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The new Enforcement Guidelines on the Abuse of Dominance
Provisions are a much-needed update to the existing
guidelines, which were released more than a decade ago. The
Guidelines follow the circulation of drafts in 2009 and 2012, as
well as extensive public consultation. Unfortunately, the
Guidelines reflect an open-ended enforcement approach in key
substantive issues – in particular, with respect to joint
dominance, the application of the "but for" test and the
use of Administrative Monetary Penalties ("AMPs").
Problematic Joint Abuse Enforcement
Approach
The new Guidelines indicate that similar or parallel conduct is
not, on its own, sufficient to conclude that firms are acting
jointly. However, the Guidelines then go on to state that evidence
of coordinated behaviour is not "strictly necessary" to
conclude that firms are not competing vigorously – an
approach that potentially allows the Bureau to take enforcement
action against firms even where there is no evidence of
coordination. As a result of the Bureau's vague enforcement
approach in this area, firms continue to be faced with compliance
uncertainties – a particularly problematic situation
given that the Bureau can seek significant AMPs for
non-compliance.
Application of the "But For"
Test
The application of the "but for" test (introduced by
the Federal Court of Appeal in the Canada Pipe case) is
another area of enforcement uncertainty that the new Guidelines
seek to address. Helpfully, the Guidelines outline how the Bureau
will apply the "but for" test. Less helpfully, while
correctly indicating that "the Court stated that other tests
might also be appropriate depending on the circumstances" the
Guidelines are silent as to when the Bureau might deviate from the
"but for" test or what alternative test(s) it might
adopt. This represents a missed opportunity to provide clarity to
stakeholders in an area that continues to raise compliance
uncertainties.
Use of Administrative Monetary Penalties
Since March 2009, the Bureau has had the power to seek
significant AMPs (up to $10 million for first offences or $15
million for subsequent offences). Given the lack of case law on the
use of AMPs, it would have been helpful for the Bureau to provide
guidance as to when it will seek AMPs, as well as the factors it
will consider in determining the appropriate amount. Again, the
Guidelines represent a missed opportunity to provide clarity on
this important issue, which contributes to the overall uncertainty
regarding the Bureau's enforcement approach.
Summary
While the Guidelines provide a useful, updated overview of the
Bureau's enforcement approach, they unfortunately provide less
guidance than was previously the case (in addition to the issues
discussed above, they omit the detailed examples and analysis found
in the prior version and drafts).
As a result of the open-ended enforcement approach set out in
the Guidelines, combined with an overall lack of guidance in key
areas, businesses continue to face compliance uncertainties.
Because of these uncertainties, companies must continue to take
care in their business activities, including with respect to the
implementation of initiatives that are generally viewed as
pro-competitive, such as loyalty programs and volume
incentives.
An electronic copy of the Enforcement Guidelines for the Abuse
of Dominance Provisions can be found here.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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