In early 2009 Canada's Competition Act was
significantly amended. One of the amendments removed the price
maintenance provisions from the criminal provisions of the
Act to re-enact them – in largely the same form
– as a reviewable conduct provision. As a result, agreements
between suppliers and distributors as to minimum prices to be
charged by the distributor, as well as refusals by suppliers to
provide product to discounting distributors, ceased to be criminal
offenses. Rather, the same conduct became subject to civil
challenge before the Competition Tribunal. If the applicant can
demonstrate that the conduct is having an adverse effect on
competition the Tribunal may make an order that the conduct
The first – and so far the only – case which has
been brought under this new civil provision is far from the typical
supplier/distributor situation described above. The case was
brought by the Commissioner of Competition in late 2010 against
VISA and MasterCard. However, unlike the traditional price
maintenance situation of a supplier setting the price at which its
distributor may sell, the Commissioner challenged MasterCard and
VISA rules which require (i) that if merchants accept such payment
cards they cannot charge cardholders a surcharge for paying with
the card (the "No Surcharge" rule); and (ii) requiring
that, if merchants accept one type of VISA card or MasterCard card,
they must accept all cards within the brand (the "Honour All
Because of the peculiar facts of this case, the decision
provides relatively little guidance to the business community as to
the applicability of the new reviewable price maintenance
provisions to a more typical price maintenance situation.
Challenges to the Honour All Cards and No Surcharge rules, as
well as to the basic system of interchange rates used to balance
demand between the consumer and merchant side of the platform, have
occurred in various parts of the world. The European Commission is
active in the area. In the United States a major class action has
recently been settled touching on these issues. In Australia the
Reserve Bank has made regulations with respect to the issue. In
Canada, as well as the Competition Bureau proceeding before the
Tribunal, there are major outstanding class actions addressing some
of these same issues.
The full reasons for the decision have not been released by the
Tribunal, as it is editing them for confidentiality. Once these
reasons are available, there may be additional insights available
with respect to the application of the new civil reviewable price
maintenance provision. No decision has been announced by the
Commissioner as to whether he will appeal the Tribunal's
decision to the Federal Court of Appeal, but there is a thirty day
* McMillan represented MasterCard in the case before the
Competition Tribunal, with a team led by James Musgrove, Jeff
Simpson, David Kent and Adam Chisholm.
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
The Commissioner of Competition addressed innovation, enforcement and policy initiatives at the Competition Bureau in his keynote speech, "Strengthening Competition: Innovation, Collaboration and Transparency."
Used car listing website operator CarGurus Inc.'s attempt to force rival Trader Corporation to supply it with vehicle listing data has encountered a dead end as the Competition Tribunal denied it leave to commence a private application under several provisions of the Competition Act.
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