Federal Court Decisions

     T-702-97

     T-743-97

     T-746-97

     T-750-97

    

BETWEEN:

     NORTH AMERICAN VAN LINES CANADA LTD.

     Applicant

     - and -

     DIRECTOR OF INVESTIGATION AND RESEARCH,

     COMPETITION ACT and RICHARD A. WAGNER

     Respondents

     REASONS FOR ORDER

RICHARD J.:

Nature of Proceedings

    

     The applicant seeks an order quashing and setting aside the order of Richard A. Wagner made April 7, 1997, in his capacity as a Presiding Officer at examinations ordered pursuant to subsection 11(1) of the Competition Act¹ (the "Act"). The order provides that the persons being inquired into, being North American, United Van Lines (Canada) Ltd., Allied Van Lines Limited and Atlas Van Lines (Canada) Ltd., and their counsel, are not entitled to attend at the examination of any person in these examinations except at the time of their own individual examinations.

     The other Van Lines have made a similar application in respect of Presiding Officer's order concerning them.

     On April 28, 1992, Mr. Justice MacKay made an order, on consent, that the applications in Court files T-702-97, T-743-97, T-746-97 and T-750-97, be heard at the same time, on Monday, June 23, 1997. At the same time, Mr. Justice MacKay granted the Van Lines an interim stay pending final determination of the application for judicial review. Accordingly, these reasons also apply to Court files T-743-97, T-746-97 and T-750-97.

Background Proceedings

     On May 14, 1996, the Director of Investigation and Research (the Director) commenced an inquiry pursuant to paragraph 10(1)(b) of the Act.

     The parties whose conduct the Director was inquiring into were North American, Atlas Van Lines (Canada) Ltd., Allied Van Lines Limited and United Van Lines (Canada) Ltd. They are collectively designated as the Van Lines.

     On July 22, 1996, the Director applied ex parte and obtained an order from this Court requiring the Van Lines to produce records pursuant to paragraph 11(1)(b) of the Act and to make a written return of information under oath or solemn affirmation pursuant to paragraph 11(1)(c).

     On March 7, 1997, Mr. Justice Pinard made thirty orders upon the ex parte application of the Director. These orders required the persons named therein to attend at a time and place designated to be examined in the inquiry and, in some cases, required those persons to produce certain records. The orders also appointed Richard A. Wagner as Presiding Officer.

     At the commencement of proceedings in Ottawa on Monday, April 7, 1997, counsel for the Director brought a motion seeking to exclude the parties whose conduct was being inquired into and their counsel.

     After submissions were heard by the Presiding Officer from counsel for the Director and counsel for the Van Lines and counsel acting for two individuals, the Presiding Officer went into an in camera session and adjourned the proceedings for that purpose.

     The transcript records the following statement made by the Presiding Officer:

Given the issue of confidentiality, I think it is appropriate that before I give my decision on this matter that I perhaps have an in camera session with the Director to determine the nature of the confidential information. Given the submissions that have been made and in order to make a proper determination on the issue of confidentiality, I would suspect that the Director could not in an affidavit put in the confidential information given the position he has taken.

So I would like now to perhaps break for ten minutes, come back in a confidential session with the Director's counsel and the members of the Bureau only to hear the nature and extent of the confidential information that they are saying is at issue here.

So we will adjourn for ten minutes and I will be back with Mr. Sutton and the Competition Bureau.

Thank you.

     During that in camera session, the Presiding Officer met with counsel for the Director and an employee from the Director's office, Mr. Grant, and received evidence and submissions. In addition, the Presiding Officer invited a complainant witness, Mr. Baird, to join the in camera session at which time Mr. Baird apparently also provided evidence.

     The Presiding Officer concluded that the presence of the Van Lines at any examination, other than their own, would be prejudicial to the effective conduct of the examination and, in the case of complainant witnesses, prejudicial to the inquiry also, and would result in the disclosure of confidential commercial information relating to the business of the person being examined or his employer. Accordingly, an order was made under subsection 14(2) of the Act pursuant to paragraphs 12(4)(a) and (b) of the Act.

     None of the parties present at the commencement of the examinations objected to the decision by the Presiding Officer to conduct an in camera session with the Director to discuss confidential matters.

     None of the parties present at the commencement of the examinations waived or offered to waive the confidentiality of their own information. None of the parties present advised the Presiding Officer that counsel was authorized by the client to withhold from the client confidential information that may come to the attention of counsel in the event that they had been successful in arguing that they should remain in the room even if their clients were excluded.

     The only evidence of prejudice said by the applicants to be caused by their exclusion from the hearings is the conclusory statement found in John Skinner's affidavit on behalf of North American Van Lines. Mr. Skinner states out that he has been informed that criminal charges could result from the hearings and concludes that "both the company and myself will have been fundamentally prejudiced in a manner not capable of being compensated by an award of money."

Statutory Provisions

10. (1) The Director shall

     . . .

