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DECEMBER 2023 COMPETITION ACT AMENDMENTS

On December 15, 2023, Bill C-56 (An Act to amend the Excise Tax Act and the Competition Act), which introduced the first of two significant rounds of amendments to the federal Competition Act, largely came into force.

This first new round of amendments to the Competition Act, which is intended to strengthen the ability of the Competition Bureau (Bureau) and private parties to enforce Canadian competition law and enhance competition generally in Canada, includes fundamental changes to Canadian competition law not seen since the last major amendments in 2009.

In general, the new amendments to the Competition Act under Bill C-56 include new broad powers for the Bureau to conduct market studies, changes to the core substantive test for abuse of dominance under section 79 (creating new two-track tests for abuse of dominance), increased penalties for abuse of dominance, broadening the civil agreements provision (section 90.1) to include agreements between non-competitors (i.e., to also apply to vertical agreements, such as distribution/supply agreements, vertical joint venture agreements, etc.) and repealing the efficiencies defences under section 90.1 and also for mergers under section 96.

These amendments increase the potential competition law risk for companies, trade and professional associations and other entities, particularly those without credible and effective competition law compliance programs and that have not reviewed their business practices to reflect Canada’s new competition law.

The amendments introduced by Bill C-56 in December 2023 are expected to be followed by a second and more significant round of amendments contained in Bill C-59, which is currently working its way through Parliament. If passed, Bill C-59 would be the most important amendments to Canadian competition law since the current modern Competition Act replaced the former Combines Investigation Act in the 1980s.

For more information about the December 2023 amendments, see: Significant Canadian Competition Act Amendments Come Into Force (Bill C-56). See also: Competition Bureau, Guide to the December 2023 amendments to the Competition Act. For more information about Bill C-59, the second amending bill, which has not yet passed, see here.

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OVERVIEW OF CANADIAN
COMPETITION LAW ENFORCEMENT

The Competition Act is enforced and administered by the Competition Bureau, a federal enforcement agency headed by the Commissioner of Competition.

The Competition Bureau investigates potential criminal competition law offences and civil reviewable matters under the Competition Act based on its own investigations and complaints from consumers, competitors and other marketplace participants.

For more information about Competition Bureau complaints see: complaints.

The Competition Bureau has significant powers to investigate potential violations of the Competition Act. These include the ability to obtain court orders to search premises and seize documents, search and seize computer records, tap phone lines, compel individuals to testify under oath or require companies or individuals to produce documents or responses to written information requests.

CIVIL MATTERS & CRIMINAL OFFENCES

The Commissioner of Competition has the power to investigate and refer criminal matters under the Competition Act to the Director of Public Prosecutions (DPP) for prosecution. These include conspiracy (price-fixing, market allocation/division and supply/output restriction agreements between competitors), bid-rigging, criminal misleading advertising, deceptive telemarketing and pyramid selling. As of June 23, 2023, as a result of Competition Act amendments made in 2022, no poach and wage-fixing agreements between competing employers will also be criminal offences under section 45 of the Competition Act.

While the Competition Bureau investigates potential violations of the Competition Act’s criminal offences, the responsibility for prosecutions lies with the DPP. In practice, the Competition Bureau and the Public Prosecution Service work closely together on criminal competition law investigations.

The Commissioner of Competition is also responsible for investigating and initiating applications relating to potential violations of the Competition Act’s civil reviewable matters sections.

These are civil (not criminal) sections of the Competition Act, which are mostly heard by the federal Competition Tribunal but may also be adjudicated by provincial civil courts depending on the section of the Competition Act.

The Competition Tribunal is a specialized administrative body consisting of judges and lay experts. Civil reviewable matters under the Competition Act include the civil misleading advertising, refusal to deal, price maintenance, abuse of dominance and exclusive dealing / tied selling / market restriction sections.

COMMENCEMENT OF COMPETITION
LAW MATTERS

Proceedings may be commenced under the Competition Act by the Competition Bureau itself based on its own investigations or based on complaints from customers, competitors or other industry participants.

In many criminal cases, the Competition Bureau commences investigations based on parties applying for immunity or leniency under the Bureau’s formal Immunity or Leniency Programs.

The Competition Bureau’s Immunity and Leniency Programs are its leading source of evidence about criminal violations of the Competition Act and can be a significant safe harbour companies or individuals implicated in potential criminal competition law violations.

WHISTLEBLOWERS

The Competition Bureau also relies on whistleblowers for some of their matters. For more information see: whistleblowers.

PRIVATE ACTIONS & PRIVATE
ACCESS APPLICATIONS

In addition to Competition Bureau investigations, private parties may also in some cases commence private actions for violations of the criminal sections of the Competition Act (typically under the criminal conspiracy or criminal misleading advertising sections) or commence private access applications before the Competition Tribunal for orders under the abuse of dominance (section 79), refusal to deal (section 75), price maintenance (section 76) or exclusive dealing / tied selling / market restriction (section 77) provisions of the Competition Act.

For more information about private actions and private access applications under the Competition Act, see: Canadian competition litigation.

COMPETITION BUREAU ADVOCACY

In addition to direct enforcement – for example, compulsory production orders, search warrants, Competition Tribunal applications or references for prosecution of criminal matters – the Bureau can and consistently does engage in competition advocacy in Canada.

In this respect, the Bureau has the power under sections 125 and 126 of the Competition Act to make representations to federal or provincial boards, commissions or other tribunals. This may include pro-competition related submissions to regulators, legislators and others involved in the formulation and enforcement of federal or provincial laws or regulations.

The Bureau often uses its advocacy powers where it either does not want to commence formal enforcement or cannot use its direct enforcement powers (e.g., in relation to regulated markets). For more information, see: Regulated Conduct.

