The Law and Economics of Canadian Competition Policy

The Law and Economics of Canadian Competition Policy

Michael Trebilcock
Ralph A. Winter
Paul Collins
Edward M. Iacobucci
Copyright Date: 2002
Pages: 816
https://www.jstor.org/stable/10.3138/9781442681606
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  • Book Info
    The Law and Economics of Canadian Competition Policy
    Book Description:

    Offering a unique cross-disciplinary approach to scholarship in law and economics, this much-needed work expounds and critically evaluates all of the major doctrines of Canadian competition policy. The topics addressed, each in a separate chapter, include: Canadian competition policy in an historical context; basic economic concepts; multi-firm conduct; horizontal agreements; the merger review process; predatory pricing and price discrimination; vertical restraints; intra-brand competition; inter-brand competition; abuse of dominance; competition policy and intellectual property rights; competition policy and trade policy; competition policy and regulated industries; and enforcement.

    The treatment of each substantive topic is organized first around a discussion of the relevant body (or bodies) of economic theory and then the pertinent bodies of legal doctrine, including case law. Each chapter contains a critique of existing law in light of contemporary economic theory. This is the only book available that offers an up-to-date integrated analysis of economic theory and legal doctrine in the context of Canadian competition policy.

    eISBN: 978-1-4426-8160-6
    Subjects: Law

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Acknowledgments
    (pp. vii-2)
  4. ONE Canadian Competition Policy in Historical Perspective
    (pp. 3-36)

    Competition or antitrust policy, at least in its broad strokes, has always been a matter of high politics, implicating both influential and often divergent economic interests and contested values, ideas, or ideologies relating to political economy that societal institutions – law making, law enforcement, and legal adjudication and interpretation – have been called upon to mediate. Modern competition or antitrust law belongs primarily to the family of legislative reactions to the upheavals of successive industrial revolutions, the first of which began in Britain in the eighteenth and early nineteenth centuries. Other members of the family include parliamentary reform, factory acts,...

  5. TWO Basic Economic Concepts in Competition Policy
    (pp. 37-85)

    Competition policy addresses basic economic questions, such as whether a particular trade practice is designed to promote the efficient delivery of a product to customers or to exclude potential rivals from the market, or whether a prospective merger will enhance or diminish the economic performance of an industry. The language of theCompetition Actreflects the underlying economic content of the law and application of the Act often revolves around the economic evidence and economic analysis necessary to address the questions at issue. In Canada as in the United States, economic theory and evidence play a much more central role...

  6. THREE Multi-firm Conduct: Horizontal Agreements
    (pp. 86-130)

    The prohibition against price fixing and other forms of anticompetitive horizontal arrangements lies at the core of competition policy in virtually all sophisticated competition law jurisdictions.¹ This apparent consensus in the treatment of such arrangements is largely motivated by the economic rationale, discussed below in this chapter, which underlies these laws. Specifically, such arrangements typically result in a misallocation of resources by consumers to the point at which at least some consumers are forced out from the market, resulting in a ʹdeadweightʹ social loss.² For example, in the case of cartels, gains from economies of scale or scope are rarely...

  7. FOUR The Merger Review Process
    (pp. 131-287)

    Merger law differs from other areas of competition policy in that ʹit is prophylactic in nature: rather than attempting to control the exercise or abuse of market power, it seeks to prevent its creation in the first place.ʹ¹ Competition policy on horizontal mergers is based on the proposition that an increase in concentration in a market can lead to an increase in market power. The consequences of increased market power are higher prices, resulting in inefficiently low market output levels as well as wealth transfers from buyers to sellers. In this chapter, we first develop the economic foundation for this...

  8. FIVE Predatory Pricing and Price Discrimination
    (pp. 288-372)

    While definitions of the practice vary, Joskow and Klevorick provide a useful working definition of predatory pricing: ʹPredatory pricing behavior involves a reduction of price in the short run so as to drive competing firms out of the market or to discourage entry of new firms in an effort to gain larger profits via higher prices in the long run than would have been earned if the price reduction had not occurred.ʹ¹

    Predatory pricing has given rise to considerable controversy. Despite its intuitive appeal as a profitable strategy for a firm seeking market power, a significant amount of commentary suggests...

