Canada: Canada Accelerates Move Towards Reliance On Market Forces In Telecommunications Sector

As reported in the December 2006 issue of The Competitor, the Canadian government recently launched several initiatives with a view to fostering increased reliance on market forces in Canada’s regulated telecommunications industry. In November 2006, the federal Cabinet exercised its power under the Telecommunications Act to vary the Canadian Radio-Television and Telecommunication Commission’s (the CRTC) 2005 Voice over Internet Protocol (VoIP) decision (see the December 2006 issue of The Competitor). As discussed in more detail below, in December 2006, the federal government tabled telecommunications-specific amendments to the Competition Act (the Act) designed to give the Act more "teeth" should a dominant telecoms provider abuse a dominant position. At the same time, the government announced its intention to vary the CRTC’s local forbearance decision in order to significantly extend local service deregulation, and issued the first-ever policy direction to the CRTC, encouraging greater reliance on market forces.

Bill C-41

On December 7, 2006, Canadian Minister of Industry Maxime Bernier tabled draft telecommunications-specific amendments to the Act. Bill C-411 would amend the Act to allow the Competition Tribunal 2 (the Tribunal) to impose administrative monetary penalties (AMPs) – essentially fines – of up to C$15 million in respect of abuse of dominance by telecommunications service providers regarding services not subject to CRTC regulation.

The Act’s abuse-of-dominance provision, s. 79, applies to one or more persons with market power who engage in a practice of anti-competitive acts that result in a substantial prevention or lessening of competition.3 Currently, where the Tribunal finds there has been an abuse of dominance it may make an order prohibiting the conduct in future and/or directing the infringing person to take such other actions as are "reasonable and necessary" to overcome the effects of the anti-competitive practice, including the divestiture of assets or shares. Where the Tribunal makes an order against an entity operating a domestic air service,4 it may also impose an AMP against the entity of up to C$15 million. Bill C-41, therefore, will extend the Tribunal’s power to order AMPs in respect of abuse of dominance to telecommunications services providers.

In support of its proposed amendments, the government cited the March 2006 report of the Telecommunications Policy Review Panel (the TPR Panel).5 However, the TPR Panel did not recommend that AMPs be made available to the Tribunal, but rather suggested them as an enforcement mechanism for the CRTC and the Panel’s proposed "Telecommunications Competition Tribunal."6 Furthermore, in proposing amendments specific to the telecommunications industry, Bill C-41 runs counter to the notion of the Act as generally applicable framework legislation and is contrary to recent statements by the Commissioner of Competition against sector-specific provisions.7 Although fines for abuse of dominance generally, as proposed by the previous government in the now-defunct Bill C-19 (2004), are opposed by many, empowering the Tribunal to impose stiff fines for abuse of dominance by telecom service providers may be seen as the quid pro quo for the proposed deregulation of local exchange services covering some 60% of the population (see below), and is consistent with the Bureau’s historic support of AMPs for abuse of dominance. As of the time of publication, Bill C-41 had yet to be referred to a Parliamentary committee for in-depth review.

Local Forbearance

On December 11, 2006, Minister Bernier announced the federal government’s proposed variation of the CRTC’s local forbearance decision, which had been issued back in April.8 In its April 2006 decision, the CRTC had determined that it would forbear from regulating retail local exchange services offered by an incumbent local exchange carrier (ILEC) where the ILEC could demonstrate, among other things, that it had suffered a 25% market-share loss in the relevant market for which forbearance was sought.

The government proposes replacing the CRTC’s market-share test with a "competitive facilities test." This test would require forbearance in respect of residential services in markets where at least three non-affiliated facilities-based service providers offer local services (two of which, including the ILEC, are wireline providers and one of which is a wireless provider). As the Minister explains, "[t]his means that in regions where consumers have access to telephone services from a traditional telephone service, a cable company and at least one non-related wireless provider [approximately 60% of the Canadian population], deregulation will occur."9 Forbearance in respect of business services would be required where at least two wireline network operators (including the ILEC) are present.

Alternatively, where the requirements of the competitive facilities test are not met, an ILEC would be permitted to apply to the CRTC for forbearance based on competition principles if at least two independent facilities-based service providers are present – the ILEC and a facilities-based entrant – and the ILEC does not have market power. The government is also proposing the elimination of CRTC "winback" restrictions, which limit the ability of ILECs to market their services to customers who have switched to alternative service providers. The government published its variation proposal for public consultation. Comments were due by January 15, 2007.10

Policy Direction

Finally, on December 18, 2006, Minister Bernier announced that the federal government had issued a policy direction to the CRTC under the Telecommunications Act. The policy direction, which was first proposed in June 2006 and recommended by the TPR Panel,11 requires the CRTC to "rely on market forces to the maximum extent feasible as the means of achieving the telecommunications policy objectives" [set out in the Telecommunications Act] and, when relying on regulation, to use measures "that interfere with the operation of competitive market forces to the minimum extent necessary to meet the policy objectives."12 The government has stated that the policy direction "represents an initial step towards greater regulatory change in telecommunications."13

Canada’s telecommunications regulatory framework, as embodied in the Telecommunications Act, was last modernized in 1993. The government’s recent market-based reform initiatives, along with ongoing efforts by the CRTC to decrease regulatory burden, aim to accelerate the shift towards reliance on market forces and to improve the competitiveness of the Canadian telecommunications industry.


1. An Act to amend the Competition Act, 39th Parl., 1st Sess., 7 December 2006.

2. The Competition Tribunal is a specialized adjudicative body that hears and decides all applications with respect to the reviewable practices, mergers and civil deceptive marketing practices provisions of the Act, including allegations of abuse of dominance.

3. Section 78 of the Act provides a non-exhaustive list of business practices that constitute anti-competitive acts for the purposes of the abuse of dominance provision, which acts have been described as involving an element of "purpose, object or design to undermine competition" (Competition Bureau, Enforcement Guidelines on the Abuse of Dominance Provisions, July 2001, at 10).

4. "Domestic air service" is defined in the Canada Transportation Act, S.C. 1996, c. 10, s. 55(1), as "an air service between points in Canada, from and to the same point in Canada or between Canada and a point outside Canada that is not in the territory of another country."

5. See Industry Canada, News Release, "Minister of Industry Moves to Promote the Interests of Canadian Consumers of Telecommunications Services," 7 December 2006.

6. Telecommunications Policy Review Panel, Final Report, March 2006, at 12 and 291-292.

7. See 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: "Sector-specific focus is the exception rather than the rule for us."

8. Telecom Decision CRTC 2006-15, Forbearance from the regulation of retail local exchange services, 6 April 2006.

9. Industry Canada, Speaking Points for the Honourable Maxime Bernier, 11 December 2006. See also Industry Canada, News Release, "Canada’s New Government Proposes to Accelerate Deregulation of Local Telephone Service in the Interests of Canadian Consumers," 11 December 2006.

10. See Canada Gazette, Part I, Vol. 140, No. 50, 16 December 2006, at 4312.

11. TPR Final Report, at 3-39.

12. Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives, SOR/2006-355.

13. Id., Regulatory Impact Analysis Statement.

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.