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Domtar requires its directors, officers and employees to abide by the laws, rules and regulations and in particular the antitrust laws for each jurisdiction in which Domtar conducts business. Particular emphasis is being placed in the area of antitrust laws due to their complexity, as well as the serious consequences resulting from their violation.

To this end, the Domtar Law Department has prepared an Antitrust Compliance Program which is comprised of the following:

  • Antitrust Policy
  • Antitrust E-training Module
  • Antitrust Awareness Seminars
  • Canadian Competition Law Compliance Guide
  • European Union (“EU”) Competition Law Compliance Guide
  • U.S. Antitrust Law Compliance Guide
  • North American Antitrust Law Compliance Quick Reference Guide
  • Antitrust Directives
  • Competitor Contacts Guidelines and Procedures

Every director, officer and employee will be required to become familiar with the Antitrust Compliance Program documents and the Record Retention Policy. In addition, certain officers and employees will be required to take on an annual basis the Antitrust E-training module and attend the Antitrust Awareness Seminars.

The Antitrust Compliance Program may be subject to periodic audits from time to time to ensure compliance with the program. Naturally, everyone will be expected to co-operate fully in any such audits.

Antitrust compliance guide

I. Introduction

The United States antitrust laws, the Canadian Competition Act and the EU competition laws have been enacted to ensure that free market dynamics dictate the availability of goods to the consuming public.

In the United States, antitrust laws were enacted for the following main purposes:

  • To prevent agreements or understandings between competitors that are likely to injure competition;
  • To prevent agreements or understandings between customers and suppliers that are likely to injure competition;
  • To prevent mergers, acquisitions or joint ventures where the transaction is likely to injure competition; and
  • To prevent certain kinds of unilateral actions by a company that are likely to injure competition.

The purpose of the Competition Act in Canada is to maintain and encourage competition, to promote efficiency, expand Canadian opportunities in world markets, recognize the role of foreign competition in Canada, ensure that small and medium-sized enterprises have equitable opportunity and to provide consumers with competitive prices and product choices. Article 101 of the Treaty on the Functioning of the EU prohibits agreements and other forms of cooperation between businesses which prevent, restrict or distort competition in the EU.

The penalties for contravening antitrust laws are very severe. They include heavy fines, jail and damage awards, including treble damages in the United States, and, in the case of serious infringements in the EU, fines that can be imposed on companies of up to 10 per cent of the company’s global group turnover. In addition, an investigation for alleged contravention of antitrust laws will cause hardship on Domtar in terms of time and money. It is imperative that Domtar be diligent in its compliance with antitrust laws.

 

II. Summary of United States Antitrust Laws

2.1 Sherman Act of 1890

  • Prohibits contracts, combinations or conspiracies in restraint of trade or commerce (SectionOne)
  • Prohibits monopolization or attempts to monopolize (Section Two)

 2.2 Clayton Act of 1914

  • Prohibits certain exclusive dealing and tying arrangements (Section Three)
  • Prohibits certain mergers and acquisitions (Section Seven)
  • Regulates serving on the Board of Directors or as an officer of two or more competing companies simultaneously (Section Eight)

 2.3 Robinson – Patman Act of 1936

  • An amendment to the Clayton Act (Section Two)
  • Prohibits sellers from discriminating in price and promotional allowances between competing customers
  • Prohibits buyers from inducing discriminatory prices and promotional allowances

 2.4 Federal Trade Commission Act of 1914

  • Prohibits unfair methods of competition and deceptive practices including activities which violate the Antitrust Laws as well as the spirit of such laws (Section Five)

 2.5 State Antitrust Laws

  • Most states have antitrust laws for anti-competitive activities within the state. These laws are typically modeled on federal antitrust laws.

 

III. Summary of the Competition Act of Canada

The Antitrust Laws of Canada are contained in a single Act, the Competition Act of 1985.

Originally, Canadian Antitrust Laws were enacted as criminal laws in 1889 and were part of the Criminal Code. There were a number of acts enacted, including the Combines Investigation Act of 1923, to give powers to the authorities to investigate and punish offenders. The Combines Investigation Act was primarily a criminal law which required proof “beyond a reasonable doubt” in order to obtain a guilty verdict. Such a burden of proof made enforcement of the Act difficult.

In 1985, the Competition Act was enacted which separated anti-competitive practices between those that were criminal in nature and those that could be referred to a Tribunal for a ruling, thus lessening the burden of proof to the level of a civil court. Only if a tribunal made a ruling and the offender disobeyed the order would it be considered an illegal act. The principal Canadian antitrust laws and processes for enforcement of these laws were amended in 2009 and included sweeping changes to most aspects of the relevant laws and enforcement of them by the Canadian Competition Bureau and the courts.

The Canadian laws cover activities very similar to those covered in the United States. These include criminal laws relating to price fixing, bid-rigging, and allocation schemes. Price discrimination, predatory pricing and resale price maintenance were recently decriminalized, but severe sanctions and liability, including damages, may still be imposed. On the civil side, the Competition Act covers mergers, abuses of dominance, refusals to deal, tied selling, exclusive dealing and certain types of market restrictions.

 

IV. The Basic Rules in Europe

The EU competition rules apply to any conduct which has an impact or effect within the EU. Businesses based outside the EU can also be subject to these rules; a business’s nationality or place of incorporation is not relevant for these purposes.

The basic provisions of EU competition law are contained in the Treaty on the Functioning of the EU. The Treaty has been signed and ratified by all 27 current Member States of the EU and applies across the EU to all industries.

Under EU competition law, “undertakings” (that is, businesses) are prohibited from:

(a) entering into agreements or arrangements that prevent, restrict or distort competition within the EU; or

(b) engaging in abusive behaviour when they enjoy a dominant market position.

In each Member State of the EU there are national competition laws that broadly mirror these EU rules. The national competition laws of the EU Member States are very similar to the EU competition rules, but apply when the anti-competitive conduct has a purely local effect within the territory of the relevant EU Member State; by contrast EU competition law applies when there is some cross-border element within the EU.

 

V. Rest of the World

Finally, Domtar also conducts a business outside the above jurisdictions. In all countries where Domtar is or will transact business, there are similar antitrust or competition laws that must be followed without exception. For the most part, the laws will be the same or similar in every country, although the procedures and processes for enforcing them may differ. Domtar employees are expected to well understand these core antitrust and competition compliance concepts and to seek Domtar Legal Department guidance whenever there is any doubt as to the correct course of action.

 

Updated : Dec. 2012

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