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CT-2017-008 THE COMPETITION TRIBUNAL IN THE MATTER of the Competition Act, R.S.C. 1985, c. C-34, as amended; and AND IN THE MATTER OF an application for orders pursuant to section 74.1 of the Competition Act for conduct reviewable pursuant to paragraph 74.01(1)(a) and subsection 74.01(3) of the Competition Act.
BETWEEN: THE COMMISSIONER OF COMPETITION Applicant - and - HUDSON’S BAY COMPANY Respondent HBC’S RESPONSE AND MEMORANDUM OF FACT AND LAW (Commissioner of Competition’s Motion for Leave to File Supplemental Witness Statement and to Lift HBC Confidentiality Claims) (returnable March 12, 2019)
STIKEMAN ELLIOTT LLP 5300 Commerce Court West 199 Bay Street Toronto, Ontario M5L 1B9
Eliot N. Kolers LSO# 38304R Phone: (416) 869-5637 Email: ekolers@stikeman.com
Mark E. Walli LSO# 53266L Phone: (416) 869-5577 Email: mwalli@stikeman.com
Patricia Joseph LSO# 75535Q Phone: (416) 869-5642 Email: pjoseph@stikeman.com Fax: (416) 947-0866
Counsel for the Respondent
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TO: Attorney General of Canada Department of Justice Canada Competition Bureau Legal Services Place du Portage, Phase 1 50 Victoria Street, 22nd Floor Gatineau, QC K1A 0C9
Alexander Gay Phone: (819) 994-3068 Email: alex.gay@canada.ca
Derek Leschinsky Phone: (819) 956-2842 Email: Derek.Leschinsky@canada.ca
Katherine Rydel Phone: (819) 997-2837 Email: katherine.rydel@canada.ca
Counsel for the Commissioner of Competition AND TO: The Registrar Competition Tribunal Thomas D’Arcy McGee Building 1 90 Sparks Street, Suite 600 Ottawa, ON K1P 5A4
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CT-2017-008 THE COMPETITION TRIBUNAL IN THE MATTER of the Competition Act, R.S.C. 1985, c. C-34, as amended; and AND IN THE MATTER OF an application for orders pursuant to section 74.1 of the Competition Act for conduct reviewable pursuant to paragraph 74.01(1)(a) and subsection 74.01(3) of the Competition Act.
BETWEEN: THE COMMISSIONER OF COMPETITION Applicant - and - HUDSON’S BAY COMPANY Respondent HBC’S RESPONSE AND MEMORANDUM OF FACT AND LAW (Commissioner of Competition’s Motion for Leave to File Supplemental Witness Statement and to Lift HBC Confidentiality Claims) (returnable March 12, 2019)
1. The motion brought by the Commissioner of Competition (the “Commissioner”) seeks two distinct types of relief, both of which should be refused in the circumstances of this proceeding. 2. Primarily, the Commissioner requests leave to file the Supplemental Witness Statement of Adam Zimmerman (“Supplemental Zimmerman Statement”), which was served on HBC almost two months after the deadline for service of the Commissioner’s witness statements under the Tribunal’s Scheduling Order in this proceeding. 1 Based on the materials served by 1 Order Amending the Scheduling Order dated March 28, 2018 (the “Scheduling Order”).
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the Commissioner in support of his motion, which do not include any affidavit explaining his non-compliance, the Commissioner’s position appears to be that he can disregard the Tribunal’s Scheduling Order at will, without explanation or consequence. That is a surprising position for the Commissioner to take, given that he has previously argued (on the motion he brought seeking to strike out HBC’s pleading in this proceeding) that any unjustified breach of the Tribunal’s Scheduling Order is a serious matter. 2 3. The Commissioner seeks to excuse the late service by arguing that delivery of the Supplemental Zimmerman Statement would have been timely in relation to the minimum time (in advance of the hearing date) allowed for service of witness statements under the Tribunal’s Rules. There are two problems with this purported justification. First, it simply seeks to write the Scheduling Order out of existence. The default time limits under the Tribunal’s Rules do not apply in this proceeding; the Scheduling Order does. 4. The second problem with the Commissioner’s argument is that the proposed Supplemental Zimmerman Statement is not just late under the Scheduling Order, it is in clear breach of the Tribunal’s Rules on discovery and pre-hearing disclosure. Among other things, the
but which was not disclosed in any of the Commissioner’s affidavits of documents, was not previously produced in this proceeding, and was not among the more than 95,000 documents listed in the Commissioner’s January 2019 notice of documents on which he purportedly intended to rely at the hearing. Nevertheless, the Commissioner asserts on this motion that this document is relevant and the admission of that document for the “truth of its contents” would not be prejudicial to HBC. 2 Memorandum of Fact and Law of the Commissioner of Competition dated November 28, 2017 at paras. 22-23.
