The Competition Bureau (the "Bureau") issued draft
Enforcement Guidelines – Price Maintenance (the
"Guidelines") for review and public consultation. The
goal of the Guidelines is to provide businesses with some clarity
as to the Bureau's enforcement approach in this area.
Since 2009, price maintenance has been dealt with under the
civil provisions of the Competition Act (previously, it
was a per se criminal offence). Accordingly, price
maintenance is now only caught under the Competition Act
i. a supplier attempts to
influence a reseller to charge higher prices or refrain from
discounting prices by threat, promise or agreement or refuses to
supply or otherwise discriminates against a reseller due to its low
pricing policy; AND
ii. the conduct has an adverse
effect on competition.
Where a supplier has engaged in price maintenance, either the
Commissioner of Competition (the "Commissioner") or a
private party can seek an order prohibiting the conduct at issue.
There are no monetary penalties or damages available under the
civil price maintenance provision.
Since the law was changed, many businesses have implemented
minimum price policies, published manufacturer's suggested
retail price ("MSRP") lists and initiated minimum
advertised price ("MAP") policies. These practices are
often used by suppliers as part of their brand
management/positioning strategy. The Guidelines acknowledge that
price maintenance is generally legitimate business conduct that can
have pro-competitive effects (e.g., by facilitating entry, as well
as encouraging retailers to stock and aggressively promote
The Guidelines represent the Bureau's attempt to provide
guidance to businesses as to how it will apply the price
maintenance provision to the marketplace. Usefully, the Guidelines
clearly indicate that the Bureau will take enforcement action only
where the conduct is likely to "create, preserve or enhance
market power." Typically, to have "market power," a
firm must have a share of 50% or more of the relevant market.
Practically this means that most businesses can take steps to
manage the resale pricing of their products with minimal compliance
risk. However, businesses with a significant presence within
a market will need to conduct a more fulsome risk assessment before
engaging in this type of conduct.
Broadly speaking, the Guidelines, while non-binding, appear to
take a reasonable enforcement approach. Usefully, the Guidelines
contain some hypothetical scenarios that will likely help
businesses better understand how the price maintenance provision
applies to their operations. While these hypothetical scenarios may
be somewhat simplistic, they do provide an overview of the factors
that the Bureau considers in its analysis.
Interested parties are invited to provide comments no later than
June 2, 2014, and the final Guidelines will be
issued some time after the consultation process.
For a copy of the Bureau press release, please click here.
For a copy of the draft Enforcement Guidelines – Price
Maintenance (Section 76 of the Competition Act), please click 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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