Canadian COMPETITION LAW

SWEEPING CANADIAN COMPETITION ACT
AMENDMENTS (BILL C-59) PASSED JUNE 20, 2024

On June 20, 2024, Bill C-59 was passed (the Fall Economic Statement Implementation Act, 2023), which introduced the third of three significant rounds of amendments to Canada’s federal Competition Act in two years (together with Bill C-19 and Bill C-56). This new round of amendments to the Competition Act completes a sweeping overhaul of the Competition Act 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 effect in 1986 replacing the former Combines Investigation Act.

The Bill C-59 amendments, among other things, strengthen the Competition Bureau’s powers to enforce key deceptive marketing provisions of the Competition Act (e.g., relating to drip pricing, 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 provisions of the Act and for reprisal actions penalizing individuals for complying with the Act) and introduce a new clearance regime for environmental protection related agreements. Canada’s Competition Act merger review regime was also substantially overhauled, eliminating the efficiency defence, introducing market share presumptions and a more restrictive remedial test for restoring competition.

These amendments, together with those enacted in June 2022 and December 2023 (Bill C-19 and Bill C-56), 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 laws. For the Competition Bureau’s summary of the June 20, 2024 Bill C-59 amendments to the Competition Act, see: Guide to the June 2024 amendments to the Competition Act (June 25, 2024).

Our blogs will be updated to reflect these amendments.

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“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.)

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“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)

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OVERVIEW OF CANADIAN COMPETITION LAW
AND TRADE UNIONS

The federal Competition Act is framework legislation that applies, with limited exceptions, to most businesses and industries in Canada. There are, however, several exceptions to the application of the Competition Act for certain collective bargaining related activities.

Under paragraph 4(1)(a) of the Competition Act, there is an exception for collective bargaining by unions for the “reasonable protection” of workmen or employees.

Under section 4(1)(c) of the Competition Act, there is an exception for associations of employers that organize to collectively bargain with their employees in relation to salary or wages and terms or conditions of employment.

Under section 4(1)(b) of the Competition Act, there is a third exception for the activities of fishermen.

Without these exceptions, some activities involving labour unions and employer associations may otherwise constitute criminal conspiracies (i.e., cartels) under section 45 of the Competition Act or otherwise violate the Act.

While some authorities over the years have suggested that these exceptions are absolute (i.e., apply to any and all activities relating to unions or employer associations), the case law decided under these exemptions and Competition Bureau and former Restrictive Trade Practice Commission guidance have concluded that there are limitations to the application of these exceptions.

Similar to the regulated conduct defence, activities that fall outside of the scope of the collective bargaining exceptions set out in section 4 may be subject to the Competition Act.

In this regard, some Canadian courts have taken a narrow and restrictive approach to the section 4 exceptions. The Competition Bureau has issued negative advisory opinions under these exceptions and the former Restrictive Trade Practices Commission has taken the position in the past that some activities involving unions, such as collective refusals to deal or supply or activities relating more in essence to the supply of products than labour, may in fact be subject to the Competition Act.

As such, section 4 of the Competition Act does not provide blanket exceptions for any and all trade union related activities and unions that become involved in activities that are illegal under the Competition Act may face liability.

Some limitations of section 4 of the Competition Act include the fact that section 4(1)(a) is limited to combinations of workmen or employees only (i.e., does not apply to other categories of individuals, such as owners/operators of companies), 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 section 4(1)(a).

Section 4(1)(c) is limited to collective bargaining by employers in an employer association with their employees. In this regard, members of employer associations that otherwise restrict competition can, and in some cases have been, exposed to Competition Act liability.

The collective bargaining exceptions under all of section 4(1) of the Competition Act (that is sections 4(1)(a)-(c)) are also limited by section 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 exceptions under section 4 of the Competition Act may not apply where there is an agreement to withhold products or refrain from acquiring products, other than the services of workmen or employees.

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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.

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