 Commission on Asbestos, 1982. "Public Participation in Collective Decision-making: The Question of Funding 11 (with Engelhart) (Economic Council of Canada, Regulation Reference, Working Paper, 1981). "Case Studies in the Choice of Governing Instrument", (with Hartle. Prichard and Dewees) (&:anomic Council of Canada, Working Paper, 1981).
A Survey of Industrial Policies in Selected OECD Countries (with Chandler), Macdonald Royal Commission, 1985.
The Politics of Positive Sum, in Ottawa. Money and Power (ed. Courchene ~. Ontario Economic Council. 198S.
Adjusting to Trade: A Comparative Perspective, (with Chandler and Howse), .Economic Council of Canada, Discussion Paper, .December 1988.
Medical Malpractice: An Empirical Analysis of the Canadian Experience (with Dewees and C'.oyte) (for Federal-Provincial Task Force on Malpractice Liability, 1989,
The Limits of Freedom of Contract: The Commercialiution of Reproductive Materials and Serviees (with Martin, Lawson, and Lewis) (for the Royal Commission on New Reproductive · Technologies, 1993).
WORK IN PROGRESS 1. The Making of the Mosaic: A History of C8nadian Immigration Policy; (with Ninette Kelley).
2. A paper on the economic implications of the Nuclear Liability Act with Winter (accepted for publication in International Review of I.Aw and Economics).
3. A paper on the Restructurin& of Ontario Hydro (with Daniels). 4. A paper "Competition Policy and Trade Policy: Mcdiatine the Interface". 5. A paper on the. Fair Trade, Free Trade Debate (with Howse), to be published in a volume of essays by Cambridge University Press. 6. A paper "What Makes Poor Countries Poor7 The Role of Institutional Capital in Economic Development ... 7. A paper on Comparative Monopoly Laws (with Campbell and Rowley).
SE~T BY: 5-21-97 ; 1:14PM BJV 298 3293~COMPETITION TRlBLiNAL;#22 13 8. A paper 11 The Law and &:onomics of Corporate Restructuring• (with Katz). 9. A paper on the Role of the Civil Justice System in the Choice of Governing Instrument (with Howse).
rev. June l. 1995
SENT BY: 5-21-97 ; 1:14PM ; BJV 298 3293~COMPETJTION TRIBUNAL;#23 THE COMPETITION TRIBUNAL IN TIIE MATIER OF an application by the Director of Investigation and Research under sections 79 and 1O S of the Competition Act, R.S.C. 1985, c. C. . 34;
AND IN THE MA TIER OF certain practices of the Publishers of Yellow Pages Telephone Directories in Canada;
AND IN THE MAT IER OF a Consent Order granted by the Competition Tribunal dated November 18, 1994;
AND IN THE MA TIER OF an application by TELUS Advertising Services Inc. and TEL US Advertising Services (Edmonton) Inc., under sections 105 and 106(b) of the Competition Act, R.S.C. 1985, c. C-34, as a amended, to vary the Consent Order
granted by the Competition Tribunal dated November 18, 1994.
BETWEEN: TELUS ADVERTISING SERVICES INC. TELUS ADVERTISING SERVICES (EDMONTON) INC. Applicants
THE DIRECTOR OF INVESTIGATION AND RESEARCH, ANGLO CANADIAN TELEPHONE COMPANY, DIRECTWEST PUBUSHERS LTD., THE MANITOBA TELEPHONE SYSTEM MT&T HOLDINGS INCORPORATED, TELE-DIRECT (PUBLICATIONS) INC •• and TELE-DIRECT (SERVICES) INC. Respondents
COMPETITIVE IMPACT ASSESSMENT REPORT by Michael J. Trebilcock Faculty of Law University of Toronto
" uT.t.;Jili·'l' t:•: . J., fj•J .".. .'.. n?1r" c' s., l.i:.iu[ 141-'...,_. ...-..J '' l!t(.', . .. ••••• ,, .................... . , r / i ' ; f ,t . ! 4 rr t;•tJ to In tf'" " ' ' A~ :-f""t':* 0 t " JJl'•"""rU ti .......... ~r.J..a.6..fr.e./.. ... ?;,t~:i:1.. k (j,~) Slvt..'.: ..; i: /J4cre m.e ri'~:· · L. , ~......... · I.' Nt ..J •liltH f./1 . ............ &••• r.:.t.·.y of..~. ....,, ,".tl.';1;. ..... A . 19 t'~ 2 f\. ' ~ "' ( ti / .. / .. t. . ••. I • ... ......... ~ / /;)..". .... I " A NCTl~lW Pll!3LI s:\c3\084\28?91 ~\0061.doc
SENT BY: 5-21-97 ; 1:15PM ; B.JV 238 32S3-.COMPETITION TRIBl!NAL;#24 -2-
1. I have been retai.Md. by TELUS Advertising Servi<:e Inc. and TELUS Advertising Services (Edmonton) Inc. (hereinafter TAS and TASE respectively) to prepare a Competitive Impact .Assessment Report analysin& the likely competitive impact of the proposed variation of the CANYPS Consent Order granted on November 18, 1994 that is the subject of this Application.
