Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Canada Competition Bureau releases price maintenance enforcement guidelines, (Sep 16, 2014)

By Linda O’Brien, J.D., LL.M.

The Canada Competition Bureau announced today that it has released its final enforcement guidelines, titled “Price Maintenance (Section 76 of the Competition Act).” The guidelines describe the Bureau’s general approach to enforcing Section 76 of the Competition Act, including with respect to common business practices, such as minimum resale pricing, manufacturer-suggested resale pricing, and minimum advertised pricing. They replace previous guidelines and bulletins dealing with price maintenance.

In March 2014, the Bureau released draft guidelines for public consultation. The Bureau reviewed the comments received during the consultation period prior to finalizing the guidelines. The issuance of the guidelines supports the Bureau’s Action Plan on Transparency, which aims to promote the development of a more cost-effective, efficient, and responsive agency, while providing Canadians with more opportunities to learn about the Bureau’s work.

Price maintenance under the Act occurs when a person influences upward or discourages the reduction of another person’s selling or advertised prices by means of a threat, promise, or agreement, or when a person refuses to supply another person or otherwise discriminates against them because of their low pricing policy, in each case with the result that competition in a market is likely to be adversely affected. Specifically, Section 76 of the Act permits the Competition Tribunal to make a remedial order in respect of certain types of price maintenance conduct where the conduct has had, is having, or is likely to have an adverse effect on competition in a market.

Price maintenance practices are common in many markets, and can be pro-competitive in many circumstances. Price maintenance conduct also can stimulate inter-brand competition among competing brands of products, such as by facilitating the entry or expansion of competitors by encouraging retailers to stock and promote the supplier’s products, or by encouraging retailers to engage in marketing efforts for a particular product.

An important requirement under Section 76 is that price maintenance conduct has had, is having, or is likely to have an adverse effect on competition in a market, which is only likely to occur in some circumstances. When examining whether price maintenance conduct is likely to adversely affect competition in a market, market power is a key factor in the Bureau’s analysis.

Upon finding that price maintenance conduct is likely to adversely affect competition in a market, the Tribunal may make a remedial order prohibiting the conduct. Alternatively, the Tribunal may make an order requiring a supplier or a retailer, as the case may be, to do business with another person on usual trade terms

In considering enforcement action under Section 76 of the Act, the Bureau evaluates allegations of price maintenance on a case-by-case basis, in the context of structural and other market-specific characteristics. In the course of an examination or inquiry, the Commissioner will generally afford parties the opportunity to respond to the Bureau’s concerns regarding alleged contraventions of Section 76 and to propose an appropriate resolution to address them.

In 2009, amendments to the Competition Act decriminalized the treatment of price maintenance conduct under the Act. Under Section 76, it is necessary to demonstrate that price maintenance conduct has had, is having or is likely to have an adverse effect on competition in a market. Alleged criminal price-fixing conspiracies continue to be dealt with under Section 45 of the Competition Act.

News: Antitrust