Analysis of Competition Act 1985 in Loblaw Company Case.

This case study provides an overview of the Competition Act 1985 in Canada, focusing on its purpose, scope, and the role of the Competition Bureau. It details anti-competitive activities prohibited under the Act, including conspiracy, false representations, and abuse of dominance. The study also outlines investigation procedures, penalties for infractions, and applies the statute to the Loblaw Company case, examining allegations of misuse of dominance. The analysis covers Loblaw's policies related to price competition, margin shielding, and non-price competition, and the Bureau's investigation, which ultimately discontinued due to lack of sufficient evidence. The document concludes by emphasizing the importance of evidence-based enforcement decisions and the Bureau's commitment to addressing anti-competitive behavior in the marketplace. Desklib provides access to this and many other solved assignments.

Running head: BUSINESS LAW
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Table of Contents
Introduction......................................................................................................................................4
Purpose of the study.....................................................................................................................4
Scope of the study........................................................................................................................4
Research methodology.................................................................................................................4
Sources of information................................................................................................................4
Competition Act 1985......................................................................................................................5
Description/Overview..................................................................................................................5
Purpose........................................................................................................................................5
Competition Bureau/ Commission..................................................................................................5
Description of the site/ url...........................................................................................................5
Description of organization.........................................................................................................6
Mission and value statement........................................................................................................6
Mandate and purpose...................................................................................................................6
Public Compliant procedure........................................................................................................7
Anti-competitive activities under Competitions Act 1985..............................................................7
Investigation procedure...............................................................................................................9
Determination and Hearing of infractions...................................................................................9
Penalties.......................................................................................................................................9
Application of the statute to Loblaw Company case.......................................................................9
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References......................................................................................................................................12
APPENDIX A................................................................................................................................13
APPENDIX B................................................................................................................................14
APPENDIX C................................................................................................................................15
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Introduction
Purpose of the study
The purpose of the study is to understand the various anti-behavior practices that are
being carried out within the marketplace. The study is purported to understand the nature of anti-
behavioral activities in Canada and the penalties that are imposed by the Competition Act 1985
(Whish & Bailey, 2015).
Scope of the study
Anti-competitive behavior refers to the business practice where the businesspersons or
entity agrees to restrict, prevent or distort their competition with an objective to affect trade. The
scope of this study is to understand the objective of the Competition Act of Canada that has been
designed to promote such competition and safeguard the marketplace against all the anti-
competitive acts (Slot & Farley, 2017). This paper shall entail the various legislative provisions
that aim at safeguarding the consumers by prohibiting the deceptive business practices.
Research methodology
The information contained in this research paper has been obtained using qualitative
research methodology using the secondary data sources.
Sources of information
The information for this paper has been obtained using secondary resources like articles,
legislations and the official sites of the Competition Bureau Commission under Competition
Act 1985.
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Competition Act 1985
Description/Overview
The Competition Act 1985 governs the Canadian Competition Law. It falls under the
Federal legislative framework that is applicable to majority of industries and businesses in
Canada. The legislation includes civil and criminal matters that are subjected to review. The
Commissioner of Competition (Commissioner) is the head of a Federal Enforcement agency
known as the Federal Competition Bureau (Bureau).
Purpose
The purpose of the legislation is comprehensive in nature, which can be categorized into the four
parts:
i. the statute purports to uphold the flexibility and effectiveness of the Canadian economy;
ii. the statute aims at intensifying prospects to enable Canada participate in the world
market;
iii. the statute professes to endow consumers with product choices and competitive prices;
iv. the statute contends that the medium-sized and small enterprises shall have an equitable
opportunity to take part in the Canadian economy;
Competition Bureau/ Commission
Description of the site/ url
http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/h_00125.html
The site provides with relevant information about the Competition Bureau and the
present Commissioner of competition. It also provides information about the enforcement and
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administration of the four statutes that falls under the regulation of the Competition Bureau,
setting out links that provides information about the action plan of the Bureau.
Description of organization
The Competition Bureau is an autonomous law enforcement agency that aims at
ensuring that the Canadian consumers and businesses thrive in an innovative and competitive
marketplace. The Commissioner leads the agency and the Bureau is held responsible for the
enforcement and administration of the four statutes:
i. Textile Labeling Act
ii. Competition Act
iii. Consumer Packaging and Labeling Act, and
iv. Precious Metals Marking Act
Mission and value statement
The objective of the Bureau is to make progress in the services rendered to the public by
strengthening the trust through its collaboration with all its international and domestic
stakeholders (Scott et al., 2017). The Bureau believes that transparency is valuable and this
collaboration process would ensure that the Canadian businesses and consumers are growing
within an innovative and competitive marketplace.
