Canada Post’s monopoly over mail collection confirmed

Several companies providing outbound international mail collection services in competition with Canada Post have lost a key legal challenge to Canada Post’s monopoly. In September 2005, the Ontario Court of Appeal confirmed that s. 14(1) of the Canada Post Corporation Act gives Canada Post the exclusive right to collect letter mail in Canada , even if it is destined for other countries.[1]

Canada Post sued Key Mail Canada Inc. and other providers of outbound international mail services, seeking to enjoin them from collecting outbound international mail, on the basis that they were infringing Canada Post’s statutory monopoly over mail collection. Key Mail argued in its defence that Canada Post only has a statutory monopoly over mail that is both collected and delivered in Canada . Canada Post brought a motion for a determination of this issue. It won at first instance.[2] Key Mail appealed.

The argument in the Court of Appeal turned mainly on an ambiguity in the English version of s. 14. The English version could be interpreted either as creating a separate monopoly over each of three activities in Canada, that is, collecting, transmitting and delivering letters, or as creating a monopoly only when all three activities occur in Canada, that is, when the letter is collected and is delivered in Canada. However, the French version contained no such ambiguity, the court found. Its slightly different phrasing made it clear that Canada Post has a monopoly over each of the three activities.

Two of Key Mail’s alternative arguments are of particular interest to competition lawyers. Key Mail invited the court to adopt the US doctrine that monopoly-creating statutes should be construed strictly. The court held that the issue did not arise because, technically, Canada Post does not have a monopoly but a “sole and exclusive statutory privilege”. This reasoning is highly unsatisfactory. The court did not explain what the difference between a monopoly and a “sole and exclusive statutory privilege” might be. Indeed, it is almost inconceivable that a “sole and exclusive statutory privilege” to engage in a particular business would not be a monopoly.

The court said that the issue of whether monopoly-creating statutes should be strictly construed has not been dealt with in Canada, and declined to determine whether this principle should be accepted in Canadian law, pointing out that it would not override clear statutory language. However, the principle that statutes establishing professional monopolies are to be strictly construed, and that anything that is not clearly prohibited can be done by a member of the public, is well established in Canadian law, having been stated by two Supreme Court cases.[3]

Key Mail also argued s. 14 should not be interpreted as creating a monopoly over collecting mail going to international destinations because this interpretation is not in harmony with the purpose and provisions of the Competition Act. The court dismissed this contention on the basis that Parliament granted Canada Post an exclusive privilege. While the court did not elaborate on the point, this appears to be an application of the principle that specific legislation (here, s. 14 of the Canada Post Corporation Act) overrides general legislation (here, the Competition Act).

Published October 18, 2005