Canadian COMPETITION LAW

December 13, 2013

In a decision issued earlier this week, Canada’s Competition Tribunal denied a Vancouver tobacco retailer’s price maintenance leave application against manufacturer Imperial Tobacco (“Imperial”) (Safa Enterprises Inc. v. Imperial Tobacco Company Limited, 2013 Comp. Trib. 19, File No. CT-2013-007).

In this case, tobacco retailer Safa Enterprises (“Safa”) argued that Imperial had been engaging in civil price maintenance under the Competition Act against it.  In particular, Safa argued that Imperial was discriminating against it in the supply of tobacco products contrary to section 76(1)(ii) of the Competition Act while supplying its competitor New Hasty Market at better wholesale prices.

In denying Safa’s leave application, the Tribunal essentially concluded that the self-represented retailer had failed to establish that one of the essential elements of section 76 may be proven on an ultimate application, namely that Imperial’s refusal to supply or alleged discriminatory treatment of Safa was based on the tobacco retailer’s low pricing policy.

In this regard, the civil price maintenance provisions of the Competition Act do not offer remedies for mere refusals to supply or suppliers that merely treat distributors or retailers differently, but instead offer wholesalers/purchasers potential Tribunal orders where a refusal to deal or discriminatory treatment can be shown to be based on their low pricing policy.

In denying the tobacco retailer’s leave application, the Tribunal also confirmed several other points related to “private access” leave applications to the Tribunal including: (i) the appropriate test on leave (held previously by the Tribunal to be whether a leave application is supported by sufficient credible evidence to give rise to a bona fide belief that an applicant may have been directly and substantially affected in its business by a reviewable practice, which could be subject to a Tribunal order); that some preliminary evidence must be adduced showing an adverse effect on competition in the relevant market (one element of section 76 being the requirement to show an adverse effect on competition); and that each of the relevant elements of the civil matter being applied under – i.e., refusal to deal, price maintenance, exclusive dealing section, etc. – must be considered by the Tribunal.

The Tribunal also confirmed that the evidentiary threshold on a private leave application is low (i.e., “sufficient credible evidence for a bona fide belief by the Tribunal” rather than, for example, on balance of probabilities) and also, interestingly, that the same general test for leave as previously established by the Tribunal should apply to the leave section of the Act for price maintenance (which differs in some respect from the other leave provision relating to refusal to deal and exclusive dealing / tied selling / market restriction).

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