Temporary Order

Backgrounder

October 12, 2000

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Introduction

The Commissioner of Competition was given exceptional powers to issue a temporary order as part of several amendments to the Competition Act under Bill C-26. The legislation received Royal Assent on June 29, 2000 and came into force on July 5th, 2000.

Changes to the legislation and newly introduced airlines regulations, allow the Bureau to better protect competition in the airline industry and are part of the federal government's initiative to ensure that Canada's dominant airline carrier does not abuse its market position. The temporary order powers apply specifically to the airline industry.

What is a Temporary Order?

It is a temporary measure which can be applied to protect competition in the airline industry while the Bureau continues an investigation. The order specifies what action the dominant airline carrier must take to comply with the law during the period of examination.

Criteria for Issuing a Temporary Order

A temporary order can be issued when it is deemed necessary to immediately stop potential anti-competitive behaviour by the dominant carrier. The Competition Act states that two conditions are required to exercise these powers:

1. The Bureau must have initiated a formal inquiry. An inquiry may be initiated either when the Commissioner has reason to believe there is a contravention of the Competition Act, or the Commissioner receives a complaint under section 9 of the Competition Act. The purpose of a formal inquiry is to determine if there is sufficient evidence to apply to the Competition Tribunal under section 79 of the Competition Act, which relates to abuse of dominance.

2. The Commissioner must believe that in the absence of a temporary order:

(i) injury to competition that cannot adequately be remedied by the Competition Tribunal is likely to occur, or

(ii) a person is likely to be eliminated as a competitor, suffer a significant loss of market share, suffer a significant loss of revenue or suffer other harm that can not be adequately remedied by the Tribunal.

A temporary order can be implemented for a period of 20 days. The order can be renewed twice, for 30 days each, if required, or revoked at any time.

The Commissioner is required to file the temporary order with the Competition Tribunal. An air carrier which is subject to a temporary order may apply to the Tribunal to have the order varied or set aside. The temporary order will remain in force until the Competition Tribunal renders its decision.

The purpose of the temporary order is to provide enough time for the Bureau to decide if it will apply to the Competition Tribunal under the abuse of dominance provision (79) of the Competition Act. If the Bureau does not have sufficient evidence for an application to the Tribunal, the case will be discontinued.