Competition commissioner has a busy year in Canada

By Andrew D Little and Kyle Donnelly, Bennett Jones LLP
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Canada’s commissioner of competition was very active in 2012. As the person responsible for enforcing the Competition Act, the commissioner and staff at the Competition Bureau inquire into potentially anti-competitive activities and transactions affecting Canadian markets. The commissioner may then commence proceedings before Canada’s independent Competition Tribunal, concerning merger transactions, abuse of dominance, anti-competitive agreements that lessen or prevent competition substantially, refusal to deal, or price maintenance. Anti-competitive activities such as price-fixing conspiracies may lead to criminal charges.

Mindful of growing interest in competition law in India and elsewhere, the following is a selection of interesting developments in Canada in 2012.

Mergers: In May 2012, the Competition Tribunal ruled in favour of the commissioner in the first challenge to a merger since 2005. Significantly, the transaction had already closed and was below the threshold for mandatory pre-merger notification. The tribunal declined to dissolve the merger, instead ordering the respondent CCS Corporation to divest the shares or assets of a subsidiary that owned a hazardous waste landfill site.

Andrew Little
Andrew Little

CCS obtained a stay pending an appeal to the Federal Court of Appeal. In December, the Federal Court of Appeal heard the appeal and reserved its decision.

Air Canada and United Continental, its US partner airline, entered into a registered consent agreement with the commissioner in October, resolving proceedings initiated by the commissioner in June 2011, under both the merger provisions and new provisions of the Competition Act relating to non-criminal agreements or arrangements between competitors that came into force in March 2010. On 14 key Canada-US routes, the consent agreement prohibits the airlines from coordinating prices, coordinating the number of seats available at each price, pooling revenue or costs, or sharing commercially sensitive information.

Noteworthy Competition Bureau publications include revised Enforcement Guidelines on the Merger Review Process, which provide more detail on the timing for review of transactions and the information-gathering processes used during merger review, particularly the supplementary information request process.

The bureau also began publishing monthly reports of concluded merger reviews and published six position statements. The statements are designed to communicate the results and briefly describe the bureau’s analysis of a particular proposed merger.

Abuse of dominance: The tribunal heard the commissioner’s abuse of dominance application against The Toronto Real Estate Board (TREB) over five weeks in September-October. The proceeding concerns TREB members’ ability to offer real estate brokerage services to their customers through virtual office websites, using a data feed of multiple listing service (MLS) information from TREB.

The commissioner seeks to prohibit TREB from enforcing certain of its MLS rules and contract provisions with its members that restrict their use of data about historical listings, including prices of sold properties; and to require TREB to include such historical listings in the data feed being provided to members.

Kyle Donnelly
Kyle Donnelly

On 20 December, the commissioner commenced two abuse of dominance applications related to the market for the supply of natural gas water heaters. The applications allege that the respondents have abused their dominant positions in certain geographic markets by imposing policies that make it harder to return a rented water heater and switch suppliers. In addition to seeking prohibition orders, the applications ask the tribunal, for the first time in a Canadian abuse of dominance case, to impose a financial penalty against the respondents.

The TREB application and the CCS merger appeal are expected to be decided in the next few months. They may provide guidance on the scope of substantial prevention of competition under the abuse of dominance and mergers sections of the Competition Act. Currently, there is much less case law on what it means to prevent competition substantially, compared with what it means to lessen competition substantially.

Price maintenance: The tribunal heard the commissioner’s price maintenance application against Visa and MasterCard in May and June. The commissioner seeks to prohibit Visa and MasterCard from implementing or enforcing no-surcharge rules on merchants, under which merchants may not add a fee to a transaction when a customer uses a Visa- or MasterCard-branded credit card for payment; and to bar the respondents’ honour-all-cards rules, which require merchants that accept a Visa- or MasterCard-branded credit card to accept all of that brand’s credit cards, including premium cards that engage higher fees payable by merchants. Visa and MasterCard, supported by two intervenors, strongly opposed the application. The outcome of this case is highly anticipated by businesses and consumers. It will be the tribunal’s first such decision since significant amendments to the Competition Act in 2009.

Andrew D Little is a partner and Kyle Donnelly is an associate lawyer at Bennett Jones LLP in Toronto. See www.bennettjones.com for an expanded version of this article with additional topics.

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