Posted in Finance, Accounting and Economics Terms, Total Reads: 236
Definition: Canadian Competition Act
The Canadian competition Act, as the name suggests is a Canadian federal law to prevent consumer interests in Canada and promotion of ethical and healthy competition among the companies operating in Canada. It includes criminal and civil provisions to deal with anti-competitive practices in the market place.
The act provides people of Canada a market place which is fair and operates near perfect competition along with providing competitive product varieties. It also keeps a close watch and monitors mergers and acquisitions to make sure that it doesn’t hamper the economic growth of the country. Examples of mergers that may harm competition include a company’s acquisition of an increasingly dynamic competitor or potential market entrant, an acquisition that prevents or limits the introduction of new products, or the acquisition of an existing business by a company which, absent the merger, likely would have entered the same market. The law also aims at preventing anti-competitive practices in the market place, like selling products at extremely low prices.
The act also tries to put a check on cartel activity. A cartel is a group of competitors that agree to take actions to reduce competition with other members of the group. These agreements limit incentives for innovation and often result in higher prices for consumers. The Act proscribes cartel activity by prohibiting conspiracies to reduce competition. The Act also prohibits certain harmful distribution practices that occur when a supplier places conditions or restrictions on the supply of a product, or refuses to supply a product altogether. These types of activities are known as tied selling, market restriction, refusal to deal and exclusive dealing. Because they may not always be anti-competitive, they are considered reviewable practices. Tied selling is a coercive practice that occurs when a seller provides a product or service on the condition that the purchaser also buy a second product or service along with it.