Competition Tribunal File No: The Competition Tribunal lln the matter of an Application by Safa Enterprises Inc. doing business as My Convenience Store for an order pursuant to Section 103.1 of the Competition Act, RSC 1985 c. C-34, as amended granting leave to bring an application pursuant to Section 76 of the Competition Act BETWEEN: Safa Enterprises Inc. Applicant AND: Imperial Tobacco Company Limited. Respondent MEMORANDUM OF FACT AND LAW OF THE APPLICANT
Table of Contents
I. Concise Statement of Facts 1 II. Statement of Point in Issue 2 111. Concise Statement of Submissions 3 (a) The Test on an Application for Leave is Met in Respect of an Application under Section 76 of the Act
IV. Concise Statement of the Order Sought, 12 Including Any Order Concerning Costs
v. List of Authorities, Statutes and Regulations to be Refe rrred to 13
Paragraph
I. Concise Statement of Facts 1. A concis1~ statement of facts is contained in Schedule A to the Application for Leave - Statement of Grounds and Material Facts, which is incorpor· ted by reference into the Memorandum.
II. Statement of the Point in Issue 2. The points in issue are whether the Tribunal should grant leaye pursuant to Section 103.1 (7 .1) for the Safa Enterprises Inc ("SEI") to proceed with the proposed Notice of Application under Section 76 of the Act.
Ill. Concise Statement of Submissions (b}The test on Application for Leave is Met in Respect of an Application under Section 76 of the Act
3. The test for granting leave in respect of an Application under r ection 76 of the Act is set out in subsection 103.1 (7.1), which provides that:
The Tribuna l may grant a leave to make an application under section 76 if it has a reason to believe that the applicant is directly affected by an~ conduct referred to in
that section that could be subject to an order under that section. 4. There are no prior decisions of the Tribunal have establ ish~ that leave should be
granted under Section 76 of the Act where there is "sufficieht credible evidence to give rise to a bona fide belief that applicant may have been directly affected in the applicant's business by a reviewable practice".
5. The on ly two applications brought before the Tribunal under section 76 are namely: The Used Car Dealers Association of Ontario v. Insurance Bureau of Canada, 2011 Comp. Trib. 10 (File No. : CT-2011-06;
6. In above mentioned application the applicant sought an @rder under Section 75 I (Refusa l to Deal) and 76 (Price Maintenance) of the Act, the ~ribunal concluded that the Applicant was directly affected under section 75, and t e application to grant a leave under section 76 was denied.
7. The other Application was brought before the Tribunal by the Commissioner of Compet ition who does not require bringing an application to grant a leave under section 76 of the Act.
The Commissioner of Competition v. Visa Canada Corporation and MasterCard International Incorporated (CT-2010-10}
8. The Commissioner of Competition v. Visa Canada Corporaf ion and MasterCard International Incorporated (CT-2010-10), the Tribunal found [hat section 76 of the Competition Act require a resale and the Applicant "Commis~ioner of Competition" had not established that the Respondents' customers resell the Respondents' products. Thus, the Tribunal dismissed the Application filed brl the commissioner of Compe1'tion without costs.
9. The Application brought before the Tribunal by the Applicr nt SEI have met t he conditions described in Section 76.
10. This is a test case for the Tribunal and will set the pre[ edent for the future applications filed under Section 76 of the Act.
11. The Competition Tribunal should consider this Application as it is the first Applica t ion filed under section 76 of the Act.
IV. Concise Statement of the Order Sought 12. SEI seeks an order from the Competition Tribunal providing Tthe following: (i) granting leave pursuant to section 103.1(7.1) for l EI to proceed with its proposed Application under section 76 of the Act;
V. List of 1!\uthorities, Statutes and Regulations to be Referred to I 13. The Applicant will refer to the following authorities, statutes I nd regulations: (i) Competition Act, R.S.C. 1985, c. C-34, as amended, Sr ion 76 and 103.1. (ii) The Used Car Dealers Association of Ontario v. Insurance Bureau of Canada, 2011 Comp. Trib. 10 {File No.: CT-2011-06
(iii) The Commissioner of Competition v. Visa Ca!ilada Corporation and MasterCard International Incorporated (CT-2010-10}
(iv) Commissioner of Competition v. British American Tobacco {CT-1999-01}
Competition Act http:// laws-lois .justice.gc.ca/ eng/acts/C-34/page-48 .html #h-32 Government Gouvemement . .d ' of Canada du Canada Ca n.a·.. · •.a"' Justice Laws Website Home > Laws Website Home > Consolidated Acts > R.S.C., 1985, c. C-34 - Table of Contents > R.S.C., 1985, c. C-34 Competition Act (R.S.C., 1985, c:. C-34) Full Document : filMl I XML [SSS KB] I EQE [1130 KB] Act current to 2013-08- 12 and last amended on 2010-03-12. Previous Versions
Previous Page Ne~tf>9ge _. ................. _· ····--······· - ·· ..... _ ··------ -----------·----------------------------Price Maintenance Price maintenance 76. (1) On application by the Commissioner or a person granted leave under section 103.1, the Tribunal may make an order under subsection (2) if the Tribunal finds that
(a) a person referred to in subsection (3) directly or indirectly (i) by agreement, threat, promise or any like means, has influenced upward, or has discouraged the reduction of, the price at which the person 's customer or any other person to whom the product comes for resale supplies or offers to supply or advertises a product within Canada, or
(ii) has refused to supply a product to or has otherwise discriminated against any person or class of persons engaged in business in Canada because of the low pricing pol icy of that other person or class of persons ; and
(b) the conduct has had, is having or is likely to have an adverse effect on competition in a market.
