July 10, 2022
On June 23, 2022, Bill C-19 (the Budget Implementation Act, 2022, No.1) received royal assent, introducing sweeping amendments to Canada’s federal Competition Act. These amendments include significant increases to the civil and criminal penalties under the Competition Act, new wage fixing and no poach offences and new criminal and civil prohibitions on drip pricing.
The amendments also include significant changes to one of the cornerstone provisions of the Canadian Competition Act – section 79 (abuse of dominance).
These initial Competition Act amendments (a second round of amendments is anticipated including potential changes to Canada’s mergers efficiency defence) follow the Competition Bureau’s submission on Examining the Competition Act in the Digital Era on February 8, 2022 and mark the most significant amendments to the Competition Act since 2009.
For more information about the 2022 amendments to the Competition Act, see: Sweeping Canadian Competition Act Amendments Passed. For more information about the 2009 amendments to the Competition Act, see: Competition Act Amendments.
Amendments to Abuse of Dominance (Section 79)
Private Access to the Competition Tribunal
Following the amendments to the Competition Act in June 2022, private access to the Competition Tribunal (Tribunal) is now possible. In this regard, while before only the Commissioner of Competition could commence abuse of dominance applications, now private parties, with leave from the Tribunal, may also challenge alleged abuse of dominance in Canada.
According to the Competition Bureau, private access to the Tribunal for abuse of dominance complements public enforcement by the Bureau due to, among other things, increasing the number of cases before the Tribunal and developing case law under the Competition Act.
This new right of private access to the Tribunal for section 79 is similar to that already available for private parties under sections 75 (refusal to deal), 76 (price maintenance) and 77 (exclusive dealing, tied selling, and market restriction) of the Competition Act.
The lack of private access to the Tribunal under section 79 had been seen as inconsistent with the broader private right of access rights under the Competition Act for other civil reviewable matters. Private applicants, however, will still have no right to monetary penalties under section 79 (i.e., only, if successful, Tribunal remedial orders, including for anti-competitive conduct to stop).
Broadened Definition of “Anti-Competitive Act”
In addition, the amendments to the Competition Act also include new factors to be considered in assessing competitive effects for sections 79 (abuse of dominance) and section 90.1 (civil agreements between competitors).
Regarding abuse of dominance, the new factors include: (i) network effects in relation to barriers to entry; (ii) quality, choice, or consumer privacy in relation to price and non-price competition; (iii) the nature and extent of change and innovation in a relevant market; and (iv) any other factor that is relevant to competition in the market that is or would be affected by the practice.
Importantly, what can constitute an anti-competitive act for the purposes of section 79 of the Competition Act has also now been broadened to include conduct that has an adverse effect on competition (section 78(1), Competition Act). Before the 2022 amendments, an anti-competitive act was limited to exclusionary, predatory or disciplinary conduct against a competitor, which was seen by some as too narrow a test for conduct that may not be directed against a competitor but may nonetheless lessen competition overall in a relevant market.
Increased Penalties
With respect to penalties under section 79, the administrative monetary penalties for abuse of dominance have increased from the previous CDN $10 million (CDN $15 million for each subsequent offence) to the greater of CDN $10 million (CDN $15 million for each subsequent offence), three times the value of the benefit obtained from the deceptive conduct or, if the latter amount cannot be reasonably determined, 3% of a company’s annual worldwide gross revenues. The former maximum fixed civil penalty for abuse of dominance had been criticized as being merely a cost of doing business and insufficient deterrent in some cases.
According to the Competition Bureau, the previous maximum penalty for abuse under the Competition Act (as well as other provisions where the maximum penalties were also increased) was “out of step” with that of other major jurisdictions and insufficient to achieve the Competition Act’s intended purpose to deter and punish anti-competitive conduct.
The new potential penalties are also now more aligned with other major jurisdictions, including the European Union and United States.
These major changes to the abuse of dominance provisions of the Competition Act mean that there is now significantly more risk for firms operating in Canada with significant market presence that engage in anti-competitive conduct.
For more information about abuse of dominance under sections 78 and 79 of the Competition Act, see: Abuse of Dominance.
**********
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, 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
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
