Case Report – Competition regulator’s production order set aside

The Globe and Mail’s Law Page from this morning covers a January 31 decision of the Federal Court in which Madam Justice McTavish set aside a production order obtained by the Commissioner of Competition. She held the Commissioner, who obtained the order under section 11 of the Competition Act by way of an ex parte application, did not make a full and frank disclosure of material facts and made statements that bordered on misrepresentations.

There were three specific bases for McTavish J.’s decision. First, she held that the Commissioner ought to have disclosed a statement it had made in a previous section 11 application that the order obtained on that application would likely be sufficient for its inquiry-related purposes. Second, she held that the Commissioner provided “misleading, inaccurate and incomplete” information on the extent of the overlap between the information it sought and information it already had. Third, she held that the Commissioner ought to have drawn the concerns brought to her attention by the respondent earlier in the year in response to a previous and similarly-broad production order in the same inquiry. Most notably, the respondent had complained that the previous order was so burdensome that its process of retrieving documents had caused its file server to crash and likely involved data restoration costs exceeding $500,000.

The decision stresses the strict burden of disclosure on parties seeking ex parte orders for production, whether in the regulatory or civil context. The part about disclosing expressed concerns about the burden of retrieving electronic documents may apply in a limited number of situations because an ex parte process often starts the course of inquiry or investigation, but it is nonetheless significant given the broader challenges associated with managing the retrieval and production of electronic documents.

The Globe also has commentary by Davies Ward lawyers John Bodrug and Anita Banicevic, linked here. This is part of a recent run of cases on transgressions by regulators related to the seizure of documents. See, for example, my coverage of the Nova Scotia Appeal’s recent decision on a Canada Revenue Agency search here and the Ontario Superior Court of Justice’s December 2007 decision on a Ministry of Labour search here. (Full reasons are still pending in the latter case.)

The Commissioner of Competition v. Labatt Brewing Company Limited, 2008 FC 59.

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