As the transition of the telecommunications and broadcasting industries from regulated monopolies to competitive markets continues, it would be beneficial to describe the authority of the Canadian Radio‑television and Telecommunications Commission under the Telecommunications and Broadcasting Acts and that of the Competition Bureau under the Competition Act.
This is particularly so given the complementary roles of the two organizations and the fact that the Commission is now moving beyond openingmarkets to competition and is exercising its powers to forbear from regulationin the area of telecommunications.
Industry stakeholders, including the general public, need greater clarityand certainty as to the overall regulatory and legal framework in which telecommunications and broadcasting firms must conduct their affairs.
Nothing in this document is intended to limit the responsibility orauthority of the Commission or the Bureau to administer the respective legislation for which they are responsible. It is recognized that in additionto competition issues, the Commission has many other statutory objectives,while the focus of the Bureau is on matters related to competition.
Issues of authority with respect to competition can be grouped intofour areas:
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1. Where the Commission has forborne or exempted from regulation
Under the Telecommunications Act, the CRTC has authority to exempt classes of carriers from application of the Act. Exemption orders may be subject to conditions. The Commission also has the power to forbear in wholeor in part from most regulatory responsibilities where it finds, for example,that services or classes of services are subject to sufficient competition to protect the interests of users and that forbearance would not likely undulyimpair the development or continuance of a competitive market. Forbearanceorders may also be conditional, and can be varied or rescinded.
As a law of general application, the Competition Act has an established administrative framework, jurisprudence and a market test standardof "substantial prevention or lessening of competition" with which to deal with competition issues. However, it is generally accepted that duringthe transition to competitive markets, competition safeguards beyond those available under the Competition Act are required.
- Where the Commission has unconditionally exempted or has forbornefrom regulation in whole and unconditionally, until such time as it exercisesits authority to review, rescind or vary its exemption or forbearance ordersand decisions, the Competition Act would apply.
- Where the Commission has forborne only in part or has exempted orforborne conditionally, the Bureau considers that the Competition Act would apply to the activities exempted or conditionally forborne from regulation.
- To the maximum extent possible, the Commission identifies in itsorders and decisions the powers and duties which the Commission will no longer exercise.
As all markets are not yet subject to effective competition, the Commissionwill continue to enforce regulatory safeguards to deal with issues such asbundling of services by the telephone companies, contract and access issuesfor multi‑dwelling buildings, and exclusive programming rights practices. Duringthe transition to competition, the Commission can deal with these issues moreefficiently than a case‑by‑case approach under the Competition Act.
One notable issue in the transition to competition is anti‑competitivecross‑subsidization. Until all telecommunications markets are subject to effective competition, the Commission will need to guard against incumbentcarriers cross‑subsidizing services offered in highly contested markets withrevenues from services where effective competition does not exist. Imputationtests and bundling restrictions imposed by the Commission are intended to address this issue. Safeguards imposed by the Commission seriously diminishthe likelihood of anti‑competitive cross‑subsidization.
When the Commission deems that markets have become sufficiently competitiveand the Commission forbears from regulation, the Competition Act would address anti‑competitive pricing issues should they arise.
2. Where the Commission and the Bureau both have authority
(a) Merger review
Under the Telecommunications Act, prior approval of telecommunications mergers is not required. However, the CRTC has specificresponsibility under the Telecommunications Act for ensuring compliance with foreign ownership and control rules and has broad regulatory authorityover the Canadian telecommunications system. Under the Competition Act, all mergers are subject to review and those which exceed proscribed economicthresholds must be formally prenotified to the Bureau.
Under the Broadcasting Act, prior approval of the Commission is required for changes of control or ownership of licensed undertakings. Whereasthe Bureau's examination of mergers relates exclusively to competitive effects,the Commission's consideration involves a broader set of objectives under theAct. This may encompass consideration of competition issuesin order to further the objectives of the Act. The Bureau's concern in radio and television broadcast markets relates primarily to the impact on advertising markets and,with respect to broadcast distribution undertakings, to the choices and pricesavailable to consumers. The Commission's concerns include those of the Bureauexcept that its consideration of advertising markets relates to the broadcasters' ability to fulfill the objectives of the Act.
It is generally Government and Commission policy to encourage competitionin broadcasting, particularly in the distribution of broadcasting services.
Consequently, with respect to merger review:
- there is parallel jurisdiction.
- any transaction must comply with the legislation administered byboth organizations.
- the merger and related pre‑notification requirements of the Competition Act apply to telecommunications and broadcasting mergers.
- review by the Commission under the Telecommunications Act deals with ensuring compliance with foreign ownership and control limitations and mayinclude other regulatory issues that may arise as a result of the transaction‑ prior approval, per se, is not required.
- review by the Commission under the Broadcasting Act applies to changes in ownership or control of licensees under the Act.
(b) Marketing practices
Depending upon the specific circumstances, marketing practices can beaddressed by the Commission or the Bureau.
The Commission will, for example, deal with slamming complaints in thetelephone market. However, the Bureau may act in cases where the slamming practice involves an element of false or misleading advertising. The Competition Act applies to all false or misleading advertising in thecommunications industry, as well as to telemarketing fraud.
The Bureau considers that the Competition Act will apply to exclusive dealing, tied selling and other trade restraints not covered by regulatorysafeguards imposed by the Commission.
Both the Commission and the Bureau would support the appropriate useof industry codes of conduct or ombudsman models as complementary vehicles todeal with consumer concerns. As appropriate, the Commission and the Bureau willreview industry codes to ensure compliance with their respective legislation.
3. Where the Commission is exercising exclusive authority
Interconnection and access are critical for telecommunications competition.They require a high degree of technological and economic expertise, as wellas flexible and timely dispute resolution. While the Competition Act applies to access and interconnection issues in unregulated network industries,they have been a primary focus of economic regulation in telecommunicationsby the CRTC.
- The CRTC will continue to deal with issues related to interconnectionand access.
4. Where the Bureau is exercising exclusive authority
Activities such as conspiracies to fix prices or otherwise prevent orlessen competition unduly, bid rigging and price maintenance are subject to criminalprohibition under the Competition Act.
- The Bureau will deal with price fixing, bid rigging and price maintenance.