Reviewable Marketing Practices in Canada

• Author: Bruce C. McDonald
• Published date: 01 December 1977
• Date: 01 December 1977
• DOI: 10.1177/0003603X7702200404
• Subject Matter: Article

REVIEWABLE MARKETING PRACTICES IN

CANADA

by

BRUCE

C.

McDoNALD·

A.

OUTLINE

OF

THE

NEW

.J

URISDICTION

It

is probably a

fair

generalization to

say

that

only two

fundamental changes have taken place

during

the

last

hundred

years in the Canadian approach to competition policy. The

first was in 1889 when

Parliament

decided

that

freedom of

trade

and

freedom of contract no longer included the freedom

of businessmen to stifle competition by

entering

agreements

concerning prices, output, marketing

and

so on. This general

approach to competition policy, namely, of using the criminal

law to prohibit specified types of

restraints,

was subsequently

applied to mergers, monopoly power, price discrimination

and

price maintenance.

The second fundamental change,

and

it

may

only be a

matter

of degree, was in essence recommended in 1969 by the

Economic Council

report'

and given

partial

effect in 1976 by

the

Stage

Iamendments to the Combines Investigation Act."

It

was an

attempt

to move positively, on a case-by-case basis,

to

restore

or stimulate competition in

particular

markets

without condemning as criminal or unreasonable the conduct

that

contributed to the lack of competition. This new ap-

proach is exemplified by the

Part

IV.1 jurisdiction conferred

upon the Restrictive

Trade

Practices Commission over

certain

types of marketing practices.

The practices which

are

the subject of

Part

IV.1

are

com-

monly adopted from time to time by suppliers to ensure the

type of marketing

that

most effectively meets their

prefer-

ences

and

commercial objectives:

>II<

Lang, Michener, Cranston, Farquharson &Wright, Toronto,

Canada.

801

802

THE

ANTITRUST

BULLETIN

1. Refusing to supply certain buyers or types of buyers

for any of a host of reasons, one of which may be to

give effect to a system of exclusive distributorships.

2. A system of consignment selling.

3. Exclusive dealing, in the sense that the supplier re-

quires the customer to obtain supplies only from him

or from named suppliers. This may for example be an

important

part

of a franchising program.

4. Restricting the market, either by

area

or class of

customer or use, in which a customer can deal in the

product supplied to him.

5. Tying the supply of one product to the supply of

another, so that if the customer takes one he must

take the other or others.

These types of distribution relationships

...

~~ween

supplier

and customer

are

now subject to prohibitory or other order

on a case-by-case basis, by the Commission, by reason of the

effect they have in a particular market or on a particular

person, or by reason of the supplier's purpose in adopting

the practice. According to the 'Minister, the "very fundamen-

tal principle" of the amendments was to benefit consumers

and small businessmen.' The reviewable practices do not

involve (horizontal) relationships between competitors, which

has been the classic and historic emphasis of combines law.

Each of the reviewable practices, and the Commission's

jurisdiction over it, will be examined in greater detail,' but

some of the general and important characteristics should be

clearly understood first.

1. The reviewable practices

are

not criminal offenses.

Regardless of the Commission's jurisdiction to review

a. particular instance of the practice, asupplier is

perfectly free to engage in the practice until and to

the extent

that

he may be specifically prohibited from

continuing to do so in the future. Breach of a

Com-