On February 3, 2014, the Federal Court of Appeal1 ruled the Competition Tribunal took too narrow an approach to the Competition Act’s abuse of dominance provisions, sending the commissioner of competition’s case against the Toronto Real Estate Board2 back to the tribunal for reconsideration. At issue is whether conduct not directed at a competitor can fall within the scope of the dominance provisions.

Background

The Toronto Real Estate Board (TREB) is a trade association whose members include most real estate agents in Toronto. It restricts how its members can provide information to their customers, which the commissioner argued is an abuse of dominance contrary to section 79 of the Competition Act.

In April 2013, the tribunal concluded that, because TREB’s actions did not affect competitors, its conduct did not fall within the scope of section 79. Additional background information, and our commentary on the tribunal’s decision, is available online.

Federal Court of Appeal decision

The court reviewed the tribunal’s decision on the correctness standard of review. The court found that the tribunal’s interpretation of a leading dominance case, Canada Pipe,3 was incorrect, and as a result the court ordered the tribunal to reconsider its decision on the merits.

The court agreed with the commissioner’s position that a person can substantially control a market within the meaning of subsection 79(1)(a) of the Act and that its conduct can have an anti-competitive effect on that market, even if that person is not a competitor of the persons targeted by its conduct. Further, the court stated that the Canada Pipe decision does not preclude a person who does not compete in a market from engaging in anti competitive acts.

In addition, the commissioner submitted, and the court agreed, that consideration of subsection 79(4), which requires the tribunal to determine whether the anti competitive act is the result of superior competitive performance, cannot be used to infer that an order could not be made against TREB solely because it does not compete with its members.

Competition Bureau guidelines

While the tribunal found support for its decision in the Competition Bureau’s 2012 Abuse of Dominance Guidelines, the court stated the guidelines “at most” show that “the Commissioner’s understanding of the scope of subsection 79(1) has changed over time” and the guidelines “provide no useful guidance to the Court…”.4 In light of that, at the conclusion of this case the bureau may be inclined to revise its abuse of dominance guidelines, which have previously been criticized for providing less guidance than previous versions.5

Implications

The tribunal will rehear the case and will have to take into account the court’s statements about sections 78 and 79 of the Act.

Although the commissioner has said he is pleased with the court’s decision, it is important to note that a rehearing does not guarantee success when the tribunal reconsiders the matter. The tribunal could reconsider the matter and effectively come to the same conclusion as it did when it first heard the case.

Indeed, in the Superior Propane case the court had sent a matter to the tribunal for reconsideration but the tribunal came back with the same conclusion as in its initial decision, although based on a different methodology.6

In the meantime, this decision creates uncertainty because the court and the tribunal have taken different positions as to whether a trade association, which is not a competitor in the market, can engage in abuse of dominance.