Competition Act (R.S.C., 1985, c. C-34)

Specialization Agreements

Marginal note:Definitions

85 For the purposes of this section and sections 86 to 90,

article

article includes each separate type, size, weight and quality in which an article, within the meaning assigned by section 2, is produced; (article)

registered

registered means registered in the register maintained pursuant to section 89; (inscrit)

specialization agreement

specialization agreement means an agreement under which each party thereto agrees to discontinue producing an article or service that he is engaged in producing at the time the agreement is entered into on the condition that each other party to the agreement agrees to discontinue producing an article or service that he is engaged in producing at the time the agreement is entered into, and includes any such agreement under which the parties also agree to buy exclusively from each other the articles or services that are the subject of the agreement. (accord de spécialisation)

Marginal note:Order directing registration

• 86 (1) Where, on application by any person, and after affording the Commissioner a reasonable opportunity to be heard, the Tribunal finds that an agreement that the person who has made the application has entered into or is about to enter into is a specialization agreement and that

  • (a) the implementation of the agreement is likely to bring about gains in efficiency that will be greater than, and will offset, the effects of any prevention or lessening of competition that will result or is likely to result from the agreement and the gains in efficiency would not likely be attained if the agreement were not implemented, and

  • (b) no attempt has been made by the persons who have entered or are about to enter into the agreement to coerce any person to become a party to the agreement,

  the Tribunal may, subject to subsection (4), make an order directing that the agreement be registered for a period specified in the order.

• Marginal note:Factors to be considered

  (2) In considering whether an agreement is likely to bring about gains in efficiency described in paragraph (1)(a), the Tribunal shall consider whether those gains will result in

  • (a) a significant increase in the real value of exports; or

  • (b) a significant substitution of domestic articles or services for imported articles or services.

• Marginal note:Redistribution of income does not result in gains in efficiency

  (3) For the purposes of paragraph (1)(a), the Tribunal shall not find that an agreement is likely to bring about gains in efficiency by reason only of a redistribution of income between two or more persons.

• Marginal note:Conditional orders

  (4) Where, on an application under subsection (1), the Tribunal finds that an agreement meets the conditions prescribed by paragraphs (a) and (b) of that subsection but also finds that, as a result of the implementation of the agreement, there is not likely to be substantial competition remaining in the market or markets to which the agreement relates, the Tribunal may provide, in an order made under subsection (1), that the order shall take effect only if, within a reasonable period of time specified in the order, there has occurred any of the following events, specified in the order:

  • (a) the divestiture of particular assets, specified in the order;

  • (b) a wider licensing of patents, certificates of supplementary protection issued under the Patent Act or registered integrated circuit topographies;

  • (c) a reduction in tariffs;

  • (d) the making of an order in council under section 23 of the Financial Administration Act effecting a remission or remissions specified in the order of the Tribunal of any customs duties on an article that is a subject of the agreement; or

  • (e) the removal of import quotas or import licensing requirements.

Marginal note:Registration of modifications

• 87 (1) On application by the parties to a specialization agreement that has been registered, and after affording the Commissioner a reasonable opportunity to be heard, the Tribunal may make an order directing that a modification of the agreement be registered.

• Marginal note:Order to remove from register

  (2) Where, on application by the Commissioner, the Tribunal finds that the agreement or a modification thereof that has been registered

  • (a) has ceased to meet the conditions prescribed by paragraph 86(1)(a) or (b), or

  • (b) is not being implemented,

  the Tribunal may make an order directing that the agreement or modification thereof, and any order relating thereto, be removed from the register.

Marginal note:Right of intervention

88 The attorney general of a province may intervene in any proceedings before the Tribunal under section 86 or 87 for the purpose of making representations on behalf of the province.

Marginal note:Register of specialization agreements

• 89 (1) The Tribunal shall cause to be maintained a register of specialization agreements, and any modifications of those agreements, that the Tribunal has directed be registered, and any such agreements and modifications shall be included in the register for the periods specified in the orders.

