The Distortive Power of AMPs: Why the Competition Bureau Must Clarify Its Stance on Administrative Monetary Penalties

Report of the C.D. Howe Institute Competition Policy Council

TORONTO, May 15, 2012 /CNW/ - The Competition Bureau should clarify how it will apply its powers under the Competition Act in seeking administrative monetary penalties for abuse of dominance, according to a consensus of the C.D. Howe Institute's Competition Policy Council, which held its third meeting on May 7, 2012.

The Competition Policy Council comprises top-ranked academics and practitioners active in the field of competition policy. Chaired by Finn Poschmann, Vice President, Research at the C.D. Howe Institute, the Council provides analysis of emerging competition policy issues. The Council, whose members participate in their personal capacities, convenes a neutral forum to test competing visions of competition policy and share views with practitioners, policymakers and the public. 

Amendments to the Competition Act in 2009 gave the Competition Bureau the power to seek administrative monetary penalties (AMPs) of up to $15 million from businesses it believes to have contravened the abuse of dominance provisions of the Act, which are non-criminal sections of that legislation. Subsequently, in March this year, the Bureau issued draft Enforcement Guidelines that were silent on the question of AMPs. At the May 7 meeting, the Council addressed the following questions: "Do Administrative Monetary Penalties make good policy? For what infractions? Are they constitutional? What are the costs, benefits, and options?"

There was a range of views among the Council members about whether AMPs for abuse of dominance are ever appropriate. Some members contended that AMPs are appropriate as a deterrence mechanism. Others expressed the view that the possibility of a firm's being subject to AMPs would chill efficient arrangements.  There was unanimity, however, on the point that the risks of over-deterrence associated with AMPs are real, and that it would be appropriate to know how the Bureau plans to approach the issue of AMPs in particular cases. Accordingly, the Council's key recommendation is that the Competition Bureau issue guidance and explain the basis on which it will assess the AMPs it seeks.

For the report go to:

http://www.cdhowe.org/the-distortive-power-of-amps-why-the-competition-bureau-must-clarify-it-stances-stance-on-administrative-monetary-penalties/17713

Benjamin Dachis, Senior Policy Analyst, C.D. Howe Institute, 416-865-1904 email: [email protected].