Strategic Alliances - Part 3: Application of the Competition Act

3.1 General Remarks
3.2 Provisions Most Relevant to Strategic Alliances

• 3.2.1 Conspiracy Provisions
  • 3.2.1.1 Defences and Exceptions
  • 3.2.1.2 Information Sharing
• 3.2.2 Export Consortia Provisions
• 3.2.3 Specialization Agreement Provisions
• 3.2.4 Merger Provisions
• 3.2.5 Joint Venture Provisions
• 3.2.6 Abuse of Dominant Position Provisions

3.1 General Remarks

A fundamental objective of the Act, as highlighted by its purpose clause, is to foster competition so that Canadian businesses become more efficient and are better able to adapt to changing markets both at home and abroad. In Canada, our small and geographically sparse markets have often resulted in firms that, though large relative to the domestic market, are small by world standards. In an age of increasing international competitive pressures, globalization of markets, and generally decreasing trade barriers, there is a continuing requirement for Canadian business to become more efficient. This is recognized both in Canada's competition legislation and in the Bureau's enforcement approach.

At the same time, a fundamental premise of the law is that firms independently operating in an unrestrained market system are best able to meet the constant pressure to innovate, improve and adjust to changing consumer demands and market conditions. This is the best means of allocating our economic resources. In an effort to balance these two principles, the Act principally seeks to prevent those business practices which unduly or substantially lessen or prevent competition and so diminish the efficiency and competitiveness of the Canadian economy. The Act also contains certain provisions which do not involve any test of market power. These include bid-rigging, certain types of agreements among federal financial institutions, price maintenance and consignment selling.

Strategic alliances may come to the Director's attention either through the parties to the alliance, a complaint, media reports or staff research. In each of these instances, Bureau staff carry out a preliminary examination and determine whether further action is warranted. (note 2) If, upon further examination, the Director believes on reasonable grounds that there has been a contravention of the criminal or civil reviewable provisions of the Act or of an outstanding order made under the Act, the Director is required to commence an inquiry. (note 3) All inquiries are conducted in private. Once an inquiry has begun, the Director has access to a number of investigative tools.

At any stage of an inquiry relating to the criminal provisions of the Act, the Director may refer a matter to the Attorney General. The Attorney General determines whether charges should be laid and conducts prosecutions or such action as the Attorney General may wish to take. In the case of an inquiry into a civil reviewable matter, the Director may apply to the Competition Tribunal for a remedial order. (note 4) The Tribunal may issue orders designed to remedy the effects of the conduct in question, but it cannot fine firms or take other punitive action. Private rights of civil action are also available to anyone who has suffered losses or damages as a result of a violation of the criminal provisions of the Act or contravention of an order issued under the Act.