Abuse of dominance is one of the foundational provisions of Canadian competition law under the Competition Act (Act),2 alongside cartels, mergers, vertical distribution practices and misleading advertising. Originally a criminal provision, abuse of dominance has been an administratively reviewable civil matter since 1986. However, it was significantly strengthened by 2009 amendments that introduced the potential for large administrative monetary penalties (AMPs).3 Combined with increased enforcement by the Canadian Competition Bureau (the Bureau), abuse of dominance has taken on a higher level of practical importance and potential risk for firms active in the Canadian marketplace.
The abuse of dominance provisions are set out in Sections 78 and 79 of the Act. In basic terms, an abuse of dominance in Canada requires a finding by the Canadian Competition Tribunal (the Tribunal) that one or more persons who substantially or completely control a class or species of business in Canada have engaged or are engaging in a practice of anticompetitive acts, with the actual or likely effect of substantially lessening or preventing competition in a market. Where an abuse of dominance is established, the Tribunal can prohibit the practice, require another action to be taken or impose AMPs.
The requisite elements of an abuse of dominance have received extensive judicial consideration, and the assessment of whether a firm is dominant and whether the required elements of an abuse have been met is far from straightforward.
To provide guidance in this area, the Bureau has issued Enforcement Guidelines (the Guidelines)4 describing its approach to the interpretation of the statutory provisions in light of case law. The Guidelines were last updated in March 2019, and explicitly supersede policy statements and several earlier guidelines, including the prior 2001 and 2012 versions of the Guidelines, as well as detailed enforcement guidelines on predatory pricing,5 guidelines specific to the telecommunications and grocery sectors, and draft guidelines specific to the airline industry.6
The Guidelines do not have the force of law and are not binding on the Tribunal, Canadian courts or even the Bureau.7 The Guidelines also emphasise that the Bureau's enforcement approach will 'depend on the particular circumstances of the matter in question', and on the discretion of the Tribunal and Canadian courts in contested cases.8 In practice, abuse of dominance in Canada turns significantly on fact-specific analysis and risk assessment. Firms that are likely to be, or to become, dominant may be subject to a higher level of potential scrutiny and exposure of their business activities if they do not adapt accordingly.
II YEAR IN REVIEW
Key recent developments indicate that, increasingly, the Bureau and Canadian courts have considered possible abuses of dominance by firms that do not compete directly in the relevant market. In August 2018, the Supreme Court of Canada dismissed a leave application by the Toronto Real Estate Board (TREB), effectively confirming that the abuse of dominance provisions can apply on the basis that TREB controls (even if it does not compete in) the market for residential real estate services in the Toronto metropolitan area. In another high-profile case initiated in 2016, the Tribunal dismissed the Commissioner's application seeking to stop the Vancouver Airport Authority (VAA) from restricting access at Vancouver International Airport to additional in-flight catering companies. In its decision, the Tribunal determined that VAA was dominant in the relevant market at Vancouver International Airport and also had a 'plausible competitive interest' in adversely affecting competition in that market. Ultimately, however, the Tribunal concluded that while VAA's conduct was exclusionary, its overall character was not anticompetitive, nor did it have the effect of substantially preventing or lessening competition. In its decision, the Tribunal confirmed the importance of considering legitimate business justifications when determining if acts are anticompetitive in nature.
The latest version of the Bureau's Guidelines, released in March 2019, picks up on the implications of these cases, and also introduces a number of other significant updates to the previous version. In the same month, the Bureau released a revised version of its guidance on the interface of intellectual property (IP) and competition law, which reflects, inter alia, another outcome of TREB(see Section II.iv).
Active enforcement has continued in a range of other cases. These include an ongoing investigation into a national airline's low-cost carrier division, in which the Bureau has alleged that certain below-cost fares amounted to predatory pricing. In April 2020, the Bureau discontinued its investigation (the second into similar conduct in recent years) into potential anticompetitive conduct by a pharmaceutical company that allegedly aimed to prevent or delay the entry of competing generic drugs by restricting a generic drug manufacturer's access to samples of the branded drug.
Other recent investigations focused on:
- a case with a software development company regarding certain restrictive business practices in markets relating to the supply of 'all-inclusive travel packages';
- a large grocery retailer's dealings with its suppliers;
- online search and search advertising practices;
- smartphone manufacturer's agreements with Canadian wireless carriers;
- restrictive clauses in contracts between TMX Group Limited and investment dealers;
- brand-name drug manufacturers' attempts to restrict access to samples needed to prove bioequivalency of generic products; and
- the possible implications of a biologic drug manufacturer's relationships with hospitals, insurers, infusion clinics and patients on biosimilar firms' ability to compete.
A theme underlying several recent developments is the increasing relevance of innovative markets, including, notably, in the pharmaceutical sector and the digital economy. Not only does recent enforcement suggest that abuse cases in innovative industries are becoming increasingly common, but the Bureau has flagged its interest in these areas in its updated Guidelines and other commentaries and statements. For example, in addition to the revised IP Enforcement Guidelines (IPEGs) and a number of statements focused on competition in the pharmaceuticals sector, the Bureau highlighted the digital economy and innovative markets in the release of its policy report titled 'Big data and innovation: key themes for competition policy in Canada' in 2018.9 Even in closing recent investigations, the Bureau has commented that it will continue to actively monitor these areas. This was the case, for example, following its inquiry into online search and advertising, and recent cases involving the competitive relationships between manufacturers of branded and generic drugs as well as biologic and biosimilar drugs.10
i TREB decision
On 23 August 2018, the Supreme Court of Canada rejected TREB's application for leave to appeal a Federal Court of Appeal decision of 1 December 2017, bringing an end to a long-running case involving the Canadian real estate industry.11
The Bureau had sought to prohibit restrictions on TREB members' provision of direct access to multiple listing service (MLS) information, such as sales inventory, selling price and broker compensation, arguing that they prevented the introduction of internet-based services, such as 'virtual office websites' through which such information could be made available at low cost.12 In an unusually short decision in April 2013, the Tribunal initially determined that the Bureau's application did not meet the requirements of Section 79(1)(b) of the Act,13 on the basis that TREB does not compete with its members. However, on appeal, the Federal Court of Appeal in 2014 held that the abuse of dominance provisions could apply on the basis that TREB controls the market for residential real estate services in the Toronto metropolitan area despite not technically competing in that market, and referred the matter back to the Tribunal for reconsideration.
Following the rehearing, the Tribunal followed the Court of Appeal's 2014 decision and ruled in April 2016 that an abuse of dominance was established, and the Federal Court of Appeal upheld that ruling in its decision in December 2017. More specifically, in its ruling upon reconsideration, the Tribunal found that TREB substantially or completely controlled the supply of MLS-based residential real estate brokerage services in the Toronto metropolitan area, owing to its control over the MLS, a key input for competitors in the market. The Tribunal also held that TREB had engaged in (and continued to engage in) a practice of anticompetitive acts for the purpose of Section 79, and that the restrictions imposed by TREB had and would continue to substantially prevent competition in the supply of residential real estate brokerage services.14 This reduction in non-price competition, according to the Tribunal, included 'a considerable adverse impact on innovation, quality and the range of residential real estate brokerage services that likely would be offered' in the area absent such restrictions.
The result in the TREB case provides a significant clarification to the application of Section 79(1)(b), which, as discussed in Section IV, requires that a dominant firm or firms have engaged in 'a practice of anticompetitive acts'. In the leading case interpreting this requirement, Canada Pipe,15 the Court of Appeal had appeared to hold that the dominant firm must be a competitor of the firm or firms targeted by the practice, and the Tribunal in its original decision in 2013 followed this line of reasoning.16 Considering the Court of Appeal's explicit rejection of that interpretation, and the ultimate outcome of the case, TREB arguably can be regarded as a landmark in Canadian abuse of dominance analysis. Its influence is already apparent in the subsequent VAA case, as well as in the latest version of the Guidelines.
