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 Commissioner’s 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 – in the past, present or future – 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 Bureau’s existing Enforcement Guidelines on the Abuse of Dominance Provisions. Rather, the Draft Telecom Bulletin describes the Bureau’s 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 Bureau’s 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 Act’s provisions dealing with deceptive marketing. The following highlights some of the Bureau’s 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 Commissioner’s 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 Bureau’s approach, addresses the Bureau’s treatment of the "Regulated Conduct Doctrine" ("RCD"). The Regulated Conduct Bulletin can be viewed on the Bureau’s 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 Bureau’s 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 Bureau’s 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 Canada’s 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 Topics
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions