DEC-28-99 TUE 04:35 PM LAW OFFICE TIU~ COMPETITION TRIBUNAl. IN THE MATTER OF THF. COMPETITION ACT, R.S. 1985, c.C-34, as amended; AND IN TJl.E MATTt:R OF an inquiry pursuant to subsection IO(l)(b)(ii) of the Competition Act rebting lo the marketing practices of Universal Payphone Systems lnc.; AND IN Tll 1 1 ~ MAT'l'li:R OF an AppUcation by the Commissioner of Competition for an interim order pursuant to section 74.11 of the Competitir...,c.t..,..,. ___ ,_ __ BETWEEN;
0 Applicant and UNlVERSAL PAYPHONE SYSTEMS INC and . GEOllGE KATSOULAKIS, a.k.a. GEORGE KATS
Respondents
JU~SPONS~~ TO APPLICATION 0
L The Respondent:; deny 1hc rdicf sought in paragraph J, 2(a)(i), 2(e), 2(t), 2{g), 2(h), 3 ilnd •1 of the Notice:: of Application
FAX NO. 416+243+2990 P. 02 File No. CT-99/02 COMPEmlOl>l r,,,:::·;~t • 1 rn:smuit l>·~ · ··· ". , ·'.,.!'" ... , F ., ., .. ,.11\-.,.,:A.1>.t:.,:.~ ;) i I L E D
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2. Tht~ Respondent.-; an::: content that an Order issue pursuant to paragraph 2(a)(ii), 2(a)(iii), 2(~t)(iv), 2(1.J), 2(c) and 2(d) of the Notice of Application.
GROUNDS 3. Tho Respondent~ deny the allegations in parugraphs 6 and 7 of the Notice of Application. 4. Tho Respondoms admit tho allegations in paragraph 8 of the Notice of Application and have ceased all such publications.
'(HATIGRIAL FACTS 5. The R<~spoudc,n!s admil the tnatcrfal facts set out in paragraphs 1, 2, 3, 4, 5, 6, 7, 8 and 9 of th~ Nol ice of Application.
6. The Rcspomfont.~ <lid, 1.1s alleged in paragraph IO, attempt to run television advertisements 0 but tho.sc ceased a1moi;t l111mcdialdy. 7 The Respondents mfo1i1: th~ allegations in paragraphs, 12; 13, 14, l8i 21, 22, 23 and 24 of tho Notice of Application.
&. 'l'ho Respondents admit tho allegations in paragraph 2.5(a) and 25(b) of the Notice of Application.
9. Tl1e Hcspomknts s\atc that, p11rsuant to paragraph 25(0), the initial pre-injunction matl:'dti! made it l'.'.leflr thnt tlw tdcphones were ' 1 not exac1.ly as shown". 0 JO. The Rc~poJl(.Jent;; ndmlt the allegations in paragraph 32, 33, 34 and 35 of the Notice of 1\pplic.Jlion but statti lhM saks meetings were held in the "glass wall" office towel' in the early
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11. Tho Respondents aurnit the allegations in paragraphs 36, 37, 38, 39, 42, 43, 45, 46~ 47 irnd 50 of the Notic~~ of Application.
12. The Respondents admit the allegations in paragraph 54 of the Notice of Application but state that the taslis were strnigbiforward and in most cases cons1sted of one-time tasks.
13. The Respondent!; admit the allegations in paragraph 58, 59> 64, 68, 71, 76, 78, 80 and 81 (.)f tlu:: Nor ice of AppJica·1 ion.
14. The Respondents ndmlt the allt~gations in i')aragraph 82 of the Notice of Application cx·ccpt that the Respondents have 110 knowledge of the results of interviews conducted by the Bure;:iu.
15. Tho Respon<lcn1t> admit the allcga.lions in paragraphs 83, 84, 85, 86> 87 and 88 of the Notic'~ of Applic:~tion.
0 The Rcspondeuts dc::ny the ~\!legations in paragraph 11 of the Notice of Application and spcdtkal!y deny that th~ opportunity wa~ offered as "self-contained''.
l 7 TJ1c Rcsponden1 s deny 1h e allegations in paragraphs J5 and 16 of the Notice of App!ical.ion.