On 17 October 2019, the Tribunal dismissed the Commissioner's application against the VAA, which is responsible for the management and operation of Vancouver International Airport, including granting physical access to the airport.17 On 20 November 2019, the Bureau announced that it would not be pursuing an appeal thus bringing an end to this case.
The case involved restrictions imposed by the VAA that, according to the Bureau, decrease competition at the airport among in-flight catering companies that prepare meals for flight passengers and crew, and also provide related galley-handling services. Specifically, the Bureau alleged that while airlines that operate at the airport want greater choice of suppliers and that there are new suppliers willing to meet this demand, the VAA denied new suppliers access to the airport. According to the Bureau, the VAA abused its dominant position 'by excluding and denying the benefits of competition' to the in-flight catering marketplace at the airport and has 'no legitimate explanation to justify the substantial prevention or lessening of competition that has resulted in higher prices, dampened innovation and lower service quality'.18
Similar to TREB, the case against the VAA involved alleged abuse of dominance in a market in which the VAA technically is not a direct competitor. In a lengthy decision dismissing the Commissioner's application, the Tribunal determined that: (1) the VAA substantially or completely controlled the market for galley-handling services at the Vancouver International Airport;19 (2) the VAA had not engaged in anticompetitive acts; and (3) the VAA's conduct did not prevent or lessen competition substantially, and was not likely do so because it had not reduced the degree of price or non-price competition in the supply of galley-handling services at the airport, relative to the degree that would likely have existed in the absence of this conduct.
The Tribunal's decision confirms and clarifies the 'plausible competitive interest' (PCI) screen used to limit the scope of cases alleging abuse of dominance against 'gatekeepers' (i.e., firms that do not compete in the market they are alleged to control, e.g., VAA and TREB). The Tribunal concluded that VAA had a PCI in the relevant market because of its 'participation in the upside' of overall revenues (through its interest in concession fees), together with its ability to exclude additional suppliers from the relevant market, which distinguished VAA from a typical upstream supplier that would suffer from a less competitive downstream market.
The decision also provided clarity on the application of the regulated conduct doctrine (RCD) and that, as a matter of law, it does not apply as a defence in Section 79 cases because, inter alia, Section 79 does not contain the 'leeway' language required to allow the RCD to be invoked and there was no statute, regulation or other subordinate legislative instrument that required, directed, mandated or authorised VAA, expressly or by necessary implication, to engage in the conduct. The Tribunal did, however, indicate that compliance with a statutory or regulatory requirement may nonetheless constitute a legitimate business justification for conduct that is potentially anticompetitive.
In this case, the Tribunal accepted that in excluding new entrants VAA could reduce the risk of finding itself in a position where it could lose one of its two full-service catering firms, thus preserving competition, choice and reliability for airlines. The Tribunal also accepted that VAA believed that its exclusionary conduct protected the airport's reputation because by maintaining two full-service catering firms, it reduced the risk of airlines experiencing significant adverse consequences because of the entry or exit of a caterer. The Tribunal held that to the extent reputational concern affected the airport's ability to compete with other airports for new routes, it constitutes a legitimate pro-competitive rationale unrelated to an anticompetitive purpose. Finally, the Tribunal also accepted that VAA's concern that introducing new entrants could result in aeroplanes departing without sufficient or high-quality meals, was a legitimate pro-competitive rationale.
iii Updated Guidelines
In March 2019, the Bureau issued a new version of its Guidelines, which is significantly more detailed than the previous version and includes several important updates.
In general, the Guidelines also carve out considerable discretion for the Bureau to assess elements of abuse of dominance, including in its definition of the relevant market or markets, as well as its determination of what constitutes substantial market power and an ability to 'control' a market.
First, in keeping with the TREB outcome, the Guidelines now specifically address the possibility that firms may 'substantially or completely control' markets in which they do not necessarily compete. Second, with respect to market power, the Guidelines now omit an informal safe harbour market share threshold of 35 per cent, which had been included in prior versions, retaining only a 50 per cent market share benchmark as a guideline for determining whether or not a firm's conduct will 'generally' prompt further examination. At the same time, the Guidelines contain additional commentary on the relevance of 'the ability to exclude' in assessing market power. Finally, the Guidelines expand upon the range of ways in which the relevant market may be defined. In particular, they emphasise the possibility that the Bureau may identify more than one product or geographic market. Further, they now specifically contemplate that either or both sides of a 'multi-sided platform' may comprise the relevant product market or markets, and also how the 'hypothetical monopolist test' may apply in cases involving the provision of free services (as may be the case in circumstances involving such platforms).
These developments are further discussed in Sections III and IV.
iv Updated IPEGs and ongoing focus on pharmaceuticals
In the same month that the updated Guidelines were released, the Bureau released its updated IPEGs.20 The revised guidance reflects another outcome of the TREB case, namely the Tribunal's rejection of TREB's argument that the information of which the use and dissemination it sought to restrict was protected by copyright and therefore subject to an exemption under the abuse of dominance provisions.21 Additionally, the 2019 version reflects updates to the Canadian Patented Medicines (Notice of Compliance) regulations.
More generally, the IPEGs reflect the Bureau's ongoing focus on pharmaceuticals, with specific commentary on potential abuse of dominance through industry-specific conduct, such as 'product switching' (or 'product hopping') and patent litigation settlements. Other enforcement and policy developments in the pharmaceutical sector include the closure of an investigation into alleged product switching by a supplier of certain pharmaceutical drugs in May 2014.22 Later that year, the Bureau also released a white paper discussing patent-related settlement agreements and the potential concerns associated with arrangements such as 'pay-for-delay' settlements under various provisions of the Act, including abuse of dominance.23 More recent public statements reiterate the Bureau's interest in the intersection between IP and competition law.24
Finally, the Bureau has conducted several investigations in the pharmaceutical sector, including most recently two inquiries that closed in early 2019 and 2020 respectively. The first involved the possible predatory or exclusionary impact of a biologic drug manufacturer's alleged conduct with regards to biosimilar firms. Here again, in its public statement regarding the closure of the investigation, the Bureau indicated that it maintains an active interest in this area, specifically commenting that it 'will continue to monitor the evolving biologic and biosimilar industry'. The second involved an alleged attempt by a brand name pharmaceutical manufacturer to restrict access and samples of a brand drug required by the generic drug manufacturer to secure market approvals. The investigation was discontinued after the branded drug samples were provided. In its press release, the Bureau expressed concerns that 'this sort of conduct has persisted despite its previous investigation and guidance to the pharmaceutical industry' and warned branded drug manufacturers that it will 'treat any explanation for a failure to supply [Canadian Reference Products ] in a timely manner with an extremely high degree of skepticism'.25 This investigation comes after Health Canada warned drug manufacturers in July 2019 that elements of risk management plans required by Health Canada cannot be used to delay comparative drug testing or hinder a generic manufacturer's ability to enter the market.26
v Summary of recent developments
The following table summarises significant recent decisions and developments.