• Marginal note:Public register

  (2) The register shall be accessible to the public.

Marginal note:Non-application of sections 45, 77 and 90.1

90 Section 45, section 77 as it applies to exclusive dealing, and section 90.1 do not apply in respect of a specialization agreement, or any modification of such an agreement, that is registered.

Agreements or Arrangements that Prevent or Lessen Competition Substantially

Marginal note:Order

• 90.1 (1) If, on application by the Commissioner, the Tribunal finds that an agreement or arrangement — whether existing or proposed — between persons two or more of whom are competitors prevents or lessens, or is likely to prevent or lessen, competition substantially in a market, the Tribunal may make an order

  • (a) prohibiting any person — whether or not a party to the agreement or arrangement — from doing anything under the agreement or arrangement; or

  • (b) requiring any person — whether or not a party to the agreement or arrangement — with the consent of that person and the Commissioner, to take any other action.

• Marginal note:Factors to be considered

  (2) In deciding whether to make the finding referred to in subsection (1), the Tribunal may have regard to the following factors:

  • (a) the extent to which foreign products or foreign competitors provide or are likely to provide effective competition to the businesses of the parties to the agreement or arrangement;

  • (b) the extent to which acceptable substitutes for products supplied by the parties to the agreement or arrangement are or are likely to be available;

  • (c) any barriers to entry into the market, including

    • (i) tariff and non-tariff barriers to international trade,

    • (ii) interprovincial barriers to trade, and

    • (iii) regulatory control over entry;

  • (d) any effect of the agreement or arrangement on the barriers referred to in paragraph (c);

  • (e) the extent to which effective competition remains or would remain in the market;

  • (f) any removal of a vigorous and effective competitor that resulted from the agreement or arrangement, or any likelihood that the agreement or arrangement will or would result in the removal of such a competitor;

  • (g) the nature and extent of change and innovation in any relevant market;

  • (g.1) network effects within the market;

  • (g.2) whether the agreement or arrangement would contribute to the entrenchment of the market position of leading incumbents;

  • (g.3) any effect of the agreement or arrangement on price or non-price competition, including quality, choice or consumer privacy; and

  • (h) any other factor that is relevant to competition in the market that is or would be affected by the agreement or arrangement.

• Marginal note:Evidence

  (3) For the purpose of subsections (1) and (2), the Tribunal shall not make the finding solely on the basis of evidence of concentration or market share.

• Marginal note:Exception where gains in efficiency

  (4) The Tribunal shall not make an order under subsection (1) if it finds that the agreement or arrangement has brought about or is likely to bring about gains in efficiency that will be greater than, and will offset, the effects of any prevention or lessening of competition that will result or is likely to result from the agreement or arrangement, and that the gains in efficiency would not have been attained if the order had been made or would not likely be attained if the order were made.

• Marginal note:Restriction

  (5) For the purposes of subsection (4), the Tribunal shall not find that the agreement or arrangement has brought about or is likely to bring about gains in efficiency by reason only of a redistribution of income between two or more persons.

• Marginal note:Factors to be considered

  (6) In deciding whether the agreement or arrangement is likely to bring about the gains in efficiency described in subsection (4), the Tribunal shall consider whether such gains will result in

  • (a) a significant increase in the real value of exports; or

  • (b) a significant substitution of domestic products for imported products.

• Marginal note:Exception

  (7) Subsection (1) does not apply if the agreement or arrangement is entered into, or would be entered into, only by parties each of which is, in respect of every one of the others, an affiliate.

• Marginal note:Exception

  (8) Subsection (1) does not apply if the agreement or arrangement relates only to the export of products from Canada, unless the agreement or arrangement

  • (a) has resulted in or is likely to result in a reduction or limitation of the real value of exports of a product;

  • (b) has restricted or is likely to restrict any person from entering into or expanding the business of exporting products from Canada; or

  • (c) has prevented or lessened or is likely to prevent or lessen competition substantially in the supply of services that facilitate the export of products from Canada.

