WeirFoulds Competition Group Scores Precedent-Setting Victory for Kobo Inc.

MARCH 19, 2014

Acting for Toronto-based e-book retailer Kobo Inc., WeirFoulds LLP's Competition Group has convinced the Competition Tribunal to prevent the implementation of a settlement agreement struck between Canada's Competition Bureau and four major publishers, Hachette Book Group, HarperCollins, Macmillan and Simon & Schuster. The settlement agreement would have fundamentally altered Kobo's contracting practices with these publishers, and on March 18, the Competition Tribunal gave Kobo the green light to test the settlement agreement to ensure it is consistent with Canada's Competition Act

In the 12 years that the Competition Bureau has had the ability to automatically settle competition cases on terms it considers appropriate, no third party has ever succeeded in getting a settlement agreement set aside.  This decision opens the door to greater scrutiny and transparency as to the Commissioner's power to enter into settlements that will directly affect third parties.

"Given the test for a stay, it is clear that the Tribunal agreed that there are serious questions that need to be answered about the terms of this consent agreement," said Nikiforos Iatrou, head of WeirFoulds' Competition Group. "The Tribunal has given Kobo the green light to proceed with its challenge, so long as it proceeds swiftly. We are obviously very pleased with this result, as it allows third parties like Kobo a meaningful opportunity to clarify the Commissioner's obligations under the Competition Act."

This is the second time in a year that WeirFoulds' Competition Group has successfully mounted a precedent-setting competition law case. Last year, the group was retained by the Commissioner of Competition to respond to an appeal of the first contested merger in Canada in seven years, Tervita v. The Commissioner of Competition. In a decision released last spring, Canada's Federal Court of Appeal sided with the Commissioner, confirming the Commissioner's ability to block mergers, even in circumstances where—at the time of the merger—the merging parties do not actually compete. The team that secured this victory for Kobo—Mr. Iatrou, Mandy Seidenberg, Scott McGrath and Bronwyn Roe—was the same team that worked to secure the victory for the Commissioner in Tervita last year.