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5. That is truly an astounding position for the Commissioner to take, especially given that, on HBC’s refusals motion in this proceeding, he objected to having to produce documents obtained by the Competition Bureau in other investigations – including an investigation against Sears which actually related to sleep sets and was contemporaneous with the Bureau investigation against HBC that led to this proceeding. In response to HBC’s refusals motion, the Commissioner asserted that, apart from the unfair burden of having to search for documents from other investigations, if HBC were to obtain those investigation documents the Commissioner was entitled to and must obtain discovery from HBC in relation to them, or else “HBC would enjoy a right to trial by ambush and to manufacture a defence without providing discovery to the Commissioner.” How, then, can the Commissioner now assert that his clear breach of the Tribunal’s Rules in respect of the Supplemental Zimmerman Statement should simply be overlooked and that the hearing should proceed as if he had properly disclosed and provided discovery on the materials raised in that statement, including The right to procedural fairness in Tribunal proceedings does not exist for the Commissioner alone. 6. Although the foregoing provides sufficient grounds for denying the Commissioner leave to file the Supplemental Zimmerman Statement, it is also the case (as discussed further below) that the materials referred to in that statement – - are irrelevant, have no probative value and would not be of any assistance to the Tribunal in deciding the matters of liability or remedy in this proceeding. 7. In addition, apart from the prejudice to HBC, admission of the Supplemental Zimmerman Statement would be prejudicial to the interests of the parties and the Tribunal in the just and efficient resolution of this proceeding, because addressing the raised in that statement would involve costly, inefficient and diverting litigation on collateral issues with no
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real significance to the actual issues raised in this proceeding. The Commissioner’s request for leave to file the Supplemental Zimmerman Statement should therefore be denied. 8. On his motion, the Commissioner also seeks various orders with respect to the designation and treatment of discovery materials as confidential under the terms of the Confidentiality Order in this proceeding. This aspect of the Commissioner’s motion is a direct response to HBC’s confidential motion to strike the Zimmerman Witness Statement and the Banks Report in their entirety, which was brought because HBC believes those reports are patently improper and inadmissible. HBC filed its motion on a confidential basis, not only because both the Zimmerman Witness Statement and the Banks Report contain confidential information, but also because, in HBC’s view, those statements are “so clearly out of bounds” that they “ought to be stopped in [their] tracks.” 9. With respect to certain materials referenced primarily in the Zimmerman Witness Statement (and to a lesser extent the Banks or Urbany reports) and listed in Annex A to his factum, the Commissioner seeks an immediate order that those materials are not confidential. Although in support of this relief the Commissioner refers in general terms to the open court principle (as discussed below), he does not engage with the important public interest in the proper administration of justice, which obviously includes the principle that improper, abusive, and inadmissible “evidence” not form part of the record on which court or Tribunal decisions are made. The Commissioner’s motion with respect to the Annex A materials therefore essentially seeks to pre-judge HBC’s motion to strike and is thus premature. 10. The Confidentiality Order is clear that confidentiality designations are relevant when the record in issue is “introduced into evidence or otherwise placed on the record”. If the Court determines that the evidence is inadmissible, as HBC asserts, the evidence cannot be introduced into evidence or placed on the record and the confidentiality designations are moot.
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If on the other hand, the motion is dismissed in whole or in part, confidentiality designations with respect to those (portions) of the Commissioner’s statements/reports that are found to be admissible can be addressed between the parties. As HBC’s response to the Commissioner’s Annex A materials illustrates, there is good reason to believe that the parties will be able to reach substantial agreement with respect to confidentiality designations. 11. That same reasoning applies with respect to the Annex B (Banks) and Annex C (Urbany) materials. HBC provided the Commissioner with its preliminary view on the confidentiality of the Banks and Urbany reports (without prejudice to its position that the Banks report is inadmissible), and only received the Commissioner’s responding position by way of the delivery of his motion materials/factum on this motion. Now that HBC has the Commissioner’s position, to the extent any part of the Banks report is found to be admissible and the parties are unable to agree on the confidentiality designations for admissible portions of the Banks report or the Urbany report, those disagreements can be brought back before the Tribunal following release of the Tribunal’s ruling on HBC’s motion to strike. 12. The final order sought by the Commissioner with respect to confidentiality designations is that HBC be required to “review the balance of confidentiality claims made to date on all records produced by HBC” in this proceeding within 30 days. That request is inconsistent with the Confidentiality Order and patently abusive. HBC has designated roughly half of its production documents as confidential, such that the Commissioner’s blanket request would require the review of more than 45,000 documents, the vast majority of which are not referred to in any witness statements and will never be used at the hearing in this proceeding. Nothing is to be gained from, and there will be substantial and unnecessary costs imposed in conducting, a blanket re-review of documents that will not be part of the hearing record.
