Review of Industrial Organization
13: 131–151, 1998.
1998 Kluwer Academic Publishers. Printed in the Netherlands.
Refusals to Deal and Aftermarkets
Department of Economics, Carleton University
THOMAS W. ROSS and W. T. STANBURY
Faculty of Commerce and Business Administration, University of British Columbia (
and T. D.
MacDonald Chair in Industrial Economics (1996/97), Competition Bureau, Industry Canada,
Refusal to deal cases have recently received a considerable amount of attention in
both Canada and the United States. In the Chrysler
cases the Canadian
Competition Tribunal supported the position of the Director of Investigation and
Research that these ﬁrms should not be permitted to refuse to supply parts to the
complainants. In the Kodak
case in the United States a jury in California awarded
$23.9 million dollars in damages to 10 independent service organizations to which
Kodak refused to sell parts.
According to Borenstein et al. (1995b, p. 1), there are
more than twenty similar cases ongoing in the United States. These refusal to deal
cases represent an important new area of antitrust intervention and litigation.
The Canadian law on refusal to deal is contained in Section 75 of the 1986 Com-
petition Act. It is a rather peculiar section within the Competition Act in that, unlike
almost all the other civil and criminal provisions of the Act, the Director of Investi-
gation and Research is not required to prove the substantial (or undue) lessening of
competition. Instead, the test is whether the complainant’s business is substantially
affected. Therefore, while most of the Competition Act is oriented toward promot-
The authors gratefully acknowledge helpful discussions with, and comments from, Robert
Anderson, Andrew Baziliauskas, Craig Colvin, Aidan Hollis, Patrick Hughes, Frank Mathewson,
Brian Rivard, Mark Ronayne, Frank Roseman, Marius Schwartz, Jo’Anne Strekaf, Ralph Winter,
and an anonymous referee; the very capable research assistance of Francisco Salas; and the research
support provided by the Social Sciences and Humanities Research Council of Canada.
Director of Investigation and Research v. Chrysler Canada Ltd. (1989) 27 C.P.R. (3d) 1.
Director of Investigation and Research v. Xerox Canada Inc. (1991) 33 C.P.R. (3d) 83.
This is a private case: Image Technical Services, Inc. et al. v. Eastman Kodak Co. The important
Supreme Court decision upheld a lower court refusal to grant Kodak’s request for summary judgement:
112 S. Ct. 2072 (1992).
DC NCalif, No. C 87 1686 AWT, 9/18/95, reported in BNA Antitrust and Trade Regulation
Report, 69, October 19, 1995.