Strategic alliance

Conspiracy, Refusal to Deal, Exclusive Dealing/Tied Selling/Market Restriction, Abuse of Dominant Position

A supplier of a product sought a written opinion in September 2003 concerning whether a proposed service arrangement with a processing company would raise concerns under the Competition Act ("Act"). The supplier had previously processed the product at its own facility but has made a decision to close its facility and outsourse its processing requirements.

The Competition Bureau examined the proposal under both the Criminal and Civil provisions of the Act, specifically the conspiracy provision, section 45, refusal to deal provision, section 75, the exclusive dealing, tied selling and market restriction provision, section 77, and the abuse of dominant position provision, section 79. Based on its understanding of the facts, the Bureau determined that if the parties implemented the arrangement as proposed, it would not have sufficient grounds to commence an inquiry for the following reasons:

  • The proposed arrangement relates specifically to the provision of processing services to the supplier and does not affect any existing arrangements the processor may have with its customers nor precludes the processor from taking on new customers;
  • The supplier's decision to close its processing facility and outsource its processing requirements was a unilateral decision and not the result of an agreement or arrangement with the processor;
  • The processor took measures to ensure the proposed service arrangement would not affect output; and,
  • There are other processors in the market that could provide a viable processing option.

Based upon the above reasons, the Bureau concluded there was no evidence the parties to the proposed arrangement had an anti‑competitive purpose or intent. The Bureau also concluded that the proposed arrangement would not result in any substantial or adverse effect on competition. As a result, the Bureau provided the opinion that the proposed arrangement, if implemented, would not give the Commissioner grounds to commence an inquiry under the aforementioned provisions of the Act.

(3065701)

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