How Much Competition is too Much?

The Canadian Competition Act is an act that is intended to protect Canadian consumers against anti-competitive business practices. It also aims at promoting healthy competition in the Canadian marketplace.

The act, which is set out in a single federal statute outlines several rules and regulations that encourage and maintain healthy competition. Here are some of the practices that lead to ‘too much’ competition in Canada:

1. Misleading advertisements

The Competition Act contains both criminal and civil provisions prohibiting misleading and deceptive advertising or other marketing techniques. Materially false or misleading statements, deceptive telemarketing, deceptive notices of winning a prize, bait and switch selling or double ticketing are forms of criminal and civil violations that are punishable under the Competition Act.

2. Bid rigging

Bid rigging is a form of collusion where the bid is promised to one party before the actual bid. It commonly occurs when:

  • Two or more persons agree that one or more of them will not submit a bid/tender, or will submit and then withdraw a bid/tender in response to a request for bids/tenders.
  • Bids/tenders are submitted on the basis of an agreement between two or more bidders.

Hence, bid rigging is a type of collusion that promotes anti-competitive spirit and thus is prohibited under the Competition Act.

3. Exclusive dealing

Exclusive dealing is where suppliers supply to consumers on a pre-agreed condition that they will only deal with them and their products. As per exclusive dealing, a consumer is refrained from dealing with other suppliers. Since this practice, leads to the creation of monopoly, it is an activity that is forbidden under the Competition Act.

4. Price maintenance (predatory pricing)

Price maintenance is a form of unfair pricing where the seller reduces the price significantly to a price much below the current market price. Such pricing strategy is called predatory pricing and is a common type of unfair pricing that is commonly used by sellers to reduce competition.

5. Abuse of dominance

When firms occupy a dominant position in the market, they tend to engage in activities that eliminate competition. Such activities deter new firms to enter the market or existing firms to continue operations. Thus, abuse of dominance is an anti-competitive practice that is punishable under the Competition act of Canada.

A properly developed Competition Act like that of Canada’s is highly beneficial to a variety of businesses. Not only does it reduce the risk of malpractices, but also empowers individuals to sue wrongdoers. So, if you have witnessed a company or a group of companies indulging in anti-competitive activities, act against it with our help.