| Agreements Involving Licensees That Unreasonably Restrict Competition |
8.1.8.1.1 All provisions in this section apply to Facilities-based Licensees, Services-based Licensees and Telecommunication Equipment Dealer Licensees. In this section, the term “Licensee” refers to Facilities-based, Services-based and Telecommunication Equipment Dealer Licensees.| 8.1.2 IDA will not routinely review agreements entered into by Licensees (other than Interconnection Agreements). However, pursuant to the procedures in section 10 of this Code, IDA may take enforcement action (on its own motion or pursuant to a request from a private party) against any Licensee that enters into an agreement with another Licensee or any unlicensed entity that has the effect of unreasonably restricting competition in the telecommunication service or equipment market. Certain types of agreements are so clearly anti-competitive that a Licensee may not enter into them under any circumstances. IDA will assess the permissibility of other agreements based on their likely competitive effects. IDA’s role is limited to determining whether a Licensee has entered into an agreement that contravenes the provisions of this Code. Contravention of these restrictions can result in the imposition of financial penalties or other enforcement measures, as provided for in section 10 of this Code. |
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| Determining the Existence of an Agreement |
| 8.2.For the purposes of this section, an agreement can be established in any of 3 ways. First, an agreement can be established through direct evidence of an express agreement, such as a signed document. Second, an agreement can be established using circumstantial evidence that demonstrates the existence of an express agreement. Finally, an agreement may be tacit (i.e., even in the absence of an actual agreement, Licensees may co-ordinate their production and pricing decisions in order to reduce aggregate output and raise market prices). IDA will not find a tacit agreement where Licensees have done nothing more than make similar output and pricing decisions, which could reflect an efficient response to changing market conditions. Rather, IDA will only find that there has been a tacit agreement if the Licensees have employed “signalling devices,” such as the sharing of price and output information, and that these devices have facilitated co-ordinated behaviour. For the purposes of this section, an arrangement between a Licensee and an affiliate that it controls does not constitute an agreement. Nor does this section restrict the ability of a Licensee to enter into an arrangement with another entity in which the second entity acts as a bona fide agent of the Licensee. |
| Prohibited Agreements Between Licensees Providing Competing Telecommunication Services and Equipment |
8.3.Licensees providing competing telecommunication services or equipment are prohibited from entering into the following types of agreements:| Price Fixing/Output Restrictions |
| 8.3.1 Licensees must not enter into agreements to fix prices or restrict output, regardless of the levels to which the Licensees agree. |
| 8.3.2 Licensees must not enter into agreements to co-ordinate separate bids for assets, resources or rights auctioned by IDA, or for any input into the Licensee’s service or for the provision by the Licensee of any telecommunication services or equipment, regardless of the price levels to which the Licensees agree. |
| Market and Customer Divisions |
| 8.3.3 Licensees are prohibited from entering into agreements not to compete to provide telecommunication services or equipment to specific End Users or not to compete in specific areas, regardless of the terms and conditions on which the Licensees agree. |
| 8.3.4 Licensees must not agree to refuse to do business with a specific supplier, competitor or End User. |
| Agreements Necessary for Legitimate Collaborative Ventures |
| 8.3.5 Nothing in subsections 8.3.1 through 8.3.4 of this Code prohibits agreements amongst Licensees that are ancillary to efficiency-enhancing integration of economic activity, where such agreements are no broader than necessary to achieve the pro-competitive benefit. For example, if competing Licensees establish a joint purchasing or production venture designed to increase total output and lower prices, the permissibility of an agreement between the 2 Licensees regarding the prices to be paid or charged by the joint venture would be assessed, under subsections 8.4-8.4.3 of this Code, based on its competitive effects. Similarly, if Licensees were to establish a market for trading bandwidth, an agreement between the Licensees to exclude competitors that did not agree to trade on certain standardised terms and conditions designed to allow for the efficient operation of the market would be assessed under subsections 8.4-8.4.3 of this Code. |
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| Agreements Between Licensees Providing Competing Telecommunication Services or Equipment That Will be Assessed Based on Competitive Effects |
