Refusal to deal

In most cases, businesses have the right to decide who they do business with. For example, a vendor may decide that delivery costs are too high to make it profitable to sell to a particular business. Or they may question the reliability or credit worthiness of a particular business.

However, under the Competition Act, refusing to sell to another business is illegal in some situations. For that to be the case, all of the following need to be true:

  • the refusal occurs even though the customer is willing to meet the supplier’s usual terms;
  • the refusal prevents the customer from being able to obtain adequate supplies of a product, significantly harming its ability to do business;
  • the refusal is a result of insufficient competition among suppliers;
  • the refusal occurs even though there is ample supply of the product; and
  • the refusal has an adverse effect on competition or is likely to do so.

In some cases, a refusal to deal can also be found to be an abuse of dominance.

Remedies for non-compliance

If a business is found to be non-compliant with the law, we will usually try to obtain voluntary compliance. If all parties agree on a solution that will restore competition to the marketplace, a formal consent agreement is then registered with the Competition Tribunal.

Consent agreements, which have the force of a court order, are inexpensive and quicker alternatives to litigation. They enable us to resolve concerns in a timely and efficient manner while ensuring compliance with the Competition Act.

If voluntary compliance cannot be achieved, we may file an application before the Tribunal for an order to remedy the situation. For example, the Tribunal can order the non-compliant company to sell to the customer it had previously refused to do business with.

The Competition Act also allows private parties (individuals or corporations) to ask the Tribunal for a remedying order if they are directly and substantially affected by a business that is refusing to deal. The process for filing a private party application is set out in the Competition Tribunal Rules, section 115.

About the Competition Tribunal

The Competition Tribunal is a quasi-judicial body that has the power to hear and dispose of matters involving non compliance with various sections of the Competition Act.

All Tribunal hearings are open to the public; however, due to sensitive or confidential testimony, a hearing may occasionally be held “in camera,” during which members of the public are excluded. An appeal of any Tribunal decision may be filed with the Federal Court of Appeal.

How to ensure compliance with the law

If you are unsure about what complying with the Competition Act means for your business, we recommend that you seek legal advice.

You can protect your business by having an effective compliance program in place. This will help your company comply with the law and it could reduce the risks associated with non-compliance. Like an early-warning system, a compliance program can help you detect and correct unlawful conduct quickly before it damages your company, your reputation, and your bottom line.

We also facilitate compliance by providing written opinions, which are subject to fees. These provide businesses with an opinion regarding proposed activities or conduct. Written opinions are binding if all material facts have been submitted, are accurate, and remain substantially unchanged.

Further reading