VanDuzer Report - Notes(2)

ENDNOTES (continued)

¹⁴⁰ Hoffman-La Roche (1980), 28 O.R. (2d) 164, at 254 (H.C.J.), aff'd (1981), 125 D.L.R. (3d) 607 (C.A.).

 

¹⁴¹ Ibid. at 201, 204.

 

¹⁴² See, for example, Director of Investigation and Research v. Hillsdown Holdings (1992), 41 C.P.R. (3d) 289 at 328-9 (Comp. Trib.).

 

¹⁴³ R. v. Consumers Glass (1981), 33 O.R. (2d) 228 (H.C.J.).

 

¹⁴⁴ R. v. Perreault (unreported, Que. Sup. Ct., June 16, 1996,). A consent order was issued in R. v. Allen Sloman Enterprises Ltd. (unreported, Federal Court of Canada, May 29, 1972). One other case involving s. 50(1)(b) resulted in an acquittal: R. v. Carnation (1969), 58 C.P.R. 112 (Alta. C.A.).

 

¹⁴⁵ Organization for Economic Cooperation and Development, Predatory Pricing (Paris: OECD, 1989) at 82.

 

¹⁴⁶ The Merger Enforcement Guidelines define the relevant market “in terms of the smallest group of products and smallest geographic area in relation to which sellers, if acting as a single firm (a “hypothetical monopolist”) that was the only seller of those products in that area, could profitably impose and maintain a significant non-transitory price increase above levels that would exist in the absence of the merger” (at 7). The application of this standard is elaborated in Part 3 of the Merger Enforcement Guidelines.

 

¹⁴⁷ Predatory Pricing Enforcement Guidelines at 2.2.1.1.

 

¹⁴⁸ Ibid. at 2.2.1.2.

 

¹⁴⁹ Part 4.6, at 33-36, Appendix I.

 

¹⁵⁰ Davies, Ward & Beck, Competition Law of Canada (New York: Juris Publishing, looseleaf) at 4-85.

 

¹⁵¹ For this to be the case, capital markets must be inefficient. Otherwise all entry costs may be financed so long as there is a promised expected rate of return commensurate with the risk. See D.G. McFetridge, "Predatory and Discriminatory Pricing" in The Law and Economics of Competition Policy, F. Mathewson, M. Trebilcock & M. Walker, eds. (Vancouver: Fraser Institute, 1990).

 

¹⁵² Economies of scale means that unit costs are lower at higher levels of production. Economies of scope arise where it is cheaper to jointly produce two or more products than to produce each separately. See Predatory Pricing Enforcement Guidelines, s. 2.2.1.2.

 

¹⁵³ L.A.W. Hunter & S.M. Hutton, “Is the Price Right: Comments on the Predatory Pricing Enforcement Guidelines and Price Discrimination Enforcement Guidelines of the Bureau of Competition Policy” (1993) 38 McGill L. J. 830 at 839-810.

 

¹⁵⁴ Predatory Pricing Enforcement Guidelines, s. 2.2.1.2. Some of these practices are reviewable under the Competition Act ss. 76, 77 and 7

 

¹⁵⁵ Hoffman-La Roche (1980), 28 O.R. (2d) 164, at 197 (H.C.J.), aff'd (1981), 125 D.L.R. (3d) 607 (C.A.).

 

¹⁵⁶ In Upper Lakes Group Inc. v. National Transportation Agency (1995), 62 C.P.R. (3d) 167 (F.C.A.), a decision interpreting a provision of the National Transportation Act, 1987, R.S.C. 1985, c. 28 (3d Supp.) similar to s. 50(1)(c), the Federal Court affirmed the National Transportation Agency's decision that CN's rates were not predatory based on there being no prospect of recoupment.

 

¹⁵⁷ Predatory Pricing Enforcement Guidelines, 2.2.2.

 

¹⁵⁸ Ibid.

 

¹⁵⁹ R. v. Consumers Glass (1981), 33 O.R. (2d) 228 (H.C.J.). Excess capacity is also recognized as a justification for pricing in the grey area by the OECD, Organization for Economic Co-operation and Development, Predatory Pricing (Paris: OECD 1989) at 82-3.

 

¹⁶⁰ Predatory Pricing Enforcement Guidelines, at 2.2.2.

 

¹⁶¹ L.A. Skeoch & B C. McDonald, Dynamic Change and Accountability in a Canadian Market Economy (Ottawa: Queen's Printer, 1976) at 218-219.

