A company may be considered to “control a class or species of business” if it has sufficient market power to set prices above competitive levels in a market for a considerable period of time. If a company has a very large market share, it will very likely have market power, but considerations such as the number of competitors and their respective market shares, excess capacity in the market and ease of entry will also be taken into account. Further, it is not necessary for a person to compete in a market itself in order for it to control that market. As a result, the abuse of dominance provisions could potentially apply, for example, to a large customer or supplier that might be considered to possess market power in an upstream or downstream market. There is little definitive guidance on when a company will be found to have the degree of market power required to trigger the potential application of these provisions. However, when a company’s market share is above 50%, or the aggregate market share of a small group of companies that arguably might be “jointly dominant” exceeds 65%, there is a danger that the abuse of dominance provisions could apply. The CA contains a non-exhaustive definition of “anticompetitive acts.” Generally speaking, the prohibition applies to any type of conduct that, if carried out by a person having market power, has a predatory, exclusionary or disciplinary effect on a participant in the relevant market or an adverse effect on competition (including on competitors). In determining whether the impugned act has had, is having or is likely to have the effect of preventing or lessening competition substantially in a market, the Tribunal will consider whether the practice is a result of superior competitive performance, and may consider the effects of the conduct on barriers to entry, price or non-price competition (including quality, choice or consumer privacy), change and innovation, and any other factor that is relevant to competition in the market.
The Tribunal may make an order, on application by the Commissioner, requiring, among other things, that a person (i) pay an administrative monetary penalty of up to three times the value of the benefit derived from the conduct or, if the value of such benefit cannot be reasonably determined, up to 3% of a party’s annual worldwide gross revenues; or (ii) cease certain conduct or dispose of assets or shares, if the Tribunal makes a finding of abuse of dominance. PRICE MAINTENANCE Price maintenance occurs when (a) a person either (i) by agreement, threat, promise or any like means has influenced upward, or discouraged the reduction of, the price at which its customer or another reseller of its product sells or offers to sell the product or (ii) has refused to supply a product to or has otherwise discriminated against another person because of the low pricing policy of that other person; and (b) such conduct has had, is having or is likely to have an adverse effect on competition. The Tribunal may make an order prohibiting a person from engaging in price maintenance or requiring a person found to be engaging in price maintenance to accept another person as a customer on usual trade terms. COMPETITOR AGREEMENTS THAT SUBSTANTIALLY PREVENT OR LESSEN COMPETITION Under section 90.1 of the CA, the Tribunal may, on application by the Commissioner, make an order prohibiting any person from doing anything under an agreement or arrangement between competitors if the Tribunal finds that the agreement or arrangement (whether existing or proposed) has, or is likely to have, the effect of preventing or lessening competition substantially.
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Doing Business in Canada
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