INST Committee Report
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CONCLUSION
Canadian competition policy, as embodied in the Competition Act and as carried out by the Competition Bureau and the Competition Tribunal, is a modern framework for dealing with contemporary antitrust issues. The Competition Act generally reflects modern economic analysis, though minor modifications might be desirable. The Competition Bureau’s enforcement guidelines can claim to be clear and transparent, though some fine-tuning would be helpful. The Bureau manages its current caseload well, though more resources would enable it to be a more vigilant enforcer. The Competition Tribunal has provided clear and thoughtful jurisprudence that properly embodies economic principles, though its procedures could be adjusted in order to expedite its workload and make room for more activity as a result of the granting of carefully thought out rights of private action. These were the views, and indeed the exact words, of the Committee expressed in its Interim Report. The Committee maintains these findings and, in this final report, has been more specific. The Committee believes that Canada’s business landscape would be served best by making conspiracies one of its highest priorities. The Committee recognizes that the Bureau has well-developed strategies and tactics already in place for detecting and pursuing both domestic and international conspiracies, but is hampered by an ineffective law — a law that is under-inclusive in its treatment of naked hard-core cartels and over-inclusive of pro-competitive strategic alliances. The Committee has, therefore, recommended that the Competition Act be modified to create a two-track conspiracy law, where cartels are pursued more vigorously under a stricter criminal track and strategic alliances are pursued more sensibly under a civil track through a new section. Under the existing criminal provision, the term "unduly" would be dropped to eliminate the need to litigate wasteful and irrelevant economic factors. At the same time, specific defences for efficiencies will be created, thereby reversing the onus of proof, to ensure the two tracks are kept separate. Additionally, a voluntary pre-clearance system for strategic alliances would be organized to provide guidance to the business sector seeking assurances that they will not be subject to criminal sanctions, and thus reduce any residual "chilling effect" the law creates. In support of realigning the enforcement priorities away from smaller mergers and back towards conspiracies, as Parliament originally intended in 1986, the Committee has recommended that more resources be allocated to the Competition Bureau and that the merger transactions notification threshold be raised from $35 million to $50 million. The Committee further recommends amending the Competition Act to provide automatic parliamentary reassessments of all merger notification thresholds every five years. Furthermore, the Committee recommends extending a private right of action to include abuse of dominance and expanding relief to those who have been prejudiced by reviewable conduct under exclusive dealing, tied selling, market restriction, refusal to deal, and abuse of dominance to include awards of damages and fines in order to bolster private enforcement, as a complement to public enforcement, of the Act. The Committee makes a number of recommendations to streamline Competition Tribunal processes for disposing of cases, most notably empowering it to assess and impose damage awards and monetary penalties on those found guilty of abuse of dominance. These unbounded penalties would provide a better balance of incentives to deter abusive conduct and hopefully reduce the caseloads of the Bureau and the Tribunal. They, along with the Tribunal’s forthcoming general power to issue interim cease and desist orders in an expeditious way, as would be granted under Bill C-23, would make the existing provisions that are specific to the airline industry redundant. The airline industry-specific provisions could then be abolished to permit the return of the Competition Act to its traditional status as a law of general application. The Committee further recommends the deletion of the condition of "substantial or complete control" in the abuse of dominance section of the Act. This would bring the abuse of dominance provision closer to conformity with the concept of market power as it has evolved through judicial interpretation and other sections of the Act. This amendment, along with the Competition Tribunal’s new power to assess monetary penalties under abuse of dominance, would support the decriminalization of the anticompetitive pricing provisions — predatory pricing, vertical price maintenance, and price discrimination — as reflected in contemporary economic thinking. Criminal-like deterrence could be maintained when such behaviour constitutes an abuse of dominance, while reducing, if not eliminating, the chilling effect on pro-competitive applications of these pricing practices. In regards to the process of merger review, the Committee recommends the establishment of an independent task force of experts for the study of the role efficiencies should play in all civilly reviewable sections of the Competition Act. In terms of refusal to deal, the Committee recommends that the Competition Bureau issue an interpretation guideline clarifying whether section 75 would apply to the circumstance where a supplier in a market characterized by supply shortages could selectively ration its available supply in such a manner as to discriminate against independent retailers. In light of all of these recommended changes, the Competition Bureau must commit to rewriting its enforcement guidelines on strategic alliances, merger review and abuse of dominant position, not the least of which must be expanded to include predatory pricing, vertical price maintenance and price discrimination practices. Finally, the Committee is convinced that these recommendations reflect the expert testimony it received; this testimony was thorough and comprehensive. A consensus was reached on most issues, allowing for specific and concrete recommendations to be made. Where a consensus was not immediately obtainable, further study was recommended. As such, we believe this report has the makings of a blueprint for a government White Paper on competition policy in Canada and the next round of amendments to the Competition Act.
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