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13. Indeed, to the extent the Commissioner has concerns over the designation of specific documents, he can raise (and has already raised) those objections in accordance with the terms of the Confidentiality Order. Moreover, even in the absence of any challenge by the Commissioner to a document designated as confidential for pre-hearing purposes, the Confidentiality Order expressly provides that (i) if the document is sought to be introduced at the hearing, the Tribunal will determine whether the document is or is not confidential, and (ii) the failure of the Commissioner to challenge the designation prior to the hearing does not prevent him from arguing at the hearing that the document is not confidential. Accordingly, the Commissioner’s request for a blanket re-view of tens of thousands of documents is abusive and ought to be dismissed. PART I - FACTS a. Supplemental Zimmerman Statement 14. The Supplemental Zimmerman Statement was delivered on February 7, 2019, without any advanced notice and well after the December 19, 2018 deadline in the Scheduling Order for delivery of the Commissioner’s witness statements and list of documents relied upon.
15. Although the documents were clearly within the Commissioner’s possession, he has provided no explanation for why the documents: (i) were not listed in the Commissioner’s affidavit of documents as required under the Rules 3 , (ii) were not delivered as part of the Commissioner’s documents relied upon and witness statements delivered by the December 19, 2018 deadline and (iii) were not disclosed in the Commissioner’s list of documents to be proposed to be admitted without further proof which was delivered January 4, 2019 in accordance with the Scheduling Order.
3 Initial productions were served to HBC on September 29, 2017; Supplemental productions were served to HBC on June 1, 2018; and further productions were served to HBC on August 9, 2018.
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16. The documents sought to be introduced through the 17. b. HBC’s Confidentiality Designations 18. On December 19, 2018, the Commissioner served the Banks Report, the Urbany Report and the Zimmerman Witness Statement. 19. On February 4, 2019, in response to a request by the Commissioner’s counsel, HBC provided to the Commissioner its proposed confidentiality redactions to the Banks Report and the Urbany Report. The Commissioner did not provide a response or attempt to discuss HBC’s proposed redactions before serving this motion. HBC also advised the Commissioner that it would provide its proposed redactions to the Zimmerman Witness Statement after the deadline for filing of its own witness statements given that under the Scheduling Order, April 5, 2019 is the deadline to file documents with the Tribunal for use at the hearing of the Application (i.e. witness statements and expert reports). 20. On February 14, 2019, HBC served its motion to strike the Banks Report and the Zimmerman Witness Statement. HBC filed its motion confidentially because the underlying evidence for the motion (the Banks Report and Zimmerman Witness Statement) have not yet
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been filed or introduced into evidence and, if ruled inadmissible, would not be introduced into evidence at the hearing of the Application. The confidentiality of the motion is further addressed in HBC’ memorandum of fact and law dated February 27, 2019. PART II - SUBMISSION A. Leave to File the Supplemental Zimmerman Statement Late Should be Denied 21. The Commissioner’s motion for leave to file the Supplemental Zimmerman Statement should be denied because the late filing of this evidence is clearly in breach of the Tribunal Rules on discovery and pre-hearing disclosure, prejudicial and procedurally unfair to HBC and the selective historical evidence is not, in any event, relevant to any matter in this proceeding. i. The Commissioner Has Breached the Tribunal Rules on Discovery and Pre-Hearing Disclosure
22. The Supplemental Zimmerman Statement has been delivered in contravention of the Tribunal Rules on discovery and pre-hearing disclosure. 23. Rules 60 and 63 of the Tribunal Rules address the requirement for each party to serve an affidavit of documents and a supplementary affidavit of documents, to the extent necessary, identifying the documents that are relevant to any matter in issue and that are or were in the possession, power or control of the party. None of the documents contained in the Supplemental Zimmerman Statement were included in the Commissioner’s affidavits of documents. 24. Rule 68 and the Scheduling Order required that the Commissioner serve his list of documents on which he intends to rely at the hearing as well as all witness statements by December 19, 2018. None of the documents contained in the Supplemental Zimmerman
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Statement were included in the Commissioner’s list of documents or the Zimmerman Witness Statement delivered on December 19, 2018. 25. Nor were the documents attached to the Supplemental Zimmerman Statement listed in the over 98,000 documents that the Commissioner listed in his Rule 72 Notice delivered on January 4, 2019 as documents to be introduced into evidence without further proof (that notice being the subject of HBC’s companion motion to strike). It was not until February 22, 2019, after the delivery of the Supplemental Zimmerman Statement, that the Commissioner purported to deliver an Amended Rule 72 Notice listing these documents. 26. Pre-hearing disclosure is an important aspect of the high degree of procedural protection that is afforded in Tribunal proceedings. The Commissioner’s failure to comply with his discovery and pre-hearing disclosure obligations is fundamentally contrary to the principles of procedural fairness that are designed to ensure that respondents know the case they have to meet. 4 27. The Commissioner has also clearly breached the Scheduling Order in this proceeding which required all such evidence to be served by December 19, 2018. Within the context of court orders issued under status review, the Federal Court has made it clear that any unjustified non-compliance with a scheduling order is a serious matter in itself. 5 28. Importantly, Rule 71 addresses the failure of a party to comply with discovery and prehearing disclosure rules: If a document has not been disclosed in the affidavit of documents and in the pre-hearing disclosure, or if privilege has not been waived for such a document, it shall not be received in evidence at the hearing unless the Tribunal orders otherwise. [emphasis added]
4 Vancouver Airport Authority v. Commissioner of Competition, 2018 FCA 24, paras 29-30. 5 Créations Magiques (CM) Inc. v. Madispro Inc., 2005 FC 281, at para 15.
