Competition Bureau Seeks Order Against Anti-Competitive Practices by Air Canada

Backgrounder

March 06, 2002

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The Abuse of Dominance Provision - Section 79 of the Competition Act

Abuse of a dominant position occurs when a dominant firm in a market, or group of firms, engage 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.

Section 79 sets out three essential elements, all of which must be found to exist by the Competition Tribunal for it to grant a remedial order:

• One or more firms substantially or completely control a class or species of business throughout Canada or any area thereof;
  
  
• This firm, or firms, have engaged in a practice of anti-competitive acts;
  
  
• The practice has prevented or lessened, or is likely to prevent or lessen competition substantially in a market.

Section 79 as it relates to the CanJet and WestJet inquiries

To obtain a remedial order from the Competition Tribunal, the Bureau must satisfy the Tribunal that Air Canada:

• substantially or completely controls the domestic airline industry in Canada, or one or more markets, being defined as an origin-destination city-pairs
  
  
• has engaged or is engaging in a practice of anti-competitive acts, including operating capacity at prices that do not cover the avoidable cost of providing the service. This anti-competitive act is defined by the Regulations Respecting Anti-competitive Acts of Persons Operating a Domestice Service. The new airline regulations came into force on August 23, 2000
  
  
• is lessening, through its anti-competitive acts, or is likely to lessen, competition substantially on one or more of the origin-destination city-pair markets referred to in the application (Halifax-Montreal, Halifax-Ottawa, Halifax-St-John's, Toronto-Moncton, Toronto-Saint John, Toronto-Fredericton, and Toronto-Charlottetown).

The details with respect to the Commissioner's allegations against Air Canada, the impact on competition and the effects on WestJet and CanJet are set out in the application to the Tribunal.

The Competition Tribunal

The Competition Tribunal is a specialized court that hears and decides applications made under the Civil provisions of the Competition Act. The Tribunal is an adjudicative body that operates independently of any government department.

The Tribunal is composed of not more than four judicial members and not more than eight lay members. The judicial members are appointed from among the judges of the Federal Court, Trial Division. Lay members are appointed by the Governor in Council on the recommendation of the Minister of Industry.