More abuse?: the Competition Bureau proposes revised guidelines on abuse of dominant market position 


April 2012

Competition and Antitrust Bulletin/TerraLex Newsletter

On March 22, 2012 the Canadian Competition Bureau released revised Draft Enforcement Guidelines on the Abuse of Dominance Provisions of the Competition Act (the "New Draft Guidelines"1). The New Draft Guidelines provide a summary of the Competition Bureau's approach to the enforcement of the abuse of dominant market position (or ‘monopolization') regime. The most significant differences between the existing guidelines which were issued in 2001 (the "2001 Guidelines"), the 2009 Draft Guidelines, which were never finalized, and the New Draft Guidelines are summarized below.

  • Necessary Intent: The most important development in the New Draft Guidelines is the Bureau's changed interpretation of the intent necessary to find that conduct constitutes an anti-competitive act, and therefore can be the basis for finding of abuse of dominant market position. The jurisprudence has been unanimous that, to constitute an anti-competitive act, conduct must be undertaken with the goal of having a negative effect on a competitor which is predatory, exclusionary or disciplinary. However, the New Draft Guidelines state that "While many types of anti-competitive conduct may be intended to harm competitors, the Bureau considers that certain acts not specifically directed at competitors could still be considered to have an anti-competitive purpose". This approach, if adopted, will greatly expand the scope for finding that conduct constitutes an Abuse of Dominance.

  • Joint Abuse of Dominance: The 2001 Guidelines expressly stated that mere conscious parallelism was insufficient to found a joint abuse of dominance case, but the 2009 Draft Guidelines removed that provision. The New Draft Guidelines confirm the shift and go further, indicating that firms may be found to hold market power as a group based on: collective market share; barriers to entry or expansion; evidence of a lack of inter-firm competition; and "other relevant factors". Co-ordinated behaviour between those alleged to be jointly dominant is not necessary to find joint dominance. This approach will make it very difficult to know when firms will be viewed as jointly dominant.

  • Market Share Thresholds: The New Draft Guidelines maintain the historic 35% market share "safe harbour". They also indicate that, while a firm with a market share of between 35% and 50% could be examined by the Bureau, depending upon the circumstances, there will be no presumption of dominance below 50% market share. This change is consistent with jurisprudence and suggests that the Bureau is now less likely than to focus on firms with market shares below 50%.

  • Substantial Lessening of Competition and Sufficient Remaining Competition: The New Draft Guidelines indicate that the focus in deciding whether there has been a "substantial lessening or prevention of competition" as a result of anti-competitive conduct requires an assessment of the relative decrease in competition in the market as a result of the conduct, not a consideration of the overall competitiveness of the market. As a result, it is at least theoretically possible for conduct that results in a "substantial" lessening of competition to be challenged, even when the market in issue continues to be characterized by a significant level of competition in absolute terms.

  • Administrative Monetary Penalties: Historically, a finding of abuse of dominant market position did not give rise to fines or civil damages. In March 2009, administrative monetary penalties (a maximum of $10 million, or $15 million for repeat conduct) were introduced. There is not yet any jurisprudence regarding the imposition of such penalties. It would have been helpful to have guidance on when and what level of administrative monetary penalties would be sought by the Commissioner, but the New Draft Guidelines are silent on this important issue.

  • Less is Less: The New Draft Guidelines offer much less guidance , by way of examples and analyses of types of anti-competitive conduct, than did the 2009 Draft Guidelines and the 2001 Guidelines. This will be a controversial development since guidelines are most useful in articulating enforcement approaches where jurisprudence is not available, and the extensive discussion of these issues in the 2009 Draft Guidelines was praised by commentators.

The New Draft Guidelines arrive on the heels of significantly enhanced enforcement efforts by the Competition Bureau. Between 2000-2008, only a single abuse of dominance case was filed. Since mid-2009 the Bureau has filed a Consent Agreement settling a matter involving joint abuse of dominance in the waste business; brought an abuse of dominance case against the Canadian Real Estate Association which was subsequently settled; and is pursuing an abuse case against the Toronto Real Estate Board. The Bureau is also litigating a case against Visa and MasterCard under the price maintenance provisions of the Act that is similar in many respects to an abuse of dominance case. Thus, the issues addressed in the New Draft Guidelines case are of significant practical, as well as policy, importance.

Those interested in commenting on the current Draft Guidelines are to submit their views in writing to the Competition Bureau by May 22, 2012.

by James Musgrove and A. Neil Campbell

1 The New Draft Guidelines are available on the Competition Bureau's website at

a cautionary note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2012