|Sector||Investigating authority||Conduct||Case opened||Status|
|Real estate services||Bureau||Restriction by TREB of members' access to multiple listing service information (sales inventory, selling price, broker compensation, etc.)||Initial application filed with the Tribunal in May 2011||Rehearing held in 2015. The Tribunal's April 2016 ruling that abuse of dominance was established (followed by issuance of an order in June) upheld by the Federal Court of Appeal on 1 December 2017; application for leave to appeal dismissed by the Supreme Court of Canada in August 2018|
|Pharmaceuticals||Bureau||Alleged 'product hopping' by Alcon through intentional disruption of the supply of a branded prescription anti-allergy drug in order to limit or prevent meaningful competition from generic drug companies||Investigation commenced in November 2012||Closure of investigation announced in May 2014 following cessation of the alleged conduct|
|Residential water heaters||Bureau||Alleged 'aggressive retention tactics' during customer calls by Reliance Comfort Limited Partnership and Direct Energy Marketing Limited, as well as other policies and procedures aimed at hindering switching to competitors||Initial applications filed with the Tribunal in December 2012||Consent agreement with Reliance Comfort Limited Partnership registered November 2014, including C$5 million penalty and C$500,000 investigation costs
Consent agreement with Direct Energy Marketing Limited registered October 2015, including a C$1 million penalty and commitment to implement a corporate compliance programme in the event of re-entry into the marketCommitments by EnerCare Inc not to continue Direct Energy's alleged anticompetitive policies and practices obtained by the Bureau in November 2014 following the acquisition of Direct Energy by EnerCare
|Insulin pumps for diabetic patients||Bureau||Imposition of warranty terms relating to use of Medtronic insulin pumps with non-Medtronic equipment, which allegedly limited competition and restricted consumer choice||Date investigation commenced not publicly disclosed but appeared to follow the acquisition by Medtronic Holdings Limited of Covidien plc, which was subject to a consent agreement registered on 26 November 2014||Agreement with Bureau to revise warranty terms announced March 2015|
|Digital economy – online search and search advertising27||Bureau||Alleged conduct by an online search engine and advertiser intended to exclude or disadvantage competitors, including through imposition of conditions and demands on customers preventing rivals from competing||Investigation commenced in 2013||Discontinuation of investigation announced in April 2016 owing to insufficient evidence, subject to ongoing monitoring of the subject of the investigation and the digital economy more generally according to the Bureau's Position Statement|
|Grocery retail28||Bureau||Investigation into pricing strategies and programmes of Canada's largest grocery retailer in the context of its relationship with its suppliers, reflecting the Bureau's focus on vertical agreements and arrangements that reference competitors, such as 'meet-or-release' and 'most-favoured nation' clauses||Investigation commenced March 2014||Discontinuation of investigation announced in November 2017 on the basis that the retailer no longer enforced certain policies and that there was insufficient evidence to conclude that the policies had lessened or prevented competition substantially|
|Smartphones29||Bureau||Imposition of potentially anticompetitive obligations and restrictions regarding the sale and marketing of smartphones in agreements with Canadian wireless carriers||Investigation commenced after Bureau's receipt of information on the matter in 2014||Discontinuation of investigation announced in January 2017 owing to insufficient evidence|
|Data aggregation – provision of indicative market data30||Bureau||Imposition of contractual clauses in TMX Group's standard form market data agreement with investment dealers, restricting the latter from sharing private market data with third parties; according to a complaint to the Bureau this hindered a potential competitor's ability to develop an alternative consolidated data market product; the Bureau considered possible 'prevention' of competition under the third part of the abuse of dominance test||Investigation commenced after the Bureau's receipt of a complaint in 2015||Discontinuation of investigation announced in November 2016 following the Bureau's conclusion that it was unlikely that the complainant could have obtained sufficient volumes of private market data from investment dealers to develop a competitive product even absent the contractual arrangements|
|Galley handling at airports and airport access for the supply of galley handling||Bureau||Conduct by the VAA alleged to decrease competition among in-flight catering companies at Vancouver International Airport||Initial application filed with the Tribunal in September 2016||Tribunal dismissed the Commissioner's application in October 2019; the Bureau announced that it does not intend to appeal the decision in November 2019|
|Software geared towards the travel industry31||Bureau||Restrictive practices by Softvoyage Inc in markets related to the supply of 'all-inclusive travel packages', specifically through the use of exclusivity clauses in contracts (including contracts with tour operators), giving rise to allegations of foreclosure of the relevant markets or otherwise making access difficult32||Date investigation commenced not publicly disclosed||Consent agreement with Softvoyage registered in January 2018, including commitments to cease restrictive practices so as to address the Bureau's concerns over possible barriers to entry|
|Pharmaceuticals33||Bureau||Imposition of restrictions by brand name manufacturers on generic manufacturers' access to samples of brand name drugs (required to prove bioequivalency of generic products)||Inquiry commenced in November 2016 following generics' allegations of having been impeded access to branded drug samples through pharmaceutical wholesalers acting as intermediaries between manufacturers and downstream purchasers||Discontinuation of investigation announced in December 2018 owing to insufficient evidence|
|Pharmaceuticals34||Bureau||Alleged conduct by a biologic drug manufacturer included supplying many hospitals with its biologic drug for 1 cent per vial; providing the biologic drug free to patients not eligible to receive reimbursement under an insurance plan; contractually requiring hospitals and private insurers to favour its biologic drug over biosimilars; and entering into exclusive contracts prohibiting third-party infusion clinics from using biosimilars to its drug||Inquiry commenced in 2018 according to Bureau Position Statement||Discontinuation of investigation announced in February 2019 owing to insufficient evidence; biologic and biosimilar industry subject to ongoing 'monitoring'|
|Airlines35||Bureau||Alleged predatory pricing (low-cost fares designed to force rivals out of the market) by a national airline's low-cost carrier division||Late 2018; date investigation commenced not publicly disclosed||Ongoing|
|Pharmaceuticals36||Bureau||Alleged conduct by a drug manufacturer intended to prevent or delay the entry of competing generic drugs by refusing to supply a generic drug manufacturer with samples of a branded drug||Inquiry commenced in early 2020 according to the Bureau Position Statement||Discontinuation of investigation announced in April 2020 after the pharmaceutical company provided the drug samples to the generic manufacturer thus resolving the Bureau's concerns|
III MARKET DEFINITION AND MARKET POWER
Determining that a firm is dominant is the first of three statutory conditions that must be independently met for the abuse of dominance provisions to apply.
The statutory criteria for dominance are set out in Section 79(1)(a) of the Act, which requires a finding that 'one or more persons substantially or completely control, throughout Canada or any area thereof, a class or species of business'. Whether this statutory test is met turns on the definition of the relevant market and an assessment of the exercise of market power.
i Market definition
A 'class or species of business' and the words 'Canada or any area thereof' have been interpreted by the Tribunal to refer to the relevant product and geographical market or markets.37 Market definition focuses conceptually on the existence of substitutes for the product and geographical territory in question. It is usually determined on the basis of a 'hypothetical monopolist' test that looks at the smallest market in which a 'small but significant and non-transitory increase in price' could be profitably imposed, beginning with the product of the firm in question and the area in which it operates, and expanding the relevant market to include other products or supplier locations likely to be substituted.38
This is generally consistent with the approach taken by the Bureau in defining markets for purposes of merger analysis.39 As in the case of mergers, market definition may depend significantly on the particular features of the product and geographical markets in question. A market need not be conclusively defined to find that a firm or firms exercise market power.40
In addition to considering actual price and supply data where available, the Bureau may take into account a range of other factors in its assessment of the product and geographic market definition, including:
- consumer behaviour;
- past product or location substitution;
- product functional interchangeability;
- unique product characteristics;
- transportation costs and shipping patterns;
- switching costs;
- the role of distant sellers and foreign competition; and
- past price correlation among substitute products.41
The 2019 Guidelines specifically contemplate how to apply the hypothetical monopolist test to 'multi-sided' platforms, where demand for one side depends on use of another, and indicate that the Bureau may define the product market either as one side of the platform or as including multiple sides, depending on the case. The updated Guidelines also consider the challenges that may arise in the application of this test where services are offered at a 'zero-monetary price' (e.g., to attract users to a multi-sided platform), and indicate that in these cases, the Bureau may focus on 'qualitative indicators of substitutability' rather than seeking to analyse whether a hypothetical monopolist would find it profit-maximising to decrease a relevant non-price dimension of competition by a small but substantial amount for a non-transitory period of time.