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29. The discovery and pre-hearing Rules aim to avoid a party being prejudiced by late disclosure of documents or information and to prohibit "trial by ambush". 6 Leave to file additional evidence should only be granted if the Tribunal is satisfied that it is in the interests of justice to do so having regard to the prejudice which will be suffered by HBC and any undue delay. 30. In the instant case, granting leave to file the proposed evidence will cause serious prejudice to HBC given that it will have no discovery rights in respect of the documents. The documents at issue . The Commissioner’s failure to comply with the discovery and pre-hearing disclosure Rules and Scheduling Order is particularly egregious with respect to and which the Commissioner seeks to rely on for the truth of its contents under Section 69(2) of the Competition Act, R.S.C., 1985, c. C-34 (the “Act”) without giving HBC any opportunity for discovery on the document as is clearly required under the Rules. It is simply not fair to expect that HBC, in the limited time available until the hearing of the Application, will have access to and will be able to review and locate documents that it could then lead at the hearing to bring clarification to the documents at issue. 31. In the circumstances, the relief sought by the Commissioner is not simply “flexibility” in the manner in which a document must be proven by the Commissioner. Nor is it sufficient for the Commissioner to state that HBC is free to lead evidence to the contrary to bring clarification to the document. that the Commissioner
6 Apotex Inc. v. Sanofi-Aventis Canada Inc., 2010 FC 481 at para 6; Potskin v. Canada (Minister of Indian Affairs & Northern Development), 2011 FC 457 at para 98.
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apparently had but did not disclose to HBC under the Rules, thereby denying HBC discovery rights. 32. It bears noting that the Commissioner in an earlier refusals motion in this proceeding refused to produce documents from a separate current investigation that actually related to relevant conduct and information in the very time period of this Application. The Commissioner complained about the burdens and unfairness of HBC’s requests for documents:
The systemic costs HBC’s requests impose would include not only the review and collection of documents from other investigations throughout the various enforcement branches of the Bureau – where the Commissioner may have obtained documents and information in a variety of contexts for a variety of purposes – but also in terms of the examinations for discovery in this litigation. To the extent HBC obtains its competitor information for the purposes of its defence (which the Commissioner submits it should not), the Commissioner should be entitled to examine HBC (or its counsel) for discovery regarding how it intends to make use of the information it receives. Otherwise, HBC would enjoy a right to trial by ambush and to manufacture a defence without providing discovery to the Commissioner. The Commissioner should be entitled to know the case he must meet rather than to guess at how HBC plans to use the documents and information he may have collected from other investigations, and if this motion were granted contrary to the Commissioner’s submissions, HBC would see for the first time. 7 33. Just as the Commissioner asserted in those submissions, HBC is entitled to know the case it must meet rather than have to guess at how the Commissioner
34. What the and after the Commissioner’s witness statements were supposed to be delivered. The Commissioner should not be rewarded for this flagrant breach of the Rules and Scheduling 7 Responding Memorandum of Fact and Law of the Commissioner of Competition dated November 14, 2018 at para. 36. [emphasis in original]
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Order and leave to file the Supplemental Zimmerman Statement ought to be denied on this basis alone. ii. The Proposed Evidence Has No Probative Value 35. In addition to the clear procedural unfairness associated with the proposed Supplemental Zimmerman Statement, the evidence the Commissioner seeks to introduce is irrelevant, has no probative value, and will not assist the Tribunal in resolving the issues raised in this proceeding. 36. The Commissioner contends that the Supplemental Zimmerman Statement should be admitted because
This contention is untenable in the circumstances. 37. Section 74.1(1)(c)(ii) provides that in the case of a corporation found to have engaged in reviewable conduct, the Tribunal may order an administrative monetary penalty in an amount not exceeding “$10,000,000 and, for each subsequent order, $15,000,000.” Section 74.1(6) of the Act addresses the meaning of the term “subsequent order” for purposes of Section 74.1(1)(c). It provides: For the purposes of paragraph (1)(c), an order made against a person in respect of conduct that is reviewable under paragraph 74.01(1)(a), (b) or (c), subsection 74.01(2) or (3) or section 74.02, 74.04, 74.05 or 74.06 is a subsequent order if
(a) an order was previously made against the person under this section in respect of conduct reviewable under the same provision;
(b) the person was previously convicted of an offence under the provision of Part VI, as that Part read immediately before the coming into force of this Part, that corresponded to the provision of this Part;
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(c) in the case of an order in respect of conduct reviewable under paragraph 74.01(1)(a), the person was previously convicted of an offence under section 52, or under paragraph 52(1)(a) as it read immediately before the coming into force of this Part; or
(d) in the case of an order in respect of conduct reviewable under subsection 74.01(2) or (3), the person was previously convicted of an offence under paragraph 52(1)(d) as it read immediately before the coming into force of this Part.
