Competition Bureau Publishes Enforcement Guidelines on Predatory Pricing

Ottawa, July 21, 2008 — The Competition Bureau today published Enforcement Guidelines on Predatory Pricing. These guidelines describe the Bureau's enforcement approach to predatory pricing and will help ensure that Canadian businesses and the public understand when pricing below cost may result in an investigation under the Competition Act.

Transparent and predictable enforcement policies are essential in today's markets, which demand flexible and innovative responses to competitive challenges. These guidelines explain how the Bureau enforces the provisions of the Competition Act which address predatory conduct to deter anti-competitive behaviour and, at the same time, avoid chilling aggressive price competition.

Three policy changes have been incorporated into the guidelines. Predatory pricing complaints will now be examined primarily under the abuse of dominance provisions, and will be addressed criminally only where conduct is egregious. When conducting price-cost analysis, the Bureau will use average avoidable cost as the standard, which refers to costs that a business could have avoided had it chosen not to sell the product(s) in question. Lastly, price matching to meet competition may now be seen as a reasonable business justification for pricing below cost.

The Bureau first issued the guidelines in 1992, and in 2007 initiated a revision of them in light of recent jurisprudence and economic thinking. The Bureau held public consultations on the updated guidelines in October 2007.

The Competition Bureau is an independent agency that contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.

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