Order (2) The Tribunal may make an order prohibiting the person referred to in subsection (3) fro m continuing to engage in the conduct referred to in pa ragraph (l)(a) or requiring them to accept another person as a customer within a specified time on usual trade terms .
Persons subject to order (3) An order may be made under subsection (2) against a person who (a) is engaged in the business of producing or supplying a product; (b) extends credit by way of credit cards or is otherwise engaged in a business that relates to credit cards ; or
(c) has the exclusive ri ghts and privileges conferred by a patent, trade-mark, copyright, registered industrial clesign or registered integrated circu it topography.
Where no order may be made (4) No order may be ade under subsection (2) if the person referred to in subsection (3 ) and the customer or other person referred to in subparagraph (l)(a)( i ) or (ii) are principal and agent or mandator and mandatary, or are affiliated corporations or directors, agents, mandataries, officers or employees of
(a) the same corporation, partnership or so le proprietorship ; or (b) corporations, partnerships or sole proprietorships that are affiliated . Suggested retail price (5) For the purposes of this section, a suggestion by a producer or supplier of a product of a resale price or minimum resale price for the product, however arrived at, is proof that the person to whom the suggestion is made is influenced in accordance with the suggestion, in the absence of
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Competition Act http: // laws-lois.justice.gc .ca/ englacts/C-34/page-48. html#h-32 proof that the producer 01- supplier, in so doing, also made it clear to the person that they were under no obligation to accept the suggestion and would in no way suffer in their business relations with the producer or supplier or with any other person if they failed to accept the suggestion.
Advertised price (6) For the purposes of this section, the publication by a producer or supplier of a product, other than a retailer, of an advertisement that mentions a resale price for the product is proof that the producer or supplier is inf luencing upward the selling price of any person to whom the product comes for resale, unless the price is expressed in a way that makes it clear to any person whose attention the advertisement comes to that the product may be sold at a lower price.
Exception (7) Subsections (5) and (6) do not apply to a price that is affixed or applied to a product or its package or container.
Refusal to supply (8) If, on application by the Commissioner or a person granted leave under section 103.1, the Tribunal finds that any person, by agreement, threat, promise or any like means, has induced a supplier, whether within or outside Canada, as a condition of doing business with the supplier, to refuse to supply a product to a particular person or class of persons because of the low pricing policy of that person or class of persons, and that the conduct of inducement has had, is having or is likely to have an adverse effect on competition in a market, the Tribunal may make an order prohib iting the person from continuing to engage in the conduct or requiring the person to do bus iness with the supplier on usual trade terms.
Where no order may be made (9) No order may be made under subsection (2) in respect of conduct referred to in subparagraph (l) (a)(ii) if the Tribunal is satisfied that the person or class of persons referred to in that subparagraph, in respect of products supplied by the person referred to in subsection (3),
(a) was making a practice of using the products as loss leaders, that is to say, not for the purpose of making a profit on those products but for purposes of advertising;
(b) was making a practice of using the products not for the purpose of selling them at a profit but for the purpose of attracting customers in the hope of selling them other products;
(c) was making a practice of engaging in misleading advertising; or (d) made a practice of not providing the level of servicing that purchasers of the products might reasonably expect.
Inferences ( 10) In considering a appl ication by a person granted leave under section 103.1, the Tribunal may not draw any inference from the fact that the Commissioner has or has not taken any acti on in respect of the matter raised by the application.