2. I was an expert witness ~or Tele-Direct in recent proceedings before the Competition Tribunal and in the course of my preparation for these proceedings acquired a substantial acquaintance with the nature and history of Yellow. Pages advertising in Canada.
3. In preparin& this assessment, I have reviewed the followin& documents: (a) Notice of Application by AGT Directory Limited and Edmonton Telephones Corporation for an order varying a Consent Order of the Tribunal of November 18. 1994 (application dated January 13, 1997); (b) The response of the Director (dated February 14, 1997); (c) The · response of other Respondents to the application (dated Febrwny 17, 1997); (d) A reply by TAS and TASE t.o the Director (dated February 28, 1997); (e) The Consent Order issued by the Competition Tnbunal dated November 18, 1994; (t) Notice of Application for Consent Order dated September 20, 1994 and accompanying Consent Order Impact Statement; aad (g) reasons and order of the CompetitJon Tribunal in Du; Director of Inyestiption Uld Bc;anch y. Id«tDimt (]>ublieatiOns) Inc. and Tclc-Pirect (,Scrvklas) ID.c... (dated February 26, 1997).
4. All Yellow Pages db:ectnry publishers who were parties to the CANYPS Agreemeilt dated December 19, 1991 and were respondents to the 1994 Consent Order proceedings are subject to the following prohibitions that are set out in para. 3 of the Consent Order of November 18, 1994:
With regard to the sale of national advertising in Yellow Pages telephone directories, each respondent shall be prohibited from: (a) maintaining a head office rule for allocating advertisers; s:\cl\0&4\28791 \!l\OOdl .doc
SENT BY: 5-21-97 ; 1:15P~ ; BJV 298 3293~COMPET!TION TRIBLNAL;#25 (b) maintaining exclusive selling arrangements with any other respondent; {c) refusing to deal with any selling company. except where the refusal is based upon reasonable and legitimate business concerns of a nonexclusionary nature; (d) discriminating between selling companies acting in their capacity as selling companies, except where the discrimination is based upon reasonable and legitimate business concerns of a non-exclusionaey
(e) refusing to license selling companies having an office in and qualified to do business in Canada, for the proper use of Yc llow Pages trademarks for the purpose of selling advertisiD& in Yellow Pages telephone directories, provided that these companies cnr.er into and mainta;n a commercially reasonable standard form of trademark licensing agreement; (f) .agreeing with any other respondent on the criteria. for determining which national advertising accounts an: commissionable; (g) agreeing with any other respondent on the rate of commission payable. except during a transition period ending June 30, 1995, duriq which a minimum commi11sion of 2S% will be available to selling companies far national advertising which meets the
commissionability criteria established by each respondent; and (h) denying to selliDg companies access to any rates and dat.a book style of publication that might continue to be, or in the future might be, compiled and dlstn"buted by and to the respondents under the auspices of CANYPS or otherwise by the respondents.
5. Io the Director's 1994 Application for approval of Che Consent Order. be submitted that the respoodenm possessed a dominant position in their respective territories with respect to Yellow Pages publishing and that they had jointly engaged in the practice of anticompetitive acts within the meaning of s. 78 and s. 79 of the Competition &tt
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SENT BY: 5-21-87 ; 1:15PM ; B,JV 298 3293-1COMPET IT I ON TR I BUNAL; #26 ~4-effectualed through the provisions of the CANYPS Agreement and the methods engaged in pursuant thereto in selling national advertisi~ into telephone directories. The Consent Order Impact Statement submitted by the Director with his Application reiterates his view that the respondents had jointly engaged in a practice of anticompetitive acts. The response of the Director of February 14, 1997 to the current Application for variation of the 1994 Consent Order again reiterates that thC 1994 Consent Order was entered into because the respondents were members of a "horizont.a.J anticompetitive arrangement of national scope".
