Competition Bureau Canada

Competition Bureau Canada

March 27, 2015 17:13 ET

Ruling Confirms That Commissioner Can Pursue Case Against Direct Energy

OTTAWA, ONTARIO--(Marketwired - March 27, 2015) - Competition Bureau

The Competition Bureau today welcomed a ruling that allows it to proceed with its case against Direct Energy Marketing Limited (Direct Energy) for water heater return policies and procedures that were aimed at preventing consumers from switching to competitors.

The Competition Tribunal ruling means that it will hear the action against Direct Energy alleging that many Ontario-based customers had little choice but to continue their rental agreements even if they wanted to purchase a water heater or switch to another rental provider.

The Bureau is seeking an administrative monetary penalty of $15 million and an order prohibiting Direct Energy Marketing Limited from engaging in similar anti-competitive conduct in the future. The company has not been active in the Ontario rental water heater industry since October 2014.

The Bureau had filed applications with the Competition Tribunal against Reliance Comfort Limited Partnership (Reliance) and Direct Energy in December 2012, alleging that they had implemented anti-competitive water heater return policies and procedures that were aimed at preventing consumers from switching to competitors.

In November 2014, the Bureau reached resolutions with Reliance and EnerCare Inc. (EnerCare), the company that acquired Direct Energy's Home and Small Commercial Services business, including its rental water heater portfolio. Those resolutions strengthen competition and consumer choice in Ontario's rental water heater industry by ensuring that consumers can more easily purchase a water heater or switch to a different rental provider.

At the same time, while Reliance and EnerCare cooperated with the Bureau, the Bureau announced that its litigation against Direct Energy would continue before the Tribunal.

Quick Facts

  • As part of the resolutions announced in November, Reliance agreed to pay an administrative monetary penalty of $5 million and contribute $500,000 to the Bureau's investigative costs. Reliance also agreed to take certain steps to make it easier for customers to terminate their rental agreements and return their water heaters to Reliance.
  • Given its acquisition of Direct Energy's rental water heater business, the Bureau also obtained commitments from EnerCare that it would put an end to Direct Energy's alleged anti-competitive behaviour.
  • The Bureau also announced in November that it would be continuing with its Tribunal application against Direct Energy. The Bureau was seeking an AMP of $15 million and an order prohibiting Direct Energy from engaging in similar conduct in the future. As a result of today's ruling, the Bureau may continue with its application against Direct Energy.

Quote

"This decision is an important development, as it means that the Commissioner can proceed with an abuse of dominance application even if the entity alleged to have abused its dominant position has exited the market. In this case, we believe that Direct Energy profitably engaged in the alleged anti-competitive behaviour for a significant period of time and we continue to believe that its practices were aimed at stifling competition by preventing consumers from switching to competitors. For this reason, we look forward to resolving this matter as quickly as possible, to the benefit of consumers and businesses alike."

John Pecman,
Commissioner of Competition

Associated Links

• Fact Sheet: Competition Bureau Strengthens Competition in Ontario's Water Heater Industry (November 2014)

• News Release: Competition Bureau Strengthens Competition in Ontario's Water Heater Industry (November 2014)

• News Release: Competition Bureau Takes Action to Support Competition in Ontario's Residential Water Heater Market (December 2012)

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