Canadian COMPETITION & ANTITRUST LAW

Facilitating factors. Factors that may support the inference of a conspiracy in the absence of an express agreement.  Some common examples of “facilitating factors”, sometimes also referred to as “plus factors”, include evidence of meetings, simultaneous price increases or other simultaneous actions, statements inferring the existence of an agreement, enforcement or monitoring and conduct that can only be explained by the existence of an agreement.  See the definition of plus factors.  See also the definition of “circumstantial evidence.”

Fidelity discount. OECD, Policy Roundtable, Loyalty and Fidelity Discounts and Rebates (2002): “… fidelity discounts are defined to be pricing structures offering lower prices in return for a buyer’s agreed or de factocommitment to source a large share of his requirements with the discounter.  Fidelity discounts could have both pro- and anticompetitive effects … It is sometimes difficult to distinguish a fidelity discount from a straightforward quantity discount.  For example, a 50 percent discount conditional on some minimum purchase quantity over a certain period of time, offered on exactly the same terms to all buyers, may or may not be a fidelity discount.  The determining factor would be whether the minimum purchase quantity corresponds to a significant number of buyers’ probable total or near total requirements in the period referred to. … Most fidelity discounts make use of what we will refer to as a ‘reference period’ in calculating the percentage discount awarded.  The reference period will typically be considerably longer than the time normally elapsing between buyers’ purchases.  For example, a taxi operator working an average of 24 days per month and purchasing 40 litres of gasoline a day, might receive a ten percent fidelity discount if it purchases more than 900 litres a month from a particular petroleum distributor.  The reference period would be one month and the taxi company’s requirements would be stated as 960 litres per month.  More formally, a buyer’s requirements are his estimated total purchases of some properly defined product (i.e. including appropriate substitutes) over the reference period used to determine eligibility for a particular fidelity discount.  Fidelity discounts can take a wider range of forms than simply a lower price or a percentage reduction. Sometimes they are offered in the form of ‘complimentary’ goods. In return for a purchase of 20 or more litres of petrol, a service station might, for example, give away a statuette belonging to a set of twenty well-known football players.  The desire to obtain a complete set could make this function like a fidelity discount, especially if the offer will be terminated in say six months. The same applies to many toys offered by breakfast cereal producers.”

Field marketing. Canadian Marketing Association, Code of Ethics and Standards of Practice:  “Field marketing is face-to-face promotion or sale of products or services to consumers.  It includes merchandising, sampling, demonstrations and events.”

Free. Competition Bureau, Pamphlet, False or Misleading Representations and Deceptive Marketing Practices: “Don’t increase the price of a product or service to cover the cost of a free product or service.”  Competition Bureau, Ensuring Truth in Advertising, False or Misleading Representations: “… where article A is advertised as being free with the purchase of article B, but article B is available at a discount or lesser price if the ‘free’ article is foregone, then article A is not if fact free. … Nor is it ‘free’ in a ‘two-for-one’ situation where the price of the first article is inflated to cover the cost of the second.”  U.S. Federal Trade Commission, FTC Guide Concerning Use of the Word “Free” and Similar Representations:  “Meaning of “Free” … The public understands that, except in the case of introductory offers in connection with the sale of a product or service … an offer of ‘Free’’ merchandise or service is based upon a regular price for the merchandise or service which must be purchased by consumers in order to avail themselves of that which is represented to be ‘Free’. In other words, when the purchaser is told that an article is ‘Free’ to him if another article is purchased, the word ‘Free’ indicates that he is paying nothing for that article and no more than the regular price for the other.  Thus, a purchaser has a right to believe that the merchant will not directly and immediately recover, in whole or in part, the cost of the free merchandise or service by marking up the price of the article which must be purchased, by the substitution of inferior merchandise or service, or otherwise.”