The Bureau has also interpreted its advocacy authority under the Competition Act to carry out market studies and develop competition policy related positions.

The Bureau’s main arguments in relation to its competition advocacy efforts have generally been threefold for regulators and policy makers: first, they should regulate only where necessary; second, they should impose the most minimal restrictions on competition to achieve competing regulatory goals; and third, they should rely on market forces as much as possible to achieve competition.

Over the years, the Bureau has often encouraged regulators, at the federal, provincial and local levels, to apply a “competition lens” to proposed regulation.

The Bureau has advocated for increased competition in a wide range of Canadian sectors, including ride-sharing/taxis, telecom, propane, pharmacy, dentistry, optometry, dental hygiene, real estate services and online health and banking services, among many others.

For companies, associations and other marketplace participants, the Bureau’s advocacy powers (and interest in encouraging competition in Canadian markets) can also be a potentially helpful tool to reduce anti-competitive regulation and help alleviate marketplace and competitor issues (e.g., entrenched competitors or legislated restrictions on business models and services).

COMPETITION BUREAU MARKET INQUIRIES

On December 15, 2023, Bill C-56 (An Act to amend the Excise Tax Act and the Competition Act), which introduced the first of two sweeping rounds of federal Competition Act amendments together with Bill C-59, received royal assent. As part of the 2023 amendments, formal market inquiry powers were given to the Competition Bureau under the new section 10.1 of the Competition Act.

In general, section 10.1 gives the Competition Bureau the power to conduct inquiries into the state of competition in a market or industry if the Commissioner is of the opinion that it is in the public interest to do so.

The Competition Bureau’s market inquiry powers require it to prepare terms of reference for the inquiry, publish the terms of reference, allow the public to provide comments for a minimum of 15 days and publish a final report. Section 10.1 also allows participants that were compelled under section 11(1) of the Competition Act to participate in the market inquiry to comment on the draft report and make confidentiality related requests prior to final publication.

These formal market inquiry powers were given to the Bureau in 2023 as a result, among other things, of perceived limitations on the Competition Bureau to conduct such studies under the existing provisions of the Competition Act in key consumer sectors (e.g., under sections 125 and 126, under which the Bureau has historically based its competition advocacy efforts where it may not have had formal enforcement powers).

For more information about Bill C-56 and the 2023 Competition Act amendments, see: Competition Act Amendments.

COMPETITION ACT PENALTIES

Violation of the Competition Act can result in significant penalties, lost time and negative publicity for individuals, companies, associations and their directors and officers.

Some potential Competition Act penalties include criminal fines, civil administrative monetary penalties or “AMPs” (essentially civil fines), imprisonment, damages (or settlements) arising from private civil actions and court orders (injunctions or prohibition orders) to stop or modify conduct.

Some specific penalties under the Competition Act include fines of up to $25 million or imprisonment for up to 14 years (for conspiracy offences under section 45), criminal fines in the discretion of the court (for bid-rigging offences under section 47 and, effective June 23, 2023, also for conspiracy offences under section 45) and civil administrative monetary penalties of up to the greater of $10 million ($15 million for each subsequent order), three times the value of benefit derived from the prohibited conduct or 3% of a company’s worldwide gross revenues if the value of the benefit derived cannot be reasonably determined (for abuse of dominance and civil misleading advertising offences under sections 79 and 74.1).

The record Canadian conspiracy (cartel) penalty to date is CDN $50 million, in a bread price-fixing investigation in which Canada Bread agreed to pay a $50 million fine after pleading guilty to fixing wholesale bread prices (see: here).

There is also potential director and officer liability under the Competition Act. The Competition Bureau commonly pursues individual executives as accused in criminal matters and plaintiffs frequently name directors and officers as defendants in civil competition law actions.

COMPETITION BUREAU SEARCHES

The Competition Bureau’s enforcement powers include the ability to obtain search warrants to search premises and seize records, which may include documents and computer records.

The Competition Act also includes criminal obstruction provisions, which make it an offence to impede or prevent or attempt to impede or prevent inquiries or examinations under the Competition Act.

Resources (Competition Act Investigations,
Enforcement and Remedies)

For more information about Canadian competition law investigations, enforcement and remedies, see: Advisory Opinions, Competition Act Complaints, Competition Act Litigation, Competition Bureau Immunity and Leniency Programs, Market Studies/Inquiries and Whistleblowers.

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SERVICES AND CONTACT

We are a Toronto based competition and advertising law firm offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. We also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.

Our experience includes advising clients in Toronto, across Canada and the United States on the application of Canadian competition and regulatory laws and we have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal and pricing and distribution matters. For more information about our competition and advertising law services see: competition law services.

To contact us about a potential legal matter, see: contact

For more information about our firm, visit our website: Competitionlawyer.ca

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    WELCOME TO CANADIAN COMPETITION LAW! - OUR COMPETITION BLOG

    We are a Toronto based competition, advertising and regulatory law firm.

    We offer business, association, government and other clients in Toronto, Canada and internationally efficient and strategic advice in relation to Canadian competition, advertising, regulatory and new media laws. We also offer compliance, education and policy services.

    Our experience includes more than 20 years advising companies, trade and professional associations, governments and other clients in relation to competition, advertising and marketing, promotional contest, cartel, abuse of dominance, competition compliance, refusal to deal and pricing and distribution law matters.

    Our representative work includes filing and defending against Competition Bureau complaints, legal opinions and advice, competition, CASL and advertising compliance programs and strategy in competition and regulatory law matters.

    We have also written and helped develop many competition and advertising law related industry resources including compliance programs, acting as subject matter experts for online and in-person industry compliance courses and Steve Szentesi as Lawyer Editor for Practical Law Canada Competition.

    For more about us, visit our website: here.