 

¹⁶² Predatory Pricing Enforcement Guidelines, at 2.2.2.

 

¹⁶³ L.A.W. Hunter & S.M. Hutton, “Is the Price Right? Comments on the Predatory Pricing Enforcement Guidelines and Price Discrimination Enforcement Guidelines of the Bureau of Competition Policy” (1993) 38 McGill L. J. 830 at 854.

 

¹⁶⁴ Davies, Ward & Beck, Competition Law of Canada (New York: Juris Publishing, looseleaf) at 4-89 - 4-91 gives examples of language reflecting aggressive competition versus predation from the Hoffman-La Roche case. On the difficulty of assessing intention from statements made see J. R. Lott, Are Predatory Commitments Credible? Who should the courts believe? (Chicago: University of Chicago Press, 1999) at 7; and R. v. Consumers Glass (1981), 33 O.R. (2d) 228 (H.C.J.).

 

¹⁶⁵ L.A.W. Hunter & S.M. Hutton argue the Guidelines adopt a purposive interpretation focusing on the harm that the section was intended to address (“Comments on the Predatory Pricing Enforcement Guidelines and Price Discrimination Enforcement Guidelines of the Bureau of Competition Policy” (1993) 38 McGill L. J. 830 at 836).

 

¹⁶⁶ Davies, Ward & Beck, Competition Law of Canada (New York: Juris Publishing, looseleaf) at 4-88. Statements acknowledging the limited likelihood of deviating from the requirements of the two stage test are the following: "If it appears that entry or expansion would likely occur on a sufficient scale to constrain the ability of the alleged predator to recoup its initial losses at a later time, the Director would have less concern" (2.2.1.2); "evidence which may suggest an intent to lessen competition or eliminate a competitor, which is not backed up by the market power to realize these goals, is less likely to be pursued" (2.4).

 

¹⁶⁷ T. Calvani “Predatory Pricing and below-cost sales laws in the United States: an analysis” (Ottawa: Competition Bureau, 1999).

 

¹⁶⁸ 881 F. 2d 1396 (7th Cir., 1989), cert. denied 494 U.S. 1019. For a brief history of the evolution of U.S. antitrust law on predation see T. Calvani, ibid.

 

¹⁶⁹ Ibid. at 1401.

 

¹⁷⁰ Ibid. at 1401-2.

 

¹⁷¹ Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993).

 

¹⁷² T. Calvani “Predatory Pricing and below-cost sales laws in the United States: an analysis (Ottawa: Competition Bureau, 1999) at 3-4;. D.G. McFetridge, "Predatory and Discriminatory Pricing" in The Law and Economics of Competition Policy, F. Mathewson, M. Trebilcock & M. Walker, eds. (Vancouver: Fraser Institute, 1990) at 92.

 

¹⁷³ W.H. Jordan, “Predatory Pricing after Brooke Group: The Problem of State ?Sales Below Cost’ Statutes” (1995) 44 Emory L. J. 267.

 

¹⁷⁴ E. Savvides-Gellerson, “The Effect of ?Below-Cost’ Selling Laws on Retail Prices of Motor Gasoline” (API Research Study 043 1987).

 

¹⁷⁵ R. Johnson, "The Impact of Sales Below Cost Laws on the U.S. Retail Gasoline Market (Ottawa: Competition Bureau, 1999). In another recent study by an economist at the Federal Trade Commission, it was found that another form of intervention, divorcement statutes, which prohibits the integration of refiners and retailers raises the price of gasoline by $.027 per gallon, reducing consumers surplus in the United States by over US$100 million (M.G. Vita, “Regulatory Restrictions on Vertical Integration and Control: the Competitive Impact of Gasoline Divorcement Statutes,” Working Paper No. 227 (Washington: Bureau of Economics, Federal Trade Commission, 1999)). Ontario, New Brunswick, Newfoundland and British Columbia have considered and rejected proposals for legislation in the gasoline marketing industry. Legislation in Nova Scotia was repealed. Quebec has enacted a regulatory scheme for gasoline margins. Prince Edward Island regulates the prices of gasoline sold at retail.

 

¹⁷⁶ (1991) 1 ECR 3359. This position was confirmed in Tetra Pak II, OJ 1992 L72/1, (1992) 4 CMLR 551.

