May 21, 2023
On June 23, 2023, criminal amendments to the Competition Act will come into force. These amendments were enacted on June 23, 2022, as part of Bill C-19, the Budget Implementation Act, 2022, No.1.
They introduced sweeping amendments to Canada’s federal Competition Act, including significant increases to the civil and criminal penalties, new prohibitions on drip pricing and expansion of private right of access to the Competition Tribunal for abuse of dominance, among other things. For more information, see: Sweeping Canadian Competition Act Amendments Passed.
Most of the amendments are now in force, with the coming into force of the criminal related amendments, which were delayed for one year to allow companies and other organizations to adjust to the changes.
These amendments, which also include significantly increased criminal fines and new criminal offences, will mean that some businesses will need to revise their business practices and amend their competition law compliance programs.
The new criminal competition law amendments also mean that there will be greater potential criminal law risk for some types of activities, including criminal conspiracy agreements with competitors.
The criminal competition law amendments that are coming into force on June 23, 2023 are as follows:
Increased Criminal Conspiracy Fine
The maximum fine for criminal conspiracy (cartel) offences (section 45), which are currently capped at $25 million, will be replaced with a fine that may be set at the discretion of the court (i.e., with no upper limit).
This amendment is consistent with the current penalty for bid-rigging (section 47 of the Competition Act) and the higher penalty provisions of other foreign jurisdictions, particularly the United States and European Union.
According to the Competition Bureau, the previous conspiracy fine under the Competition Act was “out of step” with that of other major jurisdictions, together with other Canadian competition law penalties, and insufficient to achieve the Competition Act’s intended purpose to deter and punish anti-competitive conduct.
New Wage-Fixing and No-poach
Agreement Provisions
The criminal conspiracy (cartel) provisions of the Competition Act (section 45) will be expanded to also expressly prohibit agreements between employers to fix employee wages (wage-fixing agreements) or to agree not to solicit or hire employees (no-poaching agreements).
These amendments are consistent with labour market enforcement practices and policy change commitments in the European Union and the United States and was seen as a gap in Canadian conspiracy/cartel law.
For more information on recent enforcement activity in relation to no-poach and wage-fixing agreements, see Competition Bureau, Competition Bureau statement on the application of the Competition Act to no-poaching, wage-fixing and other buy-side agreements and Competition Bureau Reiterates Narrow Enforcement Position For No-Poaching and Wage-Fixing Agreements Between Competing Employers.
New Drip Pricing
Advertising/Marketing Law Provisions
The amendments to the Competition Act also add a new provision on drip pricing to both the criminal and civil provisions on false and misleading advertising under sections 52 and 74.01 (i.e., failing to state the full price of a product or service upfront, with the full price only disclosed at a later stage or at the check-out stage of an online purchase).
Drip pricing has been one of the Competition Bureau’s deceptive marketing enforcement priorities, together with false or misleading performance claims, ordinary sale price claims and misleading testimonials/endorsements.
Prior to the recent amendments, drip pricing was only reviewable under the general criminal and civil misleading advertising provisions of the Competition Act, sections 52 and 74.01, if a pricing claim was either literally false or misleading (e.g., omitted a portion of the total price upfront).
The Bureau has cited evidential challenges associated with the enforcement of drip pricing given the lack of specific prohibitions under the Competition Act.
For more information, see: Drip Pricing.
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