“Notwithstanding that the primary motives were related to wages and not to prices as such, it is apparent that the arrangements were ones ‘having or designed to have the effect’ mentioned in a previous paragraph in describing the provisions of the Combines Investigation Act. In the circumstances it is not an excuse that the reason for seeking such effect was its anticipated result upon earnings, for it cannot be said that the arrangements were required for the ‘reasonable protection’ of the employees. If the present situation were held to be exempt from the provisions of the Combines Investigation Act, such exemption would have to be upon the principle that, so long as Union members are motivated by a desire to protect their wages, they may combine to dictate the prices and other conditions of sale of their employers’ goods and to forbid such employers, upon pain of a stoppage of work, to enter into price competition with each other. The implications of admitting such a principle are obvious. The situation created for suppliers acting in good faith would be intolerable and any who were disposed to seek means to avoid the Combines Investigation Act would have a new expedient at their disposal. All in all, the effect would tend to be subversive of the anti-combines legislation in important respects. Undesirable consequences are not, of course, reasons for failing to give effect to a provision which is precisely defined by the consequences may be a guide in construing such an expression as ‘reasonable protection’. I am of the opinion therefore, that in entering into the arrangements in question the members of the Union were exceeding any privilege they may enjoy under section 4.”
(Restrictive Trade Practices Commission, Report,
“Bread and Other Bakery Products in the Winnipeg Area” (1952))
“As we have seen, the Parliament of Canada, and indeed all the Canadian provinces, have recognized the merits of collective bargaining in the area of labour relations, as a means of counterbalancing the economic imbalance between the parties involved. On the other hand, society and Parliament have also recognized that it is essential, in the public interest, to promote competition, and illegal to permit groupings of contractors, if such groupings are intended to unduly restrain or injure such competition. … Section 4 of the Combines Investigation Act provides that it does not apply to combinations or activities of ‘workmen’ or ‘employees’ for their own reasonable protection as such workmen or employees. In other words, while Parliament encourages workers to group together for purposes of labour relations, it condemns the same action on the part of contractors, from a business point of view. As Professor Arthurs has pointed out, we feel that Parliament did not intend to allow contractors the right to form groups, since it specifically prohibits such groups in the Combines Investigation Act and the Criminal Code. Access to collective bargaining ends, then, where ‘entrepreneurship’ begins, this being an essential concept of competition and of our free market economy, and one established in the public interest, by the Combines Investigation Act.”
(U.A. v. Societe Radio-Canada/Canadian Broadcasting Corp. (1982))
“According to paragraphs 4(1)(a) and (c) of the collective bargaining provision of the Act, nothing in the Act applies to contracts, agreements or arrangements, in respect of salary or wages and terms and conditions of employment, which are or have been bargained for, entered into and executed by combinations of workmen or employees and combinations of employers in a trade, industry or profession. On the other hand, however, sub-section 4(2) of this provision makes it clear that the section 4(1) exemptions do not apply to contracts, agreements or arrangements that are entered into by an employer to withhold any product (defined in the Act to include an article or any type of industrial, trade or professional service) from any person, or to refrain from acquiring from any person any product other than in respect of the services of workmen or employees who are part of the above said exempted combinations. Moreover, the proposed article, rather than speaking to the reasonable protection of workmen or employees as members of the permitted combinations by paragraph 4(1)(a) of the Act, provides for refusing to deal with would be competitors, and rather than speaking in respect of salary or wages or working conditions of employment, as contemplated by section 4(1)(c) of the Act, it establishes a boycott, having the effect of barricading the parties to the boycott from competition at their own level. Thus, if implemented, the proposed article would cause the unionized construction firms to boycott non-union general contractors and project managers pursuant to an agreement that is not exempted from the application of the Act. It seems that this agreement would in effect deprive non-union general contractors of the services of unionized firms, impair their ability to carry on business and, consequently, lessen competition in the purchase, sale and supply of sub-contract construction work in the region covered by this collective agreement.”
(Competition Bureau, 1999 Advisory Opinion)
Overview of Canadian Competition Law and Unions
The federal Competition Act (the “Act”) is framework legislation that applies, with limited exceptions, to most businesses and industries in Canada. One exception, or to be more precise several related exceptions, relate to collective bargaining activities.
Under paragraph 4(1)(a) of the Act, collective bargaining by unions, for the “reasonable protection” of workmen or employees is exempt from the Act.
Under paragraph 4(1)(c) of the Act, an exemption is provided for associations of employers that organize to collectively bargain with their employees in relation to salary or wages and terms or conditions of employment.
A third exemption, under paragraph 4(1)(b) of the Act, relates to activities of fishermen.
Without these exemptions, some activities involving labour unions and employers associations may otherwise constitute illegal conspiracies (i.e., combinations) or otherwise violate the Act.
While some authorities over the years have suggested that these exemptions are absolute (i.e., apply to any and all activities relating to unions or employer associations), the case law decided under these exemptions, as well as Competition Bureau and former Restrictive Trade Practice Commission documents, show that this is not so.
Not unlike the regulated conduct defence (which is now partially codified under subsection 45(7) of the Act), activities that fall outside of the scope of the collective bargaining exemptions set out in section 4 may be subject to the Act.
In this regard, some courts have taken a narrow and restrictive approach to the section 4 exemptions, the Competition Bureau has issued negative advisory opinions under the exemptions and the Restrictive Trade Practices has taken the position in the past that some activities involving unions, such as collective refusals to deal or supply or activities relating more to the supply of products than labour, may well be subject to the Act.
As such, section 4 is not a blanket exemption and labour unions that become involved in activities that are illegal under the Act may nevertheless face liability.
Some limitations of section 4 include the fact that paragraph 4(1)(a) is limited to combinations of workmen or employees only (i.e., will not apply to other categories of individuals, such as owner-operators), any combination must be for the “reasonable protection” of employees or workmen and activities that restrict or limit new entry (or relate more to a product than labour) may fall outside of paragraph 4(1)(a).
With respect to paragraph 4(1)(c), it is limited to collective bargaining by employers in an employers association with their employees. In this regard, members of employers associations that otherwise restrict competition can, and in some cases have been, exposed to liability under the Act.
The collective bargaining exemptions under section 4(1) of the Act are also limited by subsection 4(2), which provides that nothing in section 4 exempts any contract, agreement or arrangement entered into by an employer to withhold any product from any person, or refrain from acquiring from any person any product other than the services of workmen or employees.
As such, the section 4 exemptions may be lost where there is an agreement to withhold products (or refrain from acquiring products), other than the services of workmen or employees.
For information about my regulatory services: contact
For more regulatory law updates follow me on Twitter: @CanadaAttorney
Visit my Google+ page for more updates: Canadian Competition & Regulatory