COMPETITION |
Culhane v. ATP Aero Training Products Inc.
T-1491-01
2004 FC 535, O'Keefe J.
6/4/04
20 pp.
Action for declaration defendants' free on-line Canadian aviation exam guides on internet contrary to Competition Act, s. 50(1)(c), for permanent prohibitory injunction and for damages pursuant to Act, s. 36(1)(a)--Plaintiff author of practice exam guides used by Canadian pilots to prepare for regulatory testing--Defendants authors of line of pilot exam preparation guides--Offering free on-line exam guides in return for e-mail address for future marketing to potential customers--Whether defendants' conduct amounting to predatory pricing--Application of five factors set out in Boehringer Ingelheim (Canada) Inc. v. Bristol-Myers Squibb Canada Inc. (1988), 83 C.P.R. (3d) 51 (Ont. Gen. Div.) to establish predatory pricing in civil suit--(1) Defendants engaged in business (of selling aviation products)--(2) Defendants engaged in policy of selling products even though giving practice exams away for free, based on traditional sale of exam guides for a price and continued updating of exam guides on-line--(3) Pursuant to policy, products sold at unreasonably low prices--Linden J., in Regina v. Hoffmann-La Roche Ltd. (Nos. 1 & 2) (1981), 33 O.R. (2d) 694 (C.A.), held reasonableness of price objective matter--Application of factors listed in Hoffmann-La Roche to determine reasonableness of price--As to actual difference between production or accounting cost and sale price, that exam guides given away for free suggesting unreasonably low price--As to whether significant length of time during which sales at questionable prices take place, defendants intending to offer exam guides free for indefinite period of time--Longer price decrease lasts, more suspect it becomes-- As to circumstances of sale, drop in selling price in defensive price-cutting situation may be reasonable, but same price cut in offensive price-cutting situation may be unreasonable--Here, defendants' price-cutting offensive, since not in reaction to any price decrease implemented by plaintiff or anyone else in marketplace--As to whether external or long-term economic benefits will accrue to seller by reducing prices below costs, defendants claiming free on-line exams will aid in increasing future sales of products--No evidence free give-aways increased sales of defendants' other products now or in future--In conclusion, free on-line exam guides constituting selling at unreasonably low price--(4) Policy has effect or tendency of substantially lessening competition or eliminating competitor--No evidence defendants had such a design or that conduct had such effect--(5) Defendants' unreasonably low pricing causes loss or damage to plaintiff--Although number of factors advanced for drop in sales, unable to ascertain from evidence defendants' unreasonably low pricing caused loss or damages to plaintiff--No breach of Act, s. 50(1)(c)--As to whether defendants unlawfully interfering with plaintiff's economic interests, application of four elements set out in Whistler Cable Television Ltd. v. Ipec Canada Inc. (1992), 75 B.C.L.R. (2d) 48 (S.C.)--Interference with plaintiff's trade or business--Giving away of free on-line exams, late payment of invoices, abuse of plaintiff's rebate and return policies not amounting to interference with plaintiff's trade or business-- Unlawful means--Since no breach of s. 50(1)(c), plaintiff failed to establish unlawful means--Intent to injure plaintiff-- No intention by defendants to injure plaintiffs--Actual injury --Since low pricing not causing loss or damage to plaintiff, no actual injury to plaintiff--Action dismissed--Competition Act, R.S.C., 1985, c. C-34, ss. 1 (as am. by R.S.C., 1985 (2nd Supp.), c. 19, s. 19), 36(1)(a), 50(1)(c).