6. At the time of the issuaiu of the 1994 Consent Order, Edmonton TclephoDCs Corporation published a Yellow Pages directory in Edmonton and AGT Directory Limited published Yellow Pages directories throughout the rest of Alberta. Both of these enterprises were independently owned - AGT Directory Limited by TELUS Corporation (hereinafter TELUS) and Edmonton Telephones Corporation by the City of FAmonton. On the same date as the Consent Order was issuedt (November 18. 1994)1 the City of Edmonton announced that it bad agreed to sell Edmonton Telephones Corporation to TELUS. This transaction closed on March 10, 1995. The Yellow Pages directories previously published by Edmonton Telephones Corporation are now published by TASE, a wholly owned subsidiary of TELUS Edmonton Holdings Inc., which in twn is a wholly owned subsidiary of TELUS. AGT Directory Umited was and is a wholly owned subsidiary of
TELUS and is now known as TELUS Advertisiq Services Inc. (T AS). Thus, as a result ofthis transaction. TELUS now through various wholly owned subsidiaries owns and operates an local telephone facilities in Alberta and all Yellow Pages directories published
in the province.
7. By press release dated February 28, 1995, the Director announced that he did not intend to challenge the acquisition of f:dmonton Telephones Corporation by TELUS.
8. This Application by TAS and TASE for a variation of the Consent Order of November 18, 1994 se~ks a variation in the Consent Order that would exclude the application of the prohibitions contained in paragraphs 3(b)(d)(f) and (g) to dealings or arrangements
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SE~T BY: 5-21-97 ; 1:15PM ; BJV 298 32S3~COMPETITION TRIBLJNAL:#27 - 5 between TAS and TASE. The 1994 Consent Order woold continue to apply to prohibited arrangements and practices between TA S (and/or TA SE) and other independently owned Yellow Pages publishers that were subject to the original Consent Order of November 18, 1994.
9. The essence of the Applicants' case for variation of the Consent Order of November 18, 1994 is that it was centrally addressed to concerted or jol.nt actions or practices of independently owned Yellow Pages directory publishers who were parties to tbe CANYPS Agreement. and not to intra-'COrporate arrangements or practices within a single functional enterprise with common ownership. I will assess this position from both legal and economic perspectives.
10. Under s. 106 of the Competjtign Act, Where, on application by the Director or a person agaimt whom an order has been made under this Part. the Tribunal finds that
(b) the Director and the person against whom an order has been made have consented to in alternative order,
the Tribunal may rescind or vary the order accordingly. 11. From a legal perspective. it is trite law that a conspiracy cannot be entered into between. formally separate but functionally identical entities. This proposition is reflectc;d in s. 45(8) of the Competition Act which states: "SUbsection (1) does not apply in respect of a conspiracy, combination, agreement, or arrangement that is entered into only by companies each of which is, in respect of every one of the others, an affiliat.e. " There is no similar provision ins. 78 ands. 79 of the Act. deaUng with abuse of dominant position. However. this lli not surprising given that these sections primarily address instances of unilateral abuse of dominant position. In cases where such abuse has occurred, from a functional perspective it should be a matter of irrelevance that a dominant firm engages in abuse of dominant position either directly or indirectly through various subsidiaries or
SENT BY: 5-21-37 ; 1: 16PM ; BJV 298 32934 COMPEflTION TRIBUNAL;#28 -6-affiliates that it effectively controls. 12. However. s. 79(1) of the Act also contemplates cases where one or 11lOie persons substantially or completely control a class or species of business in Canada and that person or persons have engaged in a practice of anticompetitive acts which are having or are likely to have the effect of preventing or lessening competition substantially in a market (often referred to as joint abuse of dominance). The Consent Order of November 18, 1994. seems clearly to be addressed to a set of joint. er concerted anticompedtlvc practices . pursued by the nonintcgrated Yellow Pages directory publishers who were parties to the Order. This view of the Comcnt Order is strongly borne out both by the Director's arguments before the Competition Tribunal in the recent Tele-Direct case and by .the Tribunal's own observations and findings in this case. The respondents in these proceedings argued, inter aHa, that the Director was estoppcd from pursuing a complaint against Tele-Direct under the Competition Act by virwe of the prior Consent Order which allegedly (in the respondents' view) addressed, and disposed of all relevant competition issues related .to Yellow Paics advertising. However, according to the Director, the anticompetitive acts which were the subject of the Consent Order were certain Wint practices of the CANYPS members regarding the manner in which national advertising could be placed in their dir~tories. h was the W'eements between the respondents which constituted the alleged anticompetitive acts and resulted in a presumptive .substantial lessening of corDpetition that were remedied by the Order. In the Tele-Direct proee.cdings, however. it was the alleged anticompetitive acts of Tele-Direct itself which were the subject of review (at p.28). The Tribunal accepted this argument holding that "it was the substantial lessening of competition resulting from the respondents' joint practice of anticompetitive acts or joint abuse of dominance which the Director sought to remedy by the Consent Order. The instant case deals with entirely separate allegations of anticompetitive acts of Tele~Direct acting alone". (at p. 28)