 

¹⁷⁷ Ibid. at §72. Where pricing was below cost and it was reasonably forseeable that a competitor would go out of business, an abuse was found (Napier Brown/British Sugar, OJ 1988 C284/91 (Commission).

 

¹⁷⁸ The interpretation of the Competition Act, 1980 in the U.K. closely follows that set out in the Guidelines (see M. A. Utton, "Anticompetitive Practices and the Competition Act, 1980" University of Reading, Department of Economics Discussion Papers in Industrial Economics, Series E Vol. III (1990/1) No. 24. at 31

 

¹⁷⁹ If business people are only presumed to be utility maximizing, then economic theory will countenance predatory behaviour which is not profit maximizing but engaged in for other reasons, such as a personal satisfaction gained from eliminating competitors.

 

¹⁸⁰ Davies, Ward & Beck, Competition Law of Canada (New York: Juris Publishing, looseleaf) at 4-68. The authors identify the consequent risk of s. 36 actions.

 

¹⁸¹ An Act to amend the Combines Investigation Act, S.C. 1951 (2d sess.), c. 30, s. 1. The provision was slightly revised by S.C. 1952, c. 39, s. 4.

 

¹⁸² S.C. 1960, c. 34, s. 14.

 

¹⁸³ An excellent overview of the legislative history of price maintenance provisions is set out in Davies, Ward & Beck, Competition Law of Canada (New York: Juris Publishing, looseleaf) at 4-97- 4-100.

 

¹⁸⁴ Where the person attempting to influence the conduct of that other person and that other person are affiliated or principal and agent, the prohibition does not apply (Competition Act, s. 61(2)).

 

¹⁸⁵ R. v. Les Must de Cartier Can. Inc. (1989), 27 C.P.R. (3d) 37 (Ont. Dist. Ct.).

 

¹⁸⁶ Competition Act, s. 61(9).

 

¹⁸⁷ R. v. Schelew (1984), 78 C.P.R. (2d) 102 (N.B.C.A.).

 

¹⁸⁸ R. v. Sunoco (1986), 11 C.P.R. (3d) 557 (Ont. Dist. Ct.); R. v. Petrofina Can. Ltd. (1974), 20 C.P.R. (2d) 83 (Ont. Dist. Ct.).

 

¹⁸⁹ R. v. Mr. Gas Limited (unreported, Ont. Ct. of Justice (Crim. Div.), August 11, 1995) at 82.

 

¹⁹⁰ See cases cited in Davies, Ward & Beck, Competition Law of Canada (New York: Juris Publishing, looseleaf) at 4-112.

 

¹⁹¹ R. v. Royal Lepage Real Estate Services Ltd. (unreported, Alberta Court of Queen's Bench, October 24, 1994).

 

¹⁹² Competition Act, s. 61(3).

 

¹⁹³ Competition Act, s. 61(4). No offence is committed if a suggested resale price is affixed or applied to a product or its package or container (s. 61(5)).

 

¹⁹⁴ R. v. Phillips Electronics Ltd. (1980), 30 O.R. (2d) 129 (C.A.

 

¹⁹⁵ E.g. Davies, Ward & Beck, Competition Law of Canada (New York: Juris Publishing, looseleaf) at 4-119 - 4-120.

 

¹⁹⁶ R. v. Royal Lepage Real Estate Services (unreported Alberta Court of Queen's Bench, October 24, 1994) at para. 33.

 

¹⁹⁷ Competition Act, s. 61(10).

 

¹⁹⁸ R. v. Salomon Can. Sports Ltée (1986), 28 C.C.C. (3d) 240 at 247, 251 (Qué. C.A.).

 

¹⁹⁹ R. v. William E. Coutts Co. (1968), 67 D.L.R. (2d) 87 (Ont. C.A.) at 93. In that case a one week sale at 2 locations was considered sufficient to constitute a practice. This definition of practice has been applied in Director of Investigation and Research v. NutraSweet Co. (1990), 32 C.P.R. (3d) 1 (Comp. Trib.), a case interpreting the abuse of dominance provision, s. 79.