38. This proceeding principally concerns the Commissioner’s challenge to HBC’s ordinary selling price representations with respect to sleep sets under section 74.01(3) of the Act. Section 74.1(6) is very clear that, with respect to those allegations, the prior order must either have been made against HBC under section 74.01(3) or must be a conviction against HBC under section 52(1)(d) of the Act, as it read in 1999, immediately prior to the coming into force of Part VII.1 of the Act.
39. The Commissioner also alleges that HBC’s use of the terms “clearance” or “end of line” with respect to sleep sets contravened section 74.01(1)(a) of the Act. Section 74.1(6) of the Act is very clear that, with respect to those allegations,
40. The Commissioner correctly notes that section 74.1(5) of the Act provides that, in determining whether to order an administrative monetary penalty, the Tribunal should consider the “history of the compliance with this Act of the person against whom the order is made.” The term “this Act” plainly means the Competition Act (see section 1), enacted in 1985, and the
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person against whom the order is made, if the Commissioner is successful, will be HBC
41. In seeking leave to file the Supplemental Zimmerman Statement as ostensibly being relevant to the potential administrative monetary penalty in this proceeding, the Commissioner does not appear to recognize that sections 74.1(1)(c), 74.1(5) and 74,1(6)
42. In addition, with respect to paragraphs 2(a) and (b) of the 43. As another purported justification for seeking the belated admission of the Supplemental Zimmerman Statement, the Commissioner makes the rather surprising claim that
The illogic of that contention is self-evident. 44. Perhaps recognizing the patent difficulties with his contention, the Commissioner immediately shifts in his submissions to claiming (without any basis) that the evidence in the Supplemental Zimmerman Statement is relevant because HBC’s own pleading put conduct from the 1970s, 1980s and early 1990s at issue in this proceeding. The Commissioner states that “HBC asserts at paragraphs 46, 51, 91 of its Amended Response that, contrary to the
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Commissioner’s allegations, it had ‘…a clear, continuous and unequivocal commitment to compliance’ (emphasis added). .” 8 45. The Commissioner’s assertions involve a deliberate misreading of HBC’s pleading as can be seen from a cursory reading of the paragraphs adverted to by the Commissioner. a) Paragraph 45 of HBC’s Amended Response, which provides the context for the position asserted in paragraph 46 on which the Commissioner purports to rely, asserts that “HBC has, and during the entire period challenged by the Commissioner in his Application had, a comprehensive advertising compliance manual (the “Compliance Manual”) applicable to Hudson’s Bay’s sale of sleep sets. In other words, the pleading in paragraph 46 clearly relates only to the 2013-2018 period; b) Paragraph 51 of HBC’s Amended Response pleads that, “demonstrating the very clear and continuous commitment to compliance which the Commissioner now alleges (without foundation) that HBC lacks, HBC modified some of Hudson’s Bay’s mattress marketing and compliance-monitoring practices subsequent to the 2013-2014 time frame addressed in the Commissioner’s Application.”; and c) Paragraph 91 of HBC’s Amended Response states that “HBC has, and at all relevant times, had a strict, comprehensive advertising compliance program, which included the Compliance Manual and training programs for all employees engaged in marketing or buying the mattresses that Hudson’s Bay offered for sale. Contrary to the Commissioner’s allegations, HBC’s compliance program demonstrates that it had a ‘clear, continuous and unequivocal commitment to compliance’ and exercised due diligence to prevent contraventions of section 74.01 of the Act from occurring.” 8 Memorandum of Fact and Law of the Commissioner of Competition dated February 27, 2019 at para 17.