• Marginal note:Exception

  (9) The Tribunal shall not make an order under subsection (1) in respect of

  • (a) an agreement or arrangement between federal financial institutions, as defined in subsection 49(3), in respect of which the Minister of Finance has certified to the Commissioner

    • (i) the names of the parties to the agreement or arrangement, and

    • (ii) the Minister of Finance’s request for or approval of the agreement or arrangement for the purposes of financial policy;

  • (b) an agreement or arrangement that constitutes a merger or proposed merger under the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act in respect of which the Minister of Finance has certified to the Commissioner

    • (i) the names of the parties to the agreement or arrangement, and

    • (ii) the Minister of Finance’s opinion that the merger is in the public interest, or that it would be in the public interest, taking into account any terms and conditions that may be imposed under those Acts;

  • (c) an agreement or arrangement that constitutes a merger or proposed merger approved under subsection 53.2(7) of the Canada Transportation Act in respect of which the Minister of Transport has certified to the Commissioner the names of the parties to the agreement or arrangement; or

  • (d) an agreement or arrangement that constitutes an existing or proposed arrangement, as defined in section 53.7 of the Canada Transportation Act, that has been authorized by the Minister of Transport under subsection 53.73(8) of that Act and for which the authorization has not been revoked.

• Marginal note:Where proceedings commenced under section 45, 49, 76, 79 or 92

  (10) 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 been commenced against that person under section 45 or 49; or

  • (b) an order against that person is sought by the Commissioner under section 76, 79 or 92.

• Marginal note:Definition of competitor

  (11) In subsection (1), competitor includes a person who it is reasonable to believe would be likely to compete with respect to a product in the absence of the agreement or arrangement.

Mergers

Marginal note:Definition of merger

91 In sections 92 to 100, merger means the acquisition or establishment, direct or indirect, by one or more persons, whether by purchase or lease of shares or assets, by amalgamation or by combination or otherwise, of control over or significant interest in the whole or a part of a business of a competitor, supplier, customer or other person.

Marginal note:Order

• 92 (1) Where, on application by the Commissioner, the Tribunal finds that a merger or proposed merger prevents or lessens, or is likely to prevent or lessen, competition substantially

  • (a) in a trade, industry or profession,

  • (b) among the sources from which a trade, industry or profession obtains a product,

  • (c) among the outlets through which a trade, industry or profession disposes of a product, or

  • (d) otherwise than as described in paragraphs (a) to (c),

  the Tribunal may, subject to sections 94 to 96,

  • (e) in the case of a completed merger, order any party to the merger or any other person

    • (i) to dissolve the merger in such manner as the Tribunal directs,

    • (ii) to dispose of assets or shares designated by the Tribunal in such manner as the Tribunal directs, or

    • (iii) in addition to or in lieu of the action referred to in subparagraph (i) or (ii), with the consent of the person against whom the order is directed and the Commissioner, to take any other action, or

  • (f) in the case of a proposed merger, make an order directed against any party to the proposed merger or any other person

    • (i) ordering the person against whom the order is directed not to proceed with the merger,

    • (ii) ordering the person against whom the order is directed not to proceed with a part of the merger, or

    • (iii) in addition to or in lieu of the order referred to in subparagraph (ii), either or both

      • (A) prohibiting the person against whom the order is directed, should the merger or part thereof be completed, from doing any act or thing the prohibition of which the Tribunal determines to be necessary to ensure that the merger or part thereof does not prevent or lessen competition substantially, or

      • (B) with the consent of the person against whom the order is directed and the Commissioner, ordering the person to take any other action.

• Marginal note:Evidence

  (2) For the purpose of this section, the Tribunal shall not find that a merger or proposed merger prevents or lessens, or is likely to prevent or lessen, competition substantially solely on the basis of evidence of concentration or market share.