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Beginning in 2000, the Commissioner of Competition began a formal inquiry under the Competition Act (the "Act") into a loyalty-based rebate program offered by Bibby Ste-Croix, a division of Canada Pipe Co. Ltd. A long standing client of Davies, Canada Pipe asked us to help respond to the Competition Bureau’s investigation. Over the course of the next five years, Davies' competition and litigation lawyers worked with Canada Pipe to respond to the investigation and when the time came, challenge the allegations made by the Commissioner. The Commissioner’s investigation eventually culminated in a contested proceeding before the Competition Tribunal where the Tribunal ultimately decided in favour of Canada Pipe and dismissed the Commissioner’s case.

A Canadian manufacturer of drain, waste and vent (“DWV”) products, Bibby Ste-Croix offers a loyalty-based rebate program to its distributors (referred to as the "Stocking Distributor Program" or "SDP"). 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. Canada Pipe views this rebate program as necessary for the company to remain competitive in the face of increased domestic and import competition.

In her notice of application to the Competition Tribunal filed in October 2002, the Commissioner asked that: (i) Canada Pipe be required to abandon its SDP, alleging that it contravened the Act's abuse of dominance and exclusive dealing provisions; and (ii) Canada Pipe be prevented from completing any acquisitions in the Canadian cast iron DWV industry for the next three years, alleging that Canada Pipe had abused its dominant position through previous acquisitions.

After five years of investigation and two years of proceedings before the Competition Tribunal, the Competition Tribunal found in favour of Canada Pipe and dismissed the Commissioner’s allegations. In its recently released reasons, the Tribunal held that the SDP is not anti-competitive and had not resulted in a substantial lessening of competition. As the first fully contested abuse of dominance case to be decided in seven years, this case serves as an important confirmation that in the absence of compelling evidence of anti-competitive intent and effect, competition and even aggressive competition should not be discouraged under the Act. The outcome also illustrates the expertise of Davies' litigation and competition teams in helping clients such as Canada Pipe to defend themselves against proceedings involving the Competition Bureau.

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2005