It is common to have a non-profit organization whose members are various business delivering a product or service. For example, real estate agents, mortgage brokers, and others. In a recent case the Commissioner of Competition v. The Toronto Real Estate Board the Federal Court of Appeal held that the abuse of dominance provisions in the Competition Act are not limited to competitors in a relevant market. Trade associations, large suppliers or customers and other persons with market power can also be found to be engaging in anti-competitive acts, notwithstanding the fact that they do not compete in the relevant market. Persons with influence or control over a market should be careful that their actions do not result in anti-competitive acts that are predatory, exclusionary or disciplinary.
Earlier this year the Federal Court of Appeal (“FCA”) allowed an appeal by the Commissioner of Competition from the Competition Tribunal’s decision dismissing its application for a remedial order under subsection 79(1) of the Competition Act against the Toronto Real Estate Board (“TREB”).
The Commissioner of Competition had filed an application with the Competition Tribunal alleging that TREB was engaging in anti-competitive acts by using its control of its Multiple Listing Service (“MLS”) to enforce rules, polices and agreements that limited TREB members’ use of MLS. The limitations on the members’ usage allegedly resulted in less competition among TREB members.
The Competition Tribunal’s decision focused on the interpretation of the abuse of dominance provisions in the Competition Act. These provisions have been interpreted in the Commissioner of Competition v. Canada Pipe Co., which found that an “anti-competitive act” must have a requisite purpose that is “an intended predatory, exclusionary or disciplinary negative effect on a competitor.” The Competition Tribunal dismissed the application on the grounds that TREB was not competing with its members and thus the abuse of dominance provisions did not apply since TREB was not a “competitor” of its members.
On appeal, the FCA held that the Competition Tribunal’s interpretation of “competitor” in Canada Pipe was too narrow in excluding individuals who are not a person’s competitor. The FCA allowed the appeal and the sent was case back to the Tribunal for reconsideration on the merits. TREB’s leave to appeal to the Supreme Court of Canada was also recently denied.
The FCA’s decision recognizes that persons who exert a degree of control or dominance on market participants, in addition to persons who are competitors in a relevant market, can be held accountable for engaging in anti-competitive acts that are predatory, exclusionary or disciplinary. Persons enjoying market power, such as trade associations or large suppliers or customers should carefully consider their actions as they can be caught by the abuse of dominance provisions in the Competition Act, notwithstanding the fact that they do not compete in the markets they serve.
The full FCA decision can be found here - http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/66660/1/document.do.
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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.