Canada: Bureau Consults On Abuse Of Dominance Provisions As Applied To Telecommunications Industry

On September 26, 2006, the Competition Bureau released its Draft Information Bulletin on the Abuse of Dominance Provisions as Applied to the Telecommunications Industry (the "Draft Bulletin"). The Draft Bulletin sets out the Bureau’s approach to reviewing complaints under sections 78 and 79 of the Competition Act (the Act) – the abuse of dominance provisions – in respect of conduct that is not regulated by the Canadian Radio-television and Telecommunications Commission (the CRTC). Stakeholder comments on the Draft Bulletin must be submitted to the Bureau by December 29, 2006.

The Abuse Of Dominance Provisions

In order for the Competition Tribunal to find under section 79 of the Act that a firm (or group of firms) has abused its dominant position, the Commissioner of Competition must establish three elements: (1) the person(s) substantially or completely controls a class or species of business (i.e., has market power); (2) that person(s) has engaged in or is engaging in a practice of anti-competitive acts; and (3) the practice has had, is having or is likely to have the effect of substantially lessening or preventing competition in a market. Section 78 lists several "anti-competitive acts" for the purposes of section 79, however the list is not exhaustive and other conduct the purpose of which is exclusionary, predatory or disciplinary may also be "anti-competitive".

The Draft Bulletin reviews the Bureau’s enforcement approach to section 79 as set out in its Enforcement Guidelines on the Abuse of Dominance Provisions, highlighting considerations specific to the telecommunications industry. While the Bureau continues to regard a "sector-specific" focus as "the exception rather than the rule,"1 the Bureau believes that the Draft Bulletin will assist with the telecommunications sector’s transition from sector-specific regulation to greater reliance on market factors, including greater reliance on the Act. In this regard, the Bureau states that "[g]iven the complex relationships that exist within the industry and the history of competitive disputes which the CRTC has considered, the Bureau may receive a significant number of complaints within the sector." "Nothing in the [Draft] Bulletin," however, "deviates from the enforcement approach outlined in the [Bureau’s more general] Enforcement Guidelines on the Abuse of Dominance Provisions."

Dominance (Market Power)

A product and geographic market generally must be defined in order to assess whether a firm possesses market power. The principles underlying relevant product and geographic definition do not differ when applied to the telecommunications sector. The Draft Bulletin does, however, highlight certain features of the telecommunications sector that, while not unique to it, may be relevant to the question of market definition in the telecommunications sector.

The Draft Bulletin states, for example, that a bundle of telecommunications services may constitute a separate product market if consumers would not purchase the services on a stand-alone basis in the face of a small but significant and non-transitory price increase. This is only true, however, if all competitors can offer a comparable bundle, otherwise the bundle may not be a distinct product market. With respect to geographic market definition, "the Bureau would define the relevant geographic market based on a specific location if subscribers to services provided at that location were not willing to substitute to services supplied at a different location." Thus, "[i]n essence, a household or place of business theoretically could be defined as a relevant geographic market." That said, the Draft Bulletin states that "the Bureau would aggregate all locations that have the same competitive alternatives … into a single geographic market", such that "a geographic market can be defined around the network of a dominant firm based on its overlapping footprint with competing networks that provide the relevant telecommunications services".

The Draft Bulletin also highlights "other" market characteristics that can be important features of the sector and are relevant to the question of whether market power exists. In addition to market share and barriers to entry, the Draft Bulletin identifies "countervailing power, and technological change and innovation" as "particularly important to the assessment of telecommunications markets." Moreover, with respect to market share, the Draft Bulletin, noting that the provision of telecommunications services is "tied to a location and [that] the number of competitive alternatives that are available to consumers can differ depending on where they live or carry on business," suggests that capacity, rather than market shares, represents an important measure of market power in the telecommunications sector. The Draft Bulletin states: "When substantial excess capacity remains in a market, allowing firms to easily increase supply in response to an increase in price, the ability to raise price[s] above competitive levels may be considerably lower than what a simple concentration measure might suggest."

Practice Of Anti-Competitive Acts

The Draft Bulletin notes that "[c]ertain types of anti-competitive acts may be more common in, or perhaps even unique to, the telecommunications industry." Actual or constructive denial of access to an "essential" facility, for example, may be anti-competitive, according to the Draft Bulletin, if (i) the firm that controls the facility is dominant in the upstream (wholesale) market for the facility and also the downstream (retail) market in which the facility is an input, and (ii) the denial of access is for the purpose of excluding competitors from entering or expanding in the downstream market (i.e., because it is "difficult or impossible" for the competitor to "practically or reasonably duplicate the facility").

The Draft Bulletin states that predatory pricing can also be an anti-competitive act if (i) "the alleged predatory price is below the average avoidable costs of the firm that is alleged being driven from the market", (ii) the alleged predatory price is below the alleged predator’s avoidable costs, and (iii) the alleged predator will likely be able to recoup its losses by charging prices above competitive levels. That said, the Draft Bulletin states that "[a]s a general principle, where a dominant telecommunications service provider’s response to competition consists only of reducing prices to levels which match, but do not undercut those of a competitor ("meeting the competition"), the Bureau will not take enforcement action when considering allegations of predation."

With respect to "targeted pricing" – the "practice of offering certain customers a significantly better price than charged previously, or that deviates from what it usually charges other customers in the market" – the Draft Bulletin notes "the inherent difficulty in establishing objective criteria that can distinguish between targeted pricing that is harmful and that which is beneficial competitive conduct." The Bureau will require "considerable ancillary evidence" in support of a claim where the targeted price exceeds avoidable costs. Bundling could constitute an anti-competitive act if it meets the Act’s definition of tied selling or amounts to predation.

Substantial Lessening Or Prevention Of Competition

The Draft Bulletin confirms that the Bureau will apply its "but for" approach2 to assessing anti-competitive effects in the telecommunications industry. More particularly, the Bureau will ask: "’but for the practice in question, would there be substantially greater competition in the relevant market, in the past, present or future?"

In addition to being of special interest to those in the telecommunications industry, the Draft Bulletin will no doubt serve to stimulate continued discourse on the Act’s abuse of dominance provisions more generally.


1. Speaking Notes for Sheridan Scott, Commissioner of Competition, Canadian Bar Association Fall Conference on Competition Law, Hotel Lac-Leamy, Gatineau, Quebec, Canada (28 September 2006), at 9.

2. See Commissioner of Competition v. Canada Pipe Company Ltd., 2006 FCA 233.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.