Where proceedings commenced under section 45, 49, 79 or 90.1 ( 11) No application may be made under this section against a person on the basis of facts that are the same or substantially the same as the facts on the basis of which
(a) proceedings have een commenced against that person under section 45 or 49; or (b) an order against tllat person is sought under section 79 or 90.1. Defini tion of "trade terms" (12) For the purposes of thi s section, "trade terms" means terms in respect of payment, units of purchase and reasonable technical and servicing requirements.
R.S., 1985, c. C-34, s. 76; R.S ., 1985, c. 19 (2nd Supp.), s. 45; 1999, c. 2, s. 37; 2009, c. 2, s. 426. Previous Version
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Competition Act http:! / laws- Io is .j ustice.gc .ca/ englacts/C-34/page-59 .html#docCont GENERAL Leave to make application under section 75, 76 or 77 103.1 ( 1) Any person may apply to the Tribunal for leave to make an application under section 75, 76 or 77. The application for leave must be accompanied by an affidavit setting out the facts in support of the person's application under that section.
Notice (2) The applicant must: serve a copy of the application for leave on the Commissioner and any person against whom the order under section 75, 76 or 77, as the case may be, is sought.
Certification by Commissioner (3) The Commissioner sha ll , within 48 hours after receiving a copy of an application for leave, certify to the Tribunal wh1ether or not the matter in respect of which leave is sought
(a) is the subject of an inquiry by the Commissioner; or (b) was the subject of an inquiry that has been discontinued because of a settlement between the Commissioner and the person against whom the order under section 75, 76 or 77, as the case may be, is sought.
Application discontinued (4) The Tribunal shall not consider an application for leave respecting a matter described in paragraph (3)(a) or (b) or a matter that is the subject of an application already submitted to the Tribunal by the Commissioner under section 75, 76 or 77 .
Notice by Tribunal (5) The Tribunal shall as soon as practicable after receiving the Commissioner's certification under subsection (3) notify the applicant and any person against whom the order is sought as to whether it can hear the application for leave.
Representations (6) A person served with an application for leave may, within 15 days after receiving notice under subsection (5), make representations in writing to the Tribunal and shall serve a copy of the representations on any other person referred to in subsection (2).
Granting leave to make application under section 75 or 77 1 of 2 (7) The Tribunal may 9rant leave to make an application under section 75 or 77 if it has re~6) i....,..1 ; ,.... , , ,.. ._ h .... ._ ._h .... ............ Ii ,.. ........ +. : .... """ : ........ ,..+.1 ,, ......... ~ ,.. , ,&...,..+.-. ..... +.: .... 11 ,, -~~ ............... ~ : .... ._L-.,.. .............. 1: .............. t-.... 1 L-. • • ,...: .......... ,,... ....
2 1(?J ,, 10 . 39 AM L-.. . . .... ....... .) '
Competition Act http://laws-lois.justice.gc.ca/ eng/acts/C-34/page-59 .html#docCont Granti ng leave to make application under section 75 or 77 (7) The Tribunal may grant leave to make an application under section 75 or 77 if it has reason to believe that the applicant is directly and substantially affected in the applicants' business by any practice referred to in one of those sections that could be subject to an order under that section.
Granti ng leave to make application under section 76 (7 .1) The Tribunal may grant leave to make an application under section 76 if it has reason to believe that the applicant is directly affected by any conduct referred to in that section that could be subj ect to an order under that section.
1ime and conditions for making application (8) The Tribunal may set the time within which and the conditions subject to which an application under section 75, 76 or 77 must be made. The application must be made no more than one year after the practice or conduct that is the subject of the application has ceased.
Decision (9) The Tribunal must give written reasons for its decision to grant or refuse leave and send cop ies to the applicant, the Commissioner and any other person referred to in subsection (2).
Limitation (10) The Commissioner may not make an application for an order under section 75, 76, 77 or 79 on the basis of the same or substantially the same facts as are alleged in a matter for which the Tribunal has granted leave under subsection (7) or (7.1), if the person granted leave has already appl ied to the Tribunal under section 75, 76 or 77.
Inferences ( 11) In considering an application for leave, the Tribunal may not draw any inference from the fact that the Commissioner has or has not taken any action in respect of the matter raised by it.
Inquiry by Commissioner ( 12) If the Commissioner has certified under subsection (3) that a matter in respect of which leave was sought by a person is under inquiry and the Commissioner subsequently discontinues the inquiry other than by way of settlement, the Commissioner shall, as soon as practicable, notify that person that the inquiry is discontinued.
2002, c. 16, s. 12; 2009, c. 2, s . 431.