(b) whenever he believes on reasonable grounds that

(i) a person has contravened or failed to comply with an order made pursuant to section 32, 33, or 34, or Part VIII,

     . . .

cause an inquiry to be made into all such matters as he considers necessary to inquire into with the view of determining the facts.

     . . .

(3) All inquiries under this section shall be conducted in private.

     . . .

11.(1) Where, on the ex parte application of the Director or the authorized representative of the Director, a judge of a superior or county court or of the Federal Court is satisfied by information on oath or solemn affirmation that an inquiry is being made under section 10 and that any person has or is likely to have information that is relevant to the inquiry, the judge may order that person to

(a) attend as specified in the order and be examined on oath or solemn affirmation by the Director or the authorized representative of the Director on any matter that is relevant to the inquiry before a person, in this section and sections 12 to 14 referred to as a "presiding officer", designated in the order;

     . . .

(3) No person shall be excused from complying with an order under subsection (1) or (2) on the ground that the testimony, record or other thing or return required of the person may tend to criminate the person or subject him to any proceeding or penalty, but no testimony given by an individual pursuant to an order made under paragraph (1)(a), or return made by an individual pursuant to an order made under paragraph (1)(c), shall be used or received against that individual in any criminal proceedings thereafter instituted against him, other than a prosecution under section 132 or 136 of the Criminal Code.

12.(1) Any person summoned to attend pursuant to paragraph 11(1)(a) is competent and may be compelled to give evidence.

     . . .

(3) A presiding officer shall permit a person who is being examined pursuant to an order under paragraph 11(1)(a) and any person whose conduct is being inquired into to be represented by counsel.

(4) Any person whose conduct is being inquired into at an examination pursuant to an order under paragraph 11(1)(a) and that person's counsel are entitled to attend the examination unless the Director or the authorized representative of the Director, or the person being examined or his employer, establishes to the satisfaction of the presiding officer that the presence of the person whose conduct is being inquired into would

(a) be prejudicial to the effective conduct of the examination or the inquiry; or

(b) result in the disclosure of confidential commercial information that relates to the business of the person being examined or his employer.

13.(1) Any person may be designated as a presiding officer who is a barrister or advocate of at least ten years standing at the bar of a province or who has been a barrister or advocate at the bar of a province for at least ten years.

     . . .

14.(1) The presiding officer may administer oaths and take and receive solemn affirmations for the purposes of examinations pursuant to paragraph 11(1)(a).

(2) A presiding officer may make such orders as he considers to be proper for the conduct of an examination pursuant to paragraph 11(1)(a).

(3) A judge of a superior or county court or of the Federal Court may, on application by a presiding officer, order any person to comply with any order made by the presiding officer under subsection (2).

...

29.(1) No person who performs or has performed duties or functions in the administration or enforcement of this Act shall communicate or allow to be communicated to any other person except to a Canadian law enforcement agency or for the purposes of the administration or enforcement of this Act

(a) the identity of any person from whom information was obtained pursuant to this Act;

(b) any information obtained pursuant to section 11, 15, 16 or 114;

     . . .

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Presiding Officer's Order

     After hearing submissions on the motion brought by counsel for the Director at the commencement of the examination on April 7, 1997, for an order that the persons whose conduct is being inquired into, namely the Van Lines, be excluded from the examinations, the Presiding Officer made the following order.

UPON motion made by Counsel for the Director of Investigation and Research (the "Director");

AND UPON hearing the submissions of counsel for the Director and counsel for North American Van Lines, United Van Lines, Tim Moore, Allied Van Lines and Atlas Van Lines;

AND UPON hearing in camera from counsel for the Director and from a complainant witness, Mr. Baird, regarding the nature and scope of the confidential information which will be dealt with in this examination;

AND UPON being satisfied that the presence of the persons whose conduct is being inquired into would be prejudicial to the effective conduct of the examination and the inquiry and that their presence would also result in the disclosure of commercial information that relates to persons being examined;

IT IS ORDERED pursuant to subsection 14(2) of the Act that:

The motion be allowed and that the persons being inquired into, being North American Van Lines, United Van Lines, Allied Van Lines and Atlas Van Lines, and their counsel, are hereby not entitled to attend at the examination of any person in this examination, except at the time of their own individual examination, if any.

Reasons to follow.

     After hearing from all counsel present, the Presiding Officer adjourned the examination to allow any of the Van Lines to apply to the Court for a stay.

---

Reasons for the Order

     On April 9, 1997, the Presiding Officer delivered written reasons. The reasons read in part as follows:

     ISSUES

The various submissions made by counsel for the parties in relation to the motion by counsel for the Director raise two basic categories of issues. The first is the proper interpretation of the relevant provisions of the Act, particularly subsection 12(4). The second is whether, having properly interpreted the Act, a sufficient basis exists for exercising my discretion to exclude persons from the examination. I will deal with each category of issues in turn.

     INTERPRETATION OF ACT

     . . .