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46. HBC’s pleading is clearly and unequivocally grounded in the actual time period relevant to the Commissioner’s Application, as pleaded by the Commissioner himself. The Commissioner’s claim that HBC’s Amended Response makes relevant is a pure fabrication that seeks to manufacture probative value for evidence which clearly has none. iii. The Proposed Evidence is clearly Prejudicial 47. Aside from having no probative value, the proposed evidence in the Supplemental Zimmerman Statement would impose significant prejudice on HBC and, relatedly, on the Tribunal itself. 48. The prejudice to HBC stems from 49. As noted above, the most obviously prejudicial part of If that
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document were to be admissible, fairness would demand that HBC be given to a meaningful opportunity to respond to it, which would, at a minimum would require the Commissioner to produce all the documents he has in his possession from that investigation and to provide HBC with discovery on how he intends to use it at the he should not also be required to produce the documents from the current mattress investigation that he has up to this point refused to produce because of the supposed burden and lack of relevance.) 50. The resulting prejudice from that course of action, to the conduct of this proceeding and the parties’ and the Tribunal’s interests in a fair and efficient resolution of the Commissioner’s Application, is palpable. The parties and the Tribunal would be bogged down in costly and time-consuming litigation of collateral issues concerning decades-old conduct that has effectively no bearing on the real issues raised in this proceeding. 51. Accordingly, the Commissioner’s motion for leave to file the Supplemental Zimmerman Statement should be dismissed. B. The Commissioner’s Motion on Confidential Documents Ought to be Dismissed 52. The Commissioner’s motion addresses three separate confidentiality issues which are summarized here with HBC’s position on each: (a) An order declaring certain portions of the Commissioner’s witness statements not to be confidential– this is premature in light of HBC’s pending motion to strike the Commissioner’s evidence and HBC’s does not agree with all positions taken by the Commissioner. HBC’s response is summarized below and detailed in Annex A hereto; (b) An order requiring HBC to review its confidentiality claims (which are not addressed in Annex A) on the Zimmerman Statement, the Supplemental Zimmerman
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Statement, the Banks Report and the Urbany Report – the Commissioner tacitly acknowledges that these confidentiality claims ought to be dealt with at a later date by seeking an order that simply requires HBC to review its confidentiality claims rather than an order that the claims, to the extent they have been made to date, are not appropriate. As set out herein, to the extent HBC is seeking a ruling that this evidence is not admissible (which applies to all documents except the Urbany Report), the Commissioner’s motion is premature and should be adjourned until after the Tribunal’s determination of HBC’s motion to strike and the Commissioner’s motion for leave to file the Supplemental Zimmerman Statement, to the extent any of this evidence is found to be admissible. As regards to the Urbany Report, HBC has no issue with responding to the Commissioner’s objections to its confidentiality designations now that they have been provided to HBC; and (c) An order that HBC be required to “review the balance of confidentiality claims made to date on all records produced by HBC” beyond the witness statements and reports mentioned above – this relief is not proper, is abusive, and misunderstands the Confidentiality Order in this proceeding. As part of its affidavit of documents, HBC has designated over 45,000 documents as confidential under the Confidentiality Order, the very large majority of which are not referred to by either party in their witness statements or expert report. This aspect of the Commissioner motion ought to be dismissed. i. Confidentiality of Documents at Annex A to the Commissioner’s Submissions
53. To a significant extent, the Commissioner’s Annex A illustrates the prematurity and unnecessary nature of his motion insofar as it relates to confidentiality designations. 54. Most of the materials listed in the Commissioner’s Annex A are referenced in and exhibited to the Zimmerman Witness Statement, which is more than 300 pages (excluding the
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exhibits). As the Commissioner states, HBC not yet provided the Commissioner with its position on the confidentiality of all the materials contained in that statement. It has not done so because the Zimmerman Witness Statement is so lengthy and HBC believes that it is inadmissible in its entirety. HBC acknowledges that, if the Zimmerman Witness Statement is not struck in its entirety, confidentiality designations will need to be addressed for whatever remains of that statement. 55. As HBC’s Response to Annex A (attached) shows, there is little disagreement between the parties concerning those specific materials. The Commissioner accepts that some of the documents are confidential and would need redactions – which HBC believes should be somewhat more extensive than proposed by the Commissioner. HBC accepts that other Annex A documents are not confidential per se (and indeed, did not claim confidentiality over them in its Affidavit of Documents). Thus, to the extent the statements referencing or exhibiting those Annex A materials are found to be admissible, there is no confidentiality disagreement between the parties. 56. HBC also notes that a few of the items on Annex A simply concern HBC’s proposed redactions to the Banks or Urbany expert reports, which HBC provided on a preliminary basis to the Commissioner (notwithstanding and without prejudice to its objection that the Banks report is inadmissible in its entirety). Prior to bringing this motion, the Commissioner did not advise HBC of his objections to the proposed redactions which he sets out in Annex A. HBC accepts those objections and would modify its redactions accordingly. 57. This simply illustrates that the better course for the Annex A documents would have been similar to the one which the Commissioner himself proposes for Annex B and Annex C, which is that, following resolution of the parties’ March 12 motions by the Tribunal, the parties
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attempt to agree on confidentiality designations for all remaining (admissible) witness statement/expert reports served by the Commissioner. ii. Confidentiality of Documents and Information Where There is a Challenge to the Underlying Evidence
