Director Announces Results of Competition Act Review of Stentor

OTTAWA, February 22, 1996 — George N. Addy, Director of Investigation and Research under the Competition Act announced today that he has concluded that there are insufficient grounds to proceed at this time with an application to the Competition Tribunal with respect to Stentor, the alliance of major Canadian telephone companies.

The Director's announcement follows an extensive examination of the structure and conduct of Stentor which was carried out pursuant to the merger provisions under sections 91 and 92 and the abuse of dominance provisions under section 78 and 79 of the Competition Act.

In making his announcement, Mr. Addy cautioned that there are continuing concerns about the Stentor arrangements and their effect on competition in telecommunications markets. While the Stentor Alliance facilitates a fully interconnected national telecommunications network among its nine member companies and enables them to offer customer services on a national and regional basis, these arrangements also constrain the telephone companies from entering into competition with one another. Mr. Addy said that his concerns about the effects of the Stentor Alliance were tempered by evidence of competitive entry into long distance markets and significantly declining rates for long distance services since the Canadian Radio-television and Telecommunications Commission (CRTC) opened the door for facilities based competition in 1992.

"The information obtained in the course of the examination did not establish that the arrangements among the Stentor companies had the effect of preventing or lessening competition substantially, which is the test which must be met under the Competition Act for the Director to make an application to the Tribunal" Mr. Addy said. "What's important to recognize is that the Canadian telecommunications industry is in a period of dramatic transition - from monopoly and regulation to competition and deregulation. It is important that the benefits of competition which have already been achieved as well as tomorrow's benefits not be jeopardized."

During the transition from monopoly and regulation to a market driven environment, the Competition Bureau will continue to closely follow the future activities of Stentor in respect to long distance services and the emerging market for competitive local telecommunications and broadband services and the Director will not hesitate to take action under the Competition Act to safeguard the competitive process.