13. In other words, the essence of the Consent Order was to prohibit various practices that were the subject of a horizontal agreement amo111st dominant firms. The Consent Order did not address unilateral practices of a dominant firm that might constitute an abuse of
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SENT BY: 5-21-97 1:16PM ; BJV 298 3293~COMPETITION TRIBIJ'iAL;#29 ~7-dominant position. Applying a functional or purposive interpretation of the Consent Order in light of the Competition Tribunal's decision in the Tele-Direct proceedings, concerted actions by dominant firms in the Yc llow Pages publishin& market, specifically with respect to natioml advertising, is governed by the Consent Order; unilateral acts engaged in by any one of these firms directly or indirectly may constitute an abuse of dominance outside the scope of the Consent Order but subject to separate review by the Director and the Tribunal under s. 78 and s. 79 of the Act and related sections (e.g. s. 77).
14. Viewed in this way, which is simply to adopt the Director's own arguments on the estoppel issue before the Tribunal, it is difficult, if not impossible, to discern any functional rationale for applying the Consent Order to purely unilateral intra-corporate practices or arrangements of any given single t'tux;tional enterprise that was a party to the Consent Order. Rat.her these practices, however orchestrated or arranged within the enterprise, would be reviewable as a potential unilateral abuse of dom.inant position. The implication that flows from this is that any practices or arrangements that TAS and TA SE may enter into between tbe-mselves as wholly owned subsidiaries of TELUS should be viewed as falling outside the scope of the Consent Order and as subject to review i if at all, only as unilateral abuses of a dominant position. To the extent that either TAS or TA SE or their parent companies enter into arrangements or engage in concerted. practices with other independently owned respondents to the Consent Order with respect to national advertising in telephone directories in Canada, these arrangements will be subject to the prohibitions and constraints contained in the Consent Order. This makes good sense of the Consent Order, the Competition Tribunal's· decision in the recent Ielc-Direct proceedings mi the trite law that one cannot conspire with oneself (through legal entities or divisions that one controls).
15. The Director's determination not to challenge the acquisition by TELUS of Edmonton Telephones Corporation on February 28, 1995 without conditions or undertakings in relation to the Yellow Pages directory business is of substantial significance in assessing the competitive implications of the curre~ ApplK:ation for a variation of the Consent Order of November 18, 1994. The hnplications of the Director's decision not to challenge
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SENT BY: 5-21-37; 1:16PM BJV 298 32fl3..,COMPETITION TRIBlJNAL;#30 - 8 the merger arc that any or all aspects of the assets, activities. and operations of TELUS and Edmonton Telephones Corporation, including their respective Yellow Pages directory publishing activities. could be fully integrated without raising anti-competitive concerns. Thus, if TELUS were to integrate fully the current Yellow Pages directory publishing activities of TA S and TASE into a single legal entity, there would be no requirement that either TELUS or any of its subsidiaries need apply to the Tribunal for a variation of the Consent Order or need to notify the Director of the integration. Given that full futegration of TAS and TASE's Yellow Pages publishing activities into a single legal entity would pose no legal problems with respect to compliance with the Coment Order and would not ru:essitate a variation thereof or notification to the Director, it would seem odd, to say the least, that a less complete form of integration between the two i.e. a more coordinated approach to the provision of national advertising should be viewed as raisin& any problems. This would be nintamount to viewi11g the Din:ctor's express and considered decision not to challenge the ·merger as permitting full integration of the merged activities but as opposing less comprehensive or transitional forms of integration. Apart from the fact that his decision to allow the merger to proceed contained no such conditions or undertaking, I can discern no competitive purpose that would be served by prohibiting less complete forms of integration between TAS and TA SE.