  9. SIX Vertical Restraints: Intrabrand Competition
    (pp. 373-438)

    Vertical restraints represent an area of active research in economics and continuing controversy in competition law. This chapter reviews the law and economics of vertical restraints that tend not to exclude suppliers of rival product brands, but rather limit competition among downstream suppliers of a particular brand. We will review the law and economics of resale price maintenance, exclusive territories, and refusals to deal. Resale price maintenance (RPM) occurs where an upstream firm, often a manufacturer, sets a specific price (or price floors or ceilings) at which downstream firms, often retailers, are permitted to sell its products. Exclusive territories, or...

  10. SEVEN Vertical Restraints: Interbrand Competition
    (pp. 439-503)

    In the context of competition law, vertical restraints may be divided into two categories. One category, vertical restraints onintrabrandcompetition, refers to restraints imposed by an upstream supplier on downstream distributors or retailers of its products that affect competition among these distributors or retailers. Conduct of this kind includes resale price maintenance and territorial restraints. The second category, vertical restraints oninterbrandcompetition, refers to restraints imposed by upstream suppliers on downstream firms that potentially affect the degree of competition among upstream suppliers and their rivals. Where Chapter 6 is dedicated to vertical restraints on intrabrand competition, this chapter...

  11. EIGHT Abuse of Dominance
    (pp. 504-572)

    The law of abuse of dominance has evolved considerably in Canada. A prohibition of monopolies was first introduced in theCombines Investigation Actof 1910¹ and remained largely unchanged until theCompetition Actof 1986.² The law prior to 1986 criminalized monopoly. Section 33 of theCombines Investigation Act of 1970³ provided that, ʹ[e]very person who is a party or privy to or knowingly assists in, or in the formation of, a merger or monopoly is guilty of an indictable offense ...ʹ Monopoly was defined in section 2 of theCombines Investigation Act of 1970as: ʹ[A] situation where one...

  12. NINE Competition Policy and Intellectual Property Rights
    (pp. 573-639)

    The legal and policy issues raised by intellectual property (IP) have attracted increasing attention from policy makers around the world. Modern advances in technology have created classes of products and processes that present new challenges for patent and competition authorities. Moreover, markets have changed. With the elimination of many barriers to trade, survival in highly competitive global markets depends on the development or adoption of state-of-the-art technologies. These changes have necessitated a re-evaluation of the laws that affect the development and diffusion of innovations, namely IP and competition laws.²

    An inherent tension exists between competition and patent laws, as described...

  13. TEN Competition Policy and Trade Policy
    (pp. 640-689)

    The United States and Canada have had domestic competition laws for more than a century. For many other industrialized countries, and for the European Union, competition laws are a much more recent phenomenon (adopted largely after the Second World War). Almost half the members of the General Agreement on Tariffs and Trade / World Trade Organization (GATT/WTO), including many developing countries, have no competition laws at all and may, in many cases, lack the institutional capacity to implement and administer an effective domestic competition law regime.² Among member countries with such laws, there are significant substantive, institutional, and procedural differences.³...

  14. ELEVEN Competition Policy and Regulated Industries
    (pp. 690-735)

    Under the Canadian federal system, the power to legislate and regulate is granted to either the provinces or the federal government under sections 91 and 92 of the constitution.¹ However, the delineation of powers provided within theConstitution Actdoes not prevent overlap between provincial and federal jurisdictions and as such does not prevent citizens and firms from facing conflicting provincial and federal statutes, which cannot both be followed. Since it is unreasonable to leave in place two sets of regulations where one prescribes what the other prohibits, it was necessary to develop a method for dealing with situations where...

  15. TWELVE Enforcement
    (pp. 736-782)

    TheCompetition Act(the ʹActʹ)¹ may be enforced in many ways, public and private, voluntary and involuntary. This range of possibilities is necessary given the broad scope of conduct that may be impugned. Under the Act there are five primary competition law enforcement actors: the commissioner of competition; the attorney general of Canada; the Competition Tribunal; private litigants; and the courts. The minister of industry, whose ministry is ultimately responsible for the Act, has only a marginal role in the process.²

    The role of each of these enforcement actors will be addressed throughout this chapter, which is structured as follows....

  16. Subject Index
    (pp. 783-792)
  17. Table of Cases
    (pp. 793-804)