On January 4, 2016, the Competition Tribunal (the “Tribunal”) released its first decision in respect of a refusal to deal case in almost 5 years. Indeed, the Tribunal dismissed Audatex Canada’s (“Audatex”) application for leave to bring a refusal to deal application under section 75 of the Competition Act (the “Act”) against CarProof and Markplaats, the owners of the AutoTrader and Kijiji websites, respectively. In doing so, it held that Audatex did not meet the appropriate test to grant leave. In other words, the Tribunal found that Audatex did not provide sufficient and credible evidence that it was: (1) directly and substantially affected in its business by CarProof and Markplaat’s refusal to deal; and (2) the conduct at issue could not establish all 5 elements of section 75 of the Act.
Audatex provides data and software solutions to Canadian automobile insurance companies and automobile repair shops in order to streamline the accident claims process. In that regard, it uses automobile sales listings to create total and partial loss valuations to determine the market values of damaged automobiles for its insurance company customers.
Audatex argued that AutoTrader and Kijiji were the two largest generators of listings data and that Audatex required each’s listings in order to effectively provide its total loss valuation services. Audatex also argued that, although it did not require the listings data for its partial loss valuation business, it would lose its partial loss valuation customers if it could not provide both services.
In refusing to grant Audatex’s application, the Tribunal examined both the leave (103.1(7)) and refusal to deal (75(1)) provisions of the Act. After considering these provisions, the Tribunal noted that it is not sufficient that the evidence show a mere possibility that the business may be directly and substantially affected—the applicant must establish the existence of reasonable grounds to believe that the refusal to supply will have a substantial effect.
Moreover, the Tribunal noted that demonstrating that a supplier has refused to supply a particular product to a customer is not sufficient. Instead, the applicant must make out all of the elements of section 75 before leave may be granted:
- a person is substantially affected in his business or is precluded from carrying on business due to his inability to obtain adequate supplies of a product anywhere in a market on usual trade terms,
- the person referred to in paragraph (a) is unable to obtain adequate supplies of the product because of insufficient competition among suppliers of the product in the market,
- the person referred to in paragraph (a) is willing and able to meet the usual trade terms of the supplier or suppliers of the product,
- the product is in ample supply, and
- the refusal to deal is having or is likely to have an adverse effect on competition in a market.
After examining the affidavit evidence of the parties, the Tribunal held that Audatex provided insufficient credible evidence to provide reasonable grounds to believe that it was directly and substantially affected in its business by the refusal to deal. The Tribunal also held that the entirety of the applicant’s business must be considered and not just the affected product line. In Audatex’s case, the Tribunal concluded that the loss of the total loss valuation service (or approximately 25 percent of its business) resulting from the refusal to supply was not adequate to demonstrate the substantial effect necessary to obtain leave.
The Audatex case demonstrates that parties remain willing to avail themselves of the private right of action provisions under the Act where they think it they have been competitively harmed. It also reiterates the stringent test the Tribunal will apply in considering whether to grant leave for such actions.