“The statute proceeds upon the footing that the preventing or lessening of competition is in itself an injury to the public. It is not concerned with public injury or public benefit from any other standpoint.”
(Howard Smith Paper Mills Ltd. v. The Queen, [1957] S.C.R. 403)
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“Competition is good for consumers for the simple reason that it compels producers to offer better deals – lower prices, better quality, new products, and more choice.”
(Sir John Vickers, former Chairman of the Office of Fair Trading, U.K.)
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“Antitrust laws … are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms.”
(United States v. Topco Associates Inc. 405 U.S. 596 (1972))
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“From this overview of the Combines Investigation Act I have no difficulty in concluding that the Act as a whole embodies a complex scheme of economic regulation. The Purpose of the Act is to eliminate activities that reduce competition in the market-place. The entire Act is geared to achieving this objective. The Act identifies and defines anti-competitive conduct. It establishes an investigatory mechanism for revealing prohibited activities and provides and extensive range of criminal and administrative redress against companies engaging in behaviour that tends to reduce competition.”
(Dickson C.J., General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641)
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LEGISLATION
Canadian competition/antitrust law is governed by the Competition Act. The Competition Act is federal law of general application that contains both criminal offences and civil “reviewable matters” and applies to most business activities in Canada, with very limited exceptions.
The Competition Act is administered and enforced by the federal Competition Bureau, a federal enforcement agency headed by the Commissioner of Competition (the “Commissioner”).
While competition law was introduced in Canada in 1889, one year before the introduction of the Sherman Act in the United States, Canadian competition law has for the most part only been actively enforced since 1986 when the modern Competition Act came into force.
PURPOSES
The Competition Act sets out four purposes as follows: (i) to promote the efficiency and adaptability of the Canadian economy, (ii) to expand opportunities for Canadian participation in world markets, (iii) to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy and (iv) to provide consumers with competitive prices and product choices.
As a practical matter, at least from the perspective of competition law enforcement agencies, the main over-riding purpose of the Competition Act is to ensure that consumers benefit from competitive and undistorted markets.
CRIMINAL OFFENCES & CIVIL “REVIEWABLE MATTERS”
The Competition Act contains a number of criminal offences. These include conspiracy (section 45), bid-rigging (section 47), criminal misleading advertising (section 52), deceptive telemarketing (section 52.1) and pyramid selling (section 55.1).
Criminal offences under the Competition Act are investigated by the Bureau, prosecuted by the Public Prosecution Service of Canada (headed by the Director of Public Prosecutions), tried in the provincial criminal courts and subject to criminal penalties including fines, imprisonment and “prohibition orders” (court orders to stop or modify conduct).
The Competition Act also contains a number of civil (i.e., non-criminal) “reviewable matters”. These include price maintenance (section 76), civil misleading advertising (section 74.01), refusal to deal (section 75), abuse of dominance (section 79), tied selling / exclusive dealing / market restriction (section 77) and mergers (section 92).
Reviewable matters under the Competition Act are also investigated by the Bureau, may result in proceedings initiated by the Bureau (or private parties in certain cases with leave), adjudicated generally before the Competition Tribunal (and in some cases, such as civil misleading advertising, also in a provincial superior court or Federal Court) and subject to a variety of potential penalties.
These include orders to stop conduct, orders to resume supply of a product, “administrative monetary penalties” (essentially civil fines) of up to Cdn. $10 million and restitution (a court order to compensate consumers harmed by the conduct).
ENFORCEMENT
Competition Bureau
The Competition Act is administered and enforced by the Competition Bureau, a federal enforcement agency headed by the Commissioner who investigates complaints by consumers and businesses.
Under the Competition Act, the Commissioner’s enforcement powers include the power to make voluntary information requests, obtain compulsory production orders for documents and written returns of information, obtain search warrants, court orders to interview persons under oath and wiretaps under the Criminal Code. The Commissioner regularly uses these enforcement powers in the context of both civil and criminal matters.
The Commissioner also has the power to make applications to the Competition Tribunal (for civil reviewable matters under the Competition Act, such as mergers, abuse of dominance, refusal to deal or price maintenance) or refer matters to the Director of Public Prosecutions for prosecution (for criminal offences, such as the conspiracy, bid-rigging, criminal misleading advertising or deceptive telemarketing).
Proceedings may be commenced under the Competition Act by the Competition Bureau or based on complaints from customers, competitors or other industry participants.
Proceedings may also be commenced as a result of an applicant seeking immunity or leniency under the Bureau’s formal Immunity or Leniency Programs (under which an applicant may receive full immunity from prosecution or leniency in penalties for cooperating with the Bureau in an investigation).
Private Damages Actions
Private parties may also in some cases commence private civil actions against persons contravening the criminal sections of the Competition Act (including section 45 (conspiracy), section 47 (bid-rigging) and section 52 (criminal misleading advertising)) or violating a court or Tribunal order made under the Competition Act.
Private parties may also in certain cases make “private access” applications to the Competition Tribunal for Tribunal orders (under the refusal to deal, price maintenance and exclusive dealing / tied selling / market restriction sections of the Competition Act).
Private parties are, however, required to obtain leave from the Tribunal before making a private access application and, unlike in the case of private actions, monetary damages are not available (only “remedial orders” from the Tribunal ordering, for example, that conduct stop or to resume supply on usual trade terms).
ADJUDICATION
Criminal Offences
Criminal matters (e.g., conspiracy, bid-rigging and criminal misleading advertising) are heard before the provincial criminal courts.
Civil Reviewable Matters
Civil reviewable matters (e.g., abuse of dominance, mergers, refusal to deal, price maintenance and tied selling/exclusive dealing/market restriction) are heard before the federal Competition Tribunal.
The Competition Tribunal is a federal administrative tribunal comprised of Federal Court judges and lay members (such as economists). Judicial members alone may determine legal questions. Lay members may determine questions of fact (or mixed questions of law and fact). Appeals from the Tribunal are to the Federal Court, to the Federal Court of Appeal and then the Supreme Court of Canada.
In some cases (civil misleading advertising) a matter may be heard in a provincial court, before the Federal Court or the Competition Tribunal.
PENALTIES
Contravention of the Competition Act can lead to significant penalties, lost time and negative publicity for individuals, companies, other types of organizations and their executives and personnel.
Potential penalties under the Competition Act include criminal fines, civil “administrative monetary penalties” (essentially civil fines), imprisonment, damages as a result of private civil actions and prohibition orders or injunctions to stop conduct.
For example, some of the specific potential penalties include criminal fines of up to Cdn. $25 million (under the criminal conspiracy provisions), civil “administrative monetary penalties” up to Cdn. $10 million (for abuse of dominance and civil misleading advertising) and imprisonment for up to 14 years (for criminal conspiracy).
Private parties (e.g., consumers or competitors) can also commence private actions for damages where they have suffered actual damage or loss as a result of a violation of the criminal provisions of the Competition Act (or the contravention of a court or Competition Tribunal order made under the Competition Act).
There is also potential director and officer liability under the Competition Act for competition law violations.
COMPETITION/ANTITRUST LAW & ECONOMIC TERMS
For competition/antitrust definitions and terms see:
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