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Annual Report 1995/96 - Discontinued Enquiries

Marketing Practices

Undertakings

Industry Section of the Act Nature of Inquiry & Conclusion Reached
Toys 52(1)(a) 171896 Canada Inc (c.o.b. as Party Packagers Toy Warehouse
Windows and Kitchen Cabinets 52(1)(a) & 52(1)(d) McDiarmid Lumber Ltd.
Free sample 52(1)(a) Telemedia Communications
Jewelry 52(1)(a) & 52(1)(d) Beverley Hills Jewelers Limited
Furniture 52(1)(a) & 52(1)(d) Nefco Furniture Ltd. c.o.b. as The Penthouse Interiors.
Contest 52(1)(a) & 59 Coca-Cola
Latex Paints 52(1)(a) Bétonel Ltée
Cellular phones 52(1)(a) Rogers Cantel Inc. and Palmer Jarvis and Glentel Inc., c.o.b. as Airtel.
Contest 52(1)(a) & 59 William Neilson Ltd.
Other reasons
Retail Trade 52(1)(a) & 52(1)(d) On August 7, 1991, after having been provided with reason to believe that offences had been committed contrary to paragraphs 52(1)(a) and 52(1)(d), the Director commenced an inquiry into regular price claims contained in printed advertisements that promoted several diverse products. While an order for the production of documents under section 11 was obtained during the course of the inquiry, insufficient evidence was found to establish that offences under the Act had been committed.
The inquiry was discontinued on February 13, 1996.
Rugs 52(1)(a) This inquiry was commenced on October 5, 1993 following receipt of a section 9 application by six residents of Canada alleging that an advertisement for an auction of damaged rugs was misleading in that some rugs being auctioned may not have been damaged. Investigation of the matter determined that the representation as to damage could be substantiated with respect to the items in question.
The inquiry was discontinued on September 5, 1995.
Oriental rugs 52(1)(a) This inquiry began on December 22, 1993 in response to a section 9 application by six residents of Canada regarding an advertisement of a sale of Persian and oriental rugs. It was alleged that the advertisement was misleading as it gave the impression that the rugs were being liquidated at low prices as part of a shipment seized by government authorities. A conviction was obtained against two of the parties responsible for the advertisement in relation to another inquiry into similar representations.
The inquiry was discontinued on September 1, 1995.
Commercials 52(1)(a) This inquiry was commenced on October 22, 1991 following receipt of complaints in which it was alleged that a telemarketing company had not provided radio commercials in the number represented to participants in a promotion. The company which made the representation subsequently closed and ceased all operations.
The inquiry was discontinued on September 5, 1995.
Water purifiers 52(1)(a) On October 22, 1991, an inquiry was commenced in respect of allegations that a telemarketing firm, as an incentive to the purchase of a water purifier, had offered travel packages without disclosing several pertinent conditions that reflected on the value of the offer. The firm in question was closed subsequently and ceased all operations.
The inquiry was discontinued on September 1, 1995.
Automobile ornaments 52(1)(a) & (b) This inquiry was commenced on March 2, 1994 following receipt of a six residents application alleging that offences under sections 45 and 79 and paragraphs 50(1)(c), 52(1)(a) and 52(1)(b) of the Act had occurred in consequence of information provided to automobile dealers concerning the potential safety problems of a car hood ornament. Evidence sufficient to support the allegations was not found during the inquiry. Further, the defence of due diligence appeared to be available in relation to paragraph 52(1)(a) and the existence of an "adequate and proper test", within the meaning of paragraph 52(1)(b), likely could have been established.
The inquiry was discontinued on April 6, 1995.
Travel promotion 52(1)(a) This inquiry was initiated on February 10, 1994 following the receipt of complaints alleging that an advertiser had offered discount travel vouchers without disclosing a restriction as to the type of travel for which the vouchers could be redeemed. During the course of the inquiry, it became apparent that the defence of due diligence was likely available to the advertiser and that the promotion would not be repeated.

The inquiry was discontinued on March 25, 1996.

Furniture 52(1)(a) & 57(2) This inquiry began on February 22, 1994 following the receipt of complaints alleging that a retail seller of furniture was engaging in misleading advertising and bait and switch selling. In regard to jurisdictional considerations, advice was sought from representatives of the Attorney General who opined that, on the facts of the matter, a prosecution could not be undertaken.

