Two’s Company; Three’s A Crowd – Competition Tribunal Okays Vancouver Airport Authority’s Ability to Limit Number of In-Flight Caterers
October 18th, 2019
The Canadian Competition Tribunal released a summary of its decision in The Commissioner of Competition v. Vancouver Airport Authority where it dismissed an application brought by the Commissioner of Competition to restrain the Vancouver Airport Authority from limiting the number of providers of in-flight catering and galley handling services for planes.
This limit, the Commissioner argued, prevented and lessened competition substantially. The Commissioner sought an order prohibiting the Vancouver Airport Authority from directly or indirectly engaging in this exclusionary practice and requiring it to authorize airside access to any in-flight catering firm that met health, safety, security and performance requirements.
The Tribunal can prohibit an abuse of dominant position under the Competition Act where one or more persons substantially or completely control a class or species of business and they have engaged in anti-competitive acts (such as excluding competing in-flight catering firms from being able to operate at the airport), and those anti-competitive acts are having the effect of preventing or lessening competition substantially in a market.
The Vancouver Airport Authority had claimed that it could rely on the “regulated conduct doctrine,” to shield it from liability. That doctrine is invoked by public bodies where a validly enacted statute, regulation or subordinate legislative instrument requires, directs, mandates or authorizes them to engage in anti-competitive conduct. The Tribunal held that, for the purposes of an abuse of dominant position application, no such defence exists for public bodies. It also noted that there were no statutes, regulations, or other statutory instruments that required the Vancouver Airport Authority to restrict in-flight catering firms in this case in any event.
The Tribunal found that the Vancouver Airport Authority completely dominated the market for galley handling services at the airport and that it had a competitive interest in that market, even though it did not actually compete in it. Its conduct was thus, captured under the abuse of dominant position provisions of the Competition Act. But, the Tribunal unanimously concluded that the Vancouver Airport Authority had a legitimate business justification for engaging in the conduct that excluded other in-flight catering firms, such as the practical considerations associated with multiple operators using limited airport facilities. The choice to limit the number of operators was not meant to be anti-competitive, as contemplated by paragraph 79(1)(b) of the Competition Act, and was sufficient to dismiss the Commissioner’s application.
Fatally, the Tribunal found that the conduct in question did not prevent or lessen competition substantially in the market for galley handling services at the airport, which the Competition Act requires. There was no reduction in price or non-price competition in the supply of those services at the airport relative to the degree of competition that would likely have existed in the absence of the conduct of excluding other operators.
A full version of the decision will be released when all confidential information is redacted.