More generally, the updated Guidelines retain ample flexibility for the Bureau to define one or more product markets. For instance, the Bureau 'may consider it appropriate to define markets in reference to particular types of purchasers in certain circumstances, such as where sellers engage in price discrimination between different sets of buyers', or by referring to 'a particular level of the supply chain'. Moreover, the Bureau 'may consider it appropriate to analyse several different (or potentially different) product markets together for the purposes of market definition'. This appears to reflect recent case law, such as Softvoyage, in which more than one relevant market was identified. Additionally, the Guidelines specifically contemplate the possibility of analysing several geographic markets together.
ii Market power
The words 'substantially or completely control' in the context of the abuse of dominance provisions have been held by the Tribunal in TREB to contemplate a substantial degree of market power. Such market power confers 'considerable latitude to determine or influence price or non-price dimensions of competition' in a market, and may be reflected in the power to exclude.42 The Guidelines, as updated in 2019, take this approach, indicating that market power (the assessment of which takes into account both pre-existing market power and the market power derived from allegedly anticompetitive practices) may be reflected in the power to exclude; that is, an ability to restrict the output of other existing or potential market participants and 'thereby profitably influence price'. Here again, the updated Guidelines reserve discretion for the Bureau, indicating that the assessment of whether a firm holds a substantial degree of market power may depend on 'the body of relevant information and/or documents on the whole' and noting that the 'exact nature of the Bureau's analysis and the weight accorded to any particular piece of information or document will depend on the circumstances of the case'.43
The Guidelines note that, while market power can be measured through direct factors such as high profit margins or 'supracompetitive profitability or pricing', these factors can present analytical issues and may be inconclusive. The more common analysis will, therefore, use indirect indicia of market power that suggest the extent to which a firm or firms will be constrained from implementing anticompetitive price increases, either owing to existing competition or likely competitive entry. Indirect indicia considered by the Bureau include the 'structural characteristics' of a market (such as market shares and barriers to entry) and the effects of anticompetitive acts and countervailing power from customers or suppliers.
Notably, in a clear nod to the outcome of the TREB case, the updated Guidelines expressly contemplate that a firm 'that does not compete in a market may nonetheless substantially or completely control that market'. In such cases, the power to exclude competitors will often feature prominently in the Bureau's analysis, whereas market shares or supracompetitive profits may not be as central. This update to the Bureau's approach presumably is the reason for which the 2019 version of the Guidelines also de-emphasises a market share safe harbour, as discussed below.
iii Market share
There is no statutory threshold for market share that will necessarily give rise to market power, nor a statutory safe harbour below which a firm will not be considered dominant. However, market share is 'usually a necessary, but not sufficient'44 condition of finding market power, and will ordinarily be considered together with other factors. Market share may be measured on the basis of revenues, unit sales, sales or production capacity or natural resource reserves, depending on which 'best reflects the current and future competitive significance of competitors'.45 In addition to the actual share, the Bureau will consider the distribution of market share among a firm's competitors, as well as market share fluctuations.
Although the Bureau has historically taken the position that a single firm market share below 35 per cent will be considered unlikely to give rise to a finding of market power, the 2019 Guidelines state only that a market share below 50 per cent will 'generally only prompt further examination' if it is believed that the anticompetitive conduct is likely to result in increased market share in a reasonable period.46 On the other hand, a single firm market share above 50 per cent (or a combined share above 65 per cent, in the case of joint dominance) will 'generally prompt further examination'. In the Tele-Direct case, the Tribunal held that where market share is 80 per cent or greater, it will look for 'extenuating circumstances' and 'generally, ease of entry' to outweigh a prima facie finding of market power.47 In practice, contested abuse of dominance cases both before and after Tele-Direct have involved market shares of 80 to 100 per cent, usually in highly concentrated markets.
iv Barriers to entry; other factors
As market share is not determinative of market power, the Bureau will also consider the barriers to entry that may be present in the market, including:
- sunk investments (e.g., in equipment, infrastructure or research and development);
- regulatory barriers;
- whether the market is mature or depends on economies of scale or scope;
- network effects; and
- availability of scarce resources or inputs.
Market entry despite barriers to entry must be likely, timely and sufficient to prevent or discourage the exercise of market power.
The Guidelines recognise that, in some instances, customers will constrain market power, for example, through vertical integration or by encouraging entry or expansion of competitors. Markets that undergo rapid technological change or innovation, or some other material form of change, may warrant different consideration if this permits new or existing competitors to overcome the exercise of market power.
v Joint dominance
The words 'one or more persons' in Section 79(1)(a) explicitly recognise that two or more firms may have joint dominance. As explained in the Guidelines, the Bureau's approach to joint dominance is essentially similar to that for single firm dominance except that it is also necessary to find that control of the market is exercised jointly.
For purposes of the criminal conspiracy provisions of the Act, 'conscious parallelism', in itself, does not constitute an agreement, and the Bureau adopted this position in prior (2001) Abuse of Dominance Enforcement Guidelines, which also described factors that could be used to infer joint action in the civil context. The 2019 Guidelines simply state that '[s]imilar or parallel conduct by firms is insufficient' to establish joint dominance, and offer no further insight into the extent of joint conduct – or maximum level of intra-group competition – required to find joint control of the market. The threshold test for joint dominance has never been considered by the Tribunal as, although the Bureau has commenced three significant joint dominance cases, all have settled prior to a contested hearing.48
In addition to the application of the abuse of dominance provisions to joint dominance, since 2010 it has been possible to address coordinated conduct under Section 90.1, a civil provision that applies to agreements between competitors that substantially lessen or prevent competition.49
vi Attempted monopolisation
In contrast to the US Sherman Act, attempted monopolisation is not caught by the abuse of dominance provisions in Canada. The existence of market power at the time anticompetitive conduct is engaged in is implicit in the formulation of the statutory test, and would prohibit an application to the Tribunal on the basis of anticipated market power. The 2019 Guidelines, moreover, no longer refer to the possibility that the Bureau may investigate the conduct of a firm that is expected to acquire market power as a result of the allegedly anticompetitive conduct 'within a reasonable period of time'.50
Nonetheless, the updated Guidelines suggest that the Bureau may contemplate, if not necessarily 'attempted' monopolisation, the possible acquisition of market power where none existed previously. For example, the Guidelines do refer to anticompetitive conduct that permits the exercise of 'new or increased market power'.51 More generally, the post-TREB updates to the Guidelines (including, in particular, the Bureau's consideration of dominance by firms that do not compete directly in the relevant market or markets, and of the ability to exclude, as well as the de-emphasising of market shares) suggest that the Bureau may apply a nuanced and potentially broad interpretation of monopolisation.
Dominance itself is not proscribed in Canada. For an abuse of dominance to be found, two other statutory conditions in addition to market power must be met. The first of these requires that the dominant firm or firms have engaged or are engaging in a 'practice of anticompetitive acts', as set out in Section 79(1)(b). The second is an effects analysis of whether the practice has had, is having or is likely to have the effect of preventing or substantially lessening competition in a market, as set out in Section 79(1)(c). While apparently similar and often assessed on the basis of the same evidence, these are conceptually distinct tests.
Practice of anticompetitive acts
Although an illustrative list of 'anticompetitive acts' is provided in Section 78 of the Act, the list is not exhaustive, and in practice, the abuse of dominance provisions can apply to a wide range of anticompetitive conduct.
