Canadian COMPETITION LAW

November 22, 2009

Private parties have a limited right of “private access” under the Competition Act (the “Act”) to the Competition Tribunal (the “Tribunal”) to seek Tribunal orders for breach of certain reviewable matters provisions of the Act. Private access rights were introduced in 2002 to allow small and medium sized firms to challenge allegedly harmful conduct to their businesses under provisions which have not historically been enforcement priorities for the Competition Bureau (e.g., the refusal to deal provisions).

Since the private access provisions were introduced, approximately eleven leave applications have been commenced.  The majority of the private access applications to date have been under the refusal to deal provision of the Act (i.e., by distributors seeking a Tribunal order for resupply of products from suppliers).

Competent Court

Private access proceedings, unlike private civil actions under the Act (which may be brought in the Federal Court or provincial courts), are brought in front of the Tribunal.

Commencing a Private Access Application

Private access to the Tribunal is available to private parties, with leave, under the refusal to deal, exclusive dealing, tied selling and market restriction provisions and, as a result of recent amendments earlier this year, under the price maintenance provisions of the Act as well. To date, however, the majority of the private access applications have been commenced  under the the refusal to deal provisions of the Act in relation to terminations of supply (i.e., distributors seeking re-supply for terminated supply, which can be an alternative remedy in addition to contractual remedies).

Leave Requirement

Private parties are required to obtain leave in order to make private access applications to the Tribunal.  In addition, in order to prevent strategic litigation, damages are not available and costs may only be awarded in the discretion of the Tribunal.

To grant leave in a private access application, the Tribunal must have “reason to believe that the applicant is directly and substantially affected by any practice [under sections 75, 76 or 77] that could be subject to a [Tribunal order]”.   With respect to evidence, the Tribunal has held that a leave application must be “supported by sufficient credible evidence to give rise to a bona fide belief that the applicant may have been directly and substantially affected in the applicant’s business by a reviewable practice, and that the practice in question could be subject to a [Tribunal] order”.

Where leave is granted, the Commissioner of Competition may also intervene in the proceedings.

Burden

The burden of proof on a private access leave application is a lower burden than the civil balance of probabilities (i.e., an private access applicant need only establish sufficient credible evdience of of the alleged conduct to lead to a bona fide belief by the Tribunal).  An affidavit filed in support of a private access leave application must contain facts that are relevant to each of the statutory elements of the alleged reviewable practice (i.e., refusal to deal, exclusive dealing, price maintenance, etc.), though the Tribunal may address each element summarily.

Limitation Period

Applications for leave under the private access provisions of the Act must be brought within one year following the end of the conduct.

Remedies

Under the private access provisions of the Act, the available remedy is a Tribunal remedial order (e.g., for a supplier to commence supply on “usual trade terms” in the case of a refusal to deal).  Private parties are not entitled to seek damages and costs may only be awarded in the discretion of the Tribunal. In addition, private parties that have been granted leave from the Tribunal to commence private access applications may also file consent agreements with the Tribunal.  Once filed with the Tribunal, consent agreements have the force of a Tribunal order.

With expected increase in private actions under the Act as a result of the recent sweeping amendments to the Act, it will be interesting to see whether there is also a corresponding increase in private access applications as well by private parties seeking Tribunal remedies under the Act.  It will as well be interesting to see whether private access applications will be brought under the newly enacted civil price maintenance provisions which, among other things, prohibit refusals to supply or discriminatory conduct based on low pricing policies, where such conduct had an adverse effect on competition.

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