The Amended Canadian Competition Act: What Businesses Need To Know

Following a series of high-profile amendments aimed at strengthening Canada's competition law regime culminating in royal assent for Bill C-59 on June 20, 2024, the legislative framework governing competition law and the conduct of businesses in Canada as set out in the Competition Act has changed substantially. The amendments to the Competition Act are broad in scope and materially increase the potential exposure of businesses in Canada to enforcement activity, as well as financial penalties, litigation, and monetary claims from private parties. Businesses operating in Canada are advised to consider their market strategies and conduct carefully in light of the amendments and to assess whether adjustments are needed to reflect the new grounds for enforcement, legal standards and potential exposure.

At the same time, the amendments are, in a number of important respects, uncertain in their intended application, complicating compliance efforts until further clarity has been provided. In addition, while many of the amendments have immediate effect, others are subject to a one-year delay before coming into force, during which time additional details and guidance are likely to become available. The full implications of the amended Competition Act will, therefore, unfold over time as guidance is released by the Competition Bureau and the law is tested by the Commissioner of Competition, as well as by private litigants who will, after the one-year delay, have expanded access to the Competition Tribunal and the right to seek monetary remedies for a range of reviewable trade practices. While guidance from the Competition Bureau to assist the business and legal communities in navigating the new landscape will be welcome, the breadth of the changes and the expanded role for private litigants promise that a broad range of new interpretations and legal theories will come before the Competition Tribunal and the courts, who will ultimately determine the scope of application of the new laws.

Below, we discuss brief highlights of the amendments, and invite you to read our in-depth summaries and analyses of the changes about which businesses in Canada need to be aware.

Increased rigour in merger enforcement

The recent amendments to the Competition Act affecting the review of mergers include the repeal of the efficiencies defence, new presumptions on the competitive effects of a merger that place greater weight on market structure (share and concentration levels), an expanded notification regime, enhanced interim injunction powers and a longer period after closing (three years) for the Commissioner to challenge non-notified mergers.

These changes are intended to enhance the enforcement of mergers viewed as anti-competitive and may result in a greater frequency of remedies being sought by the Commissioner either on a consent basis or by order of the Competition Tribunal following litigation. While there remains broad scope for mergers and acquisitions in Canada, the amendments to the merger review regime will have a wide range of implications for transacting parties including assessment of risk, transaction negotiation and transaction planning including overall timing.

Expansion of private enforcement of competition laws

Perhaps the most significant change to the Competition Act is the forthcoming expansion of private rights of access to the Competition Tribunal and the availability of new monetary remedies for a broad range of reviewable practices. Prior to the amendments, there was only a limited private right of action for damages in respect of the most egregious criminal conduct under the Competition Act. In 2002, Parliament adopted amendments that permitted limited private access to the Competition Tribunal in respect of certain limited reviewable practices. However, private litigants were required to meet a high test for leave to bring a proceeding and had no access to monetary remedies. To date, there have been only a handful of applications for private access under the reviewable practices provisions, and most of these applications were settled, withdrawn or did not reach a finding on the merits.

The new amendments will vastly expand private access to the Competition Tribunal, and represent the most dramatic expansion of private enforcement of Canada's competition laws in a generation. In particular, under these amendments, the test for leave will be significantly liberalized; private access to a broad range of reviewable practices — including deceptive marketing practices, abuse of dominance and horizontal and vertical agreements — will be expanded; new remedies of monetary relief will be created; and a new collective relief regime may open up the Tribunal to the equivalent of modern class action litigation. These changes increase the incentive for private enforcement of Canada's competition laws by a broad range of private litigants, including consumers, competitive rivals and even public-interest organizations on an individual or potentially collective basis in cases where the Commissioner has taken no enforcement action.

Given the significant nature of these changes, there will be a one-year period before the new private rights of access come into effect, providing a window for businesses to assess their practices and for the Competition Bureau and the Competition Tribunal to provide guidance and consider rules to accommodate this new private enforcement regime.

Increased competition law risk for leading firms and oligopolies

The principal civil provision of the Competition Act — abuse of a dominant position — has been amended such that an abuse of dominance is now easier to establish. Notably, a prohibition order (though not structural remedies or monetary penalties) can now be made against a dominant firm (or firms that are found to be jointly dominant) based on a finding of only one of anti-competitive intent or anti-competitive effect that cannot be attributed to "superior competitive performance".

The consequences of an adverse finding under the abuse provisions where both anti-competitive intent and effects are proven have also grown, with higher administrative monetary penalties ($25 million up from $10 million) and, once the new private enforcement regime is in effect, claims for monetary relief based on the benefit derived from anti-competitive conduct.

In addition, new concepts such as "excessive and unfair selling prices" have been incorporated, adding to existing areas of uncertainty that have not been judicially tested. These include the circumstances in which firms may be considered to be jointly dominant as well as the meaning of "superior competitive performance".

Substantially enhanced scrutiny and potential liability for commercial agreements that affect competition

The stakes are higher for parties to commercial agreements owing to three significant changes to the civil agreements provision in the Competition Act (section 90.1), some of which come into effect immediately and some of which will be delayed in coming into effect.

First, remedies have been expanded to include administrative monetary penalties of up to $10 million for a first order (previously, no monetary penalties were provided for).

