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).

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Competition Bureau Preliminary Guidance on the Mergers
and Restrictive Trade Practices Provisions of the Competition Act

On November 7, 2024, the Competition Bureau issued preliminary guidance relating to the recent changes to the provisions on mergers and restrictive trade practices under the Competition Act – see:  here.

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“As part of its mandate, the Competition Bureau uses a wide range of tools to promote and advocate for the benefits of a competitive marketplace. Market studies are one of these tools. They involve in-depth examinations of a market, industry, or competition-related topic to identify competition issues and suggest potential solutions while improving our understanding of the competitive dynamics at play.”

(Competition Bureau,
Guide to the December 2023 amendments to the Competition Act)

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DECEMBER 2023 COMPETITION ACT AMENDMENTS

On December 15, 2023, Bill C-56 (An Act to amend the Excise Tax Act and the Competition Act), which introduced the first of two new significant rounds of amendments to the federal Competition Act, largely came into force.

This first new round of amendments to the Competition Act, which is intended to strengthen the ability of the Competition Bureau (Bureau) and private parties to enforce Canadian competition law and enhance competition generally in Canada, includes fundamental changes to Canadian competition law not seen since the last major amendments to the Competition Act in 2009.

In general, the amendments to the Competition Act under Bill C-56 include new broad powers for the Bureau to conduct formal market studies, changes to the core substantive test for abuse of dominance under section 79 (creating new two-track tests for abuse of dominance), increased penalties for abuse of dominance, broadening the civil agreements provision (section 90.1) to include agreements between non-competitors (i.e., to also apply to vertical agreements, such as distribution/supply agreements and vertical joint venture agreements) and repealing the efficiencies defences under section 90.1 and also for mergers under section 96.

These amendments 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 have not reviewed their business practices to reflect Canada’s new competition law.

The amendments introduced by Bill C-56 in December 2023 are expected to be followed by a second and more significant round of amendments contained in Bill C-59, which is currently working its way through Parliament. If passed, Bill C-59 would be the most important amendments to Canadian competition law since the current modern Competition Act replaced the former Combines Investigation Act in the 1980s.

For more information about the December 2023 amendments, see: Significant Canadian Competition Act Amendments Come Into Force (Bill C-56). See also: Competition Bureau, Guide to the December 2023 amendments to the Competition Act. For more information about Bill C-59, the second federal amendment bill, which has not yet passed, see here.

Amendments to Competition Bureau
Market Studies Powers Under the Competition Act

Following amendments to the Competition Act enacted on December 15, 2023 pursuant to Bill C-56, the Bureau was given new and broad formal powers to conduct market inquiries under the newly enacted section 10.1 of the Competition Act.

Before the December 2023 amendments to the Competition Act, Canada’s Commissioner of Competition (Commissioner) carried out market related studies based on publicly available information and where the relevant parties in a study participated voluntarily (e.g., under sections 7, 125 and 126 or the Competition Act).

In the Bureau’s Guide to the December 2023 amendments to the Competition Act, its position is that the new formal market inquiry related powers enacted by Bill C-56 do not restrict it from continuing to undertake market studies under other relevant sections of the Competition Act as well and that it will continue to do so “in appropriate cases.”

Commencement of Market Inquiries

The Bureau may now, either on its own initiative or at the direction of the Minister of Innovation, Science and Industry (Minister) conduct an inquiry into the state of competition in a market or industry under sections 10.1(1) or 10.2(2) of the Competition Act.

In either case, either the Commissioner or the Minister (as applicable) must be of the opinion that it is in the public interest to commence a market inquiry.

Competition Bureau Market Inquiry Powers

With respect to enforcement, the Commissioner may apply for a court order to compel oral examinations, production of records or written returns under section 11(1) of the Competition Act (i.e., obtain orders under section 11 of the Competition Act from a court to compel testimony or the mandatory production of documents or information).

Such orders under section 11 were previously, before the passage of Bill C-56, reserved for only specific types of enforcement matters as set out under section 10 of the Competition Act (the general inquiries provision of the Competition Act, which may still be used by the Bureau as a basis to compel the production of information or testimony in relation to civil or criminal investigations).

The market inquiry provisions under section 10.1 also include additional requirements to prepare and publish terms of reference, allow for public comments for 15 days and to publish a publicly available final report.

In addition, market inquiries may be extended by the Minister for a period (or successive periods) of up to three months.

The Bureau’s formal market inquiries powers under the amended section 10.1 of the Competition Act potentially exposes businesses to the risk of being compelled to produce records or information (or for their employees or other personnel to participate in oral examinations) even in the absence of any formal enforcement by the Bureau.

Resources (Competition Act Investigations,
Enforcement and Remedies)

For more information about Canadian competition law investigations, enforcement and remedies, see: Advisory Opinions, Competition Act Complaints, Competition Act Litigation, Competition Law Enforcement, Competition Bureau Immunity and Leniency Programs and Whistleblowers.

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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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For more information about our firm, visit our website: Competitionlawyer.ca