Federal Court of Appeal Orders Re-determination in Canada Pipe Abuse of Dominance Case

Posted on August 6, 2006

Kim D.G. Alexander-Cook and Michael Kilby

On June 23, 2006, the Federal Court of Appeal (the FCA or the Court) issued its decisions and reasons in the appeal by the Commissioner of Competition (the Commissioner) and the cross-appeal by Canada Pipe Company Ltd. (Canada Pipe) from an earlier ruling by the Competition Tribunal (the Tribunal). At issue was the Tribunal's dismissal, in February 2005, of the Commissioner's abuse of dominance and exclusive dealing case against Canada Pipe.1 This appeal represents the first time the FCA has been asked to consider the application of the abuse of dominance (section 79) and exclusive dealing (section 77) provisions under Canada's Competition Act (the Act). In allowing the Commissioner's appeal and, rejecting Canada Pipe's cross-appeal, the Court considered in detail each of the specific elements the Commissioner must address in bringing an application under sections 77 and 79 of the Act. The case has been sent back to the Tribunal for re-determination.

While the Court found errors of law in the way the Tribunal had framed and conducted its analysis under both sections 77 and 79, it is far from obvious that the result on re-determination by the Tribunal will be any different than at first instance.

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Consent agreement reached for standard TV ratings service

Posted on August 1, 2006

Susan M. Hutton and Martin Lapner

On June 23, 2006, the Competition Bureau filed a consent agreement with the Competition Tribunal regarding the BBM Canada-Nielsen Media Research Limited merger. The consent agreement resolves potential competition issues arising from the merger of the electronic television audience measurement (TAM) operations of both companies. Despite the consolidation of TAM data collection in Canada, the Bureau observed that the development of a standard TAM system had widespread support in the industry, that the merger would likely result in decreased costs to purchasers, and that both parties could still competitively market proprietary analytic tools to be used on the data collected by the merged company. Beyond these benefits, the consent agreement allows for independent audits to be conducted on the merged company in order to monitor the provision of quality services to purchasers. The consent agreement is interesting in that it would appear to embody a flexible and pragmatic approach by the Bureau to mergers involving significant efficiencies - even while the law on efficiencies remains in disarray.

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Bureau permits merger of ID Biomedical and GlaxoSmithKline: No product overlap

Posted on August 1, 2006

Susan Hutton and Alexandra Stockwell

Canada's Competition Bureau recently released a Technical Backgrounder explaining its analysis of GlaxoSmithKline Inc.'s (GSK's) acquisition of ID Biomedical Corporation (IDB), both active in the development and marketing of vaccines. Interestingly, the transaction was classified as "complex," although ultimately the Bureau found that it would have little, if any, competitive impact as there was no product overlap. The Bureau may have treated the transaction with particular care due to its involvement with products essential to public health and safety, and in particular influenza vaccines. IDB supplies 75% of Canada's annual public requirements for influenza vaccines, and will do so until at least 2008, when one of its government contracts expires. The Bureau observed that, although an active producer of other vaccines and involved in vaccine development generally, GSK had never sold influenza vaccines in Canada, and that there will likely be a number of companies capable of bidding for Canadian influenza vaccine requirements when contracts come up for renewal. In addition, the Bureau noted that public health officials did not see the merger as endangering the security of supply of the vaccine for Canadians.

An important element in the Bureau's overall holding was its finding that there is no product overlap in Canada between GSK and IDB. Both companies have pipeline products aimed at certain respiratory ailments, as well as a Meningococcal strain and certain allergies. The Bureau was undeterred by this fact, however, as it said the products in question were years away from commercial viability and other pharmaceutical companies were also developing potential vaccines for the same diseases.

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