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QCompttttton m;rtbnnal m:ribunal be la QConrurrence Reference: The Used Car Dealers Association ofO ntario v. Jnsura11ce Bureau ofC anada, 2011 Comp. Trib . 10 File No.: CT-2011-06 Registry Document No .: 29
IN THE MATTER of tl1e CornpetitionAct, R.S.C. 1985, c. C-34, as amended; AND IN THE MATTER of an Application by the Used Car Dealers Association of Ontario for an Order pursuant to section 103 .1 granting leave to make application lmder sections 75 ru1d 76 of the Competition A ct.
BET\VEEN: Used Car Dealers Association of Ontario (applicant)
and Insurance Bureau of Canada (respondent)
Decided on the basis of the written record Before Judicial Member: Simpson J. (Chai1verson) Date of Reasons and Ord.er: September 9, 2011 Reasons and Ord.er signed by: Madrun Justice Sandra J. Simpson
REASONS FOR ORDER AND ORDER GRA.NTING THE APPLICANT LEAVE TO FILE AN APPLICATION PURSUANT TO SECTION 75 OF THE COMPETITION ACT
THE APPLICATION [1] The Used Car Dealers Association ofOntmio (the "UCDA") seeks leave from the Competition Trilnmal (the 'T1ibunal") to commence an application pursuant to section 75 and subparagraph 76(l)(a)(ii) ofthe CompetitionAct, R.S .C. 1985, c. C-34 (the "Act") . The proposed application names the Insurance Bureau of Canada as the respondent.
THE DECISION [2] For the following reasons leave has been granted to commence an application lmder section 75 of the Act. However, leave to proceed under section 76 has been denied .
THE APPLICANT [3] The UCDA was founded in 1984. It is a not-for-profit trade association which represents more than 4500 motor velricle dealers in Ontruio . The UCDA provides a vaiiety of services to its members including one called Auto Check TM ("Auto Check"). It provides dealers who are selling used cars with infonrrnt.ion about the accident histo1y of the vehicles they intend to sell . Using a velricle' s VIN number, a dealer who is a member of the UCDA pays a fee of$7 .00 (before ta"Ces) to conduct an Auto Check vehicle accident history search.
[4] The UCDA's evidence for tlris application is found in an affidavit sworn by Robe1t G. Beattie on June 29, 2011 (the ''Beattie At11davit'). Mr. Beattie is the UCDA's Executive Director.
THE RESPONDENT AND ITS DATABASES [5 ] The Insurance Bureau of Canada (the "IBC'') is a national not-for-profit industiy association which represents home, vehicle and business insurers. The IBC is , according to the UCDA, the only source ofintegrated inclushy wide data collected from all insurers Yvho sell auto insunmce as \Veil as from independent adjus ters and investigators . The data are located on a database 'rvlrich IBC desc1i bes as its Web Claims Search Application. However, that database does not include infonnation about the dollru· value of claims made when velricles are in accidents. Those values are found in information provided to IBC by its members and collected in a second IBC database called the Automotive Statistical Plan ("ASP Database').
THE BACKGROUND [6] In 1998, the UCDA became an Associate :tvlember of the IBC primarily to gain access to the infonnation in IBC's Web Claims Search Application. That infonnation is a c1itical input into UCDA's Auto Check busine.·s.
their use, it is reasonable to conclude Ontmio is the geographic market and that an order could therefore be made.
[37] Finally, with rnspect to usual trade tenns, t11e evidence shows th the UCDA is willing to continue to pay IBC and since tlrn Web Claims Search Application cla , is only available from IBC, th.is aspect of the tes t is met and an order could be made.
INSUFFICIENT COMPETITION AMONG SUPPLIERS [38] In my view, b{!Cause IBC is the sole supplier, the T unal could conclude that the UCDA's inability to secure the data on IBC 's Web Clai1 s Search Application is due to insntlicient competition.
THE PERSON REF:ERRED TO IN PARAG l\tIEET THE USUAL TRADE TERivIS OFT PRODUCT - 75(1 )(c :)
[39] There is no question that the UCD is prepared to continue to pay for the Web Claims Search Application data. hi these circmn ances, I find that the T1ilnurnl could conclude tlrnt this test Im s been met.
[40] The Beattie Affidavit sl ws that IBC was able to reinstate the UCDA 's associate membership and its access to le Web Claims Search Application atler the initial tennination of the UCDA' s membernhip 0 1 !lay 26, 2010. Thereatler, it continued supplying the data on a month to month basis m1ti he Tennination. Based on this evidence, the Tribunal could conclude that tlie product is in mn e supply.
