Further sweeping amendments to the Competition Act (the Act) were announced in the Fall Economic Statement Implementation Act, 2023 introduced in the House of Commons on November 28.
These additional proposed amendments come shortly after the recently tabled Bill C-56, which includes proposed amendments to the Act including, among other things, extending the Commissioner of Competition’s (Commissioner) compulsory powers and repealing the exception available for efficiencies gains brought about by mergers.1
The Government of Canada has placed significant emphasis on reviewing and amending the Act, starting with the Minister of Innovation, Science and Industry (the ISED Minister) announcing his intention to review the Act in 2022,2 and the Government of Canada completing a consultation process for reviewing the Act earlier this year.3 An initial phase of amendments to the Act received royal assent in June 2022, also by way of an omnibus bill.4
The proposed amendments are:
- Longer period to challenge mergers not subject to mandatory notification
- Granting the Commissioner a three-year post-closing period to challenge mergers not subject to mandatory notification or for which an advance ruling certificate (ARC) was not issued. Currently, the Commissioner is only permitted to challenge such mergers within one year post-closing.
- New factors in determining whether a merger is likely to prevent or lessen competition substantially
- Allowing the Competition Tribunal (the Tribunal) to consider (i) any effect from the change in concentration or market share that a merger has or is likely to bring about and (ii) the likelihood the merger would result in express or tacit coordination between competitors in a market.
- Allowing the Tribunal to consider changes in concentration or market share weakens sub-section 92(2) of the Act, which prevents the Tribunal from finding that a merger is likely to prevent or lessen competition substantially based solely on the basis of concentration or market shares.
- New penalties for civilly reviewable collaborations that lessen or prevent competition
- Increasing penalties for civilly reviewable competitor collaborations that lessen or prevent competition to include:
- Orders for divestiture of assets or shares that are reasonable and necessary to overcome the anticompetitive effects of the agreement.
- Administrative monetary penalties not exceeding the greater of (i) $10 million ($15 million for subsequent orders) or (ii) three times the value of the benefit derived from the agreement or, if that cannot be reasonably determined, 3% of the worldwide gross revenues.
- Allowing private parties (with leave) to bring an application to the Tribunal for damages in the amount of the benefit derived from the conduct.
- Bill C-56 also contains proposed amendments that will broaden section 90.1 of the Act to apply to agreements between parties who are not competitors if a significant purpose of the agreement is to prevent or lessen competition.5
- Private actions and damages for abuse of dominance, refusal to deal, exclusive dealing, tied selling, and price maintenance
- Allowing private parties to bring private actions for damages under the civilly reviewable trade practices provisions. Leave from the Tribunal will be required to commence a private action.
- Defining damages as “an amount, not exceeding the value of the benefit derived from the conduct that is the subject of the order, to be distributed among the applicant and any other person affected by the conduct, in any manner that the Tribunal considers appropriate.”
- Expanding the test for leave to allow the Tribunal to grant leave if it believes it is in the public interest to do so. This would significantly broaden the test for leave.
- Currently, the Tribunal may grant leave (for a narrower set of private party applications), only if it has reason to believe an applicant’s business is directly and substantially affected by any conduct referred to in the relevant section that could be the subject of an order.
- Private parties have been able to bring applications to the Tribunal for alleged abuse of dominance since the amendments to the Act in June 2022. Currently, private parties are not entitled to damages and any administrative monetary penalties awarded are paid to the government.
- To date, only one private party has sought leave to bring an abuse of dominance application, but the application for leave was discontinued shortly after it was brought.6
- Private actions for deceptive marketing
- Allowing private parties to seek leave from the Tribunal to bring an application under the civil deceptive marketing provisions.
- In deciding an application brought by a private party, the Tribunal may not draw any inference from the fact the Commissioner has or has not taken any action on the issues raised by the private party.
- Penalties include prohibition orders, restitution orders, and payment of an administrative monetary penalty that is currently the greater of (i) $750,000 or (ii) three times the value of the benefit derived for an individual, or the greater of (i) $10 million or (ii) three times the value of the benefit derived or if that amount cannot be reasonably determined, 3% of the corporation’s annual worldwide gross revenues.
- While the Tribunal will be able to impose administrative monetary penalties where it believes this is warranted, these are payable to the government – in other words, from a financial perspective, while successful private litigants may be able to recover some or all of their legal costs, there will be no right to damages.
- Prohibition against misleading environmental benefit claims
- Specifying that a representation to the public in the form of a statement, warranty or guarantee of a product’s benefits for protecting the environment or mitigating the environmental and ecological effects of climate change that is not based on proper and adequate testing, the proof of which lies with the person making the representation, is misleading within the meaning of the deceptive marketing provisions.
- Representations of this type could be found to be misleading under the Act’s current provisions, and this proposed amendment simply codifies this prohibition.
- New certificate regime for agreements and arrangements related to protecting the environment
- Where the Commissioner is satisfied an agreement is not likely to prevent or lessen competition, and the agreement is entered into for the purpose of protecting the environment, the Commissioner will issue a certificate that is registered with the Tribunal.
- Once an agreement or arrangement is the subject of a registered certificate, it is no longer reviewable under the Act’s criminal conspiracy and civil competitor collaboration provisions.
- Prohibition against reprisal actions
- Upon application by the Commissioner or an affected party, a federal or provincial court can grant a prohibition order and impose significant administrative monetary penalties against anyone engaging in a reprisal action.
- Defining reprisal actions as actions taken to “penalize, punish, discipline, harass or disadvantage another person” as a result of that person’s communications with the Commissioner or actual cooperation or expressed intention to cooperate with the Commissioner.
- No costs awarded against the Commissioner
- Barring the Tribunal from awarding litigation costs against the Commissioner unless it would imperil confidence in the administration of justice or have a substantial adverse effect on the other party’s ability to carry on business. This is likely to be a high threshold that will immunize the Commissioner from costs awards in all but exceptional cases.
- Penalties for failure to comply with consent agreements
- Upon application by the Commissioner, a court can impose penalties where it determines that a person, without good and sufficient cause (proof of which lies with the person), has failed to comply with a consent agreement.
- Penalties include prohibition orders, prescriptive orders, and administrative penalties in an amount to be determined by the court and not exceeding $10,000 for each day of non-compliance.
Key takeaways
Between these proposed amendments and those in Bill C-56 (tabled less than three months ago) there are likely to be significant changes made to the Act in the coming months that represent the most significant changes to the Act in decades. Although both bills will be debated and revised in committee in the House of Commons and Senate, the government’s focus on amending the Act and the quick approval of amendments to it in 2022 make it unlikely the proposed amendments in either bill will receive meaningful scrutiny before becoming law.
It is expected the Competition Bureau will provide additional guidance on its approach to enforcing provisions of the Act if the proposed amendments become law; however, it is unclear how meaningful or timely this guidance will be. What is clear is, if the proposed amendments pass as is, their impact on Canadian businesses will be significant.
We will continue to monitor the developments in this area and provide further analysis on any resulting amendments to the Act.