 

²⁰⁰ (1980), 57 C.P.R. (2d) 186 (Qué. Sess. of Peace) at 198-199. In that case it was also held that the provision only applied to after sales service. In R. v. Les Must de Cartier Can. Inc. (1989), 27 C.P.R. (3d) 37 (Ont. Dist. Ct.) the court held that refusal to supply in the interests of preserving the brand image of the supplier’s product was permitted. See generally, R. J. Roberts, Roberts on Competition/Antitrust: Canada and the United States, 2d ed. (Toronto: Butterworths, 1992) at 181-4 and S. Wong, "The Law of Price Maintenance in Canada: Review and Assessment" in R. S. Khemani & W. T. Stanbury, eds. Canadian Competition Law and Policy at the Centenary (Halifax: Institute for Research on Public Policy, 1991) 339 at 347-8.

 

²⁰¹ E.g. R. v. Campbell (1979), 51 C.P.R. (2d) 284 (B.C. Co. Ct.); and R. v. Mr. Gas Limited (unreported, Ont. Ct. of Justice (Prov. Div.), August 11, 1996).

 

²⁰² 220 U.S. 373 (1911). Amendments to the Sherman Act in 1937 and 1952 made resale price maintenance legal in most settings. These amendments were repealed in 1975 and resale price maintenance was again a per se violation. Resale price maintenance may also be contrary to s. 5 of the Federal Trade Commission Act (15 U.S.C. s. 45) and, in some circumstances, dealt with as a part of a conspiracy to monopolize, contrary to s. 2 of the Sherman Act (15 U.S.C. s. 2).

 

²⁰³ U.S. v. Colgate & Co., 250 U.S. 300 (1919).

 

²⁰⁴ U.S. v. Parke, Davis & Co., 362 U.S. 26 (1960); Acquaire v. Canada Dry Bottling Co., 24 F. 2d. 401 (2d Cir., 1994).

 

²⁰⁵ United States v. General Electric, 272 U.S. 476 (1926).

 

²⁰⁶ Simpson v. Union Oil Co., 377 U.S. 13 (1964).

 

²⁰⁷ U.S. v. Colgate & Co., 250 U.S. 300 (1919).

 

²⁰⁸ 465 U.S. 752 (1984).

 

²⁰⁹ Business Electronics Corp. v. Sharp Electronics Corp. No. 85-1910 U.S.S.C. 198

 

²¹⁰ F. Mathewson & R. Winter, "The Law and Economics of Vertical Restraints," in The Law and Economics of Competition Policy, F. Mathewson, M. Trebilcock & M. Walker, eds. (Vancouver: Fraser Institute, 1990) at 115-116.

 

²¹¹ “Opening Markets and Protecting Competition for America’s Businesses and Consumers” speech by Anne K. Bingaman, Assistant Attorney-General, Antitrust Division, Department of Justice, April 7, 1995.

 

²¹² Italian Flat Glass, OJ L33 (Dec. 7, 1988). In that case, the price maintenance practice was engaged in by a shared monopoly.

 

²¹³ VBBB/VBVB, OJ 1982 L54/36.

 

²¹⁴ Pronuptia de Paris v. Irmgard Schillgalli, (1989) ECR 353.

 

²¹⁵ AEG v. Commission, (1983) ECR 3151.

 

²¹⁶ F. Mathewson & R. Winter, “The Law and Economics of Resale Price Maintenance” (1998) 13 Rev. of Indust. Org. 57.

 

²¹⁷ In R. T. Hughes & T. N. Patel, “Current Issues Involving the Price Maintenance Provisions of the Competition Act” ((1996) 17 Comp. Pol. Rec. 40) the different treatment was of price maintenance and refusal to supply regarding the availability of the defences was described as “anomalous” (at 49).

 

²¹⁸ T.W. Ross, "Introduction: The Evolution of Competition Law in Canada" (1998) 13 Rev. of Indust. Org. 1 at 19.

 

²¹⁹ R.S.C. 1970, c. C-23, s. 33. Predatory behaviour formed part of the basis for the conviction of the accused in R. v. Eddy Match (1927), 109 C.C.C. 14 (Que. C.A.).

 

²²⁰ Alex Couture Inc. v. Canada (1991), 38 C.P.R. (3d) 293 (Que. C.A.) at 324.

 

²²¹ The former criminal provision required proof beyond a reasonable doubt and the Bureau had never been successful in proving that the lessening of competition would operate "to the detriment or against the interest of the public" beyond a reasonable doubt. The standard of proof before the Tribunal is on the balance of probabilities.

 

²²² Competition Act, s. 79(2), (3) and (5).

 

²²³ Director of Investigation and Research v. NutraSweet (1990), 32 C.P.R. (3d) 1 (Comp. Trib.) at 9-10.

