Canada: Developments In Private Antitrust Litigation

Last Updated: June 30 2005
Article by Mark C. Katz and Charles E. Tingley

The Canadian Competition Bureau (the Bureau) has reissued its Information Bulletin on Private Access to the Competition Tribunal (the Private Access Bulletin) to clarify when it may become involved in private party applications to the Competition Tribunal (Tribunal). The Tribunal has jurisdiction over disputes arising under the Competition Act’s civil "reviewable matters" provisions, including contested mergers and abuse of dominance.

Pursuant to 2002 amendments to the Competition Act, private parties may apply directly to the Tribunal for relief relating to certain reviewable matters: refusals to deal, tied selling, exclusive dealing and market restrictions. Leave must initially be obtained from the Tribunal; and remedies are limited to forms of injunctive relief, ie damages are not available. The Bureau also retains the right to apply to the Tribunal for relief regarding these reviewable matters.

The 2002 amendments were intended to give private parties access to the Tribunal for competition-related matters that were seen more as private disputes than questions of public interest. Nonetheless, the legislation still leaves scope for the Bureau’s involvement, eg it may make submissions to the Tribunal on the granting of leave or may intervene at the hearing if the application is allowed to proceed. The Bureau may also intervene to vary or rescind a private settlement agreement registered with the Tribunal.

But the Private Access Bulletin says that the Bureau will only become involved in private proceedings before the Tribunal in exceptional circumstances.

For example, the Bureau will generally not make written representations at the leave stage unless it believes that a particular case has importance beyond the parties’ immediate interests or that it could produce valuable jurisprudence. Similarly, in deciding whether to intervene in a hearing on the merits, the Bureau will consider whether there are significant competition issues and if its involvement is in the public interest. Again, this is expected to be rare, eg when the case raises broader competition issues, could have a significant impact on consumers / the business community / the Canadian economy, or could result in new economic theory or valuable jurisprudence.

The Bureau has not seen fit to intervene in any private application commenced to date. Based on the Private Access Bulletin, it appears unlikely that such interventions will occur frequently in the future.

Construx v General Motors of Canada

For instance, the Bureau is apparently not to intervene at this point in the latest request for leave to bring a private application to the Tribunal. A wholesale dealer in automobiles is claiming that General Motors of Canada Limited (GM) has contravened the Competition Act’s refusal-to-deal and market restriction provisions by refusing to sell it GM vehicles.

The dealer, Construx Engineering Corporation, exports vehicles to buyers outside Canada or resells to buyers in Canada who then export them. Construx alleges that GM has "vigorously sought to thwart" these exports by, among other things, limiting its warranty coverage and including various provisions in its dealer sales and service agreements to penalise dealers who sell vehicles to export companies such as Construx. GM also maintains a list of "suspected" exporters to whom its dealers may not sell vehicles.

Construx says these steps have had a "devastating effect" on its business and claims that GM’s actions are substantially lessening competition in "the market for exporting from and reselling in Canada of new GM motor vehicles".

Although not directly impacting on its business, Construx alleges that GM has organised similar restrictions to prevent the importation of new vehicles and that "all other major Canadian manufacturers and distributors of transportation products" have a uniform policy of preventing the export and resale of their products outside Canada or the importation of new products into Canada that are manufactured by related entities.

GM argues that the Tribunal should deny Construx’s leave application because Construx has not filed sufficient credible evidence to establish that GM’s conduct has directly and substantially affected its business or that it is having or is likely to have an adverse effect on competition in Canada.

On this point, GM asserts that the restrictions it imposes on the unauthorised export and resale of new GM vehicles are "reasonable and justified" and that these export restrictions have no impact on any "defined market" in Canada and, for that reason, the question is beyond the Tribunal’s territorial jurisdiction.

GM also notes that the Bureau has discontinued previous inquiries into GM’s export restrictions.

The Construx case is the 10th application for leave brought since the 2002 amendments. Of the previous applications, five were dismissed; one is proceeding; and another has been stayed pending further order of the Tribunal (two others were granted leave to proceed but were subsequently discontinued or dismissed before trial). All 10 have involved allegations under the Competition Act’s refusal-to-deal provision. Construx is the first application involving a claim under another reviewable practice (ie market restriction).


Competition Bureau Information Bulletin on Private Access to the Competition Tribunal (April 2005) index.cfm?itemID=1392&lg=e

Construx Engineering Corporation v General Motors of Canada Limited CT 2005-0004

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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Mark C. Katz
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