Counsel for North American, supported by counsel for the other Van Lines and counsel for Mr. Moore, argued that, inter alia, subsection 12(4) grants a presiding officer only the discretion to exclude the person being inquired into, not their counsel. This was because the first part of subsection 12(4) refers to "Any person whose conduct is being inquired into ... and that person's counsel", while the latter part of subsection 12(4) refers only to "the presence of the person whose conduct is being inquired into".

     . . .

Subsection 12(4) grants to an Inquiree the right to attend at the examination, subject to exclusion by the presiding officer. The reference to the Inquiree's counsel in the first part of subsection 12(4) is, in my view, to be interpreted as only clarifying that the Inquiree may also have counsel present. Without the words "and that person's counsel", there would be a question as to whether the statutory right to be present granted to the Inquiree also included the Inquiree's counsel. The wording eliminates the possibility of the question arising.

     . . .

For the reasons set out above, it is my view that a proper interpretation of subsection 12(4) is that the entitlement of an Inquiree and the Inquiree's counsel is one and the same and if the Inquiree is excluded, so too is the Inquiree's counsel.

     . . .

An exclusion order under subsection 12(4) does not in any way conflict with or override the right to counsel granted in subsection 12(3). The Inquiree continues to have the right to be represented by counsel. The only "right" interfered with is the right granted by subsection 12(4) to the Inquiree and the Inquiree's counsel to attend the examination, not the right to counsel under subsection 12(3).

     Conclusion Regarding Interpretation of Act

On the basis of all the above, it is my view that the Act does not create any right to the presence of an Inquiree's counsel to attend an examination if the Inquiree is excluded from attendance by order of a presiding officer under subsection 12(4) of the Act. As a result, if a presiding officer orders that an Inquiree be excluded from an examination, the Inquiree's counsel is consequently excluded.6 (6I acknowledge that in some cases, the Director and the Inquiree's counsel might wish to work out an arrangement whereby the Inquiree's counsel is permitted to remain under a confidentiality undertaking. That is not the case here and I make no finding in regard to the appropriateness or legality of such arrangements.)

     . . .

     EXERCISE OF DISCRETION

There was no real dispute between the parties that the onus of proof was on the Director or the person being examined or that person's employer to establish that the criteria for an exclusion order set out in 12(4)(a) and (b) were met.

     . . .

In my view, the proper standard to be applied is the civil standard of a balance of probabilities.

     . . .

In the present case, counsel for the Director submitted that the Van Lines (who are the Inquirees in this matter) could be excluded on the basis of each of paragraphs 12(4)(a) and (b). Mr. Sutton's submissions were with respect to all of the examinations. The wording of subsection 12(4), however, speaks in the singular of "an examination" of "the person" who is subject to a paragraph 11(1)(a) order. In this case, 30 such orders were issued by Mr. Justice Pinard. Although I do not think anything turns on it, and no one raised any issue, I took Mr. Sutton's submissions to apply to each examination of a person other than the examination of a person representing a Van Line when that person and the person's counsel must, of course, be present. My Order likewise applies to each of the 30 examinations in issue.

In support of his submissions, counsel for the Director referred to various matters including the evidence set out in the Information of Mr. John Grant sworn on February 27, 1997 and the Affidavit of the same Mr. Grant sworn on April 4, 1997. His main submission in regard to paragraph 12(4)(a) was that the presence of the Van Lines would be "prejudicial to the effective conduct of the examination" because the witnesses, at least the complainant and carrier witnesses, fear they will be sanctioned by the Van Lines and therefore would not be forthcoming in their answers to questions. Mr. Sutton's main submission in regard to paragraph 12(4)(b) was that the presence of the Van Lines would result in the disclosure of confidential commercial information relating to the persons being examined or their employer.

Counsel for each of the Van Lines and counsel for Mr. Moore argued that the evidence provided was weak and the Director had failed to "establish" that the criteria for exclusion in paragraphs 12(4)(a) and (b) had been met.

I was concerned with the adequacy of the evidence of prejudice and how confidential the areas of examination would actually be. As a result, and in order to not breach any confidences, I proceeded into a confidential in camera session with Counsel for the Director and the Director's informant and staff member, Mr. Grant. After hearing from them, I asked Mr. Baird to join the in camera session. Mr. Baird is a complainant witness and is the first person who will be examined in this matter. After providing certain information, I asked Mr. Baird to leave the in camera session and I continued with Mr. Sutton and Mr. Grant.

Although I cannot reveal the details of what was disclosed to me in camera, I can summarize by saying that Mr. Sutton and Mr. Grant provided me with additional information regarding the persons involved in this matter, the nature of the inquiry and the questions which will be asked of the various categories of witnesses. Mr. Baird provided information concerning the information he would be disclosing and his concerns regarding having the Van Lines present during his examination.

     There are four categories of persons to be examined in this matter, as follows:

1.      Complainants, being persons who have brought the subject matter of the inquiry to the attention of the Director;

2.      Civil servants, who were involved in the granting of the federal government moving contracts which are in issue in this inquiry;

3.      Carriers, who are hired by Van Lines to move goods; and

4.      Van Lines.

I will deal with each category in turn.