 

²²⁴ In Director of Investigation and Research v. Laidlaw Waste Systems Ltd. ((1992), 20 C.P.R. (3d) 289 (Comp. Trib.) at 316), the Tribunal held that it is only the existing situation which is relevant for the purposes of this inquiry. See generally R. D. Anderson & J. Monteiro, Market Definition in Abuse of Dominance Cases: The Pragmatic Approach of the Competition Tribunal (September 1, 1994). The determination of product market should be made using the substitutability test based on buyer price sensitivity adopted in Director of Investigation and Research v. NutraSweet, ibid., Laidlaw (at 320); Canada v. D. and B. Companies (1995), 64 C.P.R. (3d) 216 (Comp. Trib.)(hereinafter “Nielsen”) (at 241), and Canada v. Tele-Direct (Publications) Inc. (1997), 73 C.P.R. 1 (Comp.Trib.), rather than the hypothetical monopolist test used in the Merger Enforcement Guidelines. (A. N. Campbell, Merger Law and Practice (Toronto: Carswell, 1997) at 54-77). The substitutability test is a general standard: Products are in the same market if they are close substitutes in the sense that small price changes would cause buyers to switch from one to the other. This is a difficult test to apply in practice and the Tribunal has indicated that what factors are relevant will depend on the circumstances of each case (Nielsen at 241). This test was accepted by the Supreme Court of Canada in Director of Investigation and Research v. Southam, ((1997) 1 S.C.R. 748 at 759-760). Since direct evidence of substitutability is rarely available, recourse may be had to indirect evidence such as the "physical characteristics of the products, the uses to which the products are put, and whatever evidence there is about the behaviour of buyers that casts light on the willingness to switch from one product to another in respond to changes in relative prices" (at 759-760), quoting the Tribunal. The Supreme Court has held that weighing the criteria is a matter within the discretion of the Tribunal to be exercised in accordance with the facts of each case (at 781). The substitutability test has also been applied in a criminal context in R. v. Clarke Transport Inc. (1995), 64 C.P.R. (3d) 289 (Ont. Ct. Gen. Div.) at 310-311.

 

²²⁵ Director of Investigation and Research v. NutraSweet, ibid. at 10. In Director of Investigation and Research v. Laidlaw Waste Systems Ltd., ibid., the Tribunal considered the anticompetitive acts to assess whether there was market power.

 

²²⁶ Director of Investigation and Research v. Laidlaw Waste Systems Ltd., ibid., at 325; Director of Investigation and Research v. NutraSweet, ibid., at 28; Canada v. Tele-Direct (Publications) Inc. (1997), 73 C.P.R. 1 (Comp.Trib.); and Canada v. D. and B. Companies (1995), 64 C.P.R. (3d) 216 (Comp. Trib.).

 

²²⁷ Director of Investigation and Research v. NutraSweet, ibid. at 28.

 

²²⁸ Director of Investigation and Research v. Laidlaw Waste Systems Ltd. (1992), 20 C.P.R. (3d) 289 (Comp. Trib.) at 325; Canada v. D. and B. Companies (1995), 64 C.P.R. (3d) 216 (Comp. Trib.) at 257. In Canada v. Tele-Direct (Publications) Inc. (1997), 73 C.P.R. 1 (Comp. Trib.) at 85), however, it was held that the absence of barriers to entry will mean that dominant firms cannot exercise market power. This suggests that barriers to entry should always be considered one of the prerequisites of effective market power. No other kind of market power is relevant.

 

²²⁹ Director of Investigation and Research v. NutraSweet (1990), 32 C.P.R. (3d) 1 (Comp. Trib.) at 9-10. (95%); Director of Investigation and Research v. Laidlaw Waste Systems Ltd., ibid. (87%); Canada v. D. and B. Companies, ibid. (100%); Canada v. Tele-Direct (Publications) Inc, ibid. (96%).

 

²³⁰ (Ottawa: Industry Canada, 1991), s. 4.2.1

 

²³¹ Director of Investigation and Research v. NutraSweet (1990), 32 C.P.R. (3d) 1 (Comp. Trib.); Director of Investigation and Research v. Laidlaw Waste Systems Ltd. (1992), 20 C.P.R. (3d) 289 (Comp. Trib.); Canada v. D. and B. Companies (1995), 64 C.P.R. (3d) 216 (Comp. Trib.).

 

²³² Director of Investigation and Research v. Laidlaw Waste Systems Ltd., ibid. at 325.

