BACKGROUNDER

Amendments to Bill C-23

An Act to Amend the Competition Act and the Competition Tribunal Act

Private Access

The Competition Bureau works to protect and enhance competition so Canadians can enjoy the benefits of lower prices, product choice and quality services in a vibrant and healthy marketplace.

Under the current system, the Commissioner of Competition is the only one who can bring a competition complaint before the Competition Tribunal. Some observers have expressed concern that more cases could proceed to the Tribunal if they did not need to be handled by the Commissioner.

Allowing private access to the Tribunal will complement the Bureau's enforcement activities. Competitors who wish to pursue competition cases directly, on their own behalf, will now be able to do so in four limited areas. The proposed amendments are confined to certain anti-competitive behaviour described in sections 75-77 of the Competition Act involving refusal to deal, exclusive dealing, tied selling and market restriction.

It is expected that private access will be used mainly by small and medium sized enterprises to resolve local or limited private matters, which would normally not be taken forward by the Commissioner.

Some observers had expressed concern that allowing private access would increase the risk of strategic litigation, where one competitor would use the legal process to injure another. In response, the proposed amendments include specific safeguards to avoid this outcome:

• the process is not automatic - the Tribunal acts as a gatekeeper since a complainant must first seek, and obtain, leave to apply in order to bring a case before the Tribunal;
  
  
• the amendments provide that cases could not proceed where the Commissioner is on inquiry or has settled a matter;
  
  
• no damages may be sought as a result of private access; and,
  
  
• the Tribunal has the discretion to award costs.

Private access is a common feature of competition law enforcement in other jurisdictions such as Australia, where it has not raised concerns over strategic litigation.

Airlines:

There are 2 amendments proposed to address perceived inadequacies in the present Competition Act with respect to the airline industry:

• closing the gap that can occur after the expiry of temporary cease and desist orders issued by the Commissioner against a competitor, by permitting extensions of temporary orders until the Commissioner has received the relevant information to determine whether to file an application with the Tribunal; and
  
  
• permitting the Tribunal to assess an administrative monetary penalty ("AMP") against an airline, when it has issued an order under section 79, the abuse of dominance section of the Act.

The Commissioner of Competition can issue a temporary order under section 104.1 of the Act in specific circumstances: an inquiry must have been commenced and reason to believe must exist that competition will be harmed or a competitor eliminated if the order is not made.

A gap could exist between the time a temporary order expires and the time the Commissioner is able to bring an application before the Tribunal. It is essential to eliminate this gap because the competitor against whom the order was made could otherwise recommence the anticompetitive behaviour before the Commissioner has made the application before the Tribunal with the possible result that the injured competitor may be eliminated from the market. This result would defeat the very purpose of both the temporary cease and desist order and the application under s.79 (abuse of dominance).

If the Commissioner has not received the necessary information from the subject of the inquiry or any other person (which must furnish information consistent with court orders such as section 11 orders, or informally through undertakings) and has not had a reasonable period of time to review the information, the Commissioner will not be in a position to determine whether an application should be filed under s.79.

AMPs are being added to encourage compliance with the abuse of dominance provisions of the Competition Act in the airline industry. The $15M maximum on penalties permits the Tribunal latitude in setting an appropriate amount depending on the case. The ceiling value is sufficiently high to encourage compliance with s.79.

These measures should be viewed as necessary given the instability in the airline industry which has resulted from the events of September 11^th. The collapse of Canada 3000 and the likelihood of new start-up airlines makes it especially important, in this challenging market environment, to ensure that the airline market in Canada is competitive.