Written By Randal Hughes, Melanie Aitken, Adam Kalbfleisch, Zirjan (Zee) Derwa and Christina Skinner
On April 26, 2022, the government of Canada revealed significant proposed amendments to the Competition Act (the Act) as part of the Budget Implementation Act, 2022, No. 1 (the BIA). As expected, these amendments have now come into force with the BIA receiving Royal Assent on June 23, 2022. The changes constitute the first step in the federal government's plan for comprehensive reform to the Act, characterized by the government as an initiative to improve the effectiveness of the Act, and better protect Canadian consumers and the integrity of the marketplace.
Unfortunately, by including these amendments in an omnibus budget bill the government precluded any opportunity for meaningful consultation or debate on their substance and any opportunity to propose revisions to the implementing language, which may result in unintended consequences. As the expedited process unfolded, many stakeholders expressed concerns and advocated for the government to carefully consider and adequately debate the proposed legislative changes given the potential for a material impact on competition policy and economic growth in Canada. Notwithstanding the calls for consultation, these amendments have largely avoided scrutiny by being pushed through in the BIA, which was the same process in 2009 when the Act was last meaningfully amended.
The current round of amendments has expanded the scope of the Act, providing the Competition Bureau with broader enforcement powers and significantly increasing the penalties available under the Act. The following is a brief summary of the key amendments that are now in force. For a more in-depth discussion of these changes, please see our previous insight, Canadian Competition Act Reform: First Round of Significant Amendments.
Summary of Key Changes
- No-poach and wage-fixing agreements between employers will be criminalized effective June 23, 2023. This delay is designed to provide time for employers to evaluate and modify their practices to avoid potential criminal liability under these new provisions.
- Fines for criminal conspiracy convictions and administrative monetary penalties (AMPs) for civilly reviewable matters (i.e., deceptive marketing practices and abuse of dominance) have significantly increased:
- For criminal conspiracy convictions, the current maximum fine of $25 million has been increased to a fine "in the discretion of the court". The maximum term of imprisonment upon conviction remains 14 years.
- For findings of anticompetitive conduct relating to civilly misleading representations and abuse of dominance, the maximum AMP that may be issued by the Competition Tribunal is the greater of the current AMP amounts ($10 million for a first order and $15 million thereafter); and three times the value of the benefit derived from the conduct (if that amount can be reasonably determined), or three percent of the corporation's annual worldwide gross revenues.
- The Act now explicitly prohibits "drip pricing" under both the criminal and civil false and misleading advertising provisions. Drip pricing is the practise of offering or advertising unattainable headline prices to attract consumers while adding or burying additional fixed obligatory charges or fees in the final price, making the headline price unobtainable.
- Private parties who are substantially affected by alleged anti-competitive conduct of a dominant firm may now seek leave from the Tribunal to commence their own action for abuse of dominance. The amendments also codify the current jurisprudence by no longer requiring that conduct be shown to be harmful to a competitor.
- The Tribunal may now consider additional factors in the context of mergers and civilly reviewable competitor collaborations in determining whether there is a substantial prevention or lessening of competition.
- A new anti-avoidance provision now prohibits transaction structures that are designed to avoid the application of the pre-merger notification provisions of the Act.
The Bureau has announced the enactment of these amendments and issued a short guide outlining the changes. In its news release, the Bureau said it will host public information sessions and publish additional guidance in the coming weeks to inform stakeholders about the amendments and their impact.
These amendments address only some of the areas of concern regarding Canada's competition law that have been identified by the government and it is widely expected that the government will pursue a second round of amendments to address additional issues. Please see our previous insight, Canada First: Sound Policy Must Prevail over Groupthink, for a discussion of the various recommendations for legislative change. A review of Canada's competition laws is welcome to ensure the Act effectively and efficiently serves its purpose; however, one hopes that the government will allow for appropriate consultation and scrutiny going forward, to avoid unintended and possibly harmful effects on Canadians.
If you have any questions about the new amendments to the Act, please contact the Bennett Jones Competition/Antitrust Group.