Canadian COMPETITION LAW

July 5, 2024

OVERVIEW OF BILL C-59 AMENDMENTS
TO THE COMPETITION ACT

On June 20, 2024, Bill C-59 was passed, which introduced the third of three recent significant rounds of amendments to Canada’s federal Competition Act (together with amendments that were passed in June 2022 and December 2023).

This third round of amendments to the Competition Act completes a sweeping overhaul of Canada’s competition laws across virtually all key provisions of Canada’s competition legislation.

These amendments are also the most significant changes to Canadian competition law since the modern Competition Act came into force in 1986 replacing Canada’s former Combines Investigation Act.

In general, the amendments to the Competition Act over the past two years strengthen the Competition Bureau’s powers to enforce key deceptive marketing provisions of the Competition Act (e.g., relating to drip pricing, product performance claims and ordinary selling price (OSP) claims), strengthen private party rights to seek Competition Tribunal remedies (e.g., for civil deceptive marketing and violations of the civil agreements provisions of the Act), introduce new penalties (e.g., administrative monetary penalties for violating the civil agreements provision of the Act and for reprisal actions where individuals have been penalized for complying with the Act) and introduce a new clearance regime for environmental protection related agreements. The merger review regime was also substantially overhauled, eliminating the efficiency defence, introducing market share presumptions and a more restrictive remedial test for restoring competition.

For the Competition Bureau’s summary of the June 20, 2024 amendments to the Competition Act under Bill C-59, see: Guide to the June 2024 amendments to the Competition Act (June 25, 2024).

For more information about the Bill C-59 amendments, see also our posts: 2024 Competition Act Amendments (Bill C-59): Increased Risks for Advertisers for False or Misleading Price, Regular Price and Sale Claims and 2024 Competition Act Amendments (Bill C-59): Significantly Increased Penalties and Enforcement Options Across Key Areas of Canadian Competition Law.

NEW ENVIRONMENTAL PRODUCT AND BUSINESS
PERFORMANCE CLAIMS PROVISIONS

The Bill C-59 amendments to the Competition Act introduced two key environment-related amendments – first, two new specific environmental performance claim related provisions (the “Greenwashing Product Performance Claim Provisions”) were added to the existing general product performance claim provision under section 74.01 of the Competition Act; and second, a new mechanism was introduced allowing Canada’s Commissioner of Competition to issue environmental agreement certificates (which, when valid and registered with the Competition Tribunal, will mean that the criminal conspiracy and other agreement related provisions of the Act will not apply).

With respect to the new Greenwashing Product Performance Claim Provisions, the Competition Act was amended to add the following two new provisions under section 74.01:

Section 74.01(1)(b.1) – Representations to the public for the purposes of, directly or indirectly, promoting the supply or use of a product or any business interest in the form of a statement, warranty or guarantee of a product’s benefits for protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change that is not based on an adequate and proper test, the proof of which lies on the person making the representation.

This new provision will apply to environmental performance claims that relate to a specific product. It includes the same testing requirement to substantiate claims as the general performance claims provision of the Competition Act (i.e., an “adequate and proper test” as under section 74.01(1)(b)).

Section 74.01(1)(b.2) – Representations to the public for the purposes of, directly or indirectly, promoting the supply or use of a product or any business interest with respect to the benefits of a business or business activity for protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change that is not based on adequate and proper substantiation in accordance with internationally recognized methodology, the proof of which lies on the person making the representation.

This new provision will apply to environmental performance claims that relate to the benefits of a business or business activity more broadly. It has introduced a new testing requirement for substantiating these types of environmental claims, requiring “adequate and proper substantiation in accordance with internationally recognized methodology”.

According to the Competition Bureau, many of the greenwashing related complaints that it receives do not relate to claims about specific products, but to an overall business or brand (e.g., that a company or brand is “carbon neutral” or “net zero”). The new test to validate such business-related green claims (i.e., that they must be based on “internationally recognized methodology”) is not, however, defined in the Competition Act.

For this reason, it remains unclear what compliance guidance that the Competition Tribunal and Competition Bureau will provide for this new testing standard for brand/business related environmental performance claims.

In this regard, on July 4, 2024, the Bureau announced that based on the large number of requests for guidance on the interpretation of these new greenwashing related performance claim provisions of the Competition Act, it would develop guidance on an accelerated basis. See: Competition Bureau statement regarding guidance on Competition Act’s new greenwashing provisions.

Before the above amendments, there were no standalone performance claim provisions under the Competition Act addressing greenwashing claims. The burden had been on the Bureau to prove that greenwashing claims were misleading under the general criminal or civil false or misleading representation provisions of the Competition Act (sections 52 and 74.01 of the Act) or the existing general performance claim provision.

Following these amendments, the person making environmental performance claims about a particular product or a business will now bear the burden of proving that they are not misleading – either by proving that they are based on an adequate and proper test for section 74.01(1)(b.1) (green claims regarding a particular product) or that they have been substantiated according to the test under section 74.01(1)(b.2) (green claims relating to a business).

These new environment related performance claim provisions are part of a larger legislative trend under the three recent rounds of Competition Act amendments to make it easier for the Competition Bureau to enforce provisions of the Act relating to its advertising and marketing law enforcement priorities. In addition to false or misleading performance claims, these enforcement priorities include drip pricing, false or misleading product price claims and ordinary selling price (OSP) claims.

For more information about these Competition Bureau enforcement priorities and recent related Competition Act amendments under Bill C-59, see: 2024 Competition Act Amendments: Increased Risks for Advertisers for False or Misleading Price, Regular Price and Sale Claims.

COMPETITION BUREAU ADVISORY OPINIONS

Based on the potential penalties and consistent Competition Bureau enforcement, companies, agencies and others making product performance claims, including relating to environmental related products or businesses, should ensure that the required statutory tests are met before the performance claims are made.

Written advisory opinions are available from the Competition Bureau in relation to proposed performance claims, as well as other types of proposed advertising and marketing claims. For more information, see Competition Bureau Advisory Opinions.

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