16. Reflecting this process of progressive integration, as of October 21, 1996 TAS and TASE operate under~ same market brand throughout Alberta (l'ELUS), and operate under a common president mi inc:reasingly under common senior management. Even in the short run. partial integration of Yellow Pages publishing activities betwe.en TA S and TASE with respect to national advertising will yield various efficiencies. First, as the Application for a variation and the Reply of the Applicant point out, the existence of different commission structures and different co.mmissionability criteria for national advertising is a source of confusion to CMRs outside the province and particularly outside the country. Second, the establishment of a single point of contact for scm111 companies and CMRs seeking to place Yellow Pages advertising in directories published by TAS and TASE would reduce transaction costs, by enabling either T AS or TASE then to arrange placement of these advertisements in each other's directories. Third, because the Consent Order of November
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5-21-97; t:17PM ; BJV 298 3293-.COMPET IT I ON TR IBL~AL; #31 SE~T BY: 18. 1994 applies only to national advertising, it does oot affect any form of coordination or integration of Yellow Pap directory publishing and marketing activities between TA S and TASE with respect to non-national advertising. If different positions were to be taken on what deitees of coordination or integrati9n were pennissible on the part of TA S and TASB with respect to national advertising. on the one band, and non-national advertising, on the others this would preclude rational integration of the two setS of Yellow Pages publishing activities, with integrated f\m=tions being possible for non-national advertising, but separate functions being requJred to be maintained for national advertising. The various functions entailed in providing Yellow Pa1es advertising do not lend themselves to this form of artificial segmentation~ organizing sales forces, marketing efforts, design services. printing functions. billing activities etc. are obviously best organized, from a business point of view, across all classes of advertising where tbeac activities serve a similar functional role.
17. The entire Alberta m8rket for national Yellow Pases advertising is very small. accounting for about 10 percent of total national industry revenues from national advertising, and the market for aJl forms of Yellow Pages advertisilli in Alberta is relatively small compared to the size of Yellow Pages publishers in many other parts of Canada. This is a particularly pertinent ftctor with respect to the Yellow Pages directory publishing activities of TA SE (the succesaor t.c Edmonton Telephones Corporation's Yellow Pages publish,ing division), which publishes a very small number of directories compared to most other Yellow Pages directory publishers, implying that economies of scale and scope that are likely to be realized by fuller integration with TAS are likely to be significant and indeed would reflect more ctosely the structure of Yellow Pages publishin1 businesses in most other regions of Canada.
18. More specifically. the exemption from Clause 3(b) of the Consent Order (exclusive selling arrangements) for intra-corporate arrangements between T AS and TA SE would remove any doubts as to the ability of TAS and TASE to make periodic and efticicnt reallocations of staff :functions between the two entities in providing national advertising, reflecting other current demands on staff time. Exemption from Clause 3(d) (discriminating between
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5-21-97 ; 1:17PM ; BllV 298 3233...,COMPET IT l ON 1R I BUNAL; #32 SENT BY: -10-selling companies) would permit greater systcm·to-system access and integration within TA S and TASB, without requiring that similar access be provided to third parties to confidential custom.er and business in.formation held in these systems. Exemption from Clause 3(t) and (g) (commissionability criteria am! commission rates) would permit a more integrated and coordinated approach between TAS and TASE in promoting national Yellow Pages advertising in Alberta. principally through extei'nal selling companies and CMRs. I note in these respects that in the recent Tele-Direct proceedings tl1e Tribunal found that Tele-Direct lacks market power in the existing comrnissionable market for Yellow Pages advertising services, given that agents account for a market share of about 75 percent of national advertising services m1 Tele-Direct about 25 percent. Comparable ratios apply in Alberta. The Tribunal rcjcaed allegations that Tele-Direct bad engaged in discriminatory practices in this market that substantially lessened competition (pp.315-320). Similarly, TAB alld TASB have fewer incentives to engage in inefficient forms of discrimination against other selling companies or CMRs mth is market, given their heavi dependence, currently and prospectively, on selling companies and CMR.s outside Alberta and iIJieed outside Canada to perform vital selling functions .oo their behalf. In all these respects, variation of the Consent Order would simply place TAS and TASE, as a sin≤ functional enterprise, on a similar business footing to all the other inlegrated Yellow Pages
d.ircctory publishers in other provinces of Canada. To take a different view would be to accord prc-eminence to legal form over ec:onomic substance.
19. For all r.bese reasons, both legal and economic, I conclude that a variation of the Consent Order of November 18, 1994 as proposed in this Application by TAS and TASE would in all likelihood continue to eliminate the substantial lessening of competition which is praumed to result from the conduct which was the subject of the original application and wculd permit the :reali7aticm of various efficiencjes from greater integration of the Yellow Pages publishiug activilies of TAS and TASE pursuant to the common ownership structure that now C4ists.
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