A meeting of Canadian and U.S. moldmakers was abruptly adjourned when a legal opinion letter was produced and read saying that organizing attempts to standardize terms on automotive customers was a vi...
A meeting of Canadian and U.S. moldmakers was abruptly adjourned when a legal opinion letter was produced and read saying that organizing attempts to standardize terms on automotive customers was a violation of Canadian competition laws.
The meeting, which took place earlier this summer in Windsor, was arranged to address the frequent delay of payment, up to a year or more at times, by some automotive OEMs to moldmakers for tooling already built and delivered. In attendance were representatives from the Canadian Association of Moldmakers, the Americam Mold Builders Association, The Canadian Tooling and Manufacturing Association, CIFFMO (a Quebec association of moldmakers), the Canadian Plastics Industry Association–Mould Makers Council, as well as owners of Canadian and American mold shops.
According to Ed Bernard, president of Bernard Mould Ltd. in Oldcastle, Ont., the meeting was the result of on-going communications between the Canadian and U.S. moldmaking communities on common issues and problems. Earlier in the year Bernard, representing CAMM, was invited to address an AMBA meeting in the Bahamas. The intent of the Windsor meeting was to provide follow-up information and a forum on these issues. At this meeting the legal opinion, which was obtained by the CPIA’s General Counsel, was read aloud prior to the planned afternoon session on the delayed payment problem. Bernard says the letter, written by Kelly, Affleck and Greene, a Toronto law firm specializing in competition matters, stated that efforts by Canadian moldmakers to enforce payment terms on customers was collusion, and that companies participating in such efforts were risking penalties up to millions of dollars in fines and/or prison sentences.
“It appears they think we could have been in collusion because we were now trying to ensure payment to terms we had been stating for the last 30 years,” says Bernard. “In the opinion of this letter, by enforcing terms which automotive companies have been ignoring, we are in effect changing the cost to our customer and therefore price fixing.”
According to another lawyer contacted by Canadian Plastics, this strict interpretation of the Canadian Competition Act may or may not be upheld in a court of law. Nonetheless, Bernard says, few moldmakers have the resources to take such a risk.
“The average mold shop doesn’t have a legal department. Any OEM sure does however.”
Bernard says he is personally pursuing other means of addressing the problem, including tightening the terms of his quotation forms. He says he intends to post the payment terms and conditions used in his quotation forms on his website (www. bernardmould.com). He believes this practice will indirectly disseminate constructive ideas.