| 8.4.Unlike the types of agreements described in subsections 8.3-8.3.4 of this Code, many agreements between competitors have the potential to increase competition. Such agreements include joint agreements to produce inputs used by multiple Licensees, to produce telecommunication services and equipment sold to End Users, to jointly market telecommunication services and equipment, to jointly purchase inputs or to engage in joint research and development activities. If such agreements are challenged in an enforcement proceeding, IDA will assess whether the agreements contravene this Code based on their effect on competition. Where there is evidence that the agreement has caused actual anti-competitive harm, IDA will find it to be in contravention of this Code. Where there is no evidence of actual market effects because the agreement is relatively recent, IDA will determine the permissibility of the agreement by seeking to assess its likely effect on the market. In conducting this assessment, IDA will consider the following factors: |
| Business Purpose of the Agreement |
| 8.4.1.In reviewing an agreement, IDA will make a preliminary assessment of its likely competitive impact (i.e., IDA will attempt to determine whether the agreement is likely to lead to reductions in output and increase prices of telecommunication services). If the agreement is between or amongst a small number of Non-dominant Licensees, and the business purpose of the agreement appears to be to increase output and reduce prices, IDA will generally conclude, without conducting any further analysis, that the agreement does not contravene this Code. |
| Likelihood of Competitive Harm |
| 8.4.2.Where an agreement involves a more significant number of Non-dominant Licensees, or a Dominant Licensee, or where the agreement has the potential to result in higher prices or reductions in output of telecommunication services or equipment, IDA will conduct a more detailed assessment. In particular, IDA will consider the following factors: whether (and, if so, to what extent) the Licensees retain the ability to act independently of the agreed-upon venture; the duration of the agreement; whether, in the event the Licensees acted anti-competitively, new entry into the market would be likely, sufficient and timely enough to deter or counter-act any competitive harm; and any other factors that help predict the likely competitive effect of the agreement. If, after assessing these factors, IDA concludes that the agreement poses no risk of competitive harm, IDA will conclude that the agreement does not contravene this Code. |
| 8.4.3.If IDA’s review demonstrates that the agreement has the potential to result in a restriction of output or an increase in prices of telecommunication services and equipment, IDA will consider whether the agreement is necessary to achieve efficiencies. Such efficiencies could include reductions in the cost of developing, producing, marketing and delivering telecommunication services and equipment. If such efficiencies offset the potential anti-competitive effect, and could not reasonably be achieved through measures that reduce competition to a lesser extent, IDA will conclude that the agreement does not contravene this Code. If such efficiencies do not offset the potential anti-competitive effects, or could reasonably be achieved through measures that reduce competition to a lesser extent, IDA will conclude that the agreement contravenes this Code. |
| Agreements Between Licensees and Entities at Different Levels in the Supply Chain |
| 8.5.Licensees must not enter into agreements with entities at different levels in the supply chain such as a down-stream reseller of a Facilities-based Licensee’s telecommunication service or an upstream provider of telecommunication network equipment that have the effect of unreasonably restricting competition. This subsection provides examples of such agreements. |
| 8.5.1.A Facilities-based and a Services-based Licensee must not agree as to the price that the Services-based Licensee can charge End Users to which it resells the Facilities-based Licensee’s telecommunication service. |
| Vertical Market Allocation |
| 8.5.2.A Licensee must not assign specific End Users to, or allocate specific markets amongst, Licensees that resell its services, where this would unreasonably restrict competition. |
| 8.5.3.A Licensee must not enter into an agreement in which it agrees to package telecommunication service or equipment that it provides exclusively with the telecommunication service or equipment of another entity, where this would unreasonably restrict competition. For example, a Licensee must not agree to package its telecommunication services exclusively with the services of a single provider of terminal equipment, value added services, applications or content provider, where this would unreasonably restrict competition. |
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