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 RESALE PRICE MAINTENANCE
UNDER SECTION 76 OF THE COMPETITION ACT

Section 76 of the federal Competition Act regulates resale price maintenance in Canada as a civil reviewable matter.

Section 76 applies, but is not limited to, manufacturer’s suggested retail prices  (MSRPs), minimum resale price policies and minimum advertised price (MAP) policies (e.g., where a distributor or retailer follows a producer’s or supplier’s pricing policy or agrees not to resell a product or advertise a product below a particular price).

MINIMUM PRICE POLICIES AND AGREEMENTS

Under section 76(1)(a)(i) of the Competition Act, the Competition Tribunal (Tribunal) can make remedial orders where a producer or supplier, by agreement, threat, promise or any like means influences upward or discourages the reduction of the price at which a customer, or any other person to whom a product comes for resale, supplies, offers to supply or advertises a product in Canada.

Section 76(1)(a)(i) only applies where a reseller’s prices have been actually influenced upward by “agreement, threat, promise or any like means”.

Under the former criminal price maintenance provision, it was held that an “agreement”, oral or written, required some constraining effect on another person.  A “threat” has been held to mean an urged course of action that carries with it some sanction or penalty in the form of intimidation, fulmination, harassment or warning.  A “promise” has been held to mean where a supplier offers a customer or reseller some advantage or favourable consequences for maintaining the supplier’s recommended prices.

In its Price Maintenance Enforcement Guidelines, the Competition Bureau’s position is that an “agreement, threat, promise or any like means” includes a supplier implicitly or explicitly conferring a benefit on a retailer who adheres to the supplier’s recommended resale or advertised prices or imposing a penalty on a retailer for disregarding a supplier’s recommended resale prices.

It was further held under the former price maintenance provision (section 61) that it was insufficient to show that a supplier attempted to maintain prices by mere discussion, persuasion, complaints, suggestions, requests or advice.

For the Tribunal to make an order under section 76(1)(a)(i) of the Competition Act, however, it must also be proven that the price maintenance conduct had, is having or is likely to have an adverse effect on competition in a relevant market. Merely influencing a reseller’s price or advertised price upward is not sufficient to obtain a Tribunal order without the required competitive effects test also being met.

After Canada’s price maintenance provisions were amended in 2009, Canada shifted from a per se criminal price maintenance offence to a civil market effects-based test for the different types of price maintenance under section 76 of the Competition Act.

While likely not determinative, in evaluating whether price maintenance conduct has an adverse effect on competition, whether a supplier possesses market power would likely be a key factor. In this respect, the Bureau’s position is that a market share of less than 35% will typically not prompt further examination. It is not yet clear, however, how the Tribunal will approach market definition and the competitive effects test under section 76 in relation to MAP, minimum price and similar types of supplier/producer policies given that the relative lack of case law to date under the amended section 76.

In addition to section 76(1)(a)(i), the Competition Act also includes a deeming provision (section 76(5)), under which any suggestion by a producer or supplier of a product of a resale price or minimum resale price for a product is deemed to be proof that a retailer has been influenced in its pricing, unless the supplier makes it clear that the retailer: (i) is not obligated to accept the suggestion; and (ii) would in no way suffer in their business relations with the producer or supplier or with any other person if they refuse to accept the suggestion.

ENFORCEMENT AND PENALTIES
UNDER SECTION 76 OF THE COMPETITION ACT

Under the civil price maintenance provisions of the Competition Act, the Competition Bureau or private parties granted leave by the Competition Tribunal to make an application to the Tribunal may commence price maintenance applications seeking remedial orders.

The Competition Tribunal may order that price maintenance conduct stop or, in the case of a refusal to deal under section 76, order a supplier to accept a person as a customer within a specified period of time on usual trade terms.

No civil fines (administrative monetary penalties or AMPs) are available under section 76, either to the Competition Bureau or private parties that have obtained leave from the Competition Tribunal to make private price maintenance applications. Also, like the other civil reviewable matters under the Competition Act, no damages actions can be commenced under section 76.

The routes to a remedy under section 76 are, therefore, the following: (i) a complaint made to the Competition Bureau in which the Bureau makes a price maintenance application to the Tribunal (or negotiates a remedy with the party being investigated, such as a civil consent agreement); (ii) a price maintenance application brought before the Competition Tribunal by the Competition Bureau directly; or (iii) an application to the Competition Tribunal by a private party that has obtained leave from the Tribunal.

MONETARY PENALTIES AVAILABLE
AS OF JUNE 20, 2025

Following amendments to the Competition Act on June 20 2024, the Competition Tribunal will be able to award monetary penalties in addition to remedial orders as of June 20, 2025 (which is the coming into force date for this penalties related amendment).

In this respect, the Competition Tribunal will be able to award successful private applicants or any other person affected by the price maintenance conduct, an amount up to the value of the benefit derived from the conduct that is the subject of a Tribunal order.

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OUR MAP, MINIMUM PRICE AND MSRP POLICY SERVICES

We have helped many clients with advice relating to MAP, minimum price and MSRP policies, including reviewing and drafting MAP/minimum price policies, advice on the legal risks of restricting resale or advertised prices and the Competition Bureau’s price maintenance related enforcement policies and guidelines.

We also advise clients as to how to minimize price maintenance, refusal to deal and other Canadian competition law risk relating to distributor, dealer and customer terminations. For more information, see: Refusal to Deal.

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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