Bill C-59 Receives Royal Assent

The Evolving Competition Law Landscape in Canada – Where Are We Now and What's Next?

The final (and most significant) legislative bill in Canada's current competition law reform process – Bill C-59 – received royal assent on June 20, 2024.

Recognizing the critical role of the Competition Act (the "Act") in promoting dynamic and fair markets, Canada's Minister of Innovation, Science and Industry, the Honourable François-Philippe Champagne, announced on February 7, 2022 that he would carefully consider ways to modernize and improve its operation. Following this announcement, significant competition law reform has taken place in Canada, including the passage of the following three bills:

• Bill C-19, also known as the Budget Implementation Act, 2022, No.1, received royal assent on June 23, 2022. The key aspects of this bill are discussed in our previous blog post titled "Significant Amendments to Canada's Competition Act Are Now Law: What You Need to Know".
• Bill C-56, also known as An Act to amend the Excise Tax Act and the Competition Act, received royal assent on December 15, 2023. The key aspects of this bill are discussed in our previous blog post titled "Significant Competition Act Amendments on the Horizon".
• Bill C-59, also known as An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, received royal assent on June 20, 2024. The key aspects of this bill are discussed in our previous blog post titled " Further Significant Proposed Amendments to the Competition Act in the areas of Merger Review, Ordinary Sales Pricing, Drip Pricing and Environmental Claims".

The amendments to the Act included in Bills C-19, C-56 and C-59 (collectively, the "Bills") touch on virtually all facets of competition policy in Canada, including, without limitation, merger review, abuse of dominance, criminal cartels, competitor collaborations, deceptive marketing, greenwashing, private rights of action and market studies. All provisions of the Bills are now in force, with the exception of a select few amendments which will come into force in 2024 and 2025 as highlighted below.

According to the Government's 2023 Fall Economic Statement, these amendments are "generational changes" that "will help bring Canada into alignment with international best practices to ensure that our marketplaces promote fairness, affordability, and innovation". We would go further and describe these amendments as the most significant changes to the Act in almost 40 years – changes that fundamentally alter and transform the competition law landscape in Canada!

Bill C-352, a private member's bill introduced by the Jagmeet Singh (leader of the NDP) on September 18, 2023 that proposed a few additional changes to the Act, was defeated at the Committee stage on June 17, 2024. Accordingly, with the passage of Bill C-59, the current competition law reform process in Canada may finally be at an end.

Key Changes to the Competition Act

The key changes to the Act included in the Bills, which could have a resounding and far-reaching impact on companies doing business in Canada, are summarized below. These changes will be discussed in more detail in an upcoming series of blog posts from Fasken.