THE REFUSAL T DEAL IS HAVING OR IS LIKE TO HAVE AN ADVERSE EFFE.CT NIN A l\'IARKET-75(1)(e)
[41] In my v · ew, the Ttibtmal could find that IBC's refusal to supply the Web Claims Search Application 1 s cauS(!d Auto Check's exit from the market. Since Auto Check was the low cost provider of ccident claims searches to approximately 4500 used car dealers and, since it is reasonabl to conclu .e that these dealers will now be forced to pmchase more expensive searche- from CarProof or Caifax, the Tiibunal could find that the test is met.
PART II- PRICE IVL4.INTENANCE- 76(l)(a)(ii) [42] The test for leave to bring applications tmder section 76 of the Act is fotmcl in subsection 103 .1(7 .1 ). It says that the Tribtmal must have reason to believe tlrnt an applicant is directly affected by any conduct that could be the subject of an order.
[4 3] For the reasons given in paragraph 31 above, I have concluded tlrn.t the UCDA is directl y affected by the closure ofits Auto Check business .
H (A) IS \VILLING AND ABLE TO SUPPLIER OR SUPPLIERS OF THE
[ 44] The more clitlicult question is whether I can conclude that an order "could" be made under subparngraph 76(l)(a)(ii) in the absence of ru1y direct evidence in the Beattie Affidavit showing that IBC 's refusal to supply its Web Claims Search Application data to the UCDA is a result of Auto Check's low p1icing. Tiie only evidence before the T1ibunal is circumstantial.
[45] Some of the circumstantial evidence desc1ibed below relates to the actions and affiliations of two companies called CGI Group hie. ("CGI") and i2iQ Inc. (''i2iQ")
[4 6] In its submissions the U CDA says at paragraph 25 : UCDA is unable to establish definitively, without cliscove1y pursuant to the Tiibunal's rnles, whether IBC 's refosal to supply occuned because of concerns about Auto CheckTM's low p1icing policy. However, there is significant circumstantial evidence related to the large difference between Auto CheckT M ~md CarProof p1ices, the actions of CarProot: connections between CarProof and i2iQ and commmlic:ations between i2iQ and IBC, that provides reason to believe that IBC's refusal to supply occurred because of Auto CheckTM's low p1icing policy.
[47] Fmther in its reply submissions the UCDA said at paragraph 39: ill this situation, the circumstantial evidence that IBC was acting to benefit CGI, with whom it has a prefened business relationship, and which in hm1 has a close business relationship wit11 i2iQ and CarProof, is the only evidence on the record related to the reasons for IBC's refusal to supply. It is noteworthy that, as Mr. Beattie indicated in his atliclavit, IBC chd not provide reasons when it tenninated supply to UCDA and again in its Representations IBC has remained silent about any other reasons for the tennination. UCDA submits that in such a situation an adverse inference should be drawn from IBC s silence ruicl/or tl1e ·'sufficient credible evidence" test should be applied in a mrumer which allows potentially viable claims to proceed and be tested on the merits rather than be fil1strated by the Applicant's in<lbili1y to access relevant evidence in the possession of the Respondent during tl1e leave stage .
[48] While I accept tha t circumstantial evidence and reasonable inferences may be relied on, t11e question is whether the circumstantial evidence in tllis case meets the requirement that there be sufficient credible evidence to give rise to a bo11afide belief that Uie conduct could be subject to an order.
[49] The UCDA relies on four pieces of circumst.ru1tial evidence to show that the Tennination was because ofUCDA's $7 .00 price contrasted ·with CarProof's price of$34.95 . I will deal ·with each in tum.
(i) The Price Difference [50] The evidence shows that CarProofhas hvice approached the UCDA with a view to acquiring its dealers as its customers. These approaches failed because Uie U CDA believes that
its members prefer Auto Check' s low priced searches . Accordingly, CarProof's searches will only be attractive to the UCDA's members if Auto Checks low cost searches are no longer available.
[51] The evidence, which is said to suggest that the Tennination was dne to Auto Check's low price, is as follows :
• CarProof doesn't deal directly with IBC to obtain its ASP data. It deals t]uough an intenn1~cliate company. Mr. Beattie speculates that that company is either i2iQ or CGI or perhaps both. CGI is contractually linked to IBC because CGI operates the ASP Database for IBC and provides other data services to IBC members. One se1vice is called Auto Plus mid it provides infomrntion to assist insurers when making decisions about coverages and premiums. Another service is Enhanced Auto Plus . It includes vehicle claim histories from CarProof • 12iQ 's website also offers CarProof's vehicle claim histo1y searches and says that i2iQ has a partnership or strategic alliances with CarProof and with a division of CGI called CGI Insurnnce hiformation Se1vices. However, there is no evidence about whether i2iQ has a contractual relationship with IBC.