58. The Commissioner does not seek a ruling with respect to HBC’s confidentiality claims other than those specifically set out in Annex A. Instead, the Commissioner seeks an order that HBC review the balance of the confidentiality claims over the Zimmerman Witness Statement, Supplemental Zimmerman Statement, the Banks Report and the Urbany Report within seven days. 59. With respect to the Urbany Report, this is the first time the Commissioner is providing its response to the confidentiality designations of HBC. HBC has no issue with reviewing the Commissioner’s objections and seeking to either resolve or narrow the confidentiality claims that are in issue. 60. The admissibility of the remaining evidence (Zimmerman Witness Statement, Supplemental Zimmerman Statement and the Banks Report) is currently in issue and will be argued at the March 12 motion. The most efficient method of managing the confidentiality claims in these documents would be to address confidentiality claims based on whatever admissible evidence remains, if any, after the Tribunal’s decision on the evidentiary motions. Together, the Zimmerman Witness Statement and Banks Report (which HBC has moved to strike in their entirety) are almost 400 pages excluding exhibits. The exhibits to the Zimmerman Witness Statement total an additional 3,620 pages. The exhibits to the Banks Report total an additional 2,206 pages. The Supplemental Zimmerman Statement with exhibits total 201 pages. 61. It is not efficient to address the confidentiality of these documents before their admissibility has been addressed by the Tribunal. Importantly, the open court principle set out in
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the cases cited in the Commissioner’s submissions is simply not engaged if the evidence does not meet the threshold of admissibility as HBC asserts. The Commissioner has no blanket right to insist on publicly filing evidence which is inadmissible, particularly where the “evidence” is essentially argument supporting the Commissioner’s case. Contrary to the tone and tenor of the Commissioner’s submissions on the public interest, there has been no determination that HBC has engaged in deceptive marketing. Indeed that is the ultimate issue for the hearing and is vigorously contested. 62. Accordingly, the Commissioner’s motion on the confidentiality of the Zimmerman Witness Statement, the Supplemental Zimmerman Statement, and the Banks Report ought to be adjourned to be addressed after the Tribunal’s determinations on the evidentiary motions, if necessary. iii. Commissioner’s Motion Regarding the Balance of Confidentiality Claims is Abusive and Should be Dismissed
63. The Commissioner seeks an order that HBC be required to “review the balance of confidentiality claims made to date on all records produced by HBC” beyond the witness statements and reports mentioned above. This aspect of the motion is improper and abusive and ought to be dismissed. 64. As is evident from the Commissioner’s own Rule 72 Notice, which is the subject of HBC’s companion motion to strike, HBC has produced over 94,000 documents in its affidavit of documents. Of these documents, 46,688 have been designated by HBC as Confidential – Level B pursuant to the Confidentiality Order. The vast majority of these documents are not referred to in any of the witness statements or expert reports delivered by the Commissioner or by HBC. The relief sought by the Commissioner would require HBC to re-review its designation of tens of thousands of documents, none of which are sought to be admitted into evidence at the hearing of the Application. Moreover, HBC would be required to undergo this monumental exercise
-22-without the benefit of specific objections by the Commissioner with respect to each document. This is not provided for in the Confidentiality Order. 65. The Commissioner provides no reasonable basis, nor is there one, for the sweeping relief he requests other than general platitudes about the open court principle. As set out above, the open court principle and the public interest are not engaged where the evidence is not even sought to be admitted into evidence as is the case with this category of documents designated as confidential. The Commissioner’s blanket, and as HBC asserts improper, Rule 72 Notice cannot form the basis for the requested relief. Should any of these documents be found to be admissible, surely disputes over confidentiality claims, if any, can be addressed by the parties on a document specific basis, as is contemplated by the Confidentiality Order itself. The Commissioner’s motion, therefore, should be dismissed. PART 111 - CONCLUSION 66. For foregoing reasons, HBC states that the Commissioner’s motion ought to be dismissed with costs to HBC. DATED at Toronto, Ontario this 6th day of March, 2019.
/ Eliot N. Kolers Stikeman Elliott LLP 5300 Commerce Court West 199 Bay Street Toronto, Ontario M5L 1B9
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APPENDIX B RELEVANT STATUTES & REGULATIONS
Competition Act, R.S.C. 1985, c. C-34, s. 79 Section 52(1)(d) (as read prior to 1999 enactment) No person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever,
[…] (d) make a materially misleading representation to the public concerning the price at which a product or like products have been, are or will be ordinarily sold, and for the purposes of this paragraph a representation as to price is deemed to refer to the price at which the product has been sold by sellers generally in the relevant market unless it is clearly specified to be the price at which the product has been sold by the person by whom or on whose behalf the representation is made.
Section 69: In any proceedings before the Tribunal or in any prosecution or proceedings before a court under or pursuant to this Act,
[…] (c) a record proved to have been in the possession of a participant or on premises used or occupied by a participant or in the possession of an agent of a participant shall be admitted in evidence without further proof thereof and is prima facie proof
(i) that the participant had knowledge of the record and its contents,
(ii) that anything recorded in or by the record as having been done, said or agreed on by any participant or by an agent of a participant was done, said or agreed on as recorded and, where anything is recorded in or by the record as having been done, said or agreed on by an agent of a participant, that it was done, said or agreed on with the authority of that participant, and
(iii) that the record, where it appears to have been written by any participant or by an agent of a participant, was so written and, where it appears to have been written by an
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agent of a participant, that it was written with the authority of that participant.
Section 74.01(3)(b): (3) A person engages in reviewable conduct who, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever, makes a representation to the public as to price that is clearly specified to be the price at which a product or like products have been, are or will be ordinarily supplied by the person making the representation where that person, having regard to the nature of the product and the relevant geographic market,
[…] (b) has not offered the product at that price or a higher price in good faith for a substantial period of time recently before or immediately after the making of the representation, as the case may be.
