Competition Tribunal Rules in Favour of Canada Pipe in Abuse of Dominance Case

On February 14, 2005, the Competition Tribunal released its long awaited decision in the abuse of dominance and exclusive dealing case brought by the Commissioner of Competition against Canada Pipe Co. Ltd., a Canadian manufacturer of cast iron drain, waste and vent (DWV) products. In the first fully contested abuse of dominance case to be decided in seven years, the Competition Tribunal found in favour of Canada Pipe and dismissed the Commissioner\'s application.

The Commissioner filed an application with the Competition Tribunal in October 2002 under the abuse of dominance and exclusive dealing provisions of sections 77 and 79 of the Competition Act. The application sought an order (i) prohibiting the continuation of Canada Pipe’s Stocking Distributor program (SDP); and (ii) prohibiting Canada Pipe from completing any acquisitions in the Canadian cast iron DWV industry for the next three years. The Commissioner alleged that the SDP and prior acquisitions by Canada Pipe amounted to a practice of anti-competitive acts contrary to the Act.

The SDP offers distributors quarterly and annual rebates, as well as point of purchase discounts should they purchase all of their cast iron DWV product needs from Canada Pipe. While the Tribunal found that Canada Pipe occupied a dominant position in the relevant markets, it nonetheless held that Canada Pipe’s Stocking Distributor Program (SDP) did not constitute an anti-competitive act and did not result in a substantial lessening or prevention of competition. As a result, Canada Pipe can continue to offer the SDP to its distributors.

On March 7, 2005, the Commissioner announced that she has appealed the Tribunal’s decision to the Federal Court of Appeal.

Canada Pipe was represented throughout the investigation and litigation by Davies Ward Phillips & Vineberg LLP. The litigation team was led by senior litigation partner Kent Thomson, and included George Addy, Edward Babin, Milos Barutciski, James Doris, Anita Banicevic, Davit Akman and Charles Tingley. Competition partners Milos Barutciski and Anita Banicevic also represented Canada Pipe during the Commissioner’s investigation prior to the commencement of the litigation.

The Commissioner of Competition was represented by John Campion and Nicole Samson of Fasken Martineau DuMoulin LLP; Donald Rennie, Graham Law and Catherine Lawrence of the Department of Justice; and a team of Competition Bureau officers.