 

²³³ E.g. Director of Investigation and Research v. NutraSweet (1990), 32 C.P.R. (3d) 1 (Comp. Trib.), Director of Investigation and Research v. Laidlaw Waste Systems Ltd., ibid., Canada v. D. and B. Companies (1995), 64 C.P.R. (3d) 216 (Comp. Trib.); Canada v. Tele- Direct (Publications) Inc. (1997), 73 C.P.R. 1 (Comp. Trib.).

 

²³⁴ Intent evidence, may, however, be considered Director of Investigation and Research v. Laidlaw Waste Systems Ltd., ibid.

 

²³⁵ Director of Investigation and Research v. NutraSweet (1990), 32 C.P.R. (3d) 1 (Comp. Trib.) at 57.

 

²³⁶ Director of Investigation and Research v. Laidlaw Waste Systems Ltd. (1992), 20 C.P.R. (3d) 289 (Comp. Trib.) at 332, 343, and Canada v. D. and B. Companies (1995), 64 C.P.R. (3d) 216 (Comp. Trib.) at 257.

 

²³⁷ Director of Investigation and Research v. Laidlaw Waste Systems Ltd. (1992), 20 C.P.R. (3d) 289 (Comp. Trib.).

 

²³⁸ Canada v. D. and B. Companies (1995), 64 C.P.R. (3d) 216 (Comp. Trib.) at 270-271; Canada v. Tele-Direct (Publications) Inc. (1997), 73 C.P.R. 1 (Comp.Trib.) at 235.

 

²³⁹ Director of Investigation and Research v. NutraSweet (1990), 32 C.P.R. (3d) 1 (Comp. Trib.) at 35.

 

²⁴⁰ Director of Investigation and Research v. NutraSweet, ibid., at 47.

 

²⁴¹ Canada v. D. and B. Companies (1995), 64 C.P.R. (3d) 216 (Comp. Trib.) at 267.

 

²⁴² Ibid. at 266; Director of Investigation and Research v. NutraSweet (1990), 32 C.P.R. (3d) 1 (Comp. Trib.) at 47.

 

²⁴³ Canada v. D. and B. Companies, ibid.; Director of Investigation and Research v. NutraSweet, ibid.

 

²⁴⁴ Efficiency defences were not accepted in NutraSweet, ibid., apparently because of strong evidence of exclusionary intent (at 68-69, 90). This aspect of the decision is criticized in J. Church & R. Ware, "Abuse of Dominance under the 1986 Canadian Competition Act" ((1998) 13 Rev. of Indus. Org. 85 at 103-104). Several commentators have suggested that the result of the decision is that if a firm is dominant and engages in legitimate business practices, which happens to have an exclusionary effect, it may be liable under the abuse of dominance provision. B. M. Graham, "Abuse of Dominance - Recent Case Law: NutraSweet and Laidlaw" (1993) 38 McGill L. J. 800; J. Musgrove, "Use and Abuse of Dominant Position: A Brief Review of NutraSweet, Laidlaw, and Nielsen" (1995) 16 Canadian Comp. Pol. Rec. 52.

 

²⁴⁵ Director of Investigation and Research v. NutraSweet, ibid. at 51-2.

 

²⁴⁶ Canada v. D. and B. Companies (1995), 64 C.P.R. (3d) 216 (Comp. Trib.); Canada v. Tele-Direct (Publications) Inc. (1997), 73 C.P.R. 1 (Comp. Trib.).

 

²⁴⁷ Ibid. at 73-78.

 

²⁴⁸ Squeezing under s. 78(1)(a) was alleged but not found in Canada v. Tele-Direct (Publications) Inc. (1997), 73 C.P.R. 1 (Comp.Trib.). It was also the main anticompetitive act alleged in the High-Speed Internet access case, an inquiry recently discontinued by the Commissioner. McFetridge suggests that it is possible to interpret s. 78(i) as expressing standard that is breached when an integrated seller sells at retail for price less than its wholesale selling price plus transportation costs (D.G. McFetridge, "Predatory and Discriminatory Pricing" in The Law and Economics of Competition Policy, F. Mathewson, M. Trebilcock & M. Walker, eds. (Vancouver: Fraser Institute, 1990) at 92-3).

