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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“The Bureau considers predatory pricing to be a firm deliberately setting prices to incur losses for a sufficiently long period of time to eliminate, discipline, or deter entry by a competitor, in the expectation that the firm will subsequently be able to recoup its losses by charging prices above the level that would have prevailed in the absence of the impugned conduct, with the effect that competition would be substantially lessened or prevented.”
(Competition Bureau,
Predatory Pricing Enforcement Guidelines)
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OVERVIEW OF PREDATORY PRICING
UNDER THE CANADIAN COMPETITION ACT
In general, predatory pricing occurs where a dominant firm sets its prices below some measure of cost for a period of time sufficient to eliminate, discipline or deter new entry by a competitor, in order to later recoup its losses by charging prices above the competitive level that would have prevailed with the competitor still in the market.
Before 2009, predatory pricing could be challenged in Canada under the federal Competition Act both by private plaintiffs or the Competition Bureau under a standalone criminal predatory pricing provision of the Competition Act or by the Competition Bureau under the civil abuse of dominance provision of the Competition Act (section 79).
In 2009, the former criminal predatory pricing provision was repealed and predatory pricing could only be challenged by the Competition Bureau under section 79 of the Competition Act (abuse of dominance).
Following significant amendments made to the Competition Act that came into force on June 23, 2022, private access applications to the Competition Tribunal (i.e., the ability of private parties, and not only the Competition Bureau, to commence Competition Tribunal applications) were extended to include abuse of dominance under section 79. Prior to this amendment, only the Competition Bureau could commence abuse of dominance applications before the Competition Tribunal.
For more information, see: Abuse of Dominance and Competition Act Amendments.
Predation cases in Canada, however, are relatively uncommon and there have only been a handful of civil and criminal predatory pricing cases in Canada since the modern Competition Act was introduced in 1986.
A number of key predatory pricing law issues remain to be settled in Canada including the appropriate measure of cost for reference to below cost pricing, issues generally relating to the application and scope of section 79 of the Competition Act (under which there has only been a relatively small number of fully contested cases since 1986) and the scope and meaning of subparagraph 78(1)(i) of the Competition Act, which contains a standalone predation provision that makes it a reviewable practice (i.e., civil matter subject to administrative monetary penalties (AMPs)) for a dominant firm to sell articles at a price lower than acquisition cost to discipline or eliminate a competitor.
Substantive Test to Establish Predatory Pricing
Under Section 79 of the Competition Act
To establish that a firm has engaged in predatory pricing, all of the elements of section 79 of the Competition Act must be established by the Competition Bureau or by a private party (with leave from the Competition Tribunal under section 103.1 of the Competition Act) on an application to the Competition Tribunal.
In December 2023, significant amendments were made to section 79 of the Competition Act (abuse of dominance) replacing the former substantive test for abuse of dominance with several tests depending on the type of remedy being sought.
The potential penalties for abuse of dominance were also amended and increased.
For more information, see: Abuse of Dominance and Competition Act Amendments.
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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
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