Mandate and purpose
The agency purports to establish efficient, responsive and cost-effective agency. The
Bureau believes in building trust by implementing the competition laws of Canada in a manner
that is both expected as well as transparent in nature.
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Public Compliant procedure
In order to lodge a complaint, using the Competition Bureau online Complaint, the
aggrieved party must make a complaint. For complaints under the Competition Act, the Bureau
shall examine whether a formal inquiry requires to be initiated. The inquiries are conducted in
private and in case an inquiry is initiated, the Bureau uses several tools to examine the facts of
the situation and if any complaints require further investigation, bureau officers may use tools to
address such issues.
Anti-competitive activities under Competitions Act 1985
Under the Competition Act R.S.C. 1985, c-34, Part VI of the Act deals with Offences in
Relation to Competition and Part VII includes provisions related to Deceptive Marketing
Practices whereas under Part VIII, the statute includes provisions dealing with Matters
reviewable by Tribunal. The activities that amounts to anti-competitive activities under the
legislation include are enumerated as below:
i. conspiracy (section 45);
ii. misleading or false representations (section 52);
iii. bid-rigging (section 47);
The other activities that are considered as anti-activities and amounts to civil offences and are
reviewable matters under the statute include the following:
i. Misrepresentation to public (section 74.01);
ii. Tied selling (section 77);
iii. Abuse of dominance (section 79);
iv. Refusal to deal (section 75);
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v. Price maintenance (section 76)
The offense of price-fixing refers to “consumer fraud” as described by the Competition
Bureau of Canada. This offence is difficult to determine as a price-fixing conspiracy between
two business entities may also signify actual competition between such corporate entities. Price-
fixing may be defined as any agreement in verbal, written or inferred from conduct entered into
by two competing entities with an intention to reduce, increase or stabilize prices or any
competitive terms.
Loblaw Cos. Ltd and parent company George Weston ltd, at present, is cooperating with the
Competition Bureau as an immunity applicant in the bread price-fixing case. In Nestlé Canada
case, the company was alleged to be involved in a conspiracy to increase the price of the
chocolate bars. Under the competition law, apart from the penalty amount and imprisonment, the
courts may also impose orders to prevent the parties from engaging into or continuing with any
such offences in the future.
Under [section 36] of the Act, the aggrieved person who suffered losses or damages due to
the infringement of the criminal offence provisions mentioned above or the anti-competitive
activities, shall be entitled to claim for limited damages against person who caused such losses.
In Rocois Construction Inc case, it was held that a prior criminal conviction was not required to
claim damages. Additionally, in McDougall case, the court held that the claimant may only
establish the presence of the elements of such offences or anti-competitive activities to make
damage claims.
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Investigation procedure
The Commissioner of the Bureau is empowered to investigate any potential infringement
of the provisions of the Act. The Bureau investigates any potential competition law offences and
any civil renewable matters under the Act. These include the power of the Bureau to seize
documents, search documents, obtain wiretaps, seize computer records and even may obligate
the suspected party or parties to testify under oaths.
Determination and Hearing of infractions
The Bureau’s Immunity Program plays fundamental role investigating and prosecuting
criminal offences under the statute. In case of contraventions, the Bureau shall investigate about
the matter and thereafter address the issues. In regards to directorial and officer liability under
section 65 the Act, the individual executives are considered as accused in criminal matters.
Private parties like competitors or consumers may bring private actions for compensation against
damages caused due to the criminal actions of the company.
Penalties
Under the Competition Act, the persons who contravenes the provisions that constitutes
the anti-competitive activities shall be entitled pecuniary penalties under section 47 and 45 for
bid-rigging and conspiracy up to $25 million per count of infringement of the Act. For price-
fixing, it may lead to fines up to $24 million and may result in imprisonment for a maximum
period of 14 years.
Application of the statute to Loblaw Company case
The Commissioner of the Competition (Commissioner) commenced an inquiry against
the allegations that Loblaw Companies Ltd (Loblaw) were engaged in activities that amounted to
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misuse of the dominance provisions stipulated under the Competition Act (the Act). It was
alleged that the company was involved in the enforcement of numerous anti-competitive policies
against its suppliers (Boyer, Ross & Winter, 2017).
