INDEPTH: COMPETITION BUREAU
The Competition Bureau
CBC News Online | May 26, 2004
What is it?
The Competition Bureau was set up by the federal government to ensure that the "Canadian marketplace operates in a fair and competitive manner." Its job is to administer and apply the rules and regulations contained in the following pieces of legislation:
- The Competition Act.
- The Consumer Packaging and Labelling Act.
- The Textile Labelling Act.
- The Precious Metals Marking Act.
What does it do?
Put simply, the Competition Bureau is there to respond to consumer complaints about issues such as false advertising and unfair pricing practices. If enough people complain that a product does not perform as advertised, the bureau may investigate.
Or, if there are complaints by individuals or companies that a company – or group of companies – is trying to control the price of a product, the bureau may get involved. An example of this is the periodic investigation the board conducts into collusion in the setting of gasoline prices.
It also often gets involved when one company buys another. An example would be when a media company buys another media company. If the sale leaves the buying company with, for instance, two television stations in the same market, the bureau might approve the sale only if the buying company sells one of those stations.
The Competition Bureau also issues consumer warnings from time to time through news releases and on its website. Examples of these are warnings about work-at-home schemes that promise substantial income and "bait and switch" promotions, in which a store may advertise a certain product as being on sale, but when you get to the store that product is "not available" and you are encouraged to buy another – more expensive – model.
How is it organized?
The Competition Bureau is made up of seven branches:
- The Fair Business Practices Branch was set up to promote fair competition in the marketplace by discouraging deceptive business practices and by encouraging the provision of sufficient information to enable informed consumer choice. It is the largest branch of the Competition Bureau. The vast majority of complaints – such as misleading advertising and price-fixing – received by the bureau go to this branch.
- The Civil Matters Branch investigates competition cases that may wind up before the Competition Tribunal, such as complaints that a company is abusing its dominant position in the marketplace, or when a firm restricts which companies it will do business with.
- The Communications Branch publicizes the work of the bureau.
- The Competition Policy Branch advances the bureau's interests in international co-operation, negotiations and policy development. It provides economic advice and expertise.
- The Compliance and Operations Branch is responsible for the development of the bureau's compliance program, the enforcement policy, communications and public education.
- The Criminal Matters Branch investigates allegations of criminal offences including conspiracy to fix prices, price discrimination and predatory pricing, price maintenance and bid rigging.
- The Mergers Branch deals with mergers of companies.
What is the Competition Tribunal?
It's the body that hears complaints the Competition Bureau decides require further investigation. Normally, only the bureau decides which cases will go before the tribunal. But in a limited number of situations – such as matters regarding refusal to deal, tied selling, exclusive dealing and market restrictions – private parties are allowed to apply directly to the tribunal to be heard.
The tribunal has the power to impose fines and issue orders – such as forcing a company to publish notices correcting its false advertising.
The tribunal can also issue interim orders against a company while a complaint is still being investigated.
What are some examples of decisions the bureau has released?
In November 2003, HMV Canada filed a complaint against electronics retailer Best Buy Canada and TGA Entertainment over the distribution of the Rolling Stones Four Flicks DVD set. HMV argued a deal between Best Buy and TGA making Best Buy the only retailer to carry the product contravened the Competition Act by denying access to supply of a product and reducing competition at the retail level. The bureau dismissed the complaint, ruling that lots of Rolling Stones material was available at many retailers.
On May 31, 2002, the Competition Tribunal found that an Edmonton-based company – PVI International – made false or misleading claims about a "gas-saving" device it sold. The company claimed the Platinum Vapour Injector saved drivers up to 22 per cent in fuel costs. The tribunal ordered the company's two owners to pay fines of $25,000 each. It also ordered the company to stop making its claims about the product for 10 years.
In the spring of 1996, following a series of gasoline price increases, several people complained to the board that there was a national conspiracy to fix gas prices. The board investigated and concluded that retail gas prices across the country rose in accordance with the rise in the price of crude oil. The board also found that "while gasoline prices may arguably respond quicker to crude oil price increases than decreases, the response is so quick that any cost to consumers was negligible. Third, there are competitive reasons for similar pricing in local markets and evidence gathered in these inquiries suggest that gasoline markets are competitive."
High gasoline prices is one of the most common complaints the bureau deals with. It has investigated the issue several times – and has always concluded that market forces are responsible for fluctuations in the price of gas.
Between Oct. 26, 1999, and March 30, 2000, the bureau fined several international drug and chemical companies almost $7 million for their involvement in an international price fixing scheme involving bulk vitamins.
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