 

²⁴⁹ Application of the Areeda-Turner standard to determine if there has been squeezing under s. 79 had been suggested by the Restrictive Trade Practices Commission (Restrictive Trade Practices Commission (1987)) within the context of the sale by vertically integrated supplier of gasoline to retailer.

 

²⁵⁰ Canada v. Tele-Direct (Publications) Inc. (1997), 73 C.P.R. 1 (Comp. Trib.).

 

²⁵¹ U.S. v. Aluminum Co. of America, 148 F. 2d 416 (2nd Cir. 1945).

 

²⁵² Aspen Skiing Co. v. Aspen Highlands Skiing Corp. 472 U.S. 585 (1985) at 602, 605.

 

²⁵³ W. Holmes, Antitrust Handbook (New York: Boardman & Co., 1998) at 404-447.

 

²⁵⁴ Hoffman-La Roche v. Commission, (1979) ECR 461. Hawk suggests that it is broader and more vague than the U.S. standard described above (B. E. Hawk, United States, Common Market and International Antitrust: A Comparative Guide (New York: Aspen Law and Business, 1996) (Vol. 2) at 797-799).

 

²⁵⁵ Goldman and Witterick suggest that it will be hard to apply abuse to vertical practices because of the effect on competition test. (Abuse of Dominance and Monopolization OECD/GD (96) 131, Competition Policy Roundtables No. 8, Contribution from BIAC, Abuse of Dominant Position under the Canadian Competition Act at 4).

 

²⁵⁶ Section 79(1)(c) refers only to the competitive effect in “a market”.

 

²⁵⁷ J. Musgrove, “Use and Abuse of Dominance: A Brief Review after NutraSweet, Laidlaw and Nielsen” (1995) 16 Comp. Policy Rec. 5

 

²⁵⁸ Director of Investigation and Research v. Laidlaw Waste Systems Ltd. (1992), 20 C.P.R. (3d) 289 (Comp. Trib.).

 

²⁵⁹ In Boehringer v. Bristol Meyers Squibb ((1998) O.J. No. 4007 (Q.L.)(C.A.)), the court determined that matching a competitor's price, even if below cost, cannot be predatory, following Hoffman-La Roche. The court also refused to grant an injunction prohibiting the alleged predator from selling below cost on the additional ground that prices were inherently volatile and plaintiff would have been free to sell below cost.

 

²⁶⁰ We reviewed only complaints which were made and concluded with the Review Period.

 

²⁶¹ Competition Act, s. 11.

 

²⁶² Competition Act, s. 15.

 

²⁶³ Competition Act, Part VIII.

 

²⁶⁴ Competition Act, s. 10(1).

 

²⁶⁵ Competition Act, s. 23(1).

 

²⁶⁶ Competition Act, s. 23(2).

 

²⁶⁷ It is not necessary for the Commissioner to be on inquiry to make an application to the Tribunal, but it is usually the case. In addition to the relief which may be obtained under each specific civil and criminal provision, the Competition Act contains general provisions providing for interim relief (ss. 33, 34(2) and 104).

 

²⁶⁸ Competition Act, s. 23(2).

 

²⁶⁹ W. T. Stanbury, "Expanding Responsibilities and Declining Resources: The Strategic Responses of the Competition Bureau" (1998) 13 Rev. of Indust. Org. 205 at 228. Stanbury recites some other explanations for this trend (at 228-230).

 

²⁷⁰ W. T. Stanbury, ibid..

 

²⁷¹ This overview has some inherent limitations. In some cases multiple complaints were received but they were not all separately recorded in the tracker and may have been the subject of a single project. For example, over 100 complaints were received regarding the auto-glass industry, but they were recorded as a single project file.

 

²⁷² W. T. Stanbury, "Expanding Responsibilities and Declining Resources: The Strategic Responses of the Competition Bureau" (1998) 13 Rev. of Indust. Org. 2.

 

²⁷³ From 1978 -79 to 1995-96 the Bureau’s operating budget increased slightly from $16.7 million to $17.5 in real terms. From 1991-92 to 1995-96, the budget fell 13.5% in real terms. (W. T. Stanbury, ibid. at 211-212.) Stanbury notes as well that the costs of key inputs, such as hiring experts has increased and that dealing with challenges under the Charter of Rights and Freedoms has taxed resources.

 

²⁷⁴ There are several explanations for this as discussed in K. Roach & M. Trebilcock, "Private Party Access to the Competition Tribunal" (Ottawa Industry Canada, 1996) at 22-25. See also T.W. Ross, "Introduction: The Evolution of Competition Law in Canada" (1998) 13 Rev. of Indust. Org. 1 at 17.

