September 9, 2010
The Globe and Mail has reported that new Canadian cellphone player Mobilicity has filed a complaint against Rogers with the federal Competition Bureau. According to the Globe, Mobilicity has filed the complaint in relation to what is alleging is anti-competitive behaviour from Rogers, in particular in relation to Rogers’ new discount cellphone brand Chatr Wireless Inc.
The Globe reported:
“The Toronto-based company, which launched service in May after bidding on new wireless licenses in 2008, has alleged that Rogers’ creation of a new discount cellphone brand, Chatr Wireless Inc., is in “direct breach” of section 78 of the Competition Act.
That section of the act prohibits dominant players in any given industry from using “fighting brands,” which are often called flanker brands in the telecom industry, to eradicate new competition by coming in with lower prices.
John Bitove, Mobilicity’s chairman, said in July that he would file a complaint with the Competition Bureau, after Chatr pricing leaked onto the Internet and showed them to be nearly identical to those of the new wireless players, like Mobilicity and Wind Mobile.”
If Mobilicity’s complaint does indeed include a claim that one of Rogers’ anti-competitive acts is the introduction of a “fighting brand” (one of a non exhaustive list of anti-competitive acts under section 78 of the Competition Actfor the purposes of abuse of dominance), it may have done so given the fact that it could not establish that Rogers was engaging in below cost sales (a prerequisite for predatory pricing claims) or based on the widely known difficulty of making out predatory pricing claims. For example, in addition to the fact that there have been an extremely small handful of contested predatory pricing claims in Canada, the challenge of persuasively arguing that the necessary conditions for successful predation exist not least of which include dominance, high barriers, below cost pricing, whatever the standard – which is unsettled in Canada – and the ability of the dominant firm to recoup its losses once the other firm has exited the market) are well known. In this regard, the Bureau uses several “screening” criteria to weed out complaints that are unlikely to raise genuine and signficant predation issues, including reviewing the complainant’s financial condition (to assess the likelihood that the complainant is or will suffer losses as a result of the alleged predatory conduct and whether conducive market conditions exist for predation – e.g., dominance, high barriers and the ability of the low pricing rival to recoup its losses).
Having said that, the Competition Bureau is believed to want to commence more abuse of dominance cases, given the relatively small universe of abuse cases in Canada (with the corollary that there remains many legal aspects of abuse of dominance that remain unsettled). Though having spent more than three years investigating and proceeding with the Canadian real estate case (see The CREA Abuse of Dominance Case and Hearing Dates Set for CREA Abuse of Dominance Application), it may well scrutinize the Mobilicity complaint closely before deciding whether to proceed.
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