Canada's Competition Act applies to all businesses
and business activities in Canada. All companies doing business in
Canada need to be aware of the Act, as penalties for breach of its
provisions can be quite severe. For example, the maximum penalty
for price fixing is a fine of up to $25 million and 14 years in
The Competition Act applies to three main areas of
business conduct that can harm competition: coordinated conduct
among competitors, abuse of dominance, and mergers. The Act also
includes misleading advertising provisions.
Conspiracies and other coordinated conduct among
Hard-core cartels involving price fixing, market allocation, and
output restriction agreements between competitors are per
se criminal offences in Canada, as is bid rigging. Other
agreements between competitors that lessen or prevent competition
substantially can be annulled by a special court, the Competition
The conspiracy provision (s. 45) makes it an offence for
competitors, or potential competitors, to agree to fix, maintain or
control prices for the supply of a product; to allocate customers,
territories or markets; or to fix maintain, control, prevent,
lessen the production or supply of a product. There is an important
exception for restraints that are ancillary to a broader and
otherwise legitimate agreement.
Penalties are severe: the offence is an indictable offence
punishable by up to 14 years in jail, or a maximum fine of $25
million, or both. Private parties that are harmed by a conspiracy
can sue for damages. Canada's competition authorities offer
immunity to the first cartel participant to self-report, and
leniency to participants who cooperate subsequently.
Many conspiracies are international in scope. Despite the
absence of an express long-arm jurