Refusal to deal (Competition Act s. 75)

A franchisee meets this term when a franchisor or its supplier will not supply a product the business needs. Section 75 sits in Part VIII of the Act, Matters Reviewable by Tribunal, not among the offences. On application by the Commissioner or a person granted leave under section 103.1, the Tribunal may order one or more suppliers of a product in a market to accept a person as a customer, within a specified period and on terms it considers appropriate.

What the Tribunal must find

Subsection 75(1) lists five findings. The person must be substantially affected in the whole or part of their business, or precluded from carrying it on, because adequate supplies are not available anywhere in the market on usual trade terms. The shortage must come from insufficient competition among suppliers. The person must be willing and able to meet usual trade terms. The product must be in ample supply (or, for a means of diagnosis or repair, readily supplied). And the refusal must be having, or be likely to have, an adverse effect on competition in a market. This is subject to subsection 75(1.1), on customs duties, and subsection 75(2), on when a trademarked article is a separate product.

What to ask

• Does the franchise agreement name a required supplier? See how to check supplier relationships.
• Can the product be bought elsewhere on usual trade terms?
• Was supply refused because of the business’s low pricing policy? The Bureau says it will typically examine that conduct under subparagraph 76(1)(a)(ii) rather than under section 75.