[ 52] If CGI is the in term ediruy behveen CarP roof and IBC, the Tribmrnl is asked to speculate that, because CGI provides impo1iant data se1vices to IBC, IBC ·will be inclined to do a favour for CGI by helping it~: customer, CarProof This would be accomplished by refusing to supply data to its low cost competitor Auto Check.
[53] Regarding i2iQ, the evidence shows (i) that i2iQ 's CEO is able to say to IBC that UCDA ·s dealers could purchase data from CarProof (ii) that i2iQ and IBC were in prompt telephone contact about the UCDA's request for dollar claims infonnation ~md (iii) that i2iQ has a partnership or strategic alliance with a division of CGL This infonnation suggests to me that i2iQ has a degree of c:ontrol over CarProof m1d that i2iQ has a close relationship with IBC and may be the intennedia1y selling IBC' s data to Car Proof If those facts were true, I must infer that IBC would be inclined to do a favour for i2iQ by, in tum, helping its customer CarProof. Again, this would involve refosing to supply the Web Claims Application Search data to Auto Check.
(ii) c~irProof's Actions [54] These are des 1~ibed in the following paragraphs taken from paragraphs 13-15 oft.he Beattie Affidavit:
CarProofhas groivn substantially and is the market leader in the supply of vehicle accident history searches in Ontario. In 2004, Car Proof began distiibuting false and misleading promotional mate1ials to motor vehicle dealers in Canada, which misrepresented the nanue and scope ofUCDA' s lien search and other se1vices. Following wr[tten warnings from UCDA's legal counsel, C<1rProof abandoned this negative campaign. It. again began clistributing false m1cl misleading promotional n1aterial in 2007 in connection with U CDA's se1vices including its Auto Check.TM se1vice. I believe that this may have been motivated in whole or in
part by UCDA's position as the lo-.v-price suppliei- in the market. UCDA's efforts to resolve the situation out of court '..Vere unsuccess fol , leading it to commence litigation against CarProof That litigation -vvas ultimately settled in 2009, with CarP roof and U CDA issuing a joint statement in \Vhich Car Proof admowledged t1iat UCDA provides accident claim info1mation tlu-ough its Auto CheckT M se1vice and unde1took: not to make misleading statements in the future .
In early 2009, representatives of CarProof apprmiched UCDA and proposed that UCDA partner with CarProof to provide CmProof vehicle accident histories to UCDA mernbtlrs rather than doing so directly through the Auto CheckTM business. Such a proposal, if adopted, would have mem1t the end of the Auto Chec'kTM business . Bearing in mind CarProof's aggressive business tactics and the significantly higher prices at which it provides vehicle accident history searches, UCDA concluded that a relationship with CarProof was not in t11e best interests of its members and declined the CarProof proposal.
In early 2010, representatives of Car Proof again approached U CDA and requested that UCDA partner with CarProof to provide CarProof vehicle accident histories to UCDA members, rather than doing so directly tlu'ough the Auto CheckTM business. UCDA 's views on such a relationship had not changed, ~md we again rejected CarProof's overtures.
[55] In sum , the ev idence indicates that CarProof appears to have misrepresented Auto Check's business and has suggest.eel closing it dov.-·1i. However, these efforts have failed because of Auto Check's low price.
(iii) Conne:ctions Between CarProof and i2iQ [56] This topic is dealt with above in paragraphs 51and53. (iv) Communications Between i2iQ and IBC [57] In June 2009, the UCDA contacted Ms. Pehar of !BC to ask for access to the dollar value claims infonnation in tlie AS P Database. Sh01ily t11ereat1er, the CEO of i2iQ spoke to Ms. Pehm and advised her that UCDA could purchase CarProofvehicle histo1y reports mid confinned that he could be contacte if the UCDA wanted to pursue the idea. In tl1e alternative, he suggested that the UCDA could speak directly to CarProof
[58] The Beattie Affidavit speculates that IBC must have told i21Q or CarProof of UCDA 's request and that the only reason IBC, CarProof and i2iQ were in contact, at1er t11e UCDA asked for access to the dollar value claims :i.nfonnation -vvas because they were concerned tliat, with Uris info1111ation, Auto Check would be a more effective low cost competitor.
CONCLUSIONS [59] Against this background, it is clear that IBC has a close direct relationship ivith CGI (tluough its provision of services and maintenance of the ASP Database) and with i2iQ (it spoke to it about the UCDA ' s request for dollar value claims dat1) . It is also clear that CGI and i2iQ have close ties to CarProof Its searches are provided to IBC's members tlu-ough CGI, and i2iQ appears to have some contrnl over CarProof's operations and sells its searches through its website.
