Canadian COMPETITION & ANTITRUST LAW

Naked restraint. Competition Bureau, Competitor Collaboration Guidelines, p. 1: “restraints that are not implemented in furtherance of a legitimate collaboration, strategic alliance or joint venture.”  Common examples of naked restraints include agreements between competitors to fix prices, divide geographic markets, products or customers or restrict output.  Restraints are sometimes also categorized as price and non-price restraints.

National champion. OECD, Directorate for Financial and Enterprise Affairs, Global Forum on Competition, Competition Policy, Industrial Policy and National Champions, Contribution from Canada (2009): “The term ‘national champion’ can have many meanings. For some, it can mean globally renowned companies that are efficient and globally diversified and inspire national pride. To others, it means the creation of domestic monopolies at the expense of domestic consumers and businesses.”

Natural monopoly.  OECD, Competition Assessment Toolkit (2011): “In a ‘natural monopoly’, one supplier can produce desired output more efficiently and at a lower cost than two or more suppliers.”  “The situation in which the average cost of producing an additional unit of the good continues to decline right up to the point at which the scale of production is such that an individual supplier can meet the entire demand arising from the relevant market at a lower cost than could two, or more, suppliers if they were trying to supply the entire demand.”

Network industry. Competition Bureau, Enforcement Guidelines, Intellectual Property Enforcement Guidelines (2000): “A network industry is an industry that exhibits network effects. These effects exist when the value or benefit derived from using a product increases with the number of other users. For example, fax machines exhibit network effects because the value of owning a fax machine clearly depends on the number of compatible fax machines in use.” A. Douglas Melamed, U.S. Department of Justice, “Network Industries and Antitrust”, Address before the Federalist Society, Eighteenth Annual Symposium on Law and Public Policy: Competition, Free Markets and the Law (1999). “The most important characteristic — indeed, the defining characteristic — of network industries is that they involve products that are more valuable to purchasers or consumers to the extent that they are widely used. This phenomenon is known as a “network effect” or demand-side economy of scale.” M. Schanzenbach, “Network Effects and Antitrust Law”, 2002 Stan. Tech. Law Rev. 4: “A network is any market in which the consumption of a good by one consumer has a positive impact on the value of that good’s consumption by another consumer. A telephone, for example, is only useful to an individual if others have them as well. The more people who have them, the greater the number of possible phone calls one can make, and the more valuable telephones become.”

No action letter. One of several forms of merger control clearance under the Competition Act. Competition Bureau, Enforcement Guidelines, Merger Review Process Guidelines (2009): “If the Commissioner is not prepared to issue an ARC [Advance Ruling Certificate] in respect of a proposed transaction, the Commissioner may issue a No-Action Letter. A No-Action Letter provides written confirmation that, in the Commissioner’s view, sufficient grounds do not exist at that time to initiate proceedings before the Tribunal under the merger provisions of the Act with respect to the proposed transaction and, therefore, the Commissioner does not, at that time, intend to make an application under section 92 of the Act in respect of the transaction.” In August, 2011, the Competition Bureau revised its standard “no action” letter language to read: “…the Commissioner does not, at this time, intend to make an application under section 92 in respect of the proposed transaction.” See Competition Bureau, News Release, “Competition Bureau Updates Guidance on Merger Review ‘No Action’ Letters” (August 8, 2011). See also subsection 123(2) of the Competition Act; definition of “advance ruling certificate”.