18. The Respomfr:ints ndmit the allcg<itions in paragraph 17 of the Notice of Application, but st::iic that, for greater dariry, some responses were provided.earlier and only the last Affidavit W<'lS delivered as hlto as Novl·:nbcr 19 11 ', 1999. 0 19. The Respondent:. deny th~ allegations in paragraphs 19, 20, 25(d), 25(e)~ 25(f), 25(g)~ 25(h), 2.5(i), 30, 31, 40, <1 l, ·11, 48, 49, 50, 51, 52, 53, 55, 56, 57, 60, 61, 62, 63 65 and 66 of the 1 Notice of Application.
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20. Whh respect to th~~ ti!legations in paragraph 67 of the Notice of Application, many of the inv~slors who do not hnv~ their phones installed have chosen deliberately not to, or ha.ve slowed tl1e proc.css down by seeki~ll:\ di'ffcrent locations other than those offered, or have attempted to rnsilc from the contructs entirely.
21. The Respo11der11s deny the allegations in paragraph 69 of the Notice of Application. 22. The Respondenb: deny the allegations In paragraph 70 of the Notice of Application and Stl~tc that th~ figures w¢rc not offered as projections but were examples only. This was made c!enr rn1cforne~th the. c.alcufatioos.
23. The Respondents d1:'11y the flllcgations in paragraph 72 of the Notice of Application and srntc that arnmgemcn!s for operator 11t>rviccs, credit card processing and long distance are made di1'l'.C"llY between the i11ve:,..,ror and !he service providers,
24. The Rcspo11dcn!s deny the alicg,alions in paragraph 73 of the Notice of Application. The Q J1g11re:s nrc not bii.scd upoo a "pn;.sumption" but are given as examples. The Respondents deny 1h e. allt:.•gations in paragn:1ph.~ 74 ittHI 75 of the Notice of Application. With respect to paragraph 75 of the Notice of Applic<liion, the Rc-spondents state that it should have been obvious to investors thftt no revenue wcrnld commence until the payphone was installed. However, for gl'eat,·r clarhy, the pos.t~iujlln~.tion malerial made this clear.
25. The Responck~nts tfony the allegations in paragraphs 77 and 79 of the Notice of 1\pplicatlon and spcclftci'!Hy Mille thal they have no knowledge of the results of interviews carried out by the Buroall. 0 GROIINDS 'l<'()R OPP()8rTION 26. The Rcspm1dents ndmil that earlier pre-injunction promotional material was overly aggrcssivt~ 'llld have. since modi!ldJ it.
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27. The Respondcnti> ~tflto that the business opportunity presented to potential investors is a viabli; one.
28. The Respondents ihrthcr state that the earlier problems encountered by the Respondent, Universal Pa.yphone Systi.~ms Inc. ("Universal") were unanticipated but these problems could have been overcome.
29. The Respondents Slali:: that Universal suffered enormous setbacks following a broadcast c'n CTV in May of 1099, Ft)llowi11g 1his broadcast; which generated unfair negative publicity, enormous time wc1s spent by the employees of Universal attempting to appease worried iov~~stors.
30. A:;: well, the a.1.lv~rs1) flt•bllcily generated by the within application resulted in the refusal of m:wspapers and radio stati()JlS to carry any further ads by Universal even those that had been nwditicd offor the injunction. By the end of October, 1999, Universal was unable to advertise cffC"c1ivcly in any form. 0 3 l. The Respondcm~; n:quc.sl that this proceeding take place in the English JaOh,ruage. DATRD at Toronto, this 28"' day of December, 19;/h/ F. SCOTT S VERT Barrister & Solicitor 15 Be]tield Road
Suite E 0 Rcxdale, Ontario M9W lES T: (416) 243-8756 F: (416) 243r2990
Solicitor for the Respondents
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TO: JOHN SYMR MANON LA.POI NTH Clo Department of Jus1icc
Com1sel to the Commi:;sioner of Competition Pla.1:.c du Portage Phi:ti:;e J 50 Victoria Street Hull, Quebec
KlA OC9
T: (819) 997-3325 F: (819) 953-0267
0 0
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