The inquiry was discontinued on March 25, 1996.
Communications equipment 52(1)(a) & (b) On April 12, 1994, an inquiry was initiated in respect of allegations that performance claims about a television and radio antenna, advertised through the mail, were false and misleading. While it appeared that "an adequate and proper test", within the meaning of paragraph 52(1)(b), likely could not be established, consideration was given to a number of mitigating factors identified during the course of the inquiry. The advertisement in question was voluntarily withdrawn.

The inquiry was discontinued on March 25, 1996.

Food promotion 52(1)(a) & 57(2) This inquiry was commenced on August 3, 1994 after complaints had been received alleging that video tapes offered at low prices by a fast food chain to attract customers were not supplied in reasonable quantities. Investigation of the matter disclosed that a defence of due diligence likely could be made out in relation to paragraph 52(1)(a) and that similarly the facts of the matter would provide a defence within the terms of paragraph 57(3)(b) of the Act. Significant changes to the promotion, however, were effected.

The inquiry was discontinued on June 5, 1995.
Criminal Branch
Motorcycles/All Terrain Vehicles 61(1)c) & 61(6) The inquiry began on September 23, 1993, in response to a section 9 application made by six residents of Canada alleging that competing dealers in the national capital region and a manufacturer had violated subsection 61(6) and paragraph 61(1)(b) of the Act. The information obtained during the inquiry did not indicate that an offence under the Act had been committed.

The inquiry was discontinued on September 26, 1995.
Cellular Telephones 50(1)(c) This inquiry was commenced on March 25, 1994 following receipt of an application by six residents of Canada alleging that a supplier of cellular telephones and network services ("supplier") was engaging in predatory pricing with respect to the retail sale of cellular telephones, contrary to paragraph 50(1)(c) of the Act. The applicants were independent retailers of cellular telephones and equipment, who, as authorized agents of the supplier, also sold subscriptions to the supplier's cellular network. In 1991, the supplier established a chain of corporate retail stores, in direct competition with its authorized agents. The applicants alleged that the supplier was retailing certain models of cellular telephones at prices below the wholesale prices at which it sold the same models to its non-affiliated retail agents.

In November, 1994, the applicants settled an Ontario civil court action against the supplier which had alleged the supplier's practices constituted a breach of its agency agreement. In December 1994, the applicants wrote to the Director indicating that they wished to withdraw their application.

Information obtained during the course of the inquiry did not support the allegation of predatory pricing, and the inquiry was discontinued on October 24, 1995.

Freight Forwarding 45 On September 17, 1992 after being provided with reason to believe that an offense had been committed contrary to the conspiracy provision of the Competition Act (section 45), the Director commenced an inquiry into the activities of a number of firms providing pool car freight forwarding services. The evidence obtained in the course of this inquiry did not establish that an agreement was entered into by the transportation companies to refrain from undercutting each other's rates.

This inquiry was discontinued on March 27, 1996.
Ottawa Taxicabs 32,33 & 38 - Combines Investigation Act This inquiry commenced on January 5, 1982 under the merger provisions of section 33 of the Combines Investigation Act , following receipt of complaints from a number of taxi drivers in the city of Ottawa. The offences of price fixing and price maintenance under sections 32 and 38 of the Combines Investigation Act, respectively, were also examined as a result of information obtained during the inquiry.

Searches and oral examinations of witnesses were conducted during the course of the inquiry however evidence obtained was insufficient to establish an offence under sections 32, 33 or 38 of the Combines Investigation Act .

The inquiry was discontinued on April 12, 1995.

Electrical Distribution Equipment 45 This inquiry commenced on July 28, 1992 following receipt of complaints from two electrical contractors based in British Columbia. The complainants alleged that certain suppliers of electrical distribution equipment were parties to an agreement to fix the prices of equipment used in building construction contrary to the conspiracy provisions of section 45 of the Act.

Investigation of this matter did not produce sufficient information to provide grounds for the exercise of formal powers or to lead to a conclusion that there existed a pricing agreement between the suppliers, as alleged.

The inquiry was discontinued on April 11, 1995.
Clay Bricks 50(1)(a) This inquiry commenced on October 13, 1994 following receipt of a six resident application alleging that a manufacturer of standard clay bricks in western Canada had engaged in price discrimination contrary to paragraph 50(1)(a) of the Act.

