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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OVERVIEW OF WRITTEN OPINIONS
UNDER SECTION 124.1
COMPETITION ACT

Under section 124.1 of the Competition Act, any person may apply to the Commissioner of Competition, with supporting information, for a binding written opinion regarding the application of one or more sections of the Competition Act to proposed conduct. For more information, see: Competition Bureau Fee and Service Standards Handbook for Written Opinions.

Written opinions from the Competition Bureau are available under the following sections of the Competition Act, among others: 45 (conspiracy), 52 and 74.01 (civil and criminal misleading advertising), 52.1 (deceptive telemarketing), 55 and 55.1 (multi-level marketing and pyramid selling), 74.01(1)(b) (performance claims), 74.01(2) and 74.01(3) (ordinary selling price (OSP) claims), 74.06 (promotional contests), 76 (resale price maintenance), 77 (exclusive dealing, tied selling and market restriction), 79 (abuse of dominance) and 90.1 (the civil agreements section).

Written opinions from the Competition Bureau are one way, in addition to legal advice, to obtain comfort for some types of proposed business practices that could potentially raise issues under Canadian competition law. Advisory opinions, however, are only available for proposed conduct (i.e., for future proposed activities).

Importantly, the Commissioner of Competition has discretion under the Competition Act to issue written opinions and may consider factors including whether the Competition Bureau’s recommended information requirements to apply for an opinion have been met, facts are uncertain or hypothetical or issuing a written opinion might interfere with an ongoing examination or inquiry by the Bureau.

A written opinion, if issued, will state whether, in the Commissioner of Competition’s opinion, particular sections of the Competition Act included in the request apply to the proposed conduct.

Importantly, however, that the Competition Bureau has narrowed the scope of advice provided under such opinions. The Competition Bureau’s current policy is not to provide an assessment of the effects on competition of proposed conduct. The Bureau will also not provide an opinion on the application of potential defences.

In addition, there are some sections of the Competition Act that do not currently fall within the Commissioner of Competition’s policy for written opinions. As such, while the Competition Act refers to “any provision of the Act”, the Commissioner exercises discretion in issuing opinions in relation to some topics and sections of the Competition Act.

Written opinions are typically sought with confidentiality requests, including invoking section 29 of the Competition Act and the Competition Bureau’s policies and procedures relating to confidentiality.  Section 29 sets of the Competition Act sets out confidentiality protections for information provided to the Competition Bureau including voluntarily provided information for written opinion applications under section 124.1.

A written opinion, if issued by the Competition Bureau, is binding on the Commissioner of Competition if all of the material facts have been submitted, they are accurate and for as long as the relevant facts remain substantially unchanged.

The Competition Bureau has issued guidelines for what it recommends be included in written advisory opinion applications. For more information, see: Competition Bureau Fee and Service Standards Handbook for Written Opinions.

ENVIRONMENTAL AGREEMENT CERTIFICATES

In addition to written opinions from the Competition Bureau discussed above, As a result of amendments to the Competition Act on June 20 2024 under Bill C-59, a new mechanism was introduced allowing the Commissioner of Competition to issue environmental agreement certificates.

An environmental clearance certificate, where issued, confirms that the Commissioner is satisfied that a proposed agreement is both: (i) for the purpose of protecting the environment; and (ii) not likely to prevent or lessen competition substantially in a market.

Where an environmental agreement certificate is valid and registered with Canada’s federal Competition Tribunal, the following sections of the Competition Act will not apply: sections 45 (criminal conspiracy agreements), 47 (criminal bid-rigging) and 90.1 (the civil agreements provision).

An environmental agreement certificate can, therefore, provide an exception to the conspiracy/cartel related provisions of the Competition Act where it is validly issued and registered with the Competition Tribunal, providing comfort to parties to environment-related agreements that they do not face potential criminal competition law liability.

For more information, see: Environmental Certificates.