The Competition Bureau needs to issue clear guidelines on what it considers to be anticompetitive behaviour or consumers could lose out as companies become overly cautious, according to a report from the C.D. Howe Institute.
The institute’s competition policy council issued its report on why the Competition Bureau needs to clarify its stance on administrative monetary penalties on May 15. It calls on the bureau to stipulate how it will apply its powers under the Competition Act in seeking administrative monetary penalties for abuse of dominance. The council's key recommendation is that the bureau should issue guidance and explain the basis on which it will assess the monetary penalties it seeks.
The council is comprised of 17 lawyers, academics, economists, and several former members of the bureau.
“It would be very constructive for the bureau to provide guidance on the specific enforcement approach it will be taking in cases where it seeks administrative monetary penalties for abuse of dominance,” says Calvin Goldman, a member of the council and co-chairman of the competition, antitrust, and foreign investment group at Blake Cassels & Graydon LLP. He was also a director of investigation and research with the Competition Bureau from 1986 to 1989.
Some of the council members contend that administrative monetary penalties are appropriate as a deterrence mechanism. Others expressed the view that the possibility of a company being subject to them would create a chill. There was unanimity that the risks of over-deterrence associated with the monetary penalties are real and that it would be appropriate to know how the bureau plans to approach the issue in particular cases.
Amendments to the Competition Act in 2009 gave the Competition Bureau the power to seek administrative monetary penalties of up to $15 million from businesses it believes contravene the abuse-of-dominance provisions of the legislation.
Then in March of this year, the bureau issued draft enforcement guidelines on abuse of dominance but did not address the question of administrative monetary penalties and the factors the bureau will consider in deciding when to pursue them. At its May 7 meeting, the council posed the following questions: do administrative monetary penalties make good policy? For what infractions? Are they constitutional? What are the costs, benefits, and options?
The bureau has not yet brought a case under the abuse-of-dominance provisions seeking an administrative monetary penalty, but the need for guidelines is critical, says Benjamin Dachis, senior policy analyst with the C.D. Howe Institute.
“The real issue is the leverage that the silence creates for companies even if they aren’t doing anything wrong. If, for example, what they’re considering is a steep price discount that is competitive, but if something appears to be an anticompetitive measure or appears to be predatory pricing, they may not do it and that can end up hurting consumers if that sort of competitive behaviour doesn’t happen,” says Dachis.
“Because of the lack of guidance from the bureau, that firm’s counsel may advise that they might not want to do things they might otherwise would,” he notes, adding the council’s report echoes what other people in the industry are saying about the lack of clarity in the guidelines. “Counsel isn’t going to be able to be very clear to their clients and clearly state that the proposed business practice is onside with the abuse-of-dominance provisions. They just can’t provide that answer very clearly given the current guidelines.”
Bryan Parker, a spokesperson for the bureau, said in an e-mail to Canadian Lawyer InHouse: “The ability of the Competition Tribunal to order companies that violate the Competition Act to pay AMPs is an effective tool to prevent and deter anticompetitive behaviour that hurts Canadians.”
Parker said the revised enforcement guidelines on the abuse-of-dominance provisions of the act “appropriately provide a concise overview of the bureau’s enforcement approach to the abuse-of-dominance provisions and are careful not to prejudge decisions of the Competition Tribunal.”
“It is not possible to provide definitive guidance as each case must be assessed on its own facts,” he said.
However, Goldman says the bureau can provide an outline of the factors it considers relevant and should give examples.
“We think it can. There was consensus in the council’s report that if the commissioner intends to seek an AMP, it should only be in the most egregious of cases where there is very clear evidence that the firm’s intent was plainly anticompetitive and the other elements of the section are clearly met. The line between abusive conduct and aggressive conduct is in many cases not all that clear. So only in the clearest of cases do we suggest the bureau ought to consider seeking an AMP,” he says.
Parker also noted that provisions similar to the administrative monetary penalty section of the act have been in use for many years in other statutes such as the Investment Canada Act, the Customs Act, and a number of provincial laws.
That doesn’t sit well with Goldman, who says it’s not right to consider such a comparison.
“I think each statute has to be interpreted according to the relevant provisions of the statute itself,” says Goldman. “In the Competition Act, there is a statutory framework within s. 79 that addresses overall relevant elements of the abuse-of-dominance provision and also addresses the factors that ought to be applied in assessing the amount of an AMP, but the statutory framework doesn’t address when the bureau will decide to seek an AMP and we have to look at the relevant statute’s own framework rather than other statutes in the context of guiding the bureau.”
The Competition Bureau is seeking public comments on its revised enforcement guidelines on the abuse-of-dominance provisions until May 22.