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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OVERVIEW OF CANADIAN
COMPETITION LAW ENFORCEMENT

Canada’s federal Competition Act is enforced and administered by the Competition Bureau, which is a federal enforcement agency based in Ottawa and headed by the Commissioner of Competition.

The Competition Bureau investigates potential criminal competition law offences and civil reviewable matters under the Competition Act based on its own investigations, complaints from consumers, competitors and other marketplace participants and information it obtains from applicants seeking immunity or leniency under its Immunity and Leniency Programs.

The Competition Bureau has significant powers to investigate potential violations of the Competition Act. These include the ability to obtain court orders to search premises and seize documents, search and seize computer records, tap phone lines, compel individuals to testify under oath or require companies and individuals to produce documents or responses to written information requests.

CIVIL MATTERS AND CRIMINAL OFFENCES

Criminal Competition Act Offences

The Commissioner of Competition has the power to investigate and refer criminal matters under the Competition Act to the Director of Public Prosecutions (DPP) for prosecution.

Criminal offences under the Competition Act include conspiracy (price-fixing, market allocation/division and supply/output restriction agreements between competitors), wage-fixing and no-poaching agreements between employers,  bid-rigging, criminal misleading advertising, deceptive telemarketing and pyramid selling.

While the Competition Bureau investigates potential violations of the Competition Act’s criminal offences, the responsibility for prosecutions lies with the DPP. In practice, the Competition Bureau and the Public Prosecution Service work closely together on criminal competition law investigations and prosecutions.

Civil Reviewable Matters

The Commissioner of Competition is also responsible for investigating and initiating applications relating to potential violations of the Competition Act’s civil reviewable matters sections.

The reviewable matters provisions of the Competition Act are civil (not criminal) sections, under which proceedings are commenced before the federal Competition Tribunal and in some cases also before provincial or federal courts (in the case of civil deceptive marketing). The Competition Tribunal is a specialized administrative tribunal consisting of judges and lay experts.

Civil reviewable matters under the Competition Act include the abuse of dominance (sections 78 and 79), civil agreements (section 90.1), civil misleading advertising (section 74.01) exclusive dealing (section 77), market restriction (section 77) and tied selling (section 77) provisions.

COMMENCEMENT OF COMPETITION
LAW MATTERS

Proceedings may be commenced under the Competition Act by the Competition Bureau itself based on its own investigations or based on complaints from customers, competitors or other industry participants.

In many criminal cases, the Competition Bureau commences investigations based on parties applying for immunity or leniency under the Bureau’s formal Immunity or Leniency Programs. This may include individuals or companies that, for example, were parties to an illegal conspiracy (e.g., a criminal price-fixing agreement) or bid-rigging agreement and apply to the Bureau seeking full immunity from prosecution or, where unavailable, leniency in sentencing.

The Competition Bureau’s Immunity and Leniency Programs are its leading tools for enforcing the criminal provisions of the Competition Act and can be a significant safe harbour for companies or individuals implicated in potential criminal competition law violations. The Competition Bureau updated its Immunity and Leniency Programs in June 2024 to include wage-fixing and no-poaching agreements between employers. For more information, see: Immunity and Leniency Programs Under the Competition Act.

WHISTLEBLOWERS AND REPRISAL ACTIONS

The Competition Bureau relies on whistleblowers for some of its enforcement matters. For more information see: whistleblowers.

In addition, as a result of amendments to the Competition Act on June 20, 2024 (Bill C-59), new provisions to prohibit “reprisal actions” taken to penalize, punish, discipline, harass or disadvantage any person because of their communications or cooperation with the Bureau were added to the Competition Act.

Under these new reprisal action provisions, an application can be brought by the Commissioner of Competition or a person directly and substantially affected by an alleged reprisal action.

The potential penalties for violating these reprisal action provisions are prohibition orders to stop a person from continuing the conduct and administrative monetary penalties of, for an individual, up to $750,000 ($1 million for subsequent orders) and, for corporations, up to $10 million ($15 million for subsequent orders).

PRIVATE ACTIONS AND PRIVATE
ACCESS APPLICATIONS

In addition to Competition Bureau investigations, private parties may also in some cases commence private civil actions or class actions for violations of the criminal sections of the Competition Act, including under sections 45 (conspiracy), 47 (bid-rigging) and 52 (criminal misleading advertising).

Private parties may also commence private access applications before the Competition Tribunal under a number of provisions of the Competition Act (sections 75 (refusal to deal), 76 (price maintenance), 77 (exclusive dealing, tied selling and market restriction) and 79 (abuse of dominance)).

In addition, as a result of amendments to the Competition Act on June 20, 2024 (Bill C-59), as of June 20, 2025, private parties will also be able to commence private access applications under sections 90.1 (the civil agreements provision) and 74.1 (for civil deceptive marketing matters under Part VII.1 of the Competition Act).

COMPETITION BUREAU
COMPETITION ADVOCACY

In addition to direct enforcement – for example, compulsory production court orders, search warrants, Competition Tribunal applications and references for prosecution of criminal matters – the Competition Bureau can, and consistently does, engage in competition advocacy in Canada.

