Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Canada Competition Bureau resolves concerns in water heater industry, (Oct 30, 2015)

By Greg Hammond, J.D.

The Canada Competition Bureau reached a consent agreement with Direct Energy Marketing Ltd., resolving claims that Direct Energy restricted competition and limited consumer choice in the Ontario residential water heater industry, the agency reported today.

In December 2012, the Competition Bureau filed applications with the Competition Tribunal against Reliance Comfort L.P. and Direct Energy, alleging that the two companies had implemented anticompetitive water heater return policies and procedures that were aimed at preventing consumers from switching to competitors.

In November 2014, the Competition Bureau reached resolutions with Reliance and EnerCare Inc.—the company that acquired Direct Energy’s water heater rental business in Ontario. Under the resolutions, EnerCare agreed that it would not continue Direct Energy’s alleged anticompetitive policies and practices, and Reliance agreed to not: (1) require consumers to obtain authorization prior to returning a rented water heater; (2) refuse to deal with other suppliers who return consumers’ water heaters on their behalf; (3) unreasonably restrict when and where water heaters can be returned; (4) engage in anticompetitive retention tactics; and (5) impose unwarranted fees and charges.

Although Direct Energy exited the market in 2014, the Competition Tribunal ruled that the Competition Bureau could still pursue an order against Direct Energy. Direct Energy has now agreed to pay an administrative monetary penalty of $1 million. The consent agreement also requires Direct Energy to create and maintain a corporate compliance program if it decides to re-enter the Ontario residential water heater market in the next ten years.

“We are pleased that Direct Energy has taken the steps necessary to address the competition concerns identified by the Bureau,” stated Commissioner of Competition, John Pecman. “The resolution announced today, along with the ruling by the Tribunal, send a clear message that companies cannot evade responsibility for contravening the Competition Act just because they have ceased the conduct or exited the market.”

Companies: Direct Energy Marketing Ltd.

News: Antitrust