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Vertical Restraints

"Vertical restraints" is the generic term used to describe such practices as exclusive dealing, tied selling, and market restriction. These practices are defined and covered in section 77 of the Act. Generally, a vertical restraint occurs when a supplier puts conditions on the supply of a product which constrain the customer in terms of, for example, what else he must buy to obtain supply, where he may subsequently market the product, or what other product lines he may or may not carry as a condition of obtaining supply. None of these practices are illegal of themselves, but may become a cause for concern and action by the Commissioner if they are found to have caused, or be likely to cause, a substantial lessening of competition in a market.

Recent amendments to the Competition Act allow, subject to certain conditions, private parties to take matters directly to the Competition Tribunal for adjudication. Where the matter involves issues covered in section 75 (refusal to deal) or section 77 (exclusive dealing/tied selling), the new section 103.1 provides that "any person" may apply for leave to make an application. The primary criterion in considering the merits of any such matter is whether your business has been directly and substantially affected by the practice or policy at issue.