• Merger Provisions: The Bills include many changes that reshape the merger review process in Canada, including, most importantly, the repeal of the efficiencies defence; the introduction of rebuttable structural presumptions and a new test for merger remedies. Other changes to the merger review process include explicit consideration of labour issues; the addition of new factors to consider for the purpose of determining whether a merger will likely result in a substantial prevention or lessening of competition (an "SPLC"), such as network effects, changes in concentration and the likelihood that the merger will result in express or tacit coordination between competitors; changes to the limitation period; changes to way the "size of transaction" threshold is calculated for pre-merger notification purposes; and provisions providing for an automatic "interim interim" injunction where an injunction has been sought in the mergers context.
• Abuse of Dominance Provisions: The Bills include many changes to the abuse of dominance provisions, including, most importantly, introducing a new framework that would apply a different test depending on the remedy being sought. Other changes to the abuse of dominance provisions include an expanded definition of "anticompetitive act"; the additional of new examples of anticompetitive acts, such as "a selective or discriminatory response to an actual or potential competitor for the purpose of impeding or preventing the competitor's entry into, or expansion in, a market or eliminating the competitor from a market" and "directly or indirectly imposing excessive and unfair selling prices"; and significantly higher administrative monetary penalties ("AMPs").
• Civil Collaboration Provisions: The Bills include many changes to the civil collaboration provisions, including, most importantly, extending these provisions to agreements between non-competitors where a "significant purpose" of the collaboration is anticompetitive (rather than only to agreements between competitors) and to past conduct (rather than only to current and proposed agreements). This amendment will come into force on December 15, 2024. Other changes include the repeal of the efficiencies defence and the introduction of new remedies, including AMPs, the divestiture of assets or shares, or any other action that is reasonable and necessary to overcome the effects of the agreement in question.
• Criminal Cartel Provision: The Bills added a new per se criminal provision prohibiting wage-fixing agreements and no-poaching agreements between unaffiliated employers. They also increased available fines under the criminal cartel provisions from a maximum of $25 million to an unlimited amount "in the discretion of the court".
• Deceptive Marketing Practices Provisions: The Bills include many changes to the deceptive marketing practices provisions. For example, they shift the burden to suppliers to prove that discounts from their own prices are genuine having regard to the volume tests and/or the time test under the ordinary selling price provisions; they require advertisers to substantiate environmental claims (more on this below), whether relating to particular products or their own business interests; they deem drip pricing to be a false or misleading representation, unless the obligatory charges or fees represent only an amount imposed on a purchaser of the product by or under an Act of Parliament or the legislature of a province; and they significantly increase the amount of AMPs that may be imposed.
• Greenwashing: The Bills include a stand-alone greenwashing prohibition intended to address unsubstantiated environmental claims, whether relating to "a product's benefits for protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change" or "the benefits of a business or business activity for protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change". A person making an environmental claim must ensure that the claim is supported by "an adequate and proper test" or "adequate and proper substantiation in accordance with internationally recognized methodology", the proof of which lies on the person making the claim.
• Private Rights of Access: The Bills include provisions that will likely create robust private litigation at the Competition Tribunal, including what is potentially a form of a class action regime. In particular, these provisions will allow private access under more sections of the Act, ease the leave test that must be satisfied by private parties wanting to bring a private action and permit the Tribunal to award monetary relief to successful applicants. Notably, with the exception of the provision allowing for private access under the abuse of dominance provisions (which came into force as of June 23, 2022), these provisions do not come into effect until June 20, 2025 (i.e., one year after Bill C-59 received royal assent).
• Market Studies: The Bills permit the Commissioner to conduct market studies, either on his own initiative or as directed by the Minister. In order to obtain the information necessary for a market study, the Commissioner may apply to a court for an order compelling the production of records, an oral examination under oath and/or a written responses to questions under oath. Any market study undertaken by the Commissioner must be completed within 21 months.
• Other Amendments: The Bills also make a number of other amendments to the Act, including easing the standard in refusal to deal cases; expanding to the refusal to deal provisions to cover a refusal to supply a means of diagnosis or repair; introducing a new mechanism whereby parties may apply for a certificate relating to proposed environmental collaborations; creating a new provision that prohibits any party from taking any action to penalize, punish, discipline, harass or disadvantage another person because of that person's communications with the Commissioner or because that person has cooperated, testified or assisted in, or has expressed an intention to cooperate, testify or assist in, an investigation or proceeding under the Act; and setting out explicit remedies that are available where parties fail to comply with a consent agreement.

Key Takeaways for Businesses

Although some may disagree, the amendments summarized above are, in many cases, focussed on easing the Commissioner's enforcement burden and/or closing perceived loopholes in this Act. This is evident from, among other things, the introduction of rebuttable structural presumptions under the merger provisions, the lowering of the test under the abuse of dominance provisions, the expansion of the civil collaboration provisions and the numerous changes to the deceptive marketing practices provisions.

While these amendments are clearly beneficial to the Commissioner, they significantly increase the risk, uncertainly and costs for Canadian businesses. For example, it will now be even more important for businesses to:

• Carefully review mergers to determine if the rebuttable structural presumption thresholds are exceeded. While exceeding these thresholds will not be fatal to a transaction, the merger review exercise to secure clearance from the Competition Bureau (the "Bureau") is expected to be more rigorous and challenging, particularly where concentration levels and/or market shares are high.
• Carefully consider whether they are dominant and, if so, whether they may be engaging in either (1) a practice of anticompetitive act or (2) conduct that has had, is having or is likely to have the effect of preventing or lessening competition substantially in a market.
• Be cognizant of any aspects of their contracting practices with customers and suppliers which could potentially be considered (or perceived) as intended to prevent or lessen competition and whether those practices in fact do, or are likely to, substantially prevent or lessen competition.
• Ensure that ordinary selling price and environmental claims are supported through pricing data, adequate and proper testing or adequate and proper substantiation in accordance with internationally recognized methodology.

The failure of businesses to ensure compliance with the Act potentially exposes them to significantly increased penalties, which, in the case of the civil provisions of the Act, could be as high as 3% of their worldwide turnover. Given these risks, it is important that businesses implement and/or update their competition law compliance policies to take into account these "generational changes" to the Act.

The Bureau is in the process of reviewing and updating its enforcement guidelines to reflect the recent transformational changes to the Act, including, for example, the Abuse of Dominance Enforcement Guidelines and the Merger Enforcement Guidelines. These updates should provide valuable guidance on how the Bureau will interpret and apply these amendments in practice.

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.