Deal Me Out: Clarifying The Test For Leave In Competition Act Refusal To Deal Cases

Overview

For forty years, Canada has had a "refusal to deal" law which allows the Competition Tribunal to order firms to accept, or prevent them from cutting-off supply to customers for their products in certain circumstances. Between 1976 and 2002, only the Commissioner of Competition could bring refusal to deal cases to the Tribunal. That changed in 2002, when Canada's Competition Act1 was amended to permit private parties to bring cases to the Tribunal in their own name, with leave of the Tribunal. On January 4, 2016, the Tribunal released its latest decision on a private application for leave to commence a refusal to deal application2. In reaching this conclusion, the Tribunal re-articulated its approach to deciding whether to grant leave to commence a private application under section 75 of the Act, and offered valuable guidance on the analysis of "directly and substantially affected" under the first part of the leave test.

Background Case Facts

Audatex Canada ULC ("Audatex") was a provider of data and software solutions to Canadian automobile insurance companies and repair shops. Audatex described its "primary business" to be the provision of two services: "total loss valuation" and "partial loss estimating". The total loss valuation services involved generating total loss valuation for damaged automobiles based on information from automobile sales listings and preparing valuation reports for insurance company customers. A key input for providing such services was the automobile sales listings data. The partial loss estimating services referred to the automobile repair estimates offered to both insurance companies and repair shops. Unlike total loss valuation services, partial loss estimating services did not require automobile sales listings data as an input.

Trader Corporation ("Trader") and Marktplaats B.V. ("Marktplaats") were two companies that provided online automobile classified advertisements services. Both companies refused to supply their automobile sales listings data to Audatex on the basis that they had entered into exclusive supply agreements with CarProof Corporation ("CarProof"). CarProof used automobile sales listings data to produce detailed vehicle-history reports for use by prospective used car sellers and buyers. CarProof also sublicensed some of the data to other industry participants. Audatex tried to negotiate a satisfactory sublicense agreement with CarProof to gain access to Trader and Marktplaats automobile...