Complainant Witnesses

In regard to complainant witnesses, I am satisfied that the requirement of paragraph 12(4)(b) is met in that such witnesses will be disclosing information regarding their business and dealings with various carriers, Van Lines, government officials and the like. This information is commercially confidential to the complainants and even if some part of such information might be within the knowledge of one Van Line and therefore not confidential to that Van Line, it would not be within the knowledge of the others. I am also satisfied that the examinations cannot be segregated into confidential and non-confidential segments or into segments allowing one Van Line to be present but not another, given the mixing of various kinds of confidential commercial information.

I am also satisfied that the requirement of paragraph 12(4)(a) is met. Complainant witnesses are similar to informants in a criminal case and it is patently obvious that someone who is providing information regarding alleged improper behaviour by another will be less forthcoming than might otherwise be the case if the person is speaking with the other person in the room. This is prejudicial to the effective conduct of the examination. I also find it is prejudicial to the inquiry which, absent the free and open information of a complainant, might be thwarted due to lack of evidence from witnesses.

Civil Servants

Civil servants will be primarily dealing with commercially confidential information, including how the objectives of requests for proposal are arrived at, how they are structured, how each Van Line's bid was analyzed, evaluated and compared to that of other Van Lines, what the civil servants know about carriers and their commercial relations with them. Accordingly, I am satisfied that the criterion of paragraph 12(4)(b) has been established and that the examination cannot be segmented into confidential and non-confidential segments.

I am also satisfied that the requirement of paragraph 12(4)(a) is met. Civil servants will most likely be less forthcoming if the Van Lines are present and also because they will be concerned about disclosing government information which is confidential or secret. This is prejudicial to the effective conduct of the examination.

     Carriers

Witnesses from carriers will provide information concerning their business, their dealings with the various Van Lines, civil servants and others. I am satisfied that this information is commercially sensitive and meets the requirement of paragraph 12(4)(b) and that segmentation of the examination into confidential and non-confidential segment is not practicable.

I am also satisfied that the requirement of paragraph 12(4)(a) is met. Carriers will most likely be less forthcoming if the Van Lines are present, given that Van Lines are an important source of work and that carriers would not want to disclose their business plans regarding Van Lines. This is prejudicial to the effective conduct of the examination.

     Van Lines

The witnesses from the Van Lines, if they are examined, will be disclosing confidential commercial information concerning their business, including strategies, pricing, arrangement with carriers and the like. I am satisfied that this meet[s] the requirement of paragraph 12(4)(b) and that no segmentation is possible.

    

As to prejudice, it appears obvious that a Van Line employee would not be forthcoming with the information if the competitors of the Van Line would be in the room. This would be prejudicial to the effective conduct of the examination under paragraph 12(4)(a).

     Conclusion

On the basis of all of the foregoing, I concluded that the Director established to my satisfaction that the presence of the Van Lines at any examination, other than their own, would be prejudicial to the effective conduct of the examination and would result in the disclosure of confidential commercial information relating to the business of the person being examined or his employer. Accordingly, I made the Order set out above regarding subsection 12(4) pursuant to subsection 14(2) of the Act.

Issues

     Collectively, the applicant Van Lines raise the following issues:

1)      the interpretation of subsection 12(4);

2)      the sufficiency of the evidence; and,

3)      the in camera hearing.

Affidavit Material

     Three affidavits were before the Presiding Officer.

First Affidavit

     Although not specifically referred to in the Presiding Officer's reasons, the affidavit of John Grant, a commerce officer at the Competition Bureau, responsible for the inquiry into the conduct or activities of the Van Lines, sworn on July 22, 1996, was placed before the Presiding Officer by counsel for one of the applicants during the course of his submissions on the Director's motion to exclude parties. It reads in part as follows:

I have been a Commerce Officer engaged in the investigation of inquiries under the Act and its predecessor legislation for over fifteen years. In that regard I have undertaken training in investigative techniques, conducted, participated in and led inquiries under the Act, made and filed information in support of requests for court orders for the exercise of formal powers of investigation under the Act.

On May 14, 1996, the Director commenced an Inquiry pursuant to subsection 10(1)(b) of the Act into the conduct of Allied Van Lines Limited, North American Van Lines Canada Ltd. and Atlas Van Lines (Canada) Ltd. On June 25, 2996, the Director extended the Inquiry to include United Van Lines (Canada) Ltd. I am an officer assigned to this Inquiry and as such have knowledge of the matters herein referred to.

This Inquiry concerns conduct by the four major van lines doing business in Canada: Allied Van Lines Limited ["Allied"], North American Van Lines Canada Ltd. ["North American"], United Van Lines (Canada) Ltd. ["United"] and Atlas Van Lines (Canada) Ltd. ["Atlas"], [collectively, the "Van Lines"] which is contrary to section 34 of the Competition Act in that Allied, Atlas and North American are alleged to have individually and/or by agreement between them breached paragraphs 2, 4 (b) and 5 (b), (c), (g) and (h) and with respect to United, to have breached paragraph 2 of the 1983 Prohibition Order made pursuant to sections 30(1) and 31(1) of the Combines Investigation Act (now section 34 of the Competition Act).

