On September 9, 2011, the Competition Tribunal released a decision granting leave to the Used Car Dealers Association of Ontario (UCDA) to bring an application against the Insurance Bureau of Canada (IBC) seeking redress under the “refusal to deal” provisions contained in section 75 of the Competition Act. UCDA claims that IBC stopped supplying it with data on vehicle accident and claims history, which the IBC compiles from its member insurers. According to UCDA, it relies on being able to purchase this data to supply vehicle accident history reports to its members.  The Tribunal has granted the UCDA's application for leave to file an application under section 75, and such an application has in fact been filed.

UCDA alleges that one of its competitors in the accident history report market, CarProof, has a significant business relationship with IBC. CarProof provides its claims check service to the public at a price of $34.95 per search, while UCDA’s Auto Check service is available only to UCDA members and costs $7 per search (but includes less information than a CarProof report). UCDA alleges that IBC refuses to supply it with insurance data because of UCDA’s low pricing policy.

IBC replied that UCDA had failed to provide sufficient credible evidence that it was “substantially affected” in its business by the alleged refusal to deal. The Tribunal rejected this argument, however, finding UCDA’s evidence that its Auto Check service represented more than 50% of its net income to be sufficient to show a direct and substantial effect. IBC also argued that UCDA had not satisfied the requirements to seek leave to file an application under section 75 because it had failed to provide evidence that it was unable to obtain supplies of substitutable data (including from its competitor, CarProof), that it was willing and able to meet IBC’s usual trade terms, and that the elimination of its Auto Check product would have an adverse effect on competition in a market. 

The Tribunal rejected these arguments as well, finding that the Competition Act does not require UCDA to purchase the data it needs from its competitors. The Tribunal also found that it could potentially conclude – on a full hearing under section 75 – that there was insufficient competition in the market for the necessary data (with IBC as the sole supplier of suitable data), that UCDA was willing and able to meet the usual trade terms for the data, that the data was in ample supply (based on IBC’s continued ability to supply the data prior to its termination of UCDA as a customer), and that the refusal to deal would likely have an adverse effect on competition in UCDA’s market.

UCDA had also requested leave to bring an application under the now-civil resale price maintenance provision (s. 76 of the Competition Act), but the Tribunal found that there was insufficient evidence to show the possibility that IBC’s termination of UCDA as a customer was due to Auto Check’s low pricing policy, and did not grant leave to proceed with that claim.

One of the most interesting issues raised by UCDA’s application is whether the Tribunal will use it as an opportunity to revisit its 1997 finding, in The Director of Investigation and Research v. Warner Music Canada Ltd., that “[copyright] licences are not a product as that term is used in section 75 of the Act.” While recognizing that copyright licenses can be considered “products” for the purposes of other sections of the Act, the Tribunal, in Warner, noted that section 75 requires that a product be in an “ample supply,” a concept that the Tribunal found to be inapplicable to a copyright licence.

Some commentators have said that Warner presents an insurmountable roadblock to bringing refusal to deal cases in respect of intellectual property. Some also have suggested that the case was wrongly decided, or at least that its conclusion was drafted more broadly than was necessary, perhaps in reaction to an overly aggressive position taken by the Director (the predecessor title of the Commissioner of Competition) in that case.

UCDA is very much aware of this issue, and addressed it head on in its pleadings. UCDA denied that the data supplied to it by IBC was in the nature of a “license”, and argued further that even if intellectual property were involved it should be granted leave to bring its application on the basis of its view that the subsequent Federal Court of Appeal decision in Eli Lilly and Co. v. Apotex Inc. calls into question the Tribunal’s broad conclusion in Warner. More specifically, UCDA pleads that Warner “may have been decided incorrectly and it would be unfair to make a negative leave determination which would preclude reconsideration of the reasoning in Warner in a proceeding where the parties have the full opportunity to develop the facts and arguments related to each element of section 75.”

By arguing that it will be unable to compete in the vehicle accident history report market if IBC refuses to supply it with the necessary data, UCDA also can be viewed as invoking what has sometimes been referred to as the “essential facilities doctrine.” This doctrine, which has never been formally accepted in Canada, refers to a situation in which a monopolist controls a facility that a competitor is unable reasonably to duplicate, and the monopolist refuses to provide access to the competitor although it could feasibly do so, thereby rendering the competitor unable to compete. The essential facilities doctrine has had mixed success in other jurisdictions, faring better in the European Union (including a recent Microsoft decision, in which the Court of First Instance found that Microsoft’s failure to disclose interoperability information about its workgroup server operating system violated the European Union’s abuse of dominance law) than in the United States (where, in Verizon v. Trinko, the Supreme Court stated that it had “never recognized such a doctrine,” and, while expressly refusing to recognize or repudiate such a doctrine, expressed strong reservations about creating a new exception to the proposition that there is no duty to aid competitors).

In its leave decision, the Tribunal has not dealt with these arguments directly. It merely found that there was no evidence to suggest that IBC had ever characterized its arrangements with the UCDA as a license. Whether the Tribunal will rest on this distinction when it hears UCDA’s application on its merits, and whether it will use this case as an opportunity to critically assess the reasoning of its Warner decision, remain to be seen.