BC Securities Commission -
Speedy decision expected on VSE monopoly challenge
BC Securities Commission BCSEC
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Friday Aug 7 1998
See Vancouver Stock Exchange (VSE) Street Wire
The arrangement between the VSE and CNW is a monopoly and offends section 45 of the Competition Act and it is therefore in effect a federal crime
And U thought the VSE juniors were the crooks.....LOL
by Brent Mudry
ALLEGATIONS OF A FEDERAL CRIME CALLED HOGWASH
A secret contract, denials of a news monopoly and allegations of a federal crime were amongst the highlights of the British Columbia Securities Commission's initial hearing into the Vancouver Stock Exchange's $4-million two-year exclusive news deal with Canada NewsWire. The marathon ten-hour hearing ended at 9 p.m. Thursday, with a decision expected mid to late next week. The hearing pitted the VSE and its partner CNW against rival news services Canadian Corporate News, Canada Stockwatch and ISDN, who would be shut out of the competitive VSE news dissemination business. If the tribunal, led by commission chairman Doug Hyndman, rules to "stay" the VSE's proposal, the exchange will be forced to scrap the September 1 launch date for the unprecedented policy, pending further review. A full hearing would then be expected within 30-60 days, due to the inconvenience of costly delays for the various parties.
The ten lawyers at the Thursday hearing traded heated arguments on various issues, but the panel is focusing on whether the VSE's proposed news monopoly is against the "public interest." CNW lawyer Howard Shapray was his usual outspoken self in fending off the challengers. "There is no monopoly in Canada caused by this policy," the bombastic lawyer told the panel. Mr Shapray pointed out that CNW and its rivals will still be in "liberal competition" on the Alberta and Toronto stock exchanges. (The two exchanges have publicly stated they favour free competition instead of news monopolies.) "The proposition that this is a monopoly and it is inherently evil is hogwash," blustered Mr Shapray.
Others were less flattering about the unpopular proposed policy and its highly-secretive creation. "CNW and the VSE devised a scheme to monopolize news," Stockwatch lawyer Mark Skwarok told the tribunal. CCN lawyer Malcolm Maclean said his client fully supports the "timely dissemination" concept of the policy but he has no idea how a monopoly is either necessary or justified. "We say the public interest is not being served. . . the policy objectives can be achieved without granting a monopoly," stated Mr Maclean.
ISDN lawyer Hein Poulos was the most outspoken in attacking the anti-competitive thrust of the VSE plan. "The arrangement between the VSE and CNW is a monopoly and offends section 45 of the Competition Act and it is therefore in effect a federal crime," Mr Poulos told Mr Hyndman and fellow panelists Diane Wolich and Joan Brockman. "The creation of an unlawful monopoly can scarcely be said to be in the public interest," asserted Mr Poulos. The ISDN lawyer argued that the new policy dramatically impacts five or six commercial news providers "by vapourizing their business virtually overnight." Mr Poulos stressed that the VSE-CNW arrangement was done deal before it was first revealed to anyone else on July 6. "All learned of it as a fait accompli," he pointed out."
Mr Shapray hotly contested the anti-competition arguments, pointing out that any claims of an illegal monopoly are solely under the purview of the director of the federal competition bureau in Ottawa, not the securities commission. The CNW lawyer also denied the public interest arguments. "We are talking about the pocketbooks of certain individuals, we are not talking about the public interest," argued Mr Shapray, taking a poke at rival news services. His client, CNW, revealed the special deal's impact on its own pocketbook. "The revenue from the contract is anticipated to be in the neighbourhood of between $1.5 and $2-million per year," states Larry Cardy, vice-president of Western Canada for CNW, in an affidavit.
The actual VSE-CNW contract itself is something of a mystery. "That contract, if it exists, is not before you. . . they have chosen not to put it before you," Mr Poulos told the panel. "Almost no terms of the contract are known," stated Mr Mclean. The ISDN lawyer noted that without seeing the full contract, it is not known what special considerations may benefit the VSE itself.
Mr Shapray strenuously downplayed the merits of any feedback from VSE-listed companies on the monopoly news rule. The CNW lawyer jumped up to interrupt Stockwatch's Mr Skwarok mid-stream, and pre-emptively tried to block consideration of a Stockwatch poll. "It is a farce," Mr Shapray told the panel. "I would challenge the scientific validity of the survey," he added. The survey, sent to 800 companies on the B.C. Day holiday, generated 205 responses by noon on Wednesday. Only two companies supported the VSE policy.
(c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch.com
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