Archive for May, 2011

Why we can’t trust the Competition Bureau

May 19, 2011

by Jack Locke

There could be hell to pay for suggesting one of Calgary’s top law firms is behind the reason Canadians cannot trust the federal Competition Bureau.

It could also explain why the Competition Bureau has not found the oil and gas industry guilty of collusion or price fixing.

Imagine you are the Commissioner of Canada’s Competition Bureau. Melanie L. Aitken can do so, because she fills that position.

Melanie L. Aitken, Competition Bureau Commissioner, former partner at Bennett Jones.

Ms. Aitken joined the Bureau in 2004 and was appointed the head of the agency on August 4, 2009, for a five-year term. But before she joined government, she was a lawyer in private practice and in 2003 became a partner in the Toronto law office of Bennett Jones, the prestigious Calgary legal services firm.

Bennett Jones’s roster has included such luminaries as former Alberta premier Peter Lougheed and former Supreme Court Justice and Air India inquiry investigator John Major, amongst others.

“From 2003 to 2005, Ms. Aitken was a partner at Bennett Jones LLP, practising commercial and competition litigation,” reads Ms. Aitken’s official government biography.

Bennett Jones is oil and gas power central. They’ve represented Canadian oil giants like Shell Canada and international giants such as the Korea National Oil Company, and have provided legal services to multi-billion dollar oil and gas deals.

“The reputation of Bennett Jones has been built upon the oil industry, and that is especially true of our Calgary office” the Bennett Jones website proclaims. There can be no disputing it.

However, their influence in shifting Canada’s integrity has to be questioned.

Ms. Aitken’s predecessor at the Competition Bureau, Sheridan Scott, stepped down in 2009. After leaving public service, Ms. Scott, joined Bennett Jones to work in their Ottawa office and is now a partner with the firm.

Former Competition Bureau head Sheridan Scott.

Sheridan Scott was Canada’s Commissioner of Competition from 2004 to 2009. She oversaw at least one empirical study(2005) that looked at gasoline prices from production to retail pumps which concluded everything is legal and above board.

But the study’s conclusion was not a true investigation in the criminal sense. It was a white paper that served as a poorly produced defence of gasoline prices.

Calling for an investigation into price-fixing, collusion, abuse of market dominance is what I had called for when I filed a Competition Bureau complaint earlier this week. (see Oil Companies Give Me Gas, Lockeblog, May 17, 2011.)

The reply from the Competition Bureau was far too swift and far too toothless for a body that is composed for the purpose of protecting Canadian citizens and consumers. Their reply was not much different than one I would expect from the offices of Bennett Jones.

“Businesses are generally free to set their own prices, at whatever levels the market will bear. Individual gasoline suppliers taking advantage of tight supply to increase their prices would not raise issues because charging high prices at times of actual or anticipated excess demand, is not contrary to the Act.”

It did not answer the issue in my complaint, but I must admit it was a very good non-answer.

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Competition Bureau lacks drawers

May 19, 2011

by Jack Locke

Here is the Canadian Competition Bureau’s reply to my complaint. It took them less than 24 hours to respond, indicating to me that they mean business, or are in cahoots with business.

Competition Bureau | 50 Victoria Street, Gatineau, Quebec K1A 0C9

http://www.competitionbureau.gc.ca

Our File: R582678

Dear Mr. Locke:

Thank you for the information you provided regarding Gasoline prices

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace. The Bureau is responsible for the administration and enforcement of the Competition Act, which includes provisions against price fixing, price maintenance and abusive behaviour by a dominant firm resulting in a lessening of competition. The Act applies to gasoline and other petroleum products markets.

The Bureau has the power to deal with illegal behaviour affecting competition and it takes its responsibilities seriously. The Bureau has examined the petroleum industry over the years and, when warranted by the evidence, has taken enforcement action. Where Bureau investigators secure sufficient evidence of an offence, the Commissioner will not hesitate to refer the case to the Director of Public Prosecutions for prosecution.

Businesses are generally free to set their own prices, at whatever levels the market will bear. Individual gasoline suppliers taking advantage of tight supply to increase their prices would not raise issues because charging high prices at times of actual or anticipated excess demand, is not contrary to the Act. However, when there is evidence that high prices are the result of anti-competitive conduct subject to the Act, the Bureau will investigate and take appropriate action.

Over time, prices tend to reflect costs, and so gasoline prices tend to follow changes in crude oil prices. However, other factors can also affect gasoline prices, including local market conditions, shortages of refined gasoline, and uncertainty about the adequacy of future supplies which can add a risk premium to prices.

Should you have specific information indicating that gasoline prices in your area are the result of an agreement among competitors, or some other type of anti-competitive behaviour, I encourage you to forward that information to the Bureau.

It should be noted that the federal government does not control the price of most goods and services sold in Canada, including gasoline. Except in the event of a national emergency, only the provinces have the authority to regulate gasoline prices.

You may also want to visit the Bureau’s web site, at http://www.competitionbureau.gc.ca, for further information on the Bureau’s activities relating to gasoline. For general information on fuel prices, oil and gasoline markets and ways to manage energy costs, please visit Natural Resources Canada’s Fuel Focus at http://www.fuelfocus.nrcan.gc.ca

We invite you to visit our Web site, http://www.competitionbureau.gc.ca, to learn more about the work of the Competition Bureau and to access public information on case developments and general information about our programs and activities.

Thank you again for taking the time to bring this matter to our attention.

Jennifer Dunn

Competition Bureau Information Officer

1-800-348-5358 | facsimile 819-997-0324 | ATS/TTY 1-800-642-3844
http://www.competitionbureau.gc.ca

Oil companies give me gas

May 17, 2011

by Jack Locke

Dear Michael Ignatieff,

I have taken your advice and I am Rising Up! I filed my complaint today over what I perceive to be abusive and unlawful gas pump price fixing. If you care to join me in rising up, you can follow the link below and file a complaint.

When federal, provincial, and municipal governments siphon off 25 – 35 percent of the price of a litre of gasoline in taxes, they have a disincentive to keep its price down. And no desire to protect consumers from rapacious oil giants.

In 2005, Canada’s Competition Bureau conducted an empirical study to test whether the large gasoline price increases observed in the spring and summer of 2004 were the results of anti-competitive acts.

“…there is no unusual pricing behaviour in the Canadian gasoline industry that would support a claim of anti-competitive behaviour,” the bureau concluded.

Here’s how they came to that conclusion:

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In case you are wondering, “D” stands for dummy. I joke not.
Shell Canada Limited explains the appearance of collusion as merely a well-functioning free market on their website.

“We take this matter very seriously and Shell complies with all federal competition laws. The explanation is simple. At Shell, we are competitive on price at the local level, so what may look like unlawful collusion from a consumer perspective is really a highly competitive market working well,” explains Shell.

I beg to differ, and I have filed a complaint with the competition bureau. Michael, if you or anyone you know would like to file a complaint also, please join me. You can do so online at:

http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/frm-eng/GH%C3%89T-7TDNA5
If you wish to read my complaint, please read on…. (more…)