[60] Finally, it is reasonable to conclude based on its past conduct, that CarProof would like to see Au.to Check's lO\v cost business closed so that the UCDA 's denlers could become potential customers for CarProof s searches .
[6 1] However, while I can conclude that it is possible that the Tennination occmTed as a result of IBC's wish to support CarProofs business objectives as a favour to either CGI or i2iQ, I cannot conclude that there is sufficient credible evidence to show the possibility that the Termination by IBC was due to Auto Check 's loi.v pricing policy. In these circmnstm1ces, an order could not be made.
ORDER [62] The UCDA is hereby gnmted leave, pmsnant to subsection 103 .1(7) oft.he Act, to commence m1 application under section 75 of the Act. However, leave to npply umler section 76 of the Act is denied.
[63] The UCDA is to have its costs fixed as a lump sum amount payable folihwith based on Column III ofTaiiffB of the Federal Courts Rules, SOR/98-106. 111e UCDA is to prepare a bill of costs for review by IBC and, if m1 amount cam1ot be a.greed, the Registiy may be contacted and I will fix the amonnt once a procedure has been agreed.
DIRECTION [64) The parties ar1e to consult to see if they can agree about whether ru1 interim supply order cru1 be nrnde and, if so, on what term s. Failing agreement, the Registry may be contacted to discuss anangements for the hearing of the UCDA' s application for inte1im relief.
DATED at Ottawa, tlris 9th day of September, 2011 SIGNED on behalf of the Tribunal by the Chan1Jerson. (s) Sancha J. Silnpson
COUNSEL: For the applicant: Used Car Dealers Association of Ontario A. Neil Campbell Casey W. Halfaday
For the respondent: Insurance Bureau of Canada Peter Glossop Graham Reynolds Geoffrey Grove
~ontpetttion \!tribunal \!tribunal be la ~onntrrtnce A decision was issued today by the Competition Tribunal in Commissioner of Competition v. Visa Canada Corporation and ~MasterCard International Incorporated (CT-2010-10). The Tribunal panel was composed of the Honourable Justice Michael L. Phelan, Dr. Wiktor Askanas and Mr. Keith C. Jvfontgomery.
Summary: The Competition Tribunal dismissed the Application filed by the Commissioner of Competition without eosts. The Tribunal found that section 76 of the Competition Act requires a resale and that the Commissioner of Competition had not established that the Respondents ' customers resell the Respondents ' products. The Tribunal further held that the Commissioner's proposed interpretation of section 76 was not supported by the legislative history of the provision or other decisions.
However, in the event that the Tribunal was wrong with respect to the legal interpretation of section 76, it continued with its analysis. Under this alternative analysis, it assumed that each of the Respondents engaged in price maintenance (as the Commissioner had attempted to define the term) by implementing the no-surcharge rule, a rule which prohibits merchants from applying a surcharge for those customers paying with credit cards. The Tribunal found in that situation that there had been an adverse effect on competition.
However, the Tribunal found that even under this alternative analysis, it would have declined to issue an order and no1ted that the proper solution to the concerns raised by the Commissioner is a regulatory framework. In that regard, it noted that the experience in other jurisdictions showed that concerns would be raised by consumers regarding surcharging and that rather sooner than later, intervention would have to take place by way of regulation.
The Tribunal made no award of costs and noted that the Commissioner advanced a case which should have been brought, even if the Commissioner was not entirely successful.
The Tribunal' s reasons are confidential at this time in order to protect properly confidential evidence. A public version of the decision will issue as soon as possible after a detennination as to what infonnation must remain confidential has been made.
THE COMPETITION TRIBUNAL
IN THE MATTER OF an application by the Commissioner of Competition pursuant to sections 92 and 105 of the Competition Act, R.S.C. 1985, c. C-34;
AND IN THE MATTER OF the merger of British American Tobacco p.l.c. and Rothmans International B.V. whereby British American Tobacco p.l.c. will acquire , interalia , indirect control of Rothma ns Inc. and thereby the controlling interest of Roth mans Inc. in Rothmans, Benso n & Hedges Inc. ;
BETWEEN: THE COMMISSIONER OF COMPETITION Applicant
- and -BRITISH AMERICAN TOBACCO p.l.c. Respondent
STATEMENT OF GROUNDS AND MATERIAL FACTS I. INTRODUCTION 1. The Commissioner of Competition (the "Commissioner") brings tl1is application for a consent order on the grounds that the merger of British American Tobacco p. l.c. ("BAT") and Rothmans International B.V. ("Rothmans International"), whereby BAT will acquire , inter alia, indirect control of Rothmans Inc. ("Rothmans") and thereby its controlling interest in Rothmans, Benson and Hedges Inc. ("RBH") (the "merger") would, in the absence of the
CT-99/
- 2 draft consent order (the "DCO"), be likely to prevent or lessen competition substantially in the market for manufactured cigarettes and in the market for fine cut tobaccos throughout Canada.