In this respect, the Competition Bureau has the power under sections 125 and 126 of the Competition Act to make representations to federal or provincial boards, commissions or other tribunals. This may include pro-competition related submissions to regulators, legislators and others involved in the formulation and enforcement of federal or provincial laws or regulations.

The Bureau often uses its competition advocacy powers where it either does not want to commence formal enforcement or cannot use its direct enforcement powers (e.g., in relation to regulated markets in which it does not have jurisdiction to take enforcement measures based on the regulated conduct doctrine (RCD)).

The Competition Bureau has also interpreted its advocacy authority under the Competition Act to carry out market studies and develop competition policy related positions. As a result of significant amendments to the Competition Act in 2023, the Competition Bureau now has much stronger powers to conduct formal market studies (see discussion below).

The Competition Bureau’s main arguments in relation to its competition advocacy efforts have generally been threefold for regulators and policy makers: first, they should regulate only where necessary; second, they should impose the most minimal restrictions on competition to achieve their regulatory goals; and third, they should rely on market forces as much as possible to maintain competition.

Over the years, the Competition Bureau has often encouraged regulators, at the federal, provincial and local levels, to apply a “competition lens” to proposed regulation.

The Competition Bureau has advocated for increased competition in a wide range of Canadian sectors, including the ride-sharing/taxi, telecom, propane, pharmacy, dentistry, optometry, dental hygiene, real estate services and online health and banking services sectors, among many others.

For companies, associations and other marketplace participants, the Bureau’s advocacy powers (and interest in encouraging competition in Canadian markets) can be a potentially helpful tool to reduce anti-competitive regulation and help alleviate marketplace and competitor issues (e.g., entrenched competitors or legislated restrictions on business models and services).

COMPETITION BUREAU MARKET STUDIES

On December 15, 2023, Bill C-56 (An Act to amend the Excise Tax Act and the Competition Act), which introduced new significant amendments to the Competition Act, largely came into force. As part of these 2023 amendments, formal market inquiry powers were given to the Competition Bureau under the newly added section 10.1 of the Competition Act.

In general, section 10.1 gives the Competition Bureau the power to conduct inquiries into the state of competition in a market or industry if the Commissioner of Competition is of the opinion that it is in the public interest to do so.

The Competition Bureau’s market study powers require it to prepare and publish the terms of reference for the study, allow the public to provide comments for a minimum of 15 days and publish a final report. These new market study provisions also allow participants that were compelled under section 11(1) of the Competition Act to participate in a market study to comment on the draft report and make confidentiality related requests prior to final publication of the Competition Bureau’s report.

These formal market study powers were given to the Competition Bureau in 2023 as a result, among other things, of perceived limitations on its ability conduct such studies under the existing provisions of the Competition Act (e.g., under sections 125 and 126, under which the Competition Bureau has historically based its competition advocacy efforts).

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.

COMPETITION ACT PENALTIES

Violation of the Competition Act can result in significant penalties, lost time and negative publicity for individuals, companies, trade/professional associations and their directors and officers.

Some of the potential penalties for violating the Competition Act include criminal fines, civil administrative monetary penalties (AMPs), imprisonment, damages or settlements arising from private civil actions and court orders (e.g., injunctions or prohibition orders) to stop or modify conduct.

Some of the specific potential penalties for Competition Act violations include criminal fines with no prescribed limit (e.g., for conspiracy offences and bid-rigging), imprisonment for up to 14 years (for conspiracy offences and bid-rigging) and AMPs of up to the greater of $25 million ($35 million for each subsequent order), three times the value of the benefit derived from the abusive conduct or, if the latter amount cannot be reasonably determined, 3% of the person’s annual worldwide gross revenues (for abuse of dominance, under section 79).

The record Canadian conspiracy (cartel) penalty to date is CDN $50 million, in a bread price-fixing investigation in which Canada Bread agreed to pay this fine after pleading guilty to fixing wholesale bread prices (for more information, see: here).

In addition, as a result of amendments to the Competition Act on June 20, 2024 (Bill C-59), new provisions to prohibit “reprisal actions” taken to penalize, punish, discipline, harass or disadvantage any person because of their communications or cooperation with the Bureau were added to the Competition Act. Under these new reprisal action provisions, an application can be brought by the Commissioner of Competition or a person directly and substantially affected by an alleged reprisal action.

The potential penalties for violating these reprisal action provisions are prohibition orders to stop a person from continuing the conduct and administrative monetary penalties of, for an individual, up to $750,000 ($1 million for subsequent orders) and, for corporations, up to $10 million ($15 million for subsequent orders).

There is also potential director and officer liability under the Competition Act. In this regard, the Competition Bureau commonly pursues individual executives as accused in criminal matters and plaintiffs frequently name directors and officers as defendants in civil competition law actions and class actions.

COMPETITION BUREAU SEARCHES

The Competition Bureau’s enforcement powers also include the ability to obtain search warrants to search premises and seize records, which may include documents and computer records.

The Competition Act also includes criminal obstruction provisions, which make it an offence to impede or prevent or attempt to impede or prevent inquiries or examinations under the Competition Act.

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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.

To contact us about a potential legal matter, see: contact

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