On February 3, 2014, Canada's Federal Court of Appeal
(FCA) overturned the Competition Tribunal's decision to dismiss
the Competition Bureau's abuse of dominance application against
the Toronto Real Estate Board (TREB), sending the application back
to the Tribunal for reconsideration on its merits.
As mentioned in our earlier blog post, the
Competition Bureau's application involves a challenge by the
Bureau against TREB for allegedly abusing its dominance under
section 79 of the Competition Act in
relation to membership rules governing the use by members of the
board's multiple listing service (MLS®) listing data.
The Tribunal had dismissed the Bureau's application without
considering the merits, on the basis that TREB, as an incorporated
trade association, does not compete with its own members in the
real estate brokerage market and therefore cannot be found to have
contravened the abuse of dominance provision. Specifically, the
Tribunal had interpreted the 2006 Canada Pipe
decision as authority for the proposition that, for conduct to be
anti-competitive under section 79, the conduct must have had a
negative effect ("predatory, exclusionary or
disciplinary") on acompetitor of the person
who is the target of the Commissioner's abuse allegations.
In overturning the decision, the FCA concluded that the Tribunal
had misinterpreted Canada Pipe and consequently,
misinterpreted the abuse of dominance provisions of the Act. In
Justice Sharlow's view, paragraph 78(1)(f) – one of the
enumerated examples of "anti-competitive acts" listed in
the Act, which pertains to the stockpiling of products in order to
prevent price erosion – does not necessarily negatively
impact a competitor (indeed, logically, it should assist
competitors who will also benefit from increased prices). The
presence of this example indicates that Parliament did not intend
to limit the scope of subsection 79(1) in such a way that it could
not possibly apply to a trade association such as TREB. The
FCA went on to say that Canada Pipe would be manifestly
wrong if the Court had intended to narrow the scope of subsection
79(1) in the manner alleged by the Tribunal.
Instead, the FCA validated the Commissioner's broadened
approach to the interpretation of the abuse of dominance provisions
of the Act, in holding that a subsection 79(1) order can be made
against a person who controls a market otherwise than as a
competitor if that person has committed an anti-competitive act
against a competitor in that market. In terms of the manner in
which such control may be exercised, the Court states that this
could occur "by controlling a significant input to competitors
in the market, or by making rules that effectively control the
business conduct of those competitors".
The FCA further concluded that the Tribunal erred in finding
support for its position in the Bureau's Abuse of Dominance Guidelines
(the Guidelines). In Justice Sharlow's view, the Guidelines
provide no useful guidance to the Court in interpreting subsection
79(1). Rather, the Guidelines indicate, at most, that the
Commissioner's understanding of the scope of subsection 79(1)
has changed over time.
Similarly, the FCA saw no reason to infer from subsection 79(4)
(which directs the Tribunal to consider, among other things,
whether the alleged anti-competitive effect is a result of superior
competitive performance) that as a matter of law, a subsection
79(1) order cannot be made against a respondent simply because it
does not compete with its members.
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