On June 23, 2022, the first round of significant and expansive amendments to the Competition Act (the "Act") came into effect (the "2022 Amendments"). The 2022 Amendments, together with amendments that are expected to come into effect next year on June 23, 2023 (the "2023 Amendments" and together with the 2022 Amendments, the "Amendments") signal a transformational wave.
From employment law and marketing practices to mergers and acquisitions, the Amendments intersect with all aspects of business. The Amendments will have sweeping and far-reaching effects on business operations regardless of industry, sector or size.
In keeping with the changing tide and to fully consider the impact of the Amendments, members of our Competition Group will be providing you with in-depth and focused insights on the following topics:
- wage-fixing and no-poach agreements;
- deceptive marketing practices and drip pricing;
- abuse of dominance and private access;
- mergers and notifiable transactions;
- competitor collaborations; and
- section 11 orders.
These insights will be published on a weekly basis to provide you with a practical no-nonsense view of what the Amendments mean for business and how they fit into the broader framework of existing jurisprudence and enforcement practices.
Highlights
The Amendments:
- criminalize certain wage-fixing and no-poach agreements;
- increase penalties for deceptive marketing practices, abuse of dominance and conspiracy;
- introduce specific civil and criminal prohibitions against drip pricing;
- extend private access to the Competition Tribunal for abuse of dominance cases;
- expand the scope of the Act's merger review provisions and create an anti-avoidance rule for pre-merger notifications;
- expand the scope of the Act's competitor collaboration provisions; and
- expand the Commissioner of Competition ("Commissioner")'s formal evidence gathering powers.
Summary of the Amendments
1. Wage-Fixing and No-Poach Agreements
- As of June 23, 2023, it will be a criminal offence for employers to agree to fix, maintain, decrease or control wages or other terms of employment and to refrain from hiring or trying to hire one another's employees under certain circumstances. Violation of this provision includes imprisonment for a maximum period of 14 years or a fine to be set at the discretion of the court, or both.
2. Deceptive Marketing Practices and Drip Pricing
- Administrative Monetary Penalties for Deceptive
Marketing Practices
- Corporations
- Greater of:
- CAD$10 million (CAD$15 million for each subsequent order); or
- three times the value of the benefit derived from the deceptive conduct, or if the benefit cannot be reasonably determined, up to 3% of the corporation's annual worldwide gross revenues.
- Greater of:
- Individuals
- Greater of:
- CAD$750,000 (CAD$1 million for each subsequent order); or
- three (3) times the value of the benefit derived from the deceptive conduct, if that amount can be reasonably determined.
- Greater of:
- Corporations
- Unattainable price representations resulting from non-government-imposed fixed obligatory charges or fees are prohibited under the civil and criminal deceptive marketing provisions of the Act
3. Abuse of Dominance and Private Right of Access
- "anti-competitive act" is defined in the Act as one that is intended to have a predatory, exclusionary, or disciplinary negative impact on a competitor, or to have an adverse effect on competition.
- The non-exhaustive list of factors considered when evaluating
the competitive impact of business practices under abuse of
dominance concerns have been updated to include:
- effects on barriers to entry, such as network effects;
- effects on both price competition and non-price competition, such as quality, choice or consumer privacy;
- the nature and extent of change and innovation in the relevant market; and
- any other factor that is relevant to competition in the market that is or would be affected by the business practice.
- A selective or discriminatory response by a dominant player to make it more difficult for a competitor to enter a market or grow, or to remove a competitor from a market is a business practice that may be considered an abuse of dominance.
- Administrative Monetary Penalties for Abuse of
Dominance
- Greater of:
- CAD$10 million (CAD$15 million for each subsequent order); or
- three (3) times the value of the benefit derived from the deceptive conduct, or if the benefit cannot be reasonably determined, up to 3% of the corporation's annual worldwide gross revenues.
- Greater of:
- Private parties (including competitors) can apply to the Competition Tribunal for leave to bring an application alleging abuse of dominance.
4. Mergers and Notifiable Transactions
- The non-exhaustive list of factors considered when evaluating
the competitive impact of mergers have been updated to include:
- network efforts as another example of a barrier to entry in a market;
- the possible entrenchment of leading incumbents' market position; and
- effects on both price competition and non-price competition, such as quality, choice or consumer privacy.
- A new provision has been added to the Act to ensure mandatory merger notification requirements apply to transactions that have been designed to avoid notification.
- Timing-related clarifications on filing and calculation of waiting periods are provided.
5. Competitor Collaborations
- The non-exhaustive list of factors considered when evaluating
the competitive impact of competitor collaborations have been
updated to include:
- network efforts as another example of a barrier to entry in a market;
- the possible entrenchment of leading incumbents' market position; and
- effects on both price competition and non-price competition, such as quality, choice or consumer privacy.
- As of June 23, 2023, the monetary penalties for criminal agreements between competitors to fix prices, restrict supply or allocate markets will no longer be capped at CAD$25 million. Rather, monetary penalties will be subject to the discretion of the court.
6. Section 11 Orders
- The Commissioner can seek orders to compel foreign and domestic affiliates of any person to produce written records where the affiliate has or is likely to have records or information relevant to the Commissioner's inquiry.
- The Commissioner can seek orders against any person if they carry on business in, or sell into Canada, even if the person is located outside of Canada.
To stay up to date on how your business may be affected, stay tuned for more information from Miller Thomson's Competition Group.
The authors would like to thank Wendy Wang, Summer Student, for her contributions to this article.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