As mentioned above, that the Bureau commissioner is empowered to seize and search
documents, and even may obligate the suspected party or parties to testify under oaths under
section [11] of the Act. Similarly, in case of Loblaw company case, the Bureau used formal
investigative powers under section 11 and compelled number of parties to provide relevant
information through production of data, document and made them testify by taking oath.
Under the Act, abuse of dominance takes place when any dominant firm in a market is
involved in any anti-competitive activities that results in an decrease in the competition in the
marketplace. In order to obtain information about the enforcement of the anti-competitive
policies, the bureau retrieved information from sources like the suppliers, retailers, number of
foreign competition authorities and industry associations (Rugman & Verbeke, 2017). The
various policies that was alleged to have been implemented by Loblaw can be categorized into
three competitive activities:
Price Competition- several Loblaw policies were generated when it faced retail price competition
from another retailer;
Margin shielding- Loblaw sought compensation from the suppliers at the time when its
profitability or margin on the sale of one or more products declined below a particular threshold
and the margin shielding was generated due to non-price competition or retail price.
Non-price competition- when the company experienced non-price competition from another
retailer, it led to the formation of another anti-competitive policy that was alleged to have been
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enforced by the Grocery giant. This was evident as Loblaw sought compensation or imposed
deductions, if a supplier offered a product to another retailer before or without offering the same
product to Loblaw.
The investigation conducted by the Bureau emphasized in determining whether these
policies have impeded the competitive process by way of restraining competition among certain
number of retailers (Hollis & Grootendorst, 2015). Further, while the investigation was being
carried out, the company communicated to its suppliers about ceasing the enforcement of
majority of the Loblaw policies from Jan 2016. Prior to the discontinuing of the policies, the
company along with its suppliers introduced a new purchasing model which contained one fixed
national price for every product that has been purchased from a supplier.
Moreover, due to lack of sufficient evidences, the Bureau was unable to establish that the
policies of the Loblaw were responsible for preventing the competition in the marketplace.
However, presently, the Commissioner has elected to discontinue the inquiry it started against
the allegations made in respect of the company. The investigations were ceased post the
discontinuance of several policies that were implemented by the Loblaw. As it is known that the
Commission of the bureau undertakes its enforcement decisions solely based on evidences, lack
of evidence that polices of the company lessened the competition, is another reason for
discontinuance of the investigations. Nevertheless, if the Bureau becomes aware of any new
evidences that any company is likely to affect the marketplace, it will undoubtedly undertake
reasonable and effective action.
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References
Arsenidou, E., Sinclair, A., & Stanciute, J. (2017). Empowering the national competition
authorities to be more effective enforcers. Competition Law & Policy Debate, 3(3), 33-39.
Boyer, M., Ross, T. W., & Winter, R. A. (2017). The rise of economics in competition policy: A
Canadian perspective. Canadian Journal of Economics/Revue canadienne d'économique.
Hollis, A., & Grootendorst, P. (2015). Canada's New Generic Pricing Policy: A Reasoned
Approach to a Challenging Problem. Healthcare Policy, 11(1), 10.
Rugman, A., & Verbeke, A. (2017). Global corporate strategy and trade policy. Routledge.
Rugman, A., & Verbeke, A. (2017). Global corporate strategy and trade policy. Routledge.
Scott, D., Hollway, B., Nelson, K., & Shah, D. (2017). Global Trends in Private Damages: The
Future of Collective Actions. Competition Law International, 13(2).
Slot, P. J., & Farley, M. (2017). An Introduction to Competition Law. Bloomsbury Publishing.
Whish, R., & Bailey, D. (2015). Competition law. Oxford University Press, USA.
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APPENDIX A
R. v. Nestlé Canada Inc. 2015 ONSC 810
Rocois Construction Inc v Quebec ready Mix Inc [1985] CarswellNat 10 (Fed. C.A.) at para 3
C.R. v McDougall [2008] Carswell 2014 (S.C.C.) at para 40 and 46
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APPENDIX B
Competition Act R.S.C. 1985, c-34 (sections 11; 45; 52; 47; 74.01; 77; 79; 75; 76; 36)
Textile Labeling Act
Competition Act
Consumer Packaging and Labeling Act, and
Precious Metals Marking Act
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APPENDIX C
http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04310.html
https://www.macleans.ca/opinion/is-price-fixing-a-major-problem-in-canada/
http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/h_00125.html
http://www.canadianadvertisinglaw.com/competition-law/
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