Canada: 2006 Year In Review: Abuse Of Dominance And Other Reviewable Practices, Marketing And Advertising And Other Developments

Last Updated: May 2 2007

By Angela Di Padova, Huy A. Do, Mark A.A. Warner and Mark D. Magro


The Canada Pipe Case: New Life for the Abuse of Dominance Provisions of the Competition Act

The Federal Court of Appeal discussed the appropriate standards for identifying exclusionary conduct and evaluating the conduct of dominant firms in its June 23, 2006 decision in Commissioner of Competition v. Canada Pipe Company Ltd.1 The Court set aside a prior decision of the Competition Tribunal ("Tribunal") on the basis that the Tribunal had applied the incorrect legal tests for determining what constitutes an "anti-competitive act" and a "substantial prevention or lessening of competition" ("SPLC"). The Court also issued a decision regarding Canada Pipe's cross appeal on the proper market definition and market power.2 In a 2-1 decision, the Court dismissed Canada Pipe's cross-appeal.3

In 2002, the Commissioner of Competition ("Commissioner") brought an application alleging that the loyalty rebate program operated by Canada Pipe, referred to as the Stocking Distributor Program ("SDP"), contravened the abuse of dominance and exclusive dealing provisions of the Competition Act (the "Act"). In 2005, the Tribunal found that Canada Pipe was dominant, but dismissed the Commissionerís application on the basis that for a practice to be anti-competitive, "it must have a negative effect on competition." The Tribunal reasoned that the SDP was not an anti-competitive act because it did not impose significant switching costs on distributors and, thus, did not raise entry barriers; in fact, there was some evidence of entry and competition from imports on the record. To be guilty of abuse of dominance, a dominant firm must have engaged in a practice of anti-competitive acts and these acts must have resulted, or be likely to result, in a SPLC in contravention of paragraph 79(1)(c) of the Act.

1. Effect on Competition

The Court agreed with the Commissioner that the Tribunal had erred by focusing its analysis on whether a substantial level of competition continued to exist in the market rather than whether competition would have been substantially greater in the absence of the SDP. The Court characterized the appropriate test as a "but for" test that asks: "would the relevant markets Ė in the past, present or future Ė be substantially more competitive but for the impugned practice of anti-competitive acts".4 The Court held that the "but for" test is not the only correct approach, but nonetheless is one that must be at least considered in all cases.

2. Anti-Competitive Acts

The Tribunal had determined that the SDP did not constitute an anti-competitive act primarily because it did not have a negative effect on competition. The Court held that the Tribunal had incorrectly required a causal link between the act and a decrease in competition. The Court repeatedly stressed that an anti-competitive act is identified by reference to its purpose and that the proper analysis in deciding whether an act is anti-competitive for Section 79(1)(b) only requires a finding that an act has an intended negative effect on "competitors", not on "competition".

The Court indicated that to the extent that "efficiency" concerns are relevant to the abuse of dominance analysis, they are relevant in the context of Section 79(1)(b) such that "a business justification must be a credible efficiency or pro-competitive rationale for the conduct in question, attributable to the respondent, which relates to and counterbalances the anti-competitive effects and/or subjective intent of the acts."5

3. Disposition

The Court sent the case back to the Tribunal for a re-determination of the SPLC issue (and the issue of whether Canada Pipe had engaged in a practice of anti-competitive acts). Canada Pipe has sought leave to appeal to the Supreme Court, and it is expected that the leave application will be determined this year.

Abuse of Dominance: Telecommunications Amendments

In December 2006, the Minister of Industry tabled amendments to the Act in the House of Commons that, if adopted, would empower the Tribunal to order telecommunications service providers to pay an administrative monetary penalty of up to $15 million in cases where there is an abuse of a dominant position. This announcement followed the recommendations of the final report released in March 2006 of the Telecommunications Policy Review Panel. This Panel had recognized the value of administrative monetary penalties to promote compliance in the telecommunications industry.

Draft Information Bulletin on Abuse of Dominance and the Telecommunications Industry

In response to continuing deregulation in the telecommunications industry and a corresponding increased reliance on the laws of general application in the Competition Act, the Bureau has released a Draft Information Bulletin on the Abuse of Dominance Provisions as Applied to the Telecommunications Industry ("Draft Telecom Bulletin"). The Draft Telecom Bulletin is not a departure from the Bureauís existing Enforcement Guidelines on the Abuse of Dominance Provisions. Rather, the Draft Telecom Bulletin describes the Bureauís enforcement approach in the specific context of the telecommunications industry, which is characterized by the Bureau as a network industry, where, in many respects, competition depends on interconnection both among competitors in the same market and across market boundaries. The Draft Telecom Bulletin sets out the Bureauís approach to issues such as market definition, market power, anti-competitive acts, SPLC and remedies, as these issues pertain to the telecommunications industry.

