Increased Enforcement For Restrictive

Following several years of relative inactivity, the Canadian Commissioner of Competition (the 'Commissioner') filed two applications with the Competition Tribunal ('Tribunal') in 2010 for relief under restrictive trade practices provisions of Canada's Competition Act (the 'Act'), and in 2009 secured a consent agreement in another matter without the need for full proceedings. This represents a marked increase in enforcement action by the Commissioner under these provisions and may signal a resurgence in the Commissioner's willingness to pursue complex cases that typically require substantial resources and time to resolve. 26

By way of background, enforcement action under the Act can generally take one of three forms: (i) prosecution pursuant to a criminal provision of the Act (e.g., conspiracy, bid-rigging); (ii) application before the Tribunal for relief under a civil "reviewable matters" provision of the Act; and (iii) a private action for damages resulting from violation of a criminal provision of the Act or non-compliance with an order of the Tribunal or a court.

In addition to mergers, the civil "reviewable matters" provisions of the Act address "restrictive trade practices" including abuse of dominance; exclusive dealing; tied selling; market restriction; refusal to deal; price maintenance; and, agreements or arrangements between competitors. The price maintenance and competitor agreements provisions were introduced as part of a package of major amendments to the Act in 2009 that also revised the criminal conspiracy provision to establish a per se offence for agreements between competitors to fix prices, allocate markets or restrict output; eliminated the criminal prohibitions on price maintenance, price discrimination and predatory pricing; and introduced significant administrative monetary penalties for abuse of dominance.

The Commissioner can apply to the Tribunal for relief in respect of conduct that contravenes the restrictive trade practices provisions (listed above). Potential relief includes prohibiting the conduct, imposing steps necessary to overcome the anticompetitive effects of the conduct and, in the case of abuse of dominance, an administrative monetary penalty ('AMP') of up to C$10m for an initial finding of non-compliance (there has so far not been a case of abuse of dominance where AMPs were sought). In addition, private parties can bring applications for relief under the refusal to deal, exclusive dealing, tied selling and market restriction, and price maintenance provisions, but only with leave of the Tribunal.1

While Canadian enforcement of criminal cartel activities has largely tracked the heightened enforcement activities in other jurisdictions such as the US and the EU, the same cannot be said of restrictive trade practices over the past decade. Until last year, the Commissioner had not initiated a contested proceeding under these provisions since Canada (Commissioner of Competition) vs. Canada Pipe Co.2 – an abuse of dominance case that commenced in 2002 and ultimately settled in 2007. Although a number of private parties have sought leave to bring proceedings, principally under the refusal to deal provision, most of these applications have been denied and only two cases have proceeded to a full hearing.

Notably, however, in 2009, the Commissioner did secure a consent agreement with respect to alleged anti-competitive conduct by jointly dominant firms in the commercial waste collection business in central Vancouver Island;3 the matter was resolved without the need for a contested proceeding before the Tribunal. Additionally, and particularly...