Annual Report of the Commissioner of Competition for the year ending March 31, 2002

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Appendix I - Discontinued Cases

During 2001­2002, the Bureau discontinued a number of the formal inquiries it had initiated into allegations of anti-competitive activity.

Commercial Space Rental

The Bureau initiated an inquiry into allegations that certain commercial terms imposed on tenants of a shopping centre near Sherbrooke, Quebec, contravened the market restriction provisions of the Competition Act. The complaint alleged that the radius clauses in the lease agreements were detrimental to competition in the rental of commercial space, since they prevented mall tenants from opening other stores in the area. The Bureau concluded that, although the distance in the radius clauses was higher than that usually used in the industry, the clauses were not likely to substantially lessen competition in the area. As well, the leasing practices did not prevent a significant number of retailers from locating elsewhere. The Bureau therefore discontinued the inquiry.

Greeting Cards

The Bureau initiated an inquiry into a complaint that major greeting card suppliers were using exclusive contracts to limit the sales outlets available to competitors. The evidence showed that, while some firms might be affected by the signing of exclusive contracts, sufficient competition remained. The Bureau discontinued the inquiry.

Cold Beverages

The Bureau launched an inquiry into a complaint that major suppliers of cold beverages were entering into exclusive contracts with private and public venues. The evidence showed that, while some firms might be affected by the signing of exclusive contracts, sufficient competition remained. Consequently, the inquiry was discontinued.

Book Retailing and Distribution

In July 2000, the Bureau began an inquiry into allegations of anti-competitive acts relating to the retailing, wholesaling and distribution of books in Canada. The allegations included that firms were using their market power to obtain preferential trade terms from publishers, and carrying out exclusionary, predatory and disciplinary practices in the retail book market.

As the investigation proceeded, major structural changes occurred in the industry, most significantly the merger of two of the companies, that alleviated many competitive concerns. In April 2001, the Bureau permitted the merger to proceed under certain conditions, which the Competition Tribunal subsequently approved in a consent order. The order included a code of conduct that addressed the publishers' concerns about trade terms with the dominant book chain and retailer concerns about exclusive leases. The withdrawal of one of the subsidiary companies from the wholesale book market ended industry concerns about wholesale discounts to this subsidiary. As a consequence, the Bureau discontinued the inquiry.

Closed-circuit Television Networks in Hospitals

In March 1999, the Bureau initiated an inquiry into alleged anti-competitive acts related to access to closed-circuit television networks in hospitals.

The complaint provided reasonable evidence that one company was substantially controlling the market for hospital closed-circuit television networks outside Quebec by using long-term exclusive contracts, and that it was limiting third-party access to an essential facility. In particular, the evidence showed that the company was introducing an access fee to its competitor that it was not charging to its affiliate, with the intent of eliminating the competitor. As a result of the investigation, the company voluntarily agreed to change its business practices. Consequently, the inquiry was discontinued.

Credit Card Protection Services

In October 1999, the Bureau initiated an inquiry as a result of information provided by the Montreal police alleging that telemarketers were offering American residents credit card protection services and, during the telephone conversations, were making a number of false and misleading statements. The representations at issue occurred over a limited time period and the company discontinued operations. Upon reviewing the information provided by the police, the Bureau discontinued the inquiry.