Whether an act will be considered 'anticompetitive' depends on the limiting principle of whether it has an intended negative effect on a competitor that is 'predatory, exclusionary or disciplinary'.52 This does not necessarily require subjective intent, and the Tribunal has held that intent can be inferred from the reasonably foreseeable consequences of the conduct or the circumstances in which it is undertaken.53
Further to the ultimate result in the TREB case, the Guidelines, as updated in 2019, take the position that 'certain acts not specifically directed at competitors could still be considered to have a predatory, exclusionary, disciplinary or some other anticompetitive purpose'.54 This interpretation would encompass 'facilitating practices' that do not themselves harm a competitor but permit coordination. It is broader than the interpretation that appeared to have been applied in the earlier Canada Pipe case, in which the requirement that an anticompetitive act be intended to harm a competitor was essential. The Tribunal's initial decision in TREB also arguably foreclosed the broader interpretation. However, as discussed above, the Tribunal's ruling upon reconsideration, as upheld by the Court of Appeal, leave open the possibility that a range of acts not specifically directed at one's competitor may constitute 'anticompetitive acts'.
Where anticompetitive intent has been inferred, it is possible to rebut a presumption that the purpose of conduct is anticompetitive by establishing that the conduct had a valid business purpose or justification. In Canada Pipe, it was held that a business justification must have a 'credible efficiency or pro-competitive rationale' and be one that 'relates to and counterbalances the anticompetitive effects or subjective intent of the acts'.55 However, the Guidelines take a broader view that a business justification, while not a defence, could be anything that provides an 'alternative explanation for the overriding purpose of the conduct'.56
A 'practice' of anticompetitive acts under the abuse provisions generally requires more than a single act, but could be met by a single act that has an ongoing or systemic effect or a 'lasting impact' in a market.57 A practice may also consist of different forms of anticompetitive conduct,58 not only repeated use of the same conduct, and can therefore in theory include otherwise innocuous conduct, if used in an anticompetitive manner in combination with other anticompetitive practices.
Substantial lessening or prevention of competition
An abuse of dominance will be subject to a remedy under the Act only if there is an actual or likely substantial lessening or prevention of competition. In principle, this test concerns competition rather than individual competitors.59
The prevailing test was formulated in Canada Pipe, and recently affirmed in TREB, as well as in the context of the evaluation of mergers under the Act.60 It is a 'but for' test that seeks to determine if it is likely that there would be substantially greater competition (past, present or future) in the absence of the impugned conduct.
As was the case prior to Canada Pipe, the test considers whether a practice contributes to the creation, preservation or enhancement of market power, which will be assessed in terms of whether there is substantial effect on market entry or expansion by new or existing competitors. However, in contrast to the test prior to Canada Pipe, it is a comparative, relative assessment, rather than a consideration of whether the absolute level of competition is substantial or sufficient.61 The Guidelines indicate that the Bureau will also consider factors such as whether, but for the practice, monetary prices would be lower, product quality, service, innovation or choice would be greater, or switching between products or suppliers would be more frequent.62 The prior (2012) version of the Guidelines listed similar factors but qualified them by describing the 'but for' scenarios as 'substantially' different, which may suggest that the 2019 Guidelines broaden the potential situations in which the Bureau may look into any given practice.63
ii Exclusionary abuses
The Act enumerates several practices in Section 78 that relate to the exclusion of a competitor, including:
- margin squeezing by a vertically integrated supplier;
- acquisition by a supplier of a customer;
- pre-emption of scarce facilities or resources;
- adoption of non-compatible product specifications; and
- exclusive dealing.64
The Guidelines specify that the list above is non-exhaustive and also reference tying and bundling and activities that increase customer switching costs. Moreover, the 2019 Guidelines refer more generally to other activities that 'increase a rival's costs', as was the case in the prior version, and add to this activities that may 'reduce their revenues'.65
The Tribunal and Canadian courts have also recognised numerous other exclusivity abuses in case law, including:
- meet-or-release and most-favoured nation clauses;66
- rights of first refusal;67
- automatic price increases;68
- long-term contracts;69
- negative option automatic renewal provisions;70
- costs or penalties, such as liquidated damages or excessive fees to switch suppliers, return goods or otherwise terminate contracts early;71
- the acquisition of competitors and inclusion of non-compete clauses in the acquisition agreements;72
- various kinds of loyalty or fidelity rebates,73 including discounts and allowances in exchange for the use of the supplier's logo and name;74
- exclusive networks;75
- market allocation;76
- in the real estate services cases, the use of a database in a way that could be exclusionary;77 and
- in the airport case, denying new catering suppliers access to an airport.78
The Act formerly contained per se criminal prohibitions against price discrimination and predatory pricing. When price maintenance was decriminalised with the repeal of those provisions in 2009, it was acknowledged that this conduct would remain subject to review under the abuse of dominance provisions where the conditions of Section 79 were met.79
The Act enumerates several examples of discriminatory or predatory conduct, including freight equalisation, introducing fighting brands selectively and temporarily, buying up product to prevent price erosion, and selling articles below acquisition cost.80 Prior cases have also considered the intimidation of competitors and customers through spurious or threatened litigation,81 cross-subsidisation82 and predatory pricing generally.83
The Guidelines provide that in the context of predatory pricing conduct, the Bureau will assess whether the predatory price is sufficient to cover the average avoidable (i.e., variable) costs of providing a good or service, taking into account whether competitors could match the price without incurring a loss, and whether an allegedly predatory price is being offered to meet competition.84
iv Exploitative abuses
As discussed above, the 2019 Guidelines appear to take a broad and flexible approach to the interpretation of anticompetitive acts. In particular, they do not explicitly exclude excessive pricing or similar exploitative abuses. Nonetheless, in principle, the Act does not prohibit such practices, except to the extent that they have an exclusionary, disciplinary or predatory purpose and likely effect.
V REMEDIES AND SANCTIONS
Since 2009, the Tribunal has had the discretion, in addition to ordering behavioural or structural remedies, to impose AMPs of up to C$10 million in the first instance or C$15 million for a 'subsequent order'.85
Pursuant to the Act, the Tribunal is required to consider various factors in determining the amount of an AMP, including the affected sales, actual or anticipated profits, the dominant firm's financial position, its history of compliance and 'any other relevant factor'.86 An unpaid AMP is a debt owed to the Crown and recoverable in any court of competent jurisdiction.
Although the stated purpose of AMPs in the Act is compliance and not punishment,87 the constitutionality of AMPs has been challenged in other contexts on the basis that they are punitive and therefore warrant the same procedural protections as criminal penalties.88 To date, the water heater rental industry cases (Reliance and Direct Energy) are the only ones in which AMPs have been sought by the Bureau and ultimately imposed.89
ii Behavioural remedies
The most basic remedy under Section 79 is an order prohibiting the continuation of a practice of anticompetitive acts. In addition, or as an alternative, the Tribunal has broad discretion to make any other order required to restore competition, where a prohibition order alone is not likely to be sufficient to restore competition in the market.90 Both consent agreements and prohibition orders can theoretically be imposed for an indefinite period.91
An interim order may be issued, on application by the Bureau on an ex parte basis, where the Tribunal finds that injury to competition cannot be adequately remedied by a later order, or in certain other specific circumstances, is likely to occur in the absence of the order.92
iii Structural remedies
The Tribunal's authority to make a restorative order explicitly extends to an order to divest assets or shares, if reasonable and necessary to overcome an abuse of dominance, although to date divestiture has never been ordered under Section 79.
The Monopolistic Practices Directorate of the Bureau's Mergers and Monopolistic Practices Branch investigates potentially anticompetitive business practices, such as abuse of dominance and restrictive vertical trade practices, as well as certain types of anticompetitive agreements or arrangements.93
Obtaining an order for a remedy under the abuse of dominance provisions in principle requires an application by the Commissioner of Competition to the Tribunal, a specialised competition court with judicial and lay members that hears and decides non-criminal matters under the Act.94 Cases before the Tribunal are subject to rules of procedural practice, which, inter alia, provide for documentary, written and oral discovery on a relevance standard.95 Decisions of the Tribunal may be appealed to the Federal Court of Appeal, and ultimately to the Supreme Court of Canada. Courts may refer matters back to the Tribunal for redetermination.
