In this case, the Federal Court of Appeal clarified the legal approach to determining the existence of a "refusal to deal" under section 75 of the Competition Act, RSC 1985, c C-34.
In New Brunswick and other provinces, chickens are produced under a system of supply management, and marketing boards establish both the production quota for each province and a minimum price that producers in the province may accept when selling chickens. Inter-provincial trade in chickens is permitted, but marketing boards may intervene to prevent such trade. Deferring to the Competition Tribunal’s findings of facts and upholding its analytical approach, the Court of Appeal held that the appellant had not established that: 1) live chickens (the product) were in inadequate supply because of insufficient competition; 2) live chickens are in ample supply; and 3) the refusal to deal is having or is likely to have an adverse effect on competition in a market.
On the conclusion that the supply management system precluded an ample supply, the Court restated the test for “ample supply” as: “a product is in ample supply when producers of that product have the capacity to increase production in a timely way to meet increases in demand for the product.” For the adverse impact on competition in a market, the Court rejected the appellant’s argument that this element could relate to the same “relevant market” that was considered in the first two elements of section 75 (here, the upstream market for live chickens), holding that it would be redundant to require evidence of distortion in a market already marked by insufficient competition and that this final element must relate to an adverse impact on competition in a different market (here, the downstream market for processed chickens).
June 2, 2011
Link to Decision
Grant Bishop
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