Antitrust and Sports in Canada

• Pages: 131-151

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CHAPTER VI

ANTITRUST AND SPORTS IN CANADA

A. Introduction to Canadian Competition Law

The Competition Act

1

(formerly the Combines Investigation Act

2

) is

Canada’s principal competition legislation. Administered and enforced

by the Commissioner of Competition,

3

the Competition Act in many

respects is similar to United States antitrust laws.

4

The principal

difference between sports competition law in Canada and the United

States is that the Competition Act, unlike the Sherman Act, contains

provisions specifically addressing professional and amateur sports.

5

Despite these specific provisions, however, the body of sports

competition law in Canada is substantially less developed than in the

United States.

B. The Competition Act and Sports

1. Background

Prior to 1976 the sports industry was effectively exempt from

Canadian competition law. The relevant statute at the time covered only

1

. R.S.C. 1985, c. C-34 (Can.), as amended. For a more detailed discussion

of the Competition Act and Canadian co mpetition law and policy, see

JAMES MUSGROVE, FUNDAMENTALS OF CANADIAN COMPETITION LAW

(2d ed. 2010) and COMPETITION LAW OF CANADA (Calvin S. Gold man &

John D. Bodrug, eds., 2013).

2

. R.S. c. C-23 1976 (Can.).

3

. The Commissioner heads the Co mpetition Bureau (the “Bureau”), a

branch of the federal Dep artment of Industry. The Commissioner is an

appointee of the Federal Cabinet, referred to in Canada as the “Governor

in Council.” See Competition Act, R.S.C. 1985, c. C-34, § 7 (Can.).

Further details regarding the structure and operation of the Bureau are

available on its website: http://www.competitionbureau.gc.ca.

4

. Liz Larson, Note, More than J ust Spelling: How Differences in

Interna tional Labor Laws Crea te Barrier s to Expansion of the American

National Sports Leagues into Eur ope Intercollegiate Sports, 11 VA.

SPORTS & ENT. L.J. 288, 306 (2011).

5

. 2 WISE & MEYER, supra Chapter IV, note 141, at 792.

132 Sports and Antitrust Law

conduct involving the manufacture and sale of “articles.”

6

Because sports

were classified as a “service” rather than an “article,” the business of

sports fell outside the scope of conduct covered by the act.

7

In 1976

Canada’s competition legislation was amended to expand its application

to “services” as well as “articles”,

8

closing the gap in Canadian

competition law and bringing the sports industry within its purview.

9

While the 1976 amendments were under consideration, concerns

were raised about exposing the sports industry to potential prosecution

for illegal concerted action. In testimony before a committee of the

Canadian Senate considering the proposals Clarence Campbell, then

President of the National Hockey League (NHL), argued that “it is hard

to conceive of a single regulation or rule in professional sports which is

not basically in direct contravention of the literal text of the [conspiracy

prohibition].”

10

In response to these concerns special provision was made

6

. Combines Investigation Act, R.S.C. 1970, c. C-23.

7

. J.C.H. Jones & D.K. Davies, Not Even Semitough: Professional Sport

and Canadian Antitrust, 23 ANTITRUST BULL. 713, 713 n.2 (1978). T he

competition legislation at the time was called the Combines Investigation

Act [“Combines Act”].

8

. R.S. 1976, c.76, §§ 2, 15 (Can.).

9

. Dep’t of Consumer & Corpor ate Affairs (Can.), Pr oposals for a New

Competition Policy for Cana da: First Stage 49-52 (1973) [hereinafter

Proposa ls]. Pursuant to section 2 of the Competition Act, “service” is

defined as “a service of any d escription whether industrial, trade,

professional or otherwise”; “article” is defined as “real and personal

property of every description”; and “product” is defined to include a n

“article” and a “service”. R.S.C. 1985, c. C-34, § 2 (Can.).

10

. Stephen F. Ross, The NHL Labour Dispute and the Common Law, the

Competition Act, an d Public P olicy, 37 U.B.C. L. REV 343, 373 n.118

(2004) (emphasis omitted) (quoting Proceedings of Standing Senate

Committee on Banking, Trade and Commerce, Issue No. 5, Nov. 13,

1974, at 21-22 (Can.) (testimony of Clarence Campbell, President,

NHL)). For example, in testimony before the Senate Committee

considering the amendments, the Minister of Consumer and Corporate

Affairs, who was responsible for Canadian co mpetition policy at the time,

stated: “‘Everyone would object to it if, because [the Combines Act]

includes services in Canada i t would no longer be possible for Montreal

or Toronto teams to assemble a group of players into a tea m playing in a

league and make arrangements or regulations for the playing of hockey,

football or other sports.’” J. Kevin Wright & Jonathan Gilhen, A Note on

U.S. Antitrust Law and Professional Sport: American Needle and the

Implications for Ca nadian Competition La w, CAN. COMPETITION REC.,

Winter 2010, at 66, 80 n.47 (quoting Pro ceedings of Standing Senate