Canada: Federal Court Of Appeal Not Sold On Realtors’ Defence

In brief reasons issued on February 3, 2014, the Federal Court of Appeal (FCA) concluded that the Competition Tribunal erred in its interpretation of sections 78 and 79 of the Competition Act (the abuse of dominance provisions) and broadened the scope of application of those provisions to capture persons that do not compete directly in the market and conduct that is not directed at one's own competitor. The FCA referred the Commissioner of Competition's application against the Toronto Real Estate Board (Board) back to the Tribunal for reconsideration on the merits.

In finding that section 79(1)(a), the "substantial control of a market" requirement, could apply to the Board, the FCA agreed with the Commissioner that a person that is not a competitor can still control a market by, for example, controlling a significant input to competitors in the market or by making rules that effectively control the business conduct of those competitors.

The FCA also held that a person could engage in a "practice of anti-competitive acts," a required element under section 79(1)(b), even if the alleged conduct was not directed at the person's own competitor. To arrive at that conclusion, the FCA noted that the enumerated list of anti-competitive acts at section 78 is not exhaustive. More specifically, the FCA pointed to section 79(1)(f), which references "buying up of products to prevent the erosion of existing price levels" as an example of conduct that need not be directed at one's own competitor.

The FCA decision is expected to have a number of implications. In particular, the decision confirms that the conduct of trade associations, even if they do not compete directly with their members, can engage the abuse of dominance provisions of the Act. Trade associations should, therefore, be mindful of this risk when implementing rules or offering services to members. Moreover, to the extent that conduct need not be directed at a person's own competitor, the decision opens the bounds of section 79 in ways that may not be consistent with previous jurisprudence.

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