Exclusive Dealing, Tied selling and Market Restrictions
Restrictive practices, such as exclusive dealing, tied-selling and market restriction, can be cause for concern under section 77 of the Competition Act.
Exclusive dealing occurs when a supplier requires or induces a customer to deal only, or mostly, in certain products.
Tied-selling exists when a supplier, as a condition of supplying a particular product, requires or induces a customer to buy a second product. It may also occur when the supplier prevents the customer from using a second product with the supplied product.
Market restriction occurs when a supplier requires the customer to sell the specified products in a defined market, for example by penalizing the customer for selling outside that defined market.
The exclusive dealing, tied-selling and market restriction sections of the Competition Act may apply when the following conditions are met:
- The conduct is engaged in by a major supplier or is widespread in a market.
- The conduct in question constitutes a practice. Different restrictive acts considered together, as well as repeated instances of one act with one or more customers, may constitute a practice.
- The restrictive practice discourages a firm's entry into, or expansion in, the market.
- The practice has substantially lessened competition, or is likely to do so.
Where appropriate, the Commissioner will open discussions to obtain voluntary compliance. A more formal solution would involve the registration of a consent agreement with the Competition Tribunal. If voluntary compliance cannot be achieved, the Commissioner may file an application before the Tribunal for an order to remedy the situation.
Recent amendments to the Competition Act allow, subject to certain conditions, private parties to take matters directly to the Competition Tribunal for adjudication.
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