2. The Commissioner, with the consent of BAT, respectfully submits for approval a DCO that, if implemented, will elim inate any such effect upon competition arising from the merger.
3. The statem 1~nt of grounds and material facts herein forms the basis of the application brought by the Commissioner with the consent of BAT. The Commissioner has alleged certain material facts, and the respondent does not agree with all the facts alleged but does not contest the statement of grounds and materiail facts for the purposes of these applications and any proceeding initiated by the Commissioner relating to this consent order including an application to vary or resc ind. The respondent consensually attorns to the jurisdiction of the Competition Tribunal solely for the purpose of these applications.
II. THE PARTIES THE COMMISSIONER 4. Tile applicant is the Commissioner of Competition, appointed under s. 7 of tile Competition Act, R.S.C. 1985, c. C-34 and , as such, is the person authorized to make th is application.
BRITISH AMERICAN TOBACCO p.l.c 5. BAT is a corporation registered in England and Wales. BAT is a l1olding
- 3 company with interests in a number of companies which manufacture, distribute and sell more than 240 brands of cigarettes and other tobacco products in Canada, Europe, tl1e United States, Asia and other territories throughoutthe world . Major international brands include State Express 555, Lucky Strik1;, Kent and Benson & Hedges. As BAT is a holding company, it is not engaged in operational activities.
IMASCO LIMITED_ 6. BA T's inten~st in the Canadian tobacco business is through its indirect ownership of 42% of the voting shares of the publicly traded company lmasco Limited ("lmasco") of Montreal, whicl1 is listed on The Toronto Stock Exchange, The Montre!al Exchange and the Vancouver Stock Exchange. lmasco has three principal businesses with operations in Canada: (i) Imperial Tobacco, a division of lmasco, and its subsidiary Imperial Tobacco Limited (collectively "Imperial" of which lmasco owns 100%); (ii) lmasco Financial Corporation, through which lmasco holds its interest in The Canada Trust Company; and (iii) Shoppeirs Drug Mart Limited.
7. As a major Canadian consumer products and services company, lmasco operates through a number of divisions, including Imperial , which is Canada's largest tob:acco enterprise. lmasco also has a number of significant businesses unrelated to tobacco. Headquartered in Montreal, Imperial manufactures and distributes a full range of tobacco products, including manufactured cigarettes, cigars and fine cut tobacco. Imperial Leaf Tobacco, a company division based in Aylmer, Ontario, purchases and processes leaf tobacco for I mperia I and fo r export. Other processing facilities are located in Joliette and LaSalle, Quebec, while tobacco production and packaging facilities are located in Montreal and Guelph, Ontario.
- 4 -8. For the year ended December 31 , 1998, lmperial's sales revenue, net of tobacco taxes and duties, was $1 .8 billion and earnings from operations were $815 million.
9. Imperial has a large customer base in Canada. As its principal market, sales in Canada accounted for 96.2% of revenues in 1997. The company also exports lea1' tobacco to 20 foreign customers located mainly in England and the U.S .. It also exports tobacco products to the U.S. through its two distributors in the U.S. , Philip Morris and ITL (USA) Limited (an affiliate of Imperial).
10. The best known manufactured cigarette brands produced and distributed by Imperial arn du Maurier and Player's. Combined sales of these two brands (numbers one and two in popularity) account for almost 60% of the Canadian manufactured cigarette market. Other manufactured cigarette brands of Imperial include Matinee (the fourth largest selling brand in Canada), Cameo, Avanti, Medallion and Peter Jackson, which when combined with du Maurier and Players gives Imperial a total share of the manufactured cigarette market of some 70%. Fine cut tobacco brands include Matinee, Peter Jackson, Player's, Sweet Caporal and Vogue; pipe tobacco brands include Old Port, Old Chum, Old Virginia and Sir Walte r Raleigh, and cigar brands include Old Port, House of Lords, White Owl, Reas and Colts. General Cigar Company in Montreal, a wholly-owned subsidiary of Imperial , manufactures and distributes cigars which are exported to some 30 countries.
11. Imperial purchases tobacco grown in Ontario and Quebec and purchases approximately 1,500 packaging commodities from 60 suppliers located primarily in Canada, with some specialty items being purchased in the U.S. or