 

²⁷⁵ J.B. Musgrove, “Remedies for Reviewable Conduct: Adjusting the Balance” (1995) 16 Can. Comp. Pol. Record. 34 at 45. But see L. A. W. Hunter, S. M. Hutton, "Is the Price Right: Comments on the Predatory Pricing Enforcement Guidelines and Price Discrimination Enforcement Guidelines of the Bureau of Competition Policy (1993) 38 McGill L. J. 830.

 

²⁷⁶ The voluntary compliance activities are summarized in W. T. Stanbury, "Expanding Responsibilities and Declining Resources: The Strategic Responses of the Competition Bureau" (1998) 13 Rev. of Indust. Org. 201 at 216-221.

 

²⁷⁷ A practical enforcement issue in predation cases is that relief in the form of a criminal conviction or a successful application to the Tribunal will typically not be obtainable on a timely basis. As a consequence, in some cases of predation, the victim will not survive to see the process through. The victim may be run out of business or bought out by the predator. Examples of both occurred in the predation investigations terminated by the Bureau during the Review Period. There is no technical requirement for the victim to participate in a predation case. Indeed, evidence of a bankrupt or bought out victim may make a charge of predation more credible. Nevertheless, in practice it is difficult to pursue a case without the active help of the complainant. While it is possible to obtain interim relief under the Act in both criminal and civil cases, this has not proved to be a useful alternative in such situations.

 

²⁷⁸ In s. 75 the relevant test is “.. (a) person is substantially affected in his business or is precluded from carrying on business due to his inability to obtain adequate supplies of a product anywhere in a market on usual trade terms....”

 

²⁷⁹ Interventions were significant in the hearing on the consent order issued by the Competition Tribunal in the Interac case (Director of Investigation and Research v. Bank of Montreal, (1996) CCTD. No. 11 (QL)(consent order); (1996) CCTD. No. 12 (QL)(reasons); and (1996) CCTD. No. 1 (QL) (reasons and order granting leave to intervene).

 

²⁸⁰ Discrimination in sales to affiliates has been alleged in the context of dual distribution industries, for example.

 

²⁸¹ F.M. Scherer in “Some Last Words on Predatory Pricing” ((1975-76) 89 Harv. L. Rev. 901 at 903) suggested that an approach like that currently advocated by the Bureau was "impossible to apply in practice".

 

²⁸² Most of these comments are equally applicable to geographic price discrimination under s. 50(1)(b).

 

²⁸³ A more difficult challenge, but one which has a greater promise of generating a predation regime which is predictable and effective, would be to design a new predatory pricing provision. The elements of such a new provision might include adding, as a further alternative basis of liability, certain specific types of conduct by a firm with market power. The precise elements of such a new provision, especially the specific types of predatory conduct could only be determined by consultation with stakeholders.

 

²⁸⁴ The same comment was made in relation to U.K. competition law by M. A. Utton, "Anticompetitive Practices and the Competition Act, 1980" University of Reading, Department of Economics Discussion Papers in Industrial Economics, Series E Vol. III (1990/1) No. 24. at 41).

 

²⁸⁵ Prior to the 1986 amendments to the Competition Act, the Restrictive Trade Practices Commission fulfilled this role to some extent by carrying out industry studies.

 

²⁸⁶ A practical issue in predation cases is that relief in the form of a criminal conviction or a successful application to the Tribunal will typically not be obtainable on a timely basis. As a consequence, in some cases of predation, the victim will not survive to see the process through. The victim may be run out of business or bought out by the predator. Examples of both occurred in the predation investigations terminated by the Bureau during the Review Period. There is no technical requirement for the victim to participate in a predation case. Indeed, evidence of a bankrupt or bought out victim may make a charge of predation more credible. Nevertheless, in practice it is difficult to pursue a case without the active help of the complainant. While it is possible to obtain interim relief under the Act in both criminal and civil cases, this has not proved to be a useful alternative in such situation

 

²⁸⁷ K. Roach & M. Trebilcock, "Private Party Access to the Competition Tribunal" (Ottawa Industry Canada, 1996). Private litigation has led to a much more robust body of antitrust law in the United States.

 

²⁸⁸ Consideration might be given, for example, to setting up a small business unit. In Australia, there is a small business ombudsperson.