On February 3, 2014, Canada's Federal Court of Appeal (FCA) overturned the Competition Tribunal's decision to dismiss the Competition Bureau's abuse of dominance application against the Toronto Real Estate Board (TREB), sending the application back to the Tribunal for reconsideration on its merits.
As mentioned in our earlier blog post, the Competition Bureau's application involves a challenge by the Bureau against TREB for allegedly abusing its dominance under section 79 of the Competition Act in relation to membership rules governing the use by members of the board's multiple listing service (MLS®) listing data.
The Tribunal had dismissed the Bureau's application without considering the merits, on the basis that TREB, as an incorporated trade association, does not compete with its own members in the real estate brokerage market and therefore cannot be found to have contravened the abuse of dominance provision. Specifically, the Tribunal had interpreted the 2006 Canada Pipe decision as authority for the proposition that, for conduct to be anti-competitive under section 79, the conduct must have had a negative effect ("predatory, exclusionary or disciplinary") on a competitor of the person who is the target of the Commissioner's abuse allegations.
In overturning the decision, the FCA concluded that the Tribunal had misinterpreted Canada Pipe and consequently, misinterpreted the abuse of dominance provisions of the Act. In Justice Sharlow's view, paragraph 78(1)(f) – one of the enumerated examples of "anti-competitive acts" listed in the Act, which pertains to the stockpiling of products in order to prevent price erosion – does not necessarily negatively impact a competitor (indeed, logically, it should assist competitors who will also benefit from increased prices). The presence of this example indicates that Parliament did not intend to limit the scope of subsection 79(1) in such a way that it could not possibly apply to a trade association such as TREB. The FCA went on to say that Canada Pipe would be manifestly wrong if the Court had intended to narrow the scope of subsection 79(1) in the manner alleged by the Tribunal.
Instead, the FCA validated the Commissioner's broadened approach to the interpretation of the abuse of dominance provisions of the Act, in holding that a subsection 79(1) order can be made against a person who controls a market otherwise than as a competitor if that person has committed an anti-competitive act against a competitor in that market. In terms of the manner in which such control may be exercised, the Court states that this could occur "by controlling a significant input to competitors in the market, or by making rules that effectively control the business conduct of those competitors".
The FCA further concluded that the Tribunal erred in finding support for its position in the Bureau's Abuse of Dominance Guidelines (the Guidelines). In Justice Sharlow's view, the Guidelines provide no useful guidance to the Court in interpreting subsection 79(1). Rather, the Guidelines indicate, at most, that the Commissioner's understanding of the scope of subsection 79(1) has changed over time.
Similarly, the FCA saw no reason to infer from subsection 79(4) (which directs the Tribunal to consider, among other things, whether the alleged anti-competitive effect is a result of superior competitive performance) that as a matter of law, a subsection 79(1) order cannot be made against a respondent simply because it does not compete with its members.
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