March 11, 2005

Bureau appeals decision

By Grant Cameron

staff writer

The federal Competition Bureau is once again preparing to argue that the Canada Pipe Company Limited has engaged in anti-competitive behaviour.

A Competition Tribunal ruled in February that the supplier of iron water pipe, based in Hamilton, Ont., has done nothing wrong, however, the bureau announced Monday it has filed an appeal of that ruling with the Federal Court of Appeal.

Sheridan Scott, commissioner of competition, said in a press release that the Tribunal erred by failing to apply the correct test in its determination that Canada Pipe’s stocking distributor program (SDP) does not constitute an anti-competitive act.

“This decision raises key legal issues related to the Bureau’s mandate to pursue dominant firms that engage in anti-competitive behaviour,” she said.

The Bureau also argues that the Tribunal erred by failing to properly consider whether the SDP preserved or enhanced Canada Pipe’s market power, or impeded the entry or expansion of competitors, in the relevant markets.

On Feb. 3, the Tribunal concluded that Canada Pipe exercised market power, which is the ability to set prices above competitive levels for a considerable period of time, in the cast iron pipe, fittings and mechanical joint couplings for drain, waste and vent applications across Canada.

However, the Tribunal also found that Canada Pipe had not engaged in a practice of anti-competitive acts and that even if it had, the practice would not likely have had the effects of preventing or lessening competition substantially in the relevant markets.

The Tribunal also found that the SDP has not impeded entry of firms in a market or led to any other exclusionary effects.

However, Scott said when used by dominant firms, loyalty programs can exclude entry and expansion in the market and result in higher prices for consumers.

“Clarity of the law with respect to loyalty programs such as Canada Pipe’s Stocking Distributor Program is of fundamental importance to our enforcement of the exclusive dealing and abuse of dominance provisions of the Competition Act.”

The Competition Bureau originally filed an application before the Tribunal on Oct. 31, 2002, asking for an order prohibiting Canada Pipe — through its Bibby Ste-Croix division, from engaging in anti-competitive acts, namely exclusive dealing through its SDP, acquisitions of rivals and unreasonable restrictive covenants.

The Competition Bureau is an independent law enforcement agency that promotes and maintains fair competition. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act, and the Precous Metals Marking Act.

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