Susan M. Hutton & Marisa Berswick
On June 2, 2011, the Federal Court of Appeal (FCA) released its decision in Nadeau Poultry Farm Limited v. Groupe Westco Inc et al., in which it upheld the decision of the Competition Tribunal to dismiss the appellant’s complaint under s. 75 of the Competition Act (refusal to deal). While the appellant was ultimately unsuccessful, both decisions shed light on the limited scope of s. 75, particularly in regulated industries where supply is statutorily restricted.
The Decision at the Tribunal
As discussed in our post of November 19, 2009, this case concerns a dispute between the appellant, Nadeau Poultry Farm, the operator of the only chicken slaughtering plant in New Brunswick, and the main respondent, Group Westco Inc., a chicken producer that, along with its subsidiaries, owns or controls just over half of the chicken production in New Brunswick. In 2007, Westco offered to buy or invest in the Nadeau plant, but negotiations between the parties broke down. Westco made it clear that if Nadeau was not willing to sell its plant, Westco would construct its own slaughtering plant in partnership with Nadeau’s main competitor and thereby deprive Nadeau of 50% of its supply. Eventually, Westco gave written notice that it would stop supplying chickens to Nadeau and the other respondents followed soon after, leading to the commencement of a private action before the Competition Tribunal for an order for resumed supply. On June 8, 2009, the Tribunal dismissed the application based on Nadeau’s inability to satisfy the five conditions required by s. 75, which require that:
- a customer is substantially affected in its business or is precluded from carrying on business because it is unable to obtain adequate supplies of a product anywhere in a market on usual trade terms;
- this occurs as a result of insufficient competition among suppliers;
- the customer is willing and able to meet usual trade terms;
- the product is in ample supply; and
- the refusal to deal is having or is likely to have an adverse affect on competition in a market.