Canadian COMPETITION LAW

In a short but interesting recent note, Madam Justice Sandra J. Simpson has proposed changes be made to the federal Competition Tribunal.  In an article entitled “The Competition Tribunal 2003-2011 and Beyond”, the Federal Court judge, who sits on the Competition Tribunal, recommendeds that the Tribunal’s jurisdiction should be expanded to include the following:

1.  Single damages for parties in private actions;

2.  Private actions for abuse of dominance with leave (to which Justice Simpson adds that the Tribunal has exercised its power to grant leave to private parties responsibly);

3.  A reference power for parties in negotiations with the Commissioner; and

4.  The approval of consent agreements by a judge alone – with written comments from but no intervention by affected parties (which, in Justice Simpson’s view, will “ensure that the Commissioner has a defensible theory of harm to support his or her settlements”).

Of these, several caught my eye, including the proposal to introduce damages as a Tribunal remedy and private actions for abuse of dominance.

While damages actions are possible and increasingly common for violations of the criminal provisions of the Competition Act, only remedial orders (e.g., orders to stop conduct, resume supply on usual trade terms, etc.) are available from the Tribunal.  Together with the leave requirement (leave is required from the Tribunal for private parties to commence private access proceedings before the Tribunal), the unavailability of damages is a common obstacle preventing parties from making applications to the Tribunal.  In this regard, for competition law matters where Tribunal applications are a possibility (refusal to deal, price maintenance and exclusive dealing / tied selling / market restriction), as a practical matter advice typically begins with a discussion of available remedies and the fact that damages are not available from the Tribunal (which in many cases may remove the Tribunal as a commercially viable option for parties).

With respect to the potential for private actions for abuse of dominance, this would be a significant step indeed for the Tribunal.  Presently, the Commissioner of Competition has exclusive jurisdiction to commence abuse of dominance proceedings before the Tribunal.  This, together with the typical cost and complexity of abuse applications, may have contributed to the fact that there have been less than 15 abuse of dominance cases since the modern Competition Act was introduced in 1986.  While monetary penalties were introduced for the first time for abuse of dominance in 2009 (“administrative monetary penalties” or “AMPs” of up to Cdn. $10 million), abuse of dominance remains one of the last reviewable practices under the Competition Act for which private parties have no right to make applications to the Tribunal (together with mergers, under which the Commissioner also has exclusive jurisdiction to challenge under the Act).  While this is an interesting proposal, it is not clear that opening the door to private parties would in practice lead to more abuse applications heard by the Tribunal based, among other things, on the significant cost and complexity of taking such proceedings forward.  Having said that, the availability of damages and a private access right for abuse of dominance may give aggrieved parties an additional option for negotiating resolutions to conduct engaged in by dominant firms (i.e., if the prospect of private access and monetary penalties existed).

Justice Simpson’s proposal for a unilaterally available reference power is also an interesting, and perhaps needed change.  While some limited reference powers for reviewable matters were added to the Competition Act as a result of 2002 amendments, they are only available to the Commissioner unilaterally, to private parties granted leave for private access proceedings under the refusal to deal and exclusive dealing/tied selling/market restriction provisions or to a private party subject to inquiry and the Commissioner on consent (i.e., the Commissioner’s agreement is required).  As such, the existing reference provisions for reviewable matters are of limited practical use for private parties where the Commissioner has (or is likely) to take a particular position on a reviewable matter.

In light of the fact that the most significant changes to Canada’s Competition Act in twenty-five years were recently made in 2009 and 2010, it remains to be seen whether the Government will have the appetite to make further amendments expanding the statutory jurisdiction of the Tribunal.  If so, this may open the door further to private competition actions in Canada.

For Madam Justice Simpson’s complete comments see: Canadian Competition Law Review (p. 49).

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