Section 74.01(1)(a): 74.01 (1) A person engages in reviewable conduct who, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever,
(a) makes a representation to the public that is false or misleading in a material respect
Section 74.01(5): Subsections (2) and (3) do not apply to a person who establishes that, in the circumstances, a representation as to price is not false or misleading in a material respect
Section 74.1(1): Where, on application by the Commissioner, a court determines that a person is engaging in or has engaged in reviewable conduct under this Part, the court may order the person
(a) not to engage in the conduct or substantially similar reviewable conduct; (b) to publish or otherwise disseminate a notice, in such manner and at such times as the court may specify, to bring to the attention of the class of persons likely to have been reached or affected by the conduct, the name under which
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the person carries on business and the determination made under this section, including
(i) a description of the reviewable conduct, (ii) the time period and geographical area to which the conduct relates, and
(iii) a description of the manner in which any representation or advertisement was disseminated, including, where applicable, the name of the publication or other medium employed;
(c) to pay an administrative monetary penalty, in any manner that the court specifies, in an amount not exceeding
(i) in the case of an individual, $750,000 and, for each subsequent order, $1,000,000, or
(ii) in the case of a corporation, $10,000,000 and, for each subsequent order, $15,000,000; and
(d) in the case of conduct that is reviewable under paragraph 74.01(1)(a), to pay an amount, not exceeding the total of the amounts paid to the person for the products in respect of which the conduct was engaged in, to be distributed among the persons to whom the products were sold — except wholesalers, retailers or other distributors, to the extent that they have resold or distributed the products — in any manner that the court considers appropriate.
Section 74.1(6): For the purposes of paragraph (1)(c), an order made against a person in respect of conduct that is reviewable under paragraph 74.01(1)(a), (b) or (c), subsection 74.01(2) or (3) or section 74.02, 74.04, 74.05 or 74.06 is a subsequent order if
(a) an order was previously made against the person under this section in respect of conduct reviewable under the same provision;
(b) the person was previously convicted of an offence under the provision of Part VI, as that Part read immediately before the coming into force of this Part, that corresponded to the provision of this Part;
(c) in the case of an order in respect of conduct reviewable under paragraph 74.01(1)(a), the person was previously convicted of an offence under section 52, or under paragraph 52(1)(a) as it read immediately before the coming into force of this Part; or
(d) in the case of an order in respect of conduct reviewable under subsection 74.01(2) or (3), the person was previously convicted of an offence under paragraph 52(1)(d) as it read immediately before the coming into force of this Part.
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Competition Tribunal Rules SOR/2008-141 Rules 60(1) and (2): (1) The applicant and each respondent who has filed a response shall, within the time prescribed at a case management conference, serve an affidavit of documents on each other party.
(2) An affidavit of documents shall include (a) a list identifying the documents that are relevant to any matter in issue and that are or were in the possession, power or control of the party;
(b) any claim that a document is confidential or contains confidential information;
(c) any claim that a document is privileged; and (d) a statement of the grounds for each claim of privilege. Rule 63: A party who has served an affidavit of documents and who comes into possession or control of or obtains power over a relevant document, or who becomes aware that the affidavit of documents is inaccurate or deficient, shall as soon as possible serve a supplementary affidavit of documents listing the document or correcting the inaccuracy or deficiency.
Rules 68(1) and (2): (1) The applicant shall, at least 60 days before the commencement of the hearing, serve on every other party and on all intervenors
(a) a list of documents on which the applicant intends to rely at the hearing, noting any waivers of privilege claimed in regard to those documents; and
(b) witness statements setting out the lay witnesses’ evidence in chief in full. (2) Unless the parties otherwise agree, the witness statements shall include only fact evidence that could be given orally by the witness together with admissible documents as attachments or references to those documents.
Rule 72: The Commissioner shall provide a list of the documents to be admitted in evidence without further proof in accordance with section 69 of the Act at least 45 days before the commencement of the hearing.
Rule 74(1): The evidence in chief of each lay witness shall be tendered by way of the statement referred to in rules 68 to 70 and consist of their full statement of evidence and relevant documents or references to those documents.
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Canada Gazette, Part II, Vol. 133, No.7, 31/3/99 (extracted) AN ACT TO AMEND THE COMPETITION ACT AND TO MAKE CONSEQUENTIAL AND RELATED AMENDMENTS TO OTHER ACT
Order Fixing March 18, 1999 as the Date of the Coming into Force of Certain Sections of the Act
P.C. 1999-442 18 March, 1999 His Excellency the Governor General in Council, on the recommendation of the Minister of Industry, pursuant to section 55 of An Act to amend the Competition Act and to make consequential and related amendments to other Acts, assented to on March 11, 1999, being chapter 2 of the Statutes of Canada, 1999, hereby fixes March 18, 1999 as the day on which that Act, other than sections 25 to 35 and paragraphs 37(z.14) to (z.17), comes into force.