December 09 2004
On November 2 2004 Canadian Minister for Industry David L Emerson tabled Bill C-19 in the House of Commons, proposing amendments to the Competition Act.(1) According to the minister, these amendments are intended to strengthen Canada's competition framework in a global economy to the benefit of both consumers and businesses. Bill C-19 has passed its first reading in the House of Commons and is now being considered by the House Industry Committee.
Highlights of the proposed amendments include:
The proposed amendments represent a scaled-back version of the package of amendments that was initially suggested by the Competition Bureau in a June 2003 discussion paper. For example:
Also left out of the proposed amendments are the earlier proposals to dramatically restructure the act's conspiracy provision. Competition Commissioner Sheridan Scott has announced that possible changes to this provision will be the subject of additional study and consultation. Similarly, proposed changes to the act's efficiencies provision, which provides a defence to challenges to anti-competitive mergers, will be the focus of their own consultation process.(2)
The proposal to repeal the criminal pricing provisions is a welcome one. This move has long been advocated in recognition of the fact that these practices can be beneficial to competition. They will now only be a matter of concern if engaged in by a dominant party, and if they result in a substantial prevention or lessening of competition. In that event, however, a party could still be exposed to financial sanction in the form of AMPs.
The proposal to eliminate the act's airline-specific provisions was also expected in light of the changed competitive landscape in the Canadian airline industry, particularly the decline in Air Canada's market share since 1999. The provisions that will be repealed include provisions that (i) define certain airline-related conduct as anti-competitive acts, and (ii) give the commissioner the authority to issue ex parte cease and desist orders against an airline alleged to have abused its dominant position. In the same vein, the Competition Bureau announced recently that it would not be proceeding with its abuse of dominance case against Air Canada because the public interest did not justify continuing with this case in the current competitive environment (for further details see "New Developments in Domestic Law").
Not surprisingly, there has been a rather negative reception in many quarters to the proposals to introduce AMPs as a remedy for abuse of dominance, significantly increase the level of AMPs for deceptive marketing practices and introduce restitution orders as a possible remedy for such practices.
The bureau believes that the threat of these potential remedies will help deter anti-competitive conduct. On the other hand, critics have questioned whether it is appropriate to impose penalties of this nature for what is still non-criminal behaviour. For example, the potential maximum AMPs for abuse of dominance and deceptive marketing practices are the same as those for violation of the act's criminal conspiracy provision. Any opposition to the proposed amendments is likely to centre on these latter proposals.
For further information on this topic please contact Mark Katz or Elisa Kearney at Davies Ward Phillips & Vineberg LLP by telephone (+1 416 863 0900) or by fax (+1 416 863 0871) or by email (firstname.lastname@example.org or email@example.com). The Davies Ward Phillips & Vineberg LLP website can be accessed at www.dwpv.com.
(2) Competition commissioner, Speaking Notes to the House of Commons Standing Committee on Industry, Natural Resources, Science and Technology (November 18 2004) - available at http://strategis.ic.gc.ca/epic/internet/incb-bc.nsf/en/ct02993e.html.
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