Abuse of dominance
Abuse of a dominant position occurs when a dominant firm in a market, or a dominant group of firms, engages in conduct that is intended to eliminate or discipline a competitor or to deter future entry by new competitors, with the result that competition is prevented or lessened substantially. These provisions, contained in sections 78 and 79 of the Competition Act, establish the bounds of legitimate competitive behaviour and provide for corrective action when firms engage in anti‑competitive activities that damage or eliminate competitors and that maintain, entrench or enhance their market power.
Where appropriate, the Commissioner will open discussions to try to obtain voluntary compliance with the law; sometimes this is all the action needed to correct the situation. A more formal solution would involve the registration of a consent agreement with the Competition Tribunal when all parties agree on a solution that will restore competition to the marketplace.
The Competition Tribunal is like a court, chaired by a judge and independent of any government department.
If voluntary compliance cannot be achieved, the Commissioner may file an application for an order before the Competition Tribunal to remedy the situation.
Subsection 79(1) sets out three essential elements that must be found to exist for the Competition Tribunal to grant an order. The Tribunal must find that:
- one or more persons substantially or completely control, throughout Canada or any area thereof, a class or species of business;
- that person or these persons have engaged or are engaging in a practice of anti‑competitive acts; and
- the practice has had, is having or is likely to have the effect of preventing or lessening competition substantially in a market.
The Tribunal has a number of remedies at its disposal to overcome the effects of anti‑competitive acts and restore competition. The most common remedy is an order that requires the anti‑competitive conduct to stop. The Tribunal may also impose an administrative monetary penalty on the company that was found to have abused its dominant position. This penalty can be for any amount up to $10,000,000 for the first order and $15,000,000 for any subsequent order made by the Tribunal against the same company.
For more information:
- Abuse of Dominance: a Serious Anti-competitive Offence
- Abuse of Dominance Pamphlet
- The Abuse of Dominance Provisions (Sections 78 and 79 of the Competition Act)
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