Court of Appeal Declares Cease and Desist Powers of Competition Commissioner Unconstitutional

Air Canada has welcomed the decision by the Quebec Court of Appeal striking down as unconstitutional a provision of the Competition Act introduced in 2000 which provided the Commissioner of Competition with unfettered power to issue cease and desist orders against alleged anti-competitive acts of a dominant air carrier.

The Court issued the declaration requested by Air Canada that Section 104.1 of the Competition Act is inoperative in that it conflicts with the due process provisions afforded by the Canadian Bill of Rights.

Section 104.1 afforded the Commissioner of Competition the ability to issue a temporary order against a dominant carrier for alleged anti-competitive behavior without any requirement to first obtain the approval of an impartial and independent adjudicative authority and without having allowed Air Canada the opportunity to be heard prior to issuing such an order.

Air Canada has consistently asserted, from the introduction of the legislation in 2000 through the passage of Bill C-23 in 2002, that this unfettered power residing with the Commissioner was inappropriate and indeed unconstitutional.

"We welcome and embrace the decision of the Quebec Court of Appeal and its ruling that the Commissioner cannot, in effect, act as both investigator and judge," said John M. Baker, Senior Vice-President & General Counsel of Air  Canada. "It fully supports the position that we and others interested in the protection of due process in Canada have expressed to legislators since the introduction of this overreaching, highly damaging and completely unchecked power granted to the Commissioner," he said. "We hope that this represents an important first step in reasserting the need for judicial safeguards to protect the legitimate interests and conduct of parties engaged in appropriate and necessary competition," Mr. Baker concluded.

BACKGROUND

In October 2000, in response to a complaint by an air carrier, the Competition Commissioner issued a temporary order against Air Canada's offering of certain competitive fares on five specific routes: Ottawa-Halifax, Ottawa-Windsor, Toronto-Windsor, Halifax-St. John's and Halifax-Montréal.

The order required that Air Canada cease and desist from offering certain specific discounted fares on those routes on the grounds that offering these fares could possibly constitute an anti-competitive act and that the complainant could be eliminated as a competitor in the absence of a temporary order.

Air Canada stated that its fare initiative on the five routes in question was entirely consistent with its longstanding policy of offering competitive pricing in all markets served. The fares were introduced on a limited, flight-specific basis only, consistent with similar initiatives to maintain competitive fares in the marketplace, which are of benefit to consumers.

Air Canada stated at that time its intent to vigorously challenge the issuance by the Commissioner of Competition of the temporary order before the Quebec Superior Court.