On February 3 2014 the Federal Court of Appeal(1) ruled that 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 Board(2) 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.
The Toronto Real Estate Board 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 the Toronto Real Estate Board's actions did not affect competitors, its conduct did not fall within the scope of Section 79 (for further details please see "Competition Tribunal confirms abuse of dominance must target competitors").
The court reviewed the tribunal's decision on the correctness standard of review and found that the tribunal's interpretation of a leading dominance case, Canada Pipe,(3) was incorrect. 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 Section 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 which does not compete in a market from engaging in anti-competitive acts.
In addition, the court agreed with the commissioner's submission that consideration of Section 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 the Toronto Real Estate Board solely because it does not compete with its members.
While the tribunal found support for its decision in the Competition Bureau's 2012 Abuse of Dominance Guidelines, the court stated that the guidelines "at most" show that "the Commissioner's understanding of the scope of subsection 79(1) has changed over time", and "provide no useful guidance to the Court".(4) Therefore, at the conclusion of this case, the bureau may be inclined to revise its abuse of dominance guidelines, which have previously been criticised for providing less guidance than earlier versions.(5)
The tribunal will rehear the case and must take into account the court's statements about Sections 78 and 79 of the act.
Although the commissioner has said that he is pleased with the court's decision, rehearing does not guarantee success when the tribunal reconsiders the matter. The tribunal could reconsider the matter and effectively reach the same conclusion as it did when it first heard the case.
Indeed, in Superior Propane, 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, the 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.
For further information on this topic please contact Stephen Nattrass at Norton Rose Fulbright Canada LLP by telephone (+1 613 780 8661), fax (+1 613 230 5459) or email (email@example.com). The Norton Rose Fulbright Canada website can be accessed at www.nortonrosefulbright.com.
(6) See, Canada (Commissioner of Competition) v Superior Propane Inc, 2001 FCA 104; the tribunal's reconsideration, Commissioner of Competition v Superior Propane Inc, 2002 CACT 16; and the Federal Court of Appeal decision confirming the second tribunal decision, Canada (Commissioner of Competition) v Superior Propane Inc, 2003 FCA 53.