The following discrete breaches of the Order are under investigation in the said Inquiry:

a) Atlas' activities in interfering with the ability of a competitor, CAMS, to perform its moves of client property contrary to s. 5(b) (c) and (g) of the Order;

b) Atlas and Allied's activities in interfering with the ability of a competitor, Canadian National Intermodal Services ("CNIMS"), to perform its moves of client property contrary to s. (b) (c) and (g) of the Order;

c) Allied and North American's activities in entering into market sharing agreements which restrict the ability of affiliated carriers to provide moving services contrary to s. 4 (h) and 5 (h) of the Order;

d) Allied, Atlas, United and North American's activities in entering into market sharing agreements with each other in remote locations and their refusal to enter into such agreements with CNIMS which restricted the ability of CNIMS to provide moving services contrary to s. 4 (h) and 5 (h) of the Order;

e) Allied, Atlas, United and North American's activities in entering into agreements with carriers which restricts the ability of carriers to perform moving services contrary to s. 5 (h) of the Order;

f) The Van Lines' conduct in agreeing amongst themselves to lessen competition unduly in the provision of moving services from the Province of Newfoundland to the rest of Canada contrary to s. 2 of the Order.

g) Atlas and North American's conduct in agreeing to certain tariff pricing for household moves between the two companies contrary to s. 2 of the Order;

h) The Van Lines have adopted similar rates and discount policies regarding household moves across the United States/Canadian border, contrary to s. 2 of the Order.

The above breaches referred to in paragraphs a) to e) in particular, relate to conduct arising out of the performance of moves for or on behalf of the Federal Government, and Requests for Proposals for such moves in the years 1995-1997 representing moves of a value of approximately $90 million and 15,000 such moves per annum.

     This affidavit was made in support of the Director's ex parte application for the production of documents pursuant to paragraph 11(1)(b) of the Act In his affidavit, Mr. Grant identifies the parties from whom information is sought:

         1.      North American Van Lines Canada Ltd.

2.      Allied Van Lines Limited

3.      Atlas Van Lines (Canada) Ltd.

4.      United Van Lines (Canada) Ltd.

5.      Canadian National Intermodal Services

6.      The Office of the Interdepartmental Committee on Household Goods Removal

         7.      Public Works and Government Services Canada

     Mr. Grant goes on to say that the records sought from these parties will afford evidence relevant to the Inquiry in that they relate to Requests for Proposals for the provision of household goods moving services to the Federal Government and/or business activities in which one or more of the parties named above, were engaged during the time period of November 1, 1994, to the present. In addition, the records sought relate to the provisions of section 34(2) and (6) of the Act in that these records will show that North American, United, Atlas and Allied have individually and/or by agreement between them breached one or more of paragraphs 2, 4 (h) and 5 (b), (c), (g) and (h) of the 1983 Prohibition Order made pursuant to sections 30(1) and 31(1) of the Combines Investigation Act (section 34 of the Competition Act).

     Attached to the affidavit as an exhibit "A" is a copy of the order of Mr. Justice Evans which provides in part as follows:

AND THIS COURT DOES further prohibit the doing of any act or thing by each of the accused and each and every one of their directors, officers, agents, employees and carriers directed towards the continuation or repetition of the said offence.

     . . .

AND THIS COURT DOES, subject to the terms of paragraphs numbered 6 and 7 of this Order, further specifically prohibit each of the accused and each and every one of their directors, officers, agents, employees and carriers either, directly, or by using any industry association, or by other means from:

     . . .

(b)      taking any disciplinary action, including but not limited to, cancellation or suspension of any franchise or contract, against any carrier on account of any rate adopted or product offered by such carrier;

(c)      taking any discriminatory action relating to the coordination of van utilization against any carrier on account of any rate adopted or product offered by such carrier.

     . . .

(g)      preventing a carrier from using equipment bearing its van line's name(s), trade name(s) or trade marks(s) to effect a movement of household goods at a rate lower than that stated by its van line or to provide a product different from that defined by its van line as long as such different product meets minimum standards of quality or performance defined by its van line; or

(h)      entering into any contract or agreement that restricts any carrier from adopting any rate or offering any product different from those stated or defined by its van line.

     Attached as exhibits "B" to "G" to his affidavit are Appendixes which set out for each of the parties a detailed statement of the records being requested from each of them.