However, it is increasingly common for alleged abuses of dominance to be investigated and initially challenged outside the formal Tribunal process with a view to seeking a negotiated resolution. Negotiated settlements are then recorded in a 'consent agreement', which is registered with the Tribunal and, once registered, carries the legal force of an order of the Tribunal.96 Firms that volunteer to make changes in their business practices are generally required to formalise these commitments in a consent agreement.97
Consent agreements must be 'based on terms that could be the subject of an order of the Tribunal', but consent agreements filed with the Tribunal are not subject to its substantive oversight; nor are full details of the conduct leading to the agreement made public. Given the availability of consent agreements, abuse of dominance investigations often settle before reaching the contested hearing stage. On the other hand, this framework has been observed to be one in which respondents may ' “dig in”, or at least protract settlement discussions, to avoid a restrictive consent agreement'.98
The Act provides the Bureau with numerous tools to investigate alleged abuses of dominance, including the ability to obtain a judicial order under Section 11 of the Act to compel oral examination, document production or a written response to questions, where the Bureau believes grounds may exist for an order. Section 11 orders can extend to affiliates outside Canada of a Canadian corporation that is subject to the order, and can also be used to obtain information from third-party customers, suppliers and competitors. The Bureau has increasingly made use of this tool to compel production in recent enforcement activity, such as the inquiries involving Loblaw, the smartphone industry, the VAA and online search and advertising, and in several recent cases it has highlighted its reliance on third parties in particular.99 The Bureau can also obtain a warrant to enter and search premises and seize documents, or, in 'exigent' circumstances, exercise these rights without a warrant.100
Various procedural limitations are set forth in statute. Applications for remedies must be brought to the Tribunal no later than three years after a practice has ceased.101 The Commissioner may not bring an application under both the abuse of dominance provisions and either the criminal conspiracy provisions or the civil price maintenance, competitor collaboration or substantive merger provisions.102 However, the Bureau may, and often does, bring applications under both the abuse of dominance provisions and provisions relating to other vertical trade practices. Moreover, it is not uncommon for an investigation under the abuse provisions to immediately precede or follow the Bureau's examination of the same firm under other provisions. For instance, the Bureau's inquiry into certain practices of the grocery retailer Loblaw, based on potential abuse of dominance concerns, immediately followed its review of Loblaw's acquisition of a large pharmacy retailer (during which, according to the Bureau's statement, it uncovered evidence that certain of the grocery retailer's policies 'may have been implemented for an anticompetitive purpose'). In turn, an investigation into alleged price-fixing of bread products among Loblaw and other retailers appears to have immediately followed the abuse inquiry.103
In practice, the Bureau also frequently collaborates with its international counterparts. For instance, it consulted with the US Federal Trade Commission and the European Commission in the course of its investigation into online search and advertising practices, and indicated that it would continue to closely follow international investigations into similar alleged conduct. The Bureau has similarly referenced communications with foreign counterparts in the recent smartphones inquiry.
VII PRIVATE ENFORCEMENT
There is no private right of action to obtain remedies for abuse of dominance in Canada. Only the Commissioner may bring applications or register consent agreements with the Tribunal.
There is also no statutory right to obtain damages as a result of a finding of an abuse of dominance, although under Section 36 of the Act a private right of action is available where an order of the Tribunal has been violated.104
Attempts by private litigants to bring cases on the basis of civil conspiracy or torts alleging an abuse of dominant position have not been recognised for the reason that, unlike the criminal provisions, the civil provisions of the Act are presumptively lawful unless and until an order has been granted by the Tribunal.105
However, Section 103.1 of the Act does allow private parties to apply for leave to bring applications before the Tribunal under the refusal to deal (Section 75), price maintenance (Section 76), and exclusive dealing, tied selling and market restriction (Section 77) provisions of the Act, where the underlying requirements of those sections are met. While the remedies available under those provisions do not include AMPs or damages, and while it is costly to bring an action, private litigants could in theory use Section 103.1 to prohibit certain conduct that might otherwise be pursued as an abuse of dominance, or to draw attention to related abuse of dominance concerns, providing private parties with a 'back door' method of privately challenging abuse of dominance.106
Private parties are also entitled to file a complaint with the Bureau with regard to the abuse of dominance provisions. Consumer and competitor complaints are a primary source of leads for Bureau investigations.
VIII FUTURE DEVELOPMENTS
The following expected developments are likely to be of particular relevance for the law of abuse of dominance in Canada in the coming year:
- the outcomes of the Bureau's inquiry into low-cost airline pricing;
- further enforcement and commentary reflecting the outcomes in TREB and VAA, particularly as they relate to firms that do not compete in markets in which they may be dominant, and further development in particular of the 'plausible competitive interest' concept as well as legitimate business justifications;
- continued focus on markets within the digital economy and innovative markets generally; and
- continued attention on the pharmaceutical industry in particular, following the release of the updated IPEGs and recent investigations.
1 Arlan Gates is a partner and Eva Warden is an associate at Baker McKenzie LLP. The authors thank Jacqueline Rotondi, an associate at Baker McKenzie LLP, for her valuable contribution to the update of this chapter.
3 These were recently imposed in the water heater rental industry. The Commissioner of Competition v. Reliance Comfort Limited Partnership, CT-2012-002: www.ct-tc.gc.ca/CasesAffaires/CasesDetails-eng.asp?CaseID=355; The Commissioner of Competition v. Direct Energy Marketing Limited, CT-2012-003: www.ct-tc.gc.ca/CasesAffaires/CasesDetails-eng.asp?CaseID=356.
4 Competition Bureau, Enforcement Guidelines on the Abuse of Dominance Provisions (Sections 78 and 79 of the Competition Act) (7 March 2019): www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04420.html.
5 The former predatory pricing guidelines also addressed the Bureau's approach to predatory pricing under Section 50 of the Act, which was repealed in 2009 together with the Act's former criminal prohibition against price discrimination.
6 Competition Bureau, Enforcement Guidelines on the Abuse of Dominance Provisions (Sections 78 and 79 of the Competition Act) (July 2001); Predatory Pricing Enforcement Guidelines (July 2008); Information Bulletin on the Abuse of Dominance Provisions as Applied to the Telecommunications Industry (June 2008); the Abuse of Dominance Provisions (Sections 78 and 79 of the Competition Act) as Applied to the Grocery Sector (November 2002); and Draft Enforcement Guidelines on Abuse of Dominance in the Airline Industry (February 2001).
7 A binding written opinion on the applicability of Section 79 may be requested from the Bureau for a fee pursuant to Section 124.1 of the Act, but in practice this is infrequently used.
8 Guidelines, Preface.
9 (19 February 2018) www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04342.html. See also the Bureau's 2017–2018 Annual Plan, the focus of which is 'Competition is key – Creating the conditions for innovation' (18 May 2017): www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04241.html. In its position statement regarding the recent investigation into online search and advertising practices (see the table under Section II.v), the Bureau also flagged that the digital economy, 'including the increasing competitive significance of data, will continue to play a crucial role for Canadian businesses and consumers. Robust competition policy and enforcement in this sector will nurture a competitive and innovative Canadian marketplace.'
10 In the online search and advertising case, the Bureau stated that it will be 'closely following' the subject's conduct and 'actively monitoring' the digital marketplace. See Section II.iv for further background on the pharmaceutical investigations and Section II.v for a full summary of recent cases.
