The new Enforcement Guidelines on the Abuse of Dominance Provisions are a much-needed update to the existing guidelines, which were released more than a decade ago. The Guidelines follow the circulation of drafts in 2009 and 2012, as well as extensive public consultation. Unfortunately, the Guidelines reflect an open-ended enforcement approach in key substantive issues – in particular, with respect to joint dominance, the application of the “but for” test and the use of Administrative Monetary Penalties (“AMPs”).
Problematic Joint Abuse Enforcement Approach
The new Guidelines indicate that similar or parallel conduct is not, on its own, sufficient to conclude that firms are acting jointly. However, the Guidelines then go on to state that evidence of coordinated behaviour is not “strictly necessary” to conclude that firms are not competing vigorously – an approach that potentially allows the Bureau to take enforcement action against firms even where there is no evidence of coordination. As a result of the Bureau’s vague enforcement approach in this area, firms continue to be faced with compliance uncertainties – a particularly problematic situation given that the Bureau can seek significant AMPs for non-compliance.
Application of the “But For” Test
The application of the “but for” test (introduced by the Federal Court of Appeal in the Canada Pipe case) is another area of enforcement uncertainty that the new Guidelines seek to address. Helpfully, the Guidelines outline how the Bureau will apply the “but for” test. Less helpfully, while correctly indicating that “the Court stated that other tests might also be appropriate depending on the circumstances” the Guidelines are silent as to when the Bureau might deviate from the “but for” test or what alternative test(s) it might adopt. This represents a missed opportunity to provide clarity to stakeholders in an area that continues to raise compliance uncertainties.
Use of Administrative Monetary Penalties
Since March 2009, the Bureau has had the power to seek significant AMPs (up to $10 million for first offences or $15 million for subsequent offences). Given the lack of case law on the use of AMPs, it would have been helpful for the Bureau to provide guidance as to when it will seek AMPs, as well as the factors it will consider in determining the appropriate amount. Again, the Guidelines represent a missed opportunity to provide clarity on this important issue, which contributes to the overall uncertainty regarding the Bureau’s enforcement approach.
While the Guidelines provide a useful, updated overview of the Bureau’s enforcement approach, they unfortunately provide less guidance than was previously the case (in addition to the issues discussed above, they omit the detailed examples and analysis found in the prior version and drafts).
As a result of the open-ended enforcement approach set out in the Guidelines, combined with an overall lack of guidance in key areas, businesses continue to face compliance uncertainties. Because of these uncertainties, companies must continue to take care in their business activities, including with respect to the implementation of initiatives that are generally viewed as pro-competitive, such as loyalty programs and volume incentives.
An electronic copy of the Enforcement Guidelines for the Abuse of Dominance Provisions can be found here.