Second Affidavit

     In an affidavit sworn on February 27, 1997, in support of an application by the Director for the attendance of certain persons, for the production of documents and for the designation of a Presiding Officer, the same John Grant, attested to the following:

On May 14, 1996, the Director initiated an inquiry, pursuant to section 10(1)(b)(i) of the Act into conduct of Allied Van Lines Limited, North American Van Lines Canada Ltd. and Atlas Van Lines (Canada) Ltd. On June 25, 1996, the Director extended the inquiry to include United Van Lines (Canada) Ltd. (I am an officer assigned to this inquiry and as such have knowledge of the matters referred to in this information).

This inquiry concerns conduct by the four major van lines doing business in Canada: Allied Van Lines Limited ["Allied"], North American Van Lines Canada Ltd. ["North American"], United Van Lines (Canada) Ltd. ["United"] and Atlas Van Lines (Canada) Ltd. ["Atlas"], [collectively, the Van Lines] which is alleged to be contrary to section 34 of the Competition Act in that Allied, Atlas and North American are alleged to have individually and/or by agreement between them breached paragraphs 2, 4 (h) and 5 (b), (c), (g) and (h) and with respect to United, to have breached paragraph 2 of the 1983 Prohibition Order made pursuant to sections 30(1) and (31(1) of the Combines Investigation Act (now section 34 of the Competition Act).

The Prohibition Order [the "Order"] was made, against the Van Lines and others, on December 14, 1983, by the Honourable G. T. Evans, Chief Justice of the High Court, in the Supreme Court of Ontario, and is attached to this Information as Exhibit "A". The Order was made pursuant to the provisions of sections 30(1) and 31(1) of the Combines Investigation Act (now section 34 of the Act) at the time of conviction of the respondents to that Prohibition Order for the office of agreeing to lessen competition unduly through price fixing arrangements contrary to the provisions of section 32(1) of the Combines Investigation Act (now section 45(1)(c) of the Act). Although some aspects of the Prohibition Order were time limited, those parts of the Prohibition Order relevant to this inquiry are not time limited.

Each year the Federal Government issues a Request for Proposal ["RFP"] for the provision of household goods moving services. The RFP is similar to a tender and bid process in that a tender asks for the submission of bids and the RFP requests the submission of proposals. The terms and conditions of the RFP are determined by the Interdepartmental Committee on Household Goods Removal ["IDC"]. The IDC is composed of representatives from several Federal Government departments, namely, National Defence, Royal Canadian Mounted Police, Public Works and Government Services Canada. The Chairman of the IDC has been a senior officer from National Defence. The REF for the fiscal year 1996-97 was issued by Public Works and Government Services Canada ["PWGSC"] in consultation with the IDC.

On June 25, 1996, the Director authorized an application for the production of records and the making and delivering of written returns for information relating to the alleged violations.

On July 26, 1996, orders for the production of certain records and for the making and delivering of written returns were issued by the Honourable Mr. Justice Denault in the Federal Court of Canada, Trial Division, at Ottawa, Ontario, pursuant to section 11(1)(b) and 11(1)(c) of the Act. Between July 29th and 30th, 1996, orders were served on the following parties: North American Van Lines Canada Ltd.; Allied Van Lines Limited; Atlas Van Lines (Canada) Ltd.; and United Van Lines (Canada) Ltd. and Canadian National Railway Company.

On July 26, 1996, orders for the production of certain records were also issued by the Honourable Mr. Justice Denault in the Federal Court of Canada, Trial Division, at Ottawa, Ontario, pursuant to section 11(1)(b) of the Act. Between August 6th and 21st, 1996, these orders were served on two individuals employed by two Federal Government Departments, Colonel J. Stewart, Chairman, Interdepartmental Committee on Household Goods Removal, National Defence and Mr. Noel Bhumgara, Director General, Science, Informatics and Professional Services, Public Works and Government Services Canada.

I have examined the documents produced and the written returns delivered by the parties named in paragraphs numbered 8 and 9. In addition, I have examined documents created by the Van Lines and provided to the Director by complainants who are carries for the Van Lines. I have conducted interviews with several complainants, including Mr. Pat Baird, the President of Corporate Moving Services ["CAMS"] (now Baird Move Management) and two complainants who are agents for one of the four Van Lines and who have provided me with written statements. Based upon my experience as a commerce officer and my review of the totality of the information provided to and developed by the Director under the inquiry, my assessment of the information in the context of the nature of the markets in which the Van Lines do business, their methods of operation and organization of their operations, I believe that the information provided to me by the parties and by the individuals referred to in this Information, is accurate, reliable and credible. I have identified several persons that have or are likely to have information that is relevant to the inquiry.

