The Lamentable Rise of an Expanded Essential Facilities Doctrine in Canada: The Troubling Economic Foundations of the Toronto Real Estate Board Decision

Abstract

This paper documents the successful, if lamentable, rise of a made-in-Canada essential facilities doctrine. This made-in-Canada essential facilities doctrine is a consequence of recent enforcement of the abuse of dominance provisions of the Competition Act in the Toronto Real Estate Board case. The analysis in this paper finds that the rise of the made-in-Canada essential facilities doctrine is one implication of the developing jurisprudence of the Federal Court of Appeal and the Competition Tribunal with respect to all three of the elements required for a finding of abuse of dominance: control, practice of anticompetitive acts, and a substantial prevention or lessening of competition. This paper explains the error made in the Toronto Real Estate Board case for all three of these required elements and how they combine to result in the made-in-Canada essential facilities case. The policy and economic incoherence of this made-in-Canada essential facilities doctrine are fully manifested in the current abuse of dominance case against the Vancouver Airport Authority. This paper explains that this made-in-Canada essential facilities doctrine is inconsistent with the economics of vertical foreclosure and the economic foundations of the abuse of dominance provisions in the Competition Act. The problem in both of these cases is not conduct that creates, enhances, or maintains market power, but instead exclusion downstream is possible because of market power upstream and it may enhance efficiency.