11 Toronto Real Estate Board v. Commissioner of Competition, 23 August 2018, case 37932, dismissing application for leave to appeal 2017 FCA 236. The TREB case followed an earlier, successful challenge against the Canadian Real Estate Association (CREA) arising from allegations that CREA and its members had used their control of the MLS and related trademarks to impose exclusionary restrictions that inhibited or prevented fee-for-service, flat-fee and other 'reduced service' models from effectively competing in the residential real estate services market. The CREA case was resolved by way of a consent agreement filed with the Tribunal in 2010 that prohibits CREA from adopting, maintaining or enforcing discriminatory rules for a period of 10 years (The Commissioner of Competition v. The Canadian Real Estate Association, Consent Agreement, CT-2010-002: www.ct-tc.gc.ca/CasesAffaires/CasesDetails-eng.asp?CaseID=325).
12 Real estate boards and associations in other Canadian jurisdictions and the United States typically allow their members access to, and use of, their MLS information to provide internet-based services.
13 CT-2011-003: www.ct-tc.gc.ca/CasesAffaires/CasesDetails-eng.asp?CaseID=347. The Tribunal determined that based on its finding under Section 79(1)(b), the application would necessarily also fail the other statutory tests under Sections 79(1)(a) and 79(1)(c). The Tribunal noted in obiter that a case could potentially be brought instead under the civil horizontal agreement provisions in Section 90.1 of the Act.
14 Among other considerations, the Tribunal in its April 2016 decision found that the restrictions substantially reduced the degree of non-price competition in the supply of MLS-based residential real estate brokerage services, relative to the degree that otherwise would likely exist.
15 Canada (Commissioner of Competition) v. Canada Pipe Co, 2006 FCA 233 (Federal Court of Appeal). As leave to appeal the Court of Appeal's decision to the Supreme Court of Canada was denied, the Court of Appeal decision is a binding precedent.
16 In the initial decision, the Tribunal pointed in part to the Court of Appeal's observation in Canada Pipe that eight of the nine examples of anticompetitive acts enumerated in Section 78 of the Act describe harms against competitors, and harm to a competitor could be implied in the ninth example. It also noted that a proviso in Section 79(4) implies that the dominant firm must compete in the market. These provisions are further discussed in Section IV.
17 The Commissioner of Competition v. Vancouver Airport Authority, Notice of Application, CT-2016-015: https://www.ct-tc.gc.ca/CMFiles/CT-2016-015_Reasons%20for%20Order%20and%20Order_429_67_10-17-2019_9649.pdf.
18 The Commissioner of Competition v. Vancouver Airport Authority, Notice of Application, CT-2016-015: www.ct-tc.gc.ca/CasesAffaires/CasesDetails-eng.asp?CaseID=404.
19 The Commissioner also argued that there was a separate airside access market. While the Tribunal agreed, it ultimately concluded that nothing turned on it. The Tribunal determined that VAA controlled the galley handling services market by virtue of its control over a critical input to that market (airside access).
21 Specifically, Act, Subsection 79(5).
22 See the summary table in Section II.v.
23 Competition Bureau, 'Patent Litigation Settlement Agreements: A Canadian Perspective', 23 September 2014: www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03816.html.
24 See for example 'Intellectual property & competition law: innovation in the 4th industrial revolution' (Remarks by John Pecman, Commissioner of Competition, 10 June 2016): www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04103.html.
25 Competition Bureau, 'Competition Bureau warns pharmaceutical industry that any further obstruction to the manufacture of generic alternatives will not be tolerated', 2 April 2020: https://www.canada.ca/en/competition-bureau/news/2020/04/competition-bureau-warns-pharmaceutical-industry-that- any-further-obstruction-to-the-manufacture-of-generic-alternatives-will-not-be-tolerated.html.
26 Health Canada, 'Notice of clarification to drug manufacturers and sponsors – Risk Management Plans', 4 July 2019: https://www.canada.ca/en/health-canada/services/drugs-health-products/medeffect-canada/notice-clarification-drug-manufacturers-sponsors-risk-management-plans.html.
27 Competition Bureau, Position Statement (19 April 2016): www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04066.html.
28 Competition Bureau, Position Statement (21 November 2017): www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04310.html.
29 Competition Bureau, Position Statement (6 January 2017): www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04182.html.
30 Competition Bureau, Position Statement (21 November 2016): www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04157.html.
31 Competition Bureau, Position Statement (17 January 2018): http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04331.html.
32 According to the Bureau, the company is dominant in both the market for 'content management' and the market for 'online distribution' software. Specifically, it was alleged that after a majority of tour operators adopted Softvoyage's content management software, the company used exclusivity clauses in its contracts requiring those tour operators to only use Softvoyage's distribution software. According to the Bureau's position statement, Softvoyage also prohibited tour operators from 'extracting or using their own data managed in Softvoyage's content management software'.
33 Competition Bureau, Position Statement (20 December 2018): www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04407.html.
34 Competition Bureau, Position Statement (20 February 2019): https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04418.html.
35 As reported in the media; for example, CBC News, 'Competition Bureau checks WestJet's discount airline Swoop for predatory pricing' (12 December 2018), online: www.cbc.ca/news/business/westjet-swoop-competition-bureau-1.4942490. In previous investigations relating to air passenger and cargo services in Northern Canada, the Bureau similarly considered, inter alia, possible predatory pricing practices under the abuse of dominance provisions. See Competition Bureau, Position Statement (22 August 2017): www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04295.html.
36 Competition Bureau, Position Statement (02 April 2020): https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04524.html.
37 Canada (Director of Investigation and Research, Competition Act) v. NutraSweet Co (1990), 32 CPR (3d) 1.
38 The benchmark for 'significant' and 'non-transitory' is a 5 per cent increase in price, sustained over a one-year period. The relevant price is that which would exist in the absence of the anticompetitive acts (often not the current price). The 'price' can include not only the nominal price, but also qualitative factors, such as product quality, choice, service, support or innovation.
39 See Competition Bureau, Merger Enforcement Guidelines (2011): www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03420.html.
40 One distinction between the two approaches is the Bureau's acknowledgment, in the abuse of dominance analysis, of a potential 'overly broad product market definition' if current prices – that is, price levels where market power has already been exercised – are taken into account (the 'cellophane fallacy'). See Guidelines, Section 2.1.
41 Guidelines, Sections 1A and 1B.
42 TREB, Tribunal's decision upon reconsideration (2016) at 173-175. See also NutraSweet, indicating that to substantially or completely control is synonymous with holding market power.
43 Guidelines, Section 1C.
44 Guidelines, Section 1C,
45 Guidelines, Section 1C.
46 Despite the removal of the 35 per cent threshold in the updated Guidelines, the 50 per cent threshold nonetheless remains generally consistent with the long-standing finding of the Tribunal in the Laidlaw case that a market share below 50 per cent would not lead to a prima facie finding of dominance. Canada (Director of Investigation and Research) v. Laidlaw Waste Systems Ltd (1992), 40 CPR (3d) 289.
47 Canada (Director of Investigation and Research) v. Tele-Direct (Publications) Inc (1997), 73 CPR (3d) 1. Separately, in a case involving a sole supplier, the Tribunal presumed market power in the absence of 'evidence that there [were] no barriers to entry'; Director of Investigation and Research v. D&B Companies of Canada Ltd (1995), 64 CPR (3d) 216.
48 Canada (Director of Investigation & Research) v. Bank of Montreal (1996), 68 CPR (3d) 527; Canada (Director of Investigation & Research) v. AGT Directory Ltd  CCTD No. 24; Canada (Commissioner of Competition) v. Waste Services (CA) Inc and Waste Management of Canada Corporation, Consent Agreement, CT-2009-003. However, in the 2009 Waste Services case, the Bureau's allegations against two commercial waste firms appear to have been based on parallel conduct combined with high combined market share of greater than 80 per cent. The firms in question both used long-term contracts that imposed highly restrictive terms on customers, such as automatic renewal clauses and severe penalties for early termination; the Bureau did not suggest that the challenged conduct involved any coordination or agreement.
