The power that Rogers exert in the market for wireless, wireless data and broadband internet is utterly ridiculous. The competitive situation for these services in Canada has always been poor, but the situation was made much worse when they bought Microcell.
Since we’ve had GSM monopoly the ONLY way to use innovative GSM products is through Rogers-Fido. Canada has the highest pricing for wireless data in the world. The result is the public shy away from using such products, and a knock-on effect is that this threatens our industry’s willingness to build services upon these products to innovate.
Broadband and wireless data pricing reflects that company’s need for these services are inelastic with respect to price. Rogers are market skimming.
At the very least all the wireless carriers should be made to include their System Access Fees in their advertised price.
http://www.reportonbusiness.com/servlet/story/RTGAM.20080630.wiphone30/CommentStory/Business/;
Today, the CRTC responded:
Dear Martin Cleaver,
Thank you for your correspondence dated July 2, 2008 regarding Rogers Communications Inc. (“Rogers”).
The Competition Bureau (the “Bureau”) is an independent law enforcement agency that contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice. As part of its mandate, the Bureau is responsible for the administration and enforcement of the Competition Act (the “Act”), a federal law that governs most business conduct in Canada. The Act contains both civil and criminal provisions aimed at preventing anti-competitive practices from taking place in the marketplace.
As a general principle, the Bureau does not regulate prices or dictate distribution policies to firms. The purpose of the Act is to ensure that firms do not create, abuse, or artificially maintain their power within a market. However, legitimate exercise of any market power, including setting prices, is not a violation of the Act. In general, businesses are free to set prices as they see fit and let the market determine if these prices are viable and can be sustained.
The abuse of dominance provision of the Act (section 79) seeks to prevent dominant firms from engaging in anti-competitive acts that harm competitors and significantly impact competition in a given market. In order for conduct to violate section 79 of the Act and for the Bureau to obtain an order to stop it, the following three conditions must be met:
(a) one or more person substantially or completely control, throughout Canada or any area thereof, a class or species of business,
(b) that person or those persons have engaged in or are engaging in a practice of anti-competitive acts, and
(c) the practice has had, is having or is likely to have the effect of preventing or lessening competition substantially in a market.
Under paragraph 79(1)(a) of the Act, the Bureau must be able to show that a firm, in this case Rogers, holds a dominant position in a market and that it has used this dominant position to enhance or entrench its market power. Furthermore, under paragraph 79(1)(b) of the Act, the Bureau is required to show that Rogers is engaging in a “practice of anti-competitive acts” with an intended negative effect on a competitor that is predatory, disciplinary or exclusionary.
It is the Bureau’s view that Rogers does not hold a dominant position in the market for mobile wireless telephony services in Canada. Rogers is in direct competition with two other major wireless providers, in addition to a number of smaller carriers, all of whom offer handsets that are functional substitutes for the iPhone. Moreover, Rogers’ recently-announced pricing plans for the iPhone do not constitute an anti-competitive act as these pricing plans do not have an intended negative effect on a competitor that is predatory, disciplinary or exclusionary. Rather, they reflect an attempt by Rogers to market a product consumers find desirable and set prices accordingly. This may ultimately be disciplined by competitor responses, and/or by consumers rejecting such a strategy. In either case, market forces will determine if these prices can be sustained.
For more information on the Bureau’s approach to enforcing section 79 of the Act, please consult our Enforcement Guidelines on the Abuse of Dominance Provisions at http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/vwapj/aod.pdf/$FILE/aod.pdf.
Again, thank you for taking the time to bring this matter to our attention.
Sincerely,
Stephanie Paolin
Agent du droit de la concurrence | Direction générale des affaires civiles
Competition Law Officer | Civil Matters Branch
