Hardworking lawyers seldom get the chance to watch TV, and those that do rarely admit it, but there is a television show, starring a Canadian, in which various offers are made and the contestants decide whether it will be “deal” or “no deal.” Slightly less known or popular is a provision of Canada’s Competition Act: the refusal to deal provision. But it, too, has recently generated some excitement as a result of the B-Filer decision.
The refusal to deal provision allows firms which have been refused supply of a product to apply to the Competition Tribunal for an order that they get supplied. Amongst other preconditions for such an order is a requirement that the person seeking the order is substantially affected in their business or precluded from carrying on business due to the inability to obtain supply, that the reason for the inability to obtain supply is that there is insufficient competition, and that the refusal to supply had an adverse effect on competition. Until 2002, only the Commissioner of Competition could seek orders relating to refusal to supply, but since that time parties who have been injured have had the right to do so, and 12 cases have been launched. Only the B-Filer case has resulted in a decision, and it is now under appeal.
B-Filer’s business allowed customers to pay Internet merchants by debiting the customer’s bank account. The majority of B-Filer’s business involved money transfers to fund on-line gaming accounts at casinos outside Canada. To operate its service, B-Filer relied on the supply of certain financial services with major banks. To use B-Filer’s service, customers had to provide their confidential bank code to B-Filer. Ultimately, that turned out to be an important fact for the Competition Tribunal and for a number reasons it turned down the B-Filer application.
This is the first of the private refusal to deal cases which has been heard on its merits, and the decision is unlikely to encourage a flood of additional applications. That said, the facts of the case were peculiar. A key question, which remains outstanding, is whether the Tribunal will be sympathetic to respondents whose business justifications for discontinuing supply are related to the relatively common desire to restructure distribution agreements – to be more efficient or compete more effectively. The Tribunal was clearly sympathetic to the Bank’s justification for cutting off supply to B-Filer, both in finding that the reason B-Filer could not obtain supply was not due to insufficient competition, and also in including that it would have exercised its discretion in favour of the Bank in any event. However, the facts in the B-Filer case were unusual. How the Tribunal will react in the more usual situation of a supplier simply seeking to restructure its distribution arrangements will be important to the future course of refusal to deal litigation, and for the ability of Canadian firms to ensure that their distribution systems are efficient.