49 Some commentators foresee a complementary role for the provisions, with Section 79 targeting conduct that reduces competition outside the oligopoly, and Section 90.1 targeting competition between the oligopoly members. See M Aitken and E Davis, 'The Changing Regulation of Canadian Oligopolies: Complementary Enforcement Roles for Section 90.1 and Joint Dominance', Conference Paper, American Bar Association Section of Antitrust Law Spring Meeting, 12 April 2013. Moreover, as noted in Section VI, the responsibilities of the 'Monopolistic Practices Directorate' cover both abuse of dominance and certain types of anticompetitive agreements or arrangements.
50 This was expressly contemplated in the prior (2012) version of the Guidelines, Section 2.3.
51 Guidelines, Section 3 (describing conduct that 'lessens' competition). Elsewhere, the Guidelines refer to impugned practices causing 'a materially greater degree of market power to exist than in the absence of the practice', without specifying whether this would necessarily exclude an acquisition of new market power.
52 Canada Pipe at 66.
54 Guidelines, Section 2B.
55 Canada Pipe at 73.
56 Guidelines, Section 2B(iv).
57 Guidelines, Section 2A.
59 The Act does, however, require that the analysis take into account whether an impugned practice results from a market participant's 'superior competitive performance', which could be a legitimate cause of a relative decrease in competition (Section 79(4)).
60 Tervita Corporation v. Canada (Commissioner of Competition), 2015 SCC 3. In its decision of 22 January 2015, the Supreme Court of Canada considered whether, but for the merger, the acquired party would likely have entered the relevant market as a competitor.
61 Guidelines, Section 3. See also the Court of Appeal's 2017 decision in TREB at 66.
62 Guidelines, Section 3.
63 Guidelines (2012 version), Section 4, indicating that the Bureau may consider 'whether, in the absence of the practice of anticompetitive acts, consumer prices might be substantially lower; product quality, innovation, or choice might be substantially greater; or consumer switching between products or suppliers might be substantially more frequent'.
64 Act, Section 78(a), (b), (e), (j) and (h).
65 Guidelines, Section 3.2.1.
66 NutraSweet; D&B regarding most-favoured nation clauses.
71 Direct Energy and Reliance; Laidlaw; D&B; Waste Services.
72 Canada Pipe; Laidlaw.
73 Canada Pipe; NutraSweet.
75 Bank of Montreal.
76 AGT regarding allocation of national advertisers.
77 CREA; TREB.
79 For example, see Competition Policy Review Panel, Compete to Win (27 June 2008) at 58: www.ic.gc.ca/eic/site/cprp-gepmc.nsf/eng/h_00040.html.
80 Act, Section 78(c), (d), (f) and (i).
82 NutraSweet; Tele-Direct.
83 Commissioner of Competition v. Air Canada, 2003 Comp Trib 13; Tele-Direct.
84 Guidelines, Section 2B.
85 AMPs had previously been available in the domestic airline industry only.
86 Act, Section 79(3.2).
87 Act, Section 79(3.3).
88 Constitutional arguments challenging AMPs under the civil misleading advertising provisions of the Act, for which the same level of AMPs is available as for abuse of dominance, were made but effectively rejected in Canada (Competition Bureau) v. Chatr Wireless Inc, 2013 ONSC 5315 (Ont Sup Ct): http://canlii.ca/t/g04cv.
89 Reliance was not a fully contested case. The C$5 million penalty obtained by the Bureau was the result of a consent agreement.
90 Act, Section 79(2).
91 In contrast, criminal prohibition orders and orders regarding civil deceptive marketing practices are subject to a statutory maximum limitation period of 10 years.
92 Act, Section 103.3. Interim orders are issued for an initial term of 10 days but may be extended up to twice for 35 days each.
93 Following the internal restructuring within the Bureau that became formally effective on 1 April 2015, the Mergers and Monopolistic Practices Branch now combines the Mergers Directorate, responsible for merger review, and the Monopolistic Practices Directorate. The Mergers Directorate and Monopolistic Practices Directorate were formerly known as the Mergers Branch and Civil Matters Branch respectively. Separately, the Cartels and Deceptive Marketing Practices Branch is focused on cartels and deceptive business practices. Competition Bureau, 'Competition Bureau restructures to maximise its contribution to a more effective marketplace' (Announcement, 25 March 2015): www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03897.html.
95 Competition Tribunal Rules, SOR/2008-141: http://laws-lois.justice.gc.ca/eng/regulations/SOR-2008-141.
96 Act, Section 105.
97 Guidelines, Section 1.
98 G Addy, J Bodrug and C Tingley, 'Abuse of Dominance in Canada: Reflections on 25 Years of Section 79 Enforcement', Canadian Competition Law Review, Vol. 25, No. 2 (2012), p. 308.
99 For instance, the online search and advertising matter, which was a complaint-driven inquiry, involved extensive consultations with industry and economic experts, and interviews with a range of market participants. Similarly, in the Softvoyage case, the Bureau gathered information from multiple sources, including tour operators, travel agencies, industry associations, past and potential competitors and 'businesses offering similar products and services in foreign markets'. The Bureau has indicated that in the inquiry involving biologic and biosimilar drugs (discontinuation announced in February 2019), it 'interviewed key market participants, including pharmaceutical manufacturers, public and private insurers, hospitals, physicians, infusion clinic networks and trade associations, while also gathering relevant records from many of these parties'. In some cases, these communications may be conducted informally and voluntarily, as the Bureau does not always specify whether it relied on its formal powers under Section 11 in engaging third parties.
100 Act, Section 15.
101 Act, Section 79(6).
102 Act, Sections 45 or 49, 76, 90.1 or 92 respectively.
103 These allegations are outlined in court documents relating to the inquiry concerning alleged activities of Canada Bread Company, Limited; Weston Foods (Canada) Incorporated; Loblaw Companies Limited; Wal-Mart Canada Corporation; Sobeys Incorporated; Metro Incorporated; Giant Tiger Stores Limited and other persons. The case has also been reported in the media. See, for example, CBC, 'Bakers, grocers met to reach deals on bread prices, competition watchdog alleges' (1 February 2018): www.cbc.ca/news/business/competition-bureau-bread-price-fixing-1.4512332.
104 Section 36 of the Act applies to breaches of the criminal provisions of the Act; a breach of an order of the Tribunal is a criminal offence.
105 For example, Chadha v. Bayer Inc (1998), 82 CPR (3d) 202 (Ont Gen Div). However, in an action against TREB, CREA and their directors and officers alleging in part that they had breached the terms of CREA's consent agreement, the Court of Appeal in refusing a motion to strike the statement of claim found that a reasonable cause of action was disclosed (Dale v. Toronto Real Estate Board, 2012 ONSC 512).
106 In several past refusal to deal leave applications, the plaintiffs alleged (or implied) that the defendant suppliers were dominant. See, for example, Barcode Systems Inc v. Symbol Technologies Canada ULC; Allan Morgan and Sons Ltd v. La-Z-Boy; Mrs O's Pharmacy v. Pfizer; Paradise Pharmacy Inc v. Novartis; Broadview Pharmacy v. Wyeth; Nadeau Ferme Avicole Limitee/Nadeau Poultry Farm Limited v. Groupe Westco Inc and Groupe Dynaco, Cooperative Agroalimentaire and Volailles Acadia SEC and Volailles Acadia Inc/Acadia Poultry Inc; Canadian Standard Travel Agent Registry v. International Air Transport Association; and Swenson Inc v. Trader Corporation.