Second, covered agreements will expand (effective December 15, 2024) from agreements between competitors to all commercial agreements between businesses regardless of whether they compete with each other where "any part of" the agreement has a significant purpose to prevent or lessen competition (e.g., a non-compete provision or exclusivity provision). This will expose for the first time a broad range of ordinary commercial agreements between non-competitors to potential scrutiny and liability where a substantial prevention or lessening of competition is likely to result.

Third, the new private access regime will be available for applications relating to civil agreements and private litigants will be able to seek monetary relief (effective June 20, 2025). Moreover, it is left open whether mergers could be the subject of an application by a private party under the restructured commercial agreement provisions.

Deceptive marketing practices remain an enforcement priority

Canada's deceptive marketing practices regime has been the subject of incremental change since 2022, strengthening the Competition Bureau's ability to take enforcement action in relation to deceptive marketing, particularly as it relates to price representations and environmental claims. Substantial monetary penalties are available and, most recently, a new private right of action will come into force on June 20, 2025.

It remains to be seen whether the new private right of action for those satisfying the public-interest test will open the door to a wave of new litigation before the Tribunal considering there are already other well-established avenues to pursue monetary relief from the courts in respect of deceptive marketing practices and the lack of availability of additional monetary relief payable to private litigants (beyond the traditional restitution remedy, which is only available in certain cases). Nevertheless, the Commissioner has prioritized the enforcement of these provisions, particularly as they relate to drip pricing and greenwashing, so businesses should brace for ongoing scrutiny.

Expanded criminal conspiracy offence

Amendments that came into force on June 23, 2023 no-poach and wage-fixing agreements between unaffiliated employers (regardless of whether they are competitors). Businesses have had a year now to adjust to these new provisions. Canadian businesses have worked diligently to review their business practices, including benchmarking activities and non-solicit/non-hire provisions in contracts, to ensure compliance with the law.

To date, the Competition Bureau has not publicized an investigation under these provisions or taken enforcement action to our knowledge. However, given these parallel amendments, the possibility of private damage claims and enforcement activity in the U.S., compliance with these provisions remains a priority.

Easing the burden for refusals to deal and the new right to repair

Historically, private parties have had limited success when bringing applications under the refusal to deal provision of the Competition Act. With amendments to the refusal to deal provision, it may be that private litigants will now have greater success. The refusal to deal provision has been revamped, with a lowered standard for private litigants to be granted leave to the Competition Tribunal and an expanded scope of remedial orders. The amendments also introduce a "right to repair", prohibiting suppliers from refusing to offer repair of or diagnostic services for a product, or to make the means of diagnosis or repair available within a specified period.

Formal market studies power

The Commissioner of Competition has long been able to conduct "market studies," which examine the state of competition in a particular sector or industry. However, until recently, the Commissioner could only compel information where there were grounds to believe there has been non-compliance with the Competition Act. Commencing December 2023, the Commissioner can now initiate market studies even in the absence of non-compliance concerns.

Other notable amendments now in force

In addition to the above amendments, other notable changes to the Competition Act include a new prohibition on "reprisal actions", limitations on cost awards against the Commissioner, and a new certification regime to immunize agreements intended to protect the environment from the application of certain provisions of the Competition Act.

Takeaways

In summary, the Competition Bureau is now poised for a strengthened role in competition law enforcement, alongside a larger role for private enforcement and a new era of significance for the Competition Tribunal.

Commissioner Boswell has been provided with long-sought tools, increased resources and a stronger enforcement hand. In addition to lowered legal thresholds for securing remedies under the Competition Act and substantially increased consequences for non-compliance, the Commissioner also has a new market studies power and a clearer path to obtaining interim injunctions. Further, with the enhanced role for private parties to contest market conduct, the Competition Bureau's enforcement burden will be reduced, potentially leaving the Commissioner freer to pursue investigations of interest ranging from complaints about market conduct to non-notifiable mergers, to bring legal challenges and to focus on needed guidance and development of competition policy.

Recognizing the legal and business communities' need for clarity, the Competition Bureau is preparing to issue guidance on its enforcement approach under the amended law, with publication anticipated soon. In addition, to mitigate the potential for private litigation to interfere with public enforcement strategies, Commissioner Boswell has communicated the Competition Bureau's intention to contribute to the development of jurisprudence by intervening in private actions before the Competition Tribunal, alongside its own challenges. While the Competition Bureau's stated priority is to focus on areas that have an "impact on the affordability of daily life for Canadians", enforcement activity may increase across a wide range of market sectors.

The Competition Tribunal also enters a new era of significance. Since its inception in 1986, the Competition Tribunal's role in the development of competition law in Canada has been limited by the dearth of contested proceedings. The Competition Tribunal is now on the cusp of a potentially transformative period. Important amendments to the Competition Act that are uncertain in their application (e.g., the provision applicable to agreements between non-competitors, the amendments to the abuse of dominance regime, the new private access regime and the new merger concentration thresholds) will require interpretation, likely through contested proceedings, leading to a more robust body of jurisprudence. The Federal Court justices at the helm of the Competition Tribunal appear to be embracing the forthcoming challenges. There will be an opportunity to continue to refine expedited procedures, including mediation, which have been introduced in recent years to streamline the adjudication process.

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.