In the inquiry, the following alleged conduct is under investigation as possible breaches of the Order:

a) Atlas' activities in interfering with the ability of a competitor, CAMS, to perform its moves of client property contrary to s. 5 (b) (c) and (g) of the Order;

    

b) Atlas and Allied's activities in interfering with the ability of a competitor, Canadian National Railway Company and Corporate Moving Services, operating as Canadian National Intermodal Services ["CNIMS"], to perform its moves of client property contrary to s. 5 (b) (c) and (g) of the Order;

c) Allied and North American's activities in entering into market sharing agreements which restrict the ability of affiliated carriers to provide moving services contrary to s. 4 (h) and s. 5 (h) of the Order;

d) Allied, Atlas, United and North American's activities in entering into market sharing agreements with each other in remote locations and their refusal to enter into such agreements with CNIMS which restricted the ability of CNIMS to provide moving services contrary to s. 4 (h) and s. 5 (h) of the Order;

e) Allied, Atlas, United and North American's activities in entering into agreements with carriers which restricts the ability of carriers to perform moving services contrary to s. 5 (h) of the Order;

f) The Van Lines' conduct in agreeing amongst themselves to lessen competition unduly in the provision of moving services from the Province of Newfoundland to the rest of Canada contrary to s. 2 of the Order;

g) Atlas and North American's conduct in agreeing to certain tariff pricing for household moves between the two companies contrary to s. 2 of the Order;

h) The Van Lines' adoption of similar rates and discount policies regarding household moves across the United States/Canada border, contrary to s. 2 of the Order;

The conduct referred to in paragraphs a) to e) in particular, relates to the performance of moves for or on behalf of the Federal Government, and RFP's for such moves in the years 1995-1997. The 15,000 such moves per annum have a value of approximately $90 million.

Third Affidavit

     The relevant portions of a further affidavit of the same John Grant, sworn on April 4, 1997, read as follows:

Generally speaking, the 30 witnesses summoned to testify fall into one of four categories, i.e., complainant, civil servants, carriers and van line executives. Likewise, the conduct under inquiry can be roughly categorized as two types of behaviour, i.e., vertical, involving attempts by van lines to restrict carriers, and horizontal, consisting of allegations of price-fixing and agreements involving the van lines.

I have been informed by certain individuals who wish to remain anonymous, that they fear sanctions by the van lines with whom they are affiliated because of the testimony they expect to give at these hearings. In particular, I am advised, and believe that the van lines would be able to sanction their carriers as follows:

a) the van lines, which are responsible for assigning moves to the agents, could, in their discretion fail to assign moves or assign moves that are less desirable and less profitable.

b) the van lines can unilaterally and without cause terminate the franchise agreements with the agents.

     The Van Lines did not produce any affidavits of their own before the Presiding Officer or seek to cross-examine Mr. Grant.

Analysis

     The Presiding Officer's principal function is to ensure the proper and orderly conduct of the examination and includes making orders to achieve that end. The Presiding Officer's decision must be reviewed in the proper context, which includes the following factors:

(a)      the oral examinations in question are investigative, not adversarial in nature.

(b)      no substantive rights of the applicants (the persons under inquiry) will be determined at these examinations.

(c)      all of what occurs at the examinations, if and when there are subsequent proceedings that may affect the parties' rights, will be revealed to them by way of Crown disclosure or discovery in civil proceedings. If there are subsequent proceedings, disclosure can be made in a manner that protects confidentiality.

(d)      the Presiding Officer has no authority to rules on how parties who attend the examinations pursuant to section 12 may deal with any confidential information imparted to them.

(e)      even if counsel for the parties attends, he or she must play a minimal role, with no right to call evidence or to cross-examine or object to questions. At most, a limited right to re-examine for clarification may exist.

Grounds for review

     Section 18.1(4) of the Federal Court Act sets out the grounds which an applicant must establish to succeed on an application for judicial review. Relief may be granted if the trial division is satisfied that the federal board erred in law in making a decision or order, based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it or failed to observe a principle of natural justice, procedural fairness or other procedure that it was required by law to observe.

Questions to be decided

(a)      Did the Presiding Officer make an error of law or a reviewable error of fact when he decided to exclude the parties whose conduct is being inquired into and their counsel from the examinations of all thirty witnesses.

(b)      Did the Presiding Officer contravene the principles of procedural fairness by holding an in camera hearing.

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Error of law - Interpretation of subsection 12(4)

     Subsection 12(4) was introduced in 1985. Its predecessor was subsection 20(1) of the Combines Investigation Act.² It reads as follows:

20. (1) A member of the Commission may allow any person whose conduct is being inquired into and shall permit any person who is being himself examined under oath to be represented by counsel.

     Under this former provision, the Commissioner was required to permit a person who was a witness to be represented by counsel and had a discretion to permit a person whose conduct was under inquiry to be represented by counsel; while now, by virtue of subsection 12(3), the Presiding Officer is required to permit both a person whose conduct is under inquiry and the witness to be represented by counsel. Subsection 20(1) of the Combines Investigation Act did not address who could be present during the examinations or under what circumstances such person could be excluded.

     Pursuant to subsection 12(4), any person whose conduct is being inquired into and that person's counsel are entitled to attend the examination of any other person unless it is established to the satisfaction of the presiding officer that the presence of the person whose conduct is being inquired into would:

1)      be prejudicial to the effective conduct of the examination; or

2)      be prejudicial to the inquiry; or

3)      result in the disclosure of confidential commercial information that relates to the business of the person being examined or his employer.

