Canadian Lawyer InHouse

9 CANADIANLAWYERMAG.COM/INHOUSE MARCH 2018 News Roundup A roundup of legal department news and trends Kobo decision gives clarity to Bureau's reach T he Federal Court recently dismissed an application by e-reader maker Rakuten Kobo Inc. to quash consent agreements that the Competition Bureau entered into with three publishers regarding allegations about a conspiracy in the United States in the ebook market. Competition lawyers say that the ruling gives clarity to the reach of the Competition Bureau in extra-territorial cases and about the leeway given to the Commissioner of Competition by the courts. "It clarifies what the geographic reach of that section of the [Competition] Act is," says Nikiforos Iatrou, partner with WeirFoulds LLP in Toronto, who acted on behalf of Kobo. "Until this case, we didn't have a decision that set out what that reach was. That's important." Iatrou adds that competition lawyers now know the high standard they'll be held to if they want to challenge an action by the commissioner. "It will be very difficult to set aside consent agreements in the future," he says. The decision closes off a legal saga that has been ongoing since 2014, when the commissioner initially entered into consent agreements — settlements — with four of the five major publishers. In 2016, those agreements were set aside by the Competition Tribunal. The commissioner addressed the shortcomings identified by the tribunal and signed fresh consent agreements with three of the four publishers, which were challenged in Federal Court. The fourth publisher, HarperCollins Canada Limited, fought the agreement in the Competition Tribunal but eventually settled. That hearing delayed the Federal Court case. In Rakuten Kobo Inc. v Canada (Commissioner of Competition), 2018 FC 64, Chief Justice of the Federal Court Paul Crampton stated that he didn't want third parties such as Kobo using the court's power of judicial review to defeat Parliament's clear intention to create a limited right of review of consent agreements. "The HarperCollins agreement was conditional on the other three becoming effective," says Iatrou. "They would all become effective or none of them would become effective, and the result of this ruling is that they will now all become effective." Jayme Albert, spokesman for the Competition Bureau, said the Federal Court's decision "clarifies the scope of third party challenges to settlements with the Commissioner." "In the decision, Chief Justice Crampton found that judicial review applications brought by third parties in respect of consent agreements filed with the tribunal should only be heard in 'exceptional cases,'" he said. Iatrou says that result is similar to what the tribunal found last year, and he admits that after the HarperCollins motion wasn't successful, he knew that the Federal Court case would be an "uphill battle." Huy Do, partner with Fasken Martineau DuMoulin LLP in Toronto, who was not involved in the case, says that the jurisdictional discussion was not that hotly debated before the decision. "Now it's clear, but I don't think that it was something that was that controversial," says Do. "It essentially tells us what we already thought was the case in terms of the application of the Act." Jean-Marc Leclerc, a partner at Sotos LLP whose practice involves litigating price-fixing cases, notes that the decision put an end to Kobo's attempt to forestall having to offer its customers lower prices for almost four years. "I think it's significant that Kobo got a stay of the consent orders pending the court's determination of the issues," says Leclerc. He says in the decision that Crampton completed the analysis of the underlying issues beyond the jurisdictional argument in the interests of "judicial economy." "At the end of the day, these agreements are intended to provide customers with lower prices," says Leclerc. IH —Dale Smith ing non-essential tasks, embracing technology in some areas and re-engineering work pro- cesses in others. In short, they are responding to the market — to their new competitors and their clients. They are innovating." In an interview ALM Intelligence did with Philadelphia law firm Morgan Lewis & Bockius LLP chairwoman Jami Wintz McKeon, she said that in the last several years the firm has seen a renewed focus from clients on convergence. "They do not want to deal with 1,000 different law firms . . . their problems are cross-border, cross-discipline, cross-indus - try and so there is a great value to them if they can go to one place to get their needs met and in that respect there is no question in my mind that there is a need for scale and size can be a competitive advantage, but there is a huge caveat to that and in my view size is a competitive advantage only if you get everything else right," she said. Bruch also predicts that there will be consolidation in which law firms and ASPs will merge and much of it will be driven by the big four. "We will also see more collaboration es - pecially across bet-the-company firms who have no overlap with traditional ASPs. The full-service firms should be collaborating with their clients to understand how much services should be delivered and what ser - vices should be added," said Bruch. When it comes to in-house in-sourcing — the trend of the last 10 years or so of in- house departments bringing work inside — ALM Intelligence data suggests it may be slowing. "CFOs are saying they are growing weary of adding head count, salaries are rising inter - nally and all of this raises questions around whether the in-sourcing trend can be contin- ued, and if the low-hanging fruit for in-sourc- ing has already been plucked," said Bruch. And what about the legal departments themselves? "They will exist in the zone of competi- tion as real competitors with ASPs, full ser- vice and the big four but will also play the traditional role of general contractor. Law departments in the future are going to have to think about adding new skills, new talent new technology just to manage all of these moving parts," said Bruch. IH

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