Exclusive Dealing

Section 77 of the Competition Act permits the Commissioner of Competition or a private party (with leave of the Competition Tribunal) to make an application to the Competition Tribunal where exclusive dealing has been engaged in by a major supplier of a product.

Exclusive dealing is defined as a practice whereby a supplier requires a customer as a condition of supplying product or induces a customer by offering enhanced purchase terms to deal only or primarily in the supplier's products or to refrain from dealing in a particular kind of product except as supplied by the supplier.

Exclusive dealing arrangements are not necessarily problematic. In order to bring a successful application to the Competition Tribunal, the Commissioner must prove:

    (a) a "practice" of exclusive dealing (not just an isolated incident);

    (b) the practice is engaged in by a major supplier of a product in a market, or is widespread in a market;

    (c) the exclusive dealing is likely to impede entry or expansion of a firm or a product into a market or have other 
         exclusionary effects; and

    (d) the result will be that competition is, or is likely to be, lessened substantially.

In such circumstances, the Competition Tribunal may make an order prohibiting any or all of the suppliers engaged in the practice of exclusive dealing, from continuing to engage in that conduct. As exclusive dealing is a reviewable matter and not an offence, exclusive dealing is technically not prohibited until an order has been obtained from the Competition Tribunal.

Tied Selling

Section 77 of the Competition Act permits the Commissioner of Competition or a private party (with leave of the Competition Tribunal) to make an application to the Competition Tribunal where a supplier has engaged in tied selling.

Tied selling is defined as a practice whereby a supplier requires a customer as a condition of supplying product or induces a customer by offering better purchase terms to either purchase another product from the supplier or refrain from using another product that is not the supplier's.

Tied selling arrangements are not necessarily problematic. In order for the Commissioner (or a private party) to successfully bring an application to the Competition Tribunal to prevent a supplier from engaging tied selling, the Commissioner must prove:

    (a) a "practice" of tied selling (not just an isolated incident);

    (b) the practice is engaged in by a major supplier of a product in a market or is widespread in a market;

    (c) the tied selling is likely to impede entry or expansion of a firm or a product into a market or have other exclusionary effects; and

    (d) the result will be that competition is or is likely to be lessened substantially.

In such circumstances, the Competition Tribunal or a private party (with leave from the Competition Tribunal) may make an order prohibiting any or all of the suppliers engaged in the practice of tied selling, from continuing to do so. As tied selling is a reviewable matter and not an offence, tied selling is not prohibited until the Commissioner has obtained an order from the Competition Tribunal prohibiting the conduct.

Market Restriction

The Commissioner of Competition or a private party (with leave of the Competition Tribunal) may make an application to the Competition Tribunal where a supplier has engaged in market restriction.

Market restriction is defined in section 77 of the Competition Act as a practice whereby a supplier, as a condition of supplying a product, requires the customer to supply a product only in a defined market, or penalizes the customer for supplying a product outside that market.

Market restriction arrangements are not necessarily problematic. In order to obtain an order from the Competition Tribunal prohibiting the conduct, the Commissioner must prove:

    (a) a "practice" of market restriction (not just an isolated incident);

    (b) the practice is engaged in by a major supplier of a product in a market or is widespread in a market; and

    (c) the practice is likely to substantially lessen competition in relation to the product.

In such circumstances, the Competition Tribunal may make an order prohibiting any or all of the suppliers engaged in the practice of market restriction, from continuing to do so. As market restriction is a reviewable matter and not an offence, market restriction is not prohibited until an order has been obtained from the Competition Tribunal.

Abuse of Dominant Position

Section 79 of the Competition Act permits the Commissioner of Competition to apply to the Competition Tribunal for an order prohibiting anti-competitive acts engaged in by one or more dominant market participants. Private persons may not apply to the Competition Tribunal in respect of abuse of dominant position.

Before issuing an order under this provision, the Competition Tribunal must find that:

    (a) one or more persons substantially or completely control a class of business, throughout Canada or in any area in Canada;

    (b) such persons have engaged in a practice (rather than an isolated incident) of anti-competitive acts; and

    (c) the practice has or is likely to have the effect of preventing or lessening competition substantially in a market.

Section 78 of the Competition Act lists some anti-competitive acts, but the Competition Tribunal is able to determine that other acts are also anti-competitive acts within the meaning of section 79. The acts listed in section 78 are:

    (a) price squeezing by a vertically integrated supplier of an unintegrated competitor for the purpose of preventing the competitor's entry or expansion in a market;

    (b) acquisition of suppliers or customers who would otherwise be available to competitors, for the purpose of preventing the competitor's entry or expansion in a market;

    (c) freight equalization on the plant of a competitor for the purpose of preventing the competitor's entry into or eliminating the competitor from a market;

    (d) use of fighting brands introduced selectively on a temporary basis to discipline or eliminate a competitor;

    (e) pre-emption of scarce facilities or resources required by a competitor with the object of withholding those facilities or resources from a market;

    (f) buying up of products to prevent the erosion of existing price levels;

    (g) adoption of product specifications that are incompatible with products produced by another person and designed to prevent his entry into or eliminate him from a market;

    (h) requiring or inducing a supplier to sell only or primarily to certain customers, or to refrain from selling to a competitor with the object of preventing that competitor's entry or expansion in a market;

    (i) selling articles at a price lower than the acquisition cost for the purpose of disciplining or eliminating a competitor; and

    (j) acts or conduct of a person operating a domestic air service, as defined in the Canada Transportation Act, that may be specified under regulations; and

    (k) the denial of a person operating a domestic air service, as defined in the Canada Transportation Act, of access on reasonable commercial terms to facilities or services that are essential to the operation in a market of an air service, or the refusal to supply such facilities or services on such terms.

In addition to prohibiting the continuance of anti-competitive acts, if the Competition Tribunal finds that such an order is not likely to restore competition in a market, it may require the respondent to take such actions as are reasonable and as are necessary to overcome the effects of the practice in the market, including the divestiture of assets or shares.