     It is for the Director, or the person being examined or his employer to establish the presence of any one of these grounds to the satisfaction of the Presiding Officer.

     What is dealt with in subsection 12(4) is a person's entitlement to attend the oral examination of another person and not the right to be represented by counsel, which right is secured by subsection 12(3) and remains unaffected. It is subsection 12(4) which deals with the attendance of a person at an examination of another person during the investigative process. It grants that person and that person's counsel a limited entitlement to attend such an examination.

     Once any one of the grounds set out in subsection 12(4) is established to the satisfaction of the Presiding Officer, then the affected person and that person's counsel are not entitled to attend the examination of that other person. The counsel's entitlement to attend is dependent on the entitlement of his or her client to attend such examination. In other words, counsel's right to attend is coterminous with his or her client's entitlement to attend the examination.

     The issue of accommodation was raised before me. The proposal is two-fold: firstly, arrangements could be made to allow counsel only to be present, and, secondly the examination could be segmented into confidential and non-confidential parts.

     I agree with the thrust of the second proposal where exclusion is based solely on the ground of confidentiality, provided the examination is not prejudiced by reason of it being unreasonably segmented. The Presiding Officer must consider this alternative.

     The first proposal presents greater difficulties in the circumstances. Where the exclusion is based solely on the ground of confidentiality, it would require, at the very least, an enforceable order or undertaking of confidentiality on the part of counsel. This would appear to me to defeat the purpose of their attendance since counsel for a person under inquiry can only be present at, and not participate, in the examination.

     In this case, the Presiding Officer did address the issue of severability.

Erroneous finding of fact

     There are four categories of persons to be examined:

1.      Complainants, being persons who have brought the subject matter of the inquiry to the attention of the Director;

2.      Civil servants, who were involved in the granting of the federal government moving contracts which are in issue in this inquiry;

3.      Carriers, who are hired by Van Lines to move goods; and

4.      Van Lines.

     The Presiding Officer decided that the Director had established to his satisfaction that the presence of the Van Lines at any examination, other than their own, would be prejudicial to the effective conduct of the examination, and, in the case of complainant witnesses, to the inquiry as well, and that their presence would result in the disclosure of confidential information and that the examination cannot be segmented into confidential and non-confidential segments.

     The Presiding Officer's conclusion of prejudice under paragraph 12(4)(a) of the Act is supported by the material before him. That material included sworn allegations of collusion and retaliation. Although he held a brief in camera session for the stated purpose of determining the nature of the confidential information, there was already before him a great deal of information contained in the Grant affidavits concerning the nature of the confidential information being sought. The finding of the Presiding Officer is not patently unreasonable.

     As I have already noted, it is sufficient if either of the three grounds in subsection 12(4) is established in order to allow the Presiding Officer to exclude the person whose conduct is being inquired into from the examination of another person.

Procedural Fairness

     With respect to procedural fairness, I would adopt the approach of Décary J.A. in the Krever³ case:

The concept of procedural fairness is a shifting one; it changes depending on the type of inquiry and varies with the mandate of the commissioner and the nature of the rights that the inquiry might affect. A public inquiry under the Inquiries Act is not, I would point out, a trial, the report of a commissioner is not a judgment and his recommendations may not be enforced. Thus a commissioner has broad latitude and discretion, and the courts will question his procedural choices only in exceptional circumstances.

     This is consistent with the Irvine case⁴ where it was held that fairness is a flexible concept and its content varies depending on the nature of the inquiry and the consequences for the individuals concerned. The investigating body must control its own procedure. When that body has determinative powers, different considerations enter the process.

     Here, the process is investigative and not adjudicative or determinative. The oral examinations are part of an investigative process. They form part of the Director's inquiry. Further, the in camera session was not held to receive information from a witness under paragraph 11(1)(a) of the Act, but to assist the Presiding Officer in his determination of the application of paragraph 12(4)(b) of the Act. Counsel were given notice of the application to exclude the parties whose conduct was being inquired into, their counsel had access to the three affidavits, and were given an opportunity to make representations. Since the purpose of the in camera session was to further determine the nature of the confidential information, that purpose could not be served by allowing the parties and their counsel to be present. In these special circumstances, the degree of procedural fairness required of the Presiding Officer was adopted.

     Accordingly, the applications for judicial review to set aside the order of the Presiding Officer are dismissed.

     __________________________

     Judge

Ottawa, Ontario

October 7, 1997

__________________

¹      R.S.C., 1985, c. C-34, s. 1; R.S.C., 1985, c. 19 (2nd Supp.), s. 19.

²      R.S.C. 1970, c. C-23.

³      Canada (Attorney General) v. Canada (Commissioner of the Inquiry on the Blood System), [1997] 2 F.C. 36 at 72 (C.A.), affirming [1996] 3 F.C. 259 (T.D.).

⁴      Irvine v. Canada (Restrictive Trade Practices Commission) [1987] 1 S.C.R. 181 at 231.