In January of this year, the Bureau posted on its website the written responses it received in connection with its call for comments on the Draft Telecom Bulletin. The Draft Telecom Bulletin can be viewed online at:


In 2006, the Competition Bureau ("Bureau") continued to be active in the enforcement of the Actís provisions dealing with deceptive marketing. The following highlights some of the Bureauís enforcement actions pursuant to these provisions.

1. Media Syndication Global, Havas, and Interactive Marketing Group

On June 14, the Bureau announced that it had entered into a consent agreement with Media Syndication Global ("MSG"), Havas S.A. and Interactive Marketing Group ULC, involving alleged overstated regular prices for binoculars and blood pressure monitors. Pursuant to the consent agreement, among other things, MSG and Havas agreed to issue a partial refund to customers. Certain of the parties are also required to implement a corporate compliance program in accordance with the terms of the consent agreement.

2. Gestion Lebski

The Tribunal issued its reasons and order on September 8 in respect of Commissioner of Competition v. Gestion Lebski inc. et al,6 which involved alleged deceptive marketing practices relating to a weight loss method. The defendants in this case argued that paragraphs 74.01(a) and (b) of the Act (which are civil provisions respecting (a) false and misleading representations and (b) performance claims not based on adequate and proper tests, respectively), infringed rights under paragraph 11(d) (presumption of innocence), section 7 (right to life, liberty and security of the person) and paragraph 2(b) (freedom of expression) of the Canadian Charter of Rights and Freedoms (the "Charter").

The Tribunal ruled that section 11 of the Charter was not applicable on the basis that paragraphs 74.01(1)(a) and (b) do not create an offence within the meaning of section 11, in that the proceedings are not criminal and the sanctions are not "true penal consequences". With respect to section 7, the Tribunal found that the respondents had not shown that their life, liberty or security interests were threatened. With respect to paragraph 2(b), the Tribunal concluded (noting that the point appeared to be conceded by the respondents) that paragraph 74.01(1)(a) was constitutional on the basis that any impairment of freedom of expression was justified in a free and democratic society. Paragraph 74.01(1)(b) was declared of no force or effect for purposes of this case because the Commissioner did not present evidence on the question of whether the infringement of free expression was justified. Having declared paragraph 74.01(1)(a) to be constitutional, the Tribunal went on to make an order against certain respondents under that section, as it found that the representations made were false or misleading in a material respect. Among other things, the Tribunal ordered the payment of an administrative monetary penalty by each of Gestion Finance Tamalia Inc. and its president.

3. Econoco

Also in September, the Bureau reached a consent agreement with Econoco Inc. and its directors in relation to fuel-saving and emission-reducing claims that the Bureau alleged were not based on adequate and proper tests. The respondents agreed in a consent agreement to pay an administrative monetary penalty and issue a corrective notice.

4. Cigarette Packaging: Use of the terms "Light" and "Mild"

The Bureau announced in November that three major cigarette manufacturers had agreed to remove the words "light" and "mild" from packaging in advance of anticipated regulations requiring their removal.


Regulated Conduct Doctrine Bulletin

In June 2006, the Bureau issued a Technical Bulletin on Regulated Conduct ("Regulated Conduct Bulletin") which outlines the Commissionerís general approach to the enforcement of the Act with respect to conduct which may be regulated by another federal, provincial or municipal law or legislative regime, and, as a corollary to the Bureauís approach, addresses the Bureauís treatment of the "Regulated Conduct Doctrine" ("RCD"). The Regulated Conduct Bulletin can be viewed on the Bureauís website:

The Regulated Conduct Bulletin is largely based on the prior Supreme Court of Canada jurisprudence, most notably: (1) Jabour v. Law Society of B.C.,7 a criminal conspiracy case under the Act, where the Supreme Court applied the RCD to conduct that was simply authorized (as opposed to compelled) by a provincial law; and (2) Garland v. Consumers Gas Co.,8 where the Supreme Court stated that the RCD can only immunize conduct from the application of the Criminal Code where the Criminal Code clearly allows for the reliance on the RCD by "leeway language" such as "against the interests of the public" or "unduly".

In its Regulated Conduct Bulletin, the Bureau has indicated that it will always consider whether the RCD applies to conduct that may be regulated by provincial law. It will do so by focusing on the question of whether a validly enacted provincial law authorizes (expressly or impliedly) or requires the impugned conduct be undertaken. Where conduct is properly authorized, the Bureau will not pursue a case under the criminal conspiracy provisions of the Act (section 45) on the basis of an application of the RCD.

