The Competition Tribunal (the "Tribunal") has denied the application of Canadian Standard Travel Agent Registry ("CSTAR") under section 103.1 of the Competition Act (the "Act") for leave to bring an application against the International Air Transportation Association ("IATA") for refusal to deal under section 75 of the Act.1 This case has important implications for the Tribunal's gate keeping function for private applications to the Tribunal.
Section 103.1 of the Act requires the Tribunal to screen private applicants seeking to make an application under section 75 or 77 of the Act in a summary and expeditious manner. The CSTAR case affects the nature of this screening process because the Tribunal:
- asserted jurisdiction, for the first time, to grant interim
injunctive relief under section 104 of the Act upon the filing of
the application for leave under section 103.1 and before actually
- unilaterally extended a statutory deadline set out in section
103.1 of the Act; and
- left open the possibility of representative, class action-style
proceedings in private applications to the Tribunal under sections
75 and 77 of Act.
Background – Bringing Air Travel Into The 21st Century
IATA is the trade association of the international airline industry. It exists to promote safe, regular and economical air transport for the people of the world by providing the core infrastructure for the agreements and programs that keep global air travel working.
In June 2004, under direction from its members, IATA decided to convert all airline tickets from paper to electronic tickets, on a global basis. This was welcomed by the industry as a very positive step—e-tickets do not get lost, they reduce waste, and the processing cost associated with them is a fraction of paper tickets. Current estimates show that moving to e-tickets globally will save the industry about US$3 billion per year. The implementation date for this massive undertaking was set for June 1, 2008. Throughout the 4-year transition period IATA worked with the industry to facilitate an efficient transition to e-tickets.
CSTAR is a non-profit organization that represents many Canadian travel agencies. It is not a travel agency itself and it does not issue or otherwise deal in airline tickets at all. Although IATA had widely published the transition to e-tickets, CSTAR waited until the eleventh-hour to bring its section 103.1 application to the Competition Tribunal.
CSTAR's application alleged that IATA's global transition to e-tickets constituted a refusal to deal with various Canadian travel agents who would continue to use paper tickets for a small number of transitional situations where e-tickets are not yet feasible. CSTAR alleged this adversely affected competition on the part of its members, characterising the move to e-tickets as a refusal to deal in the paper ticket stock which IATA had previously supplied without charge. CSTAR also sought an immediate "temporary" injunction under section 104 to prevent the switch to e-tickets. Finally, it sought to be designated as a representative applicant for some 146 travel agencies it alleged were directly and substantially affected by the transition to e-ticketing.
A Green Light For Preliminary Injunctions
CSTAR brought its motion for preliminary injunctive relief until the Tribunal could decide its section 103.1 application. This request was novel. Section 104 of the Act only permits applications for interim relief to be made by the Commissioner and by persons who "have made" an application under section 75 or 77. A private party's application does not actually come into effect unless and until leave is granted by the Tribunal under section 103.1. Nothing in the Act expressly confers jurisdiction on the Tribunal to grant injunctive relief before leave is granted under section 103.1.
However, the Tribunal relied on rule 34 of the Competition Tribunal Rules - the "gap" rule – to resort to rule 372 of the Federal Court Rules. Rule 372 permits interim relief in cases of urgency before a proceeding has been initiated. While it rejected CSTAR's request for an interim injunction on the merits, the Tribunal's ruling expressly asserted the right to grant pre-leave injunctive relief in an appropriate case.
This conclusion provides the Tribunal with the power to affect the business of a party that is accused of anti-competitive behaviour under sections 75 and 77 of the Act even before the Tribunal has preformed its gate-keeping function under section 103.1. In addition to responding to an applicant's allegations in the application for leave, targets of section 103.1 applications may now have to respond almost instantaneously to motions for interim injunctive relief.
Statutory Deadlines Are More Like Guidelines?
Section 103.1(6) establishes a 15 day deadline for respondents to file representations. This provision is part of the detailed procedure, under section 103.1 and Part 8 of the Tribunal's Rules, to ensure that 103.1 applications proceed in a summary and expeditious manner.
CSTAR filed a motion for leave to file a supplementary affidavit the evening before IATA's 15 day filing period expired. Because it summarily dismissed CSTAR's application, the Tribunal did not rule on CSTAR's motion to file another affidavit. However, at the time that motion was filed, the Tribunal suspended the filing deadline for IATA's representations until it could hear the affidavit motion.
Unlike some deadlines, the 15 day deadline for filing representations is set out in the Act. The Tribunal may extend time periods that are established in the Tribunal Rules, but it is not at all clear that it has the power to extend statutory time periods without express authority.
The Tribunal's decision to extend IATA's filing deadline was not the product of a contested motion. The Tribunal did not provide reasons for its decision to extend. Nevertheless, it could be used as authority for the proposition that parties may be excused from the strict procedural and timing requirements set out in section 103.1 of the Act. This may give rise to interim action on the part of either an applicant or a respondent that could jeopardise the "summary and expeditious" objectives of the private access regime.
The Tribunal dismissed the CSTAR leave application on the merits because it was not directly and substantially affected in its own business. Accordingly, it did not decide whether CSTAR could be designated as a representative party. However, the Tribunal expressly stated that any subsequent applicant that was affected in its business would be free to seek such representative status.
Thus the question of the Tribunal's jurisdiction to designate a section 103.1 or 75 applicant as the representative of a group of claimants – in effect, a class proceeding on the application – remains unresolved. Yet neither the Act, nor the Tribunal Rules, explicitly contemplates representative proceedings.
Section 103.1(7) states that leave to make a section 75 application may only be granted if the Tribunal "has reason to believe that the applicant is directly and substantially affected in the applicant's business". That suggests the applicant must be the person allegedly affected and cannot be someone applying on another's behalf. The Federal Court of Appeal arguably confirmed this reading in "Symbol Technologies v. Barcode", and so the ability to undertake a "class proceeding" under the private access regime of the Act is by no means resolved, despite the willingness of the Tribunal to entertain an application for such an approach.
Although the Tribunal has not yet closed the door on representative actions in the future, its decision makes it clear that the party seeking representative status must show that it is directly and substantially affected in its own business. In other words, applicants like CSTAR that claim to represent businesses that are directly and substantially affected but that do not engage in that business themselves need not apply.
It will be interesting to observe future section 103.1 applications in light of the precedents set by the Tribunal in this application. Potential applicants may try to use this decision to prolong and muddy the waters on what is supposed to be a simple and expeditious screening process. Given the Tribunal's apparent invitation for an application for representative status, it may not be long before we see whether class action style proceedings will be permitted in private applications to the Tribunal.
1. IATA was represented in this case by a McMillan LLP team led by Martin Low QC and including Éric Vallières, David Kent and Jonathan Hood.
The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.
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