Insufficient evidence was found to support the allegations of price discrimination. In light of the concerns raised by the applicants, the price discrimination provisions of the Act were brought to the attention of the brick manufacturer and assurances were received from the company's President that its policy requires its Board, management and employees to comply with the Act.

The inquiry was discontinued on January 18, 1996.
Professional Sports This inquiry was commenced in July 1992, following the receipt of a complaint from a player agent representing a player who had been selected by a Canadian based professional sports team in the sport's 1989 entry draft. It was alleged that the sports league through its by-laws and its interpretation of said by-laws had unreasonably limited this player's opportunities as a player to negotiate and play for the team of his choice.

The concerns related to the retention of the player's playing rights by the team, even though he had not signed with this team following his being drafted in 1989 and ended up playing for several teams in other leagues including a professional team in Europe.

During the course of the inquiry there was a change in league management and the subsequent negotiation of a new collective bargaining agreement between the league and its players' association. The issues of mobility for players and status of rights for non-signed draft choices are specific components of the agreement negotiated between the league and its players' association.

Section 4 of the Competition Act provides an exemption from the purview of the Act for agreements and arrangements that are part of collective bargaining activities between parties as part of labour negotiations. While there was a question as to whether or not the Section 4 exemption applied to the original matter, it is clear that the league's entry draft, free agency and retention of player rights have been specifically dealt with as part of the terms of the agreement. Player mobility rules therefore, to the extent they were negotiated as part of a collective bargaining agreement, would not fall under the purview of the Competition Act.

The inquiry was discontinued on August 28, 1995.

Infant Formula 45 In 1991, an inquiry was initiated following a section 9 application by an infant formula manufacturer, complaining about the business practices of another infant formula manufacturer. The complaint alleged that an agreement between the manufacturer and a province gave the manufacturer exclusive supplier status to the hospitals in the province and resulted in substantially lessened competition by impeding entry and expansion of infant formula firms in the province.

In the course of inquiry into this matter, information obtained from suppliers and customers and other industry contacts led in June 1993 to the initiation of another inquiry under the Act into the activities of three infant formula manufacturers and their industry association. This inquiry was initiated to investigate possible abuse of dominant position in the infant formula industry, based on the industry code of marketing conduct implemented by its association. In June 1994, a third inquiry was initiated based in part on the agreements reached between the three infant formula manufacturers to adopt and adhere to an industry code of marketing conduct developed by the industry association. These agreements raised concerns under the conspiracy provisions of section 45 of the Act.

Since the initial inquiry was commenced in 1991, a number of key events significantly changed the nature of competition in the Canadian infant formula industry. The entry of another infant formula manufacturer, which emphasized retail advertising, into the Canadian market, the dissolving of the industry association and the abandonment of the association's code of marketing conduct resulted in the market experiencing price and other forms of retail competition.

Following an assessment of the facts accumulated during the course of these inquiries, and consultation with representatives of the Attorney General, the three inquiries were discontinued on January 23, 1996.

Civil Matters Branch
Auto Glass Repair 77, 45 & 50(1)(c) The Director received a six resident application in 1994, alleging that nationally represented auto glass repair chains and a number of insurance companies engaged in a number of anti-competitive acts aimed at eliminating independent competitors. It was alleged that the practices contravened a number of provisions of the Act, in particular, the abuse of dominant position provisions, section 77, and the criminal provisions of section 45 and paragraph 50(1)(c). However, the information obtained during this inquiry did not lead the Director to believe on reasonable grounds that an offence under the criminal provisions of the Act had been committed or that grounds existed for the making of an order by the Competition Tribunal. Accordingly, the inquiry was discontinued.
Insurance 77 & 79 The Director received a six resident application in 1993, alleging anti-competitive activities on the part of the Insurance Corporation of British Columbia (ICBC). The allegations were examined under sections 77 (exclusive dealing) and 79 (abuse of dominant position) of the Act. During the inquiry ICBC voluntarily modified certain behaviour In a press release dated July 13, 1995 it was announced that the Director had received undertakings from the Insurance Corporation of British Columbia in which ICBC had agreed to change certain policies that raised questions under the Competition Act. The combination of ICBC modifying its behaviour and giving undertakings to the Director provided a satisfactory resolution in this matter. Accordingly, the inquiry was discontinued.
Date Modified: 2008-06-25

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