With respect to federal law (other than the Act), the Bureau will not pursue a matter under any provision of the Act where Parliament: (a) has articulated an intention to displace competition law enforcement by establishing a comprehensive regulatory regime; and (b) provided a regulator an authority to take, or an authority to authorize another to take, action inconsistent with the Act. However, the regulator must have exercised its regulatory authority (e.g. excluding regulatory forbearance) in respect of the conduct in question.

With respect to the civil reviewable practices provisions of the Act, until jurisprudence addressing the RCD is further developed in respect of these provisions, the Bureau will not find case law dispositive in its examination of reviewable matters. Additionally, the Bureau will not refrain from pursuing regulated conduct under the reviewable matters provisions simply because a provincial law may be interpreted as authorizing the conduct or is more specific than the Act. To support its position, the Bureau has noted that a lower court decision supports the proposition that resort to the RCD is available for reviewable matters;9 however, the Bureau concedes that the lower court, in making its decision, did not expressly consider the issue: it merely accepted the agreement of all parties (including the then Commissioner) that the RCD, if engaged, was applicable to all provisions of the Act.

Bureau seeks to update its Bulletin on Corporate Compliance Programs

In June 2006, the Bureau requested comments for the purpose of updating its Bulletin on Corporate Compliance Programs (the "Compliance Bulletin"). The Compliance Bulletin was published in 1997 and is available on the Bureauís website at:

In its request for comments, the Bureau sought views on the need for:

  • corporate compliance training tools,10
  • templates for corporate compliance programs, and
  • Bureau monitoring/approval of corporate compliance programs.

Comments were received from a number of stakeholders and the Bureau is currently in the process of reviewing the Bulletin and the input received from these stakeholders. It is expected that a revised Bulletin on Corporate Compliance Programs will be released for comment this year.

Intellectual Property Interface

Last year, in collaboration with Industry Canada and the Canadian Intellectual Property Office, the Bureau commissioned a review paper intended to serve as a roadmap for certain key issues arising from the interface between competition and intellectual property law. This paper was released in March 2007 and is available on the Bureauís website at:

Coinciding with the release of this review paper was a top-level symposium held March 29-30, 2007, where the following topics were covered:

  1. Authorized Generics: examination of the extent to which brand-name Canadian pharmaceutical companies have launched generic drugs just prior to the expiration of patents and the impact such a practice may have on the entry of competitors and marketplace competition.
  2. Collective Management of Copyright: evaluation of Canadaís current system of copyright collectives, with a view to assessing its functionality in terms of minimizing transactions costs and encouraging innovation.
  3. Extension of Intellectual Property Rights: review of certain actions firms have undertaken to extend intellectual property rights beyond the intent of legislation (such as the recent attempt to obtain a trademark for LEGO blocks, considered by the Supreme Court of Canada).
  4. Compulsory Licensing: examination to determine the effectiveness of Patent Act provisions dealing with government owned patents and abuse of patent rights, and a provision the Competition Act providing remedies for restrictive trade practices through the exercise of intellectual property rights.
  5. Tying/Bundling in the Intellectual Property Context: review of economic literature in this area to determine when tying/bundling practices begin to extend intellectual property protection and inhibit innovation.

The product of the foregoing initiatives should assist the Bureau in its effort to maintain a current policy in respect of evolving areas where intellectual property and competition laws interface.

Bureau Focuses on Healthcare and Self-Regulating Professions

The Bureau is undertaking a study of the generic pharmaceutical industry, noting that generic prices are high relative to other countries. In addition, the Bureau is examining the state of competition in the self-regulating professions, noting its recent advocacy work in relation to the real estate and dental hygienist professions.

For more information on the subject of this bulletin, please contact the authors:


1 2006 FCA 233 [hereinafter Canada Pipe].

2 2006 FCA 236.

3 Ibid.

4 Canada Pipe, supra note 1 at para. 38.

5 Ibid. at para. 73.

6 2006 Comp. Trib. 32.

7 [1982] 2 S.C.R. 307.

8 [2004] 1 S.C.R. 629. Note that this case did not involve the Competition Act.

9 See Law Society of Upper Canada v. Canada (Attorney General) (1996), 28 O.R. (3d) 460 (Gen. Div.).

10 Corporate compliance training tools can take a number of forms. Note that the Bureau already has a number of tools available (including guidelines, pamphlets, multimedia tools, etc.) on its website.

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 youíve 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 Mondaq.comís content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltdís 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) Ė 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 ďno disclosureĒ 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 userís 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 friendís 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 usersí 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 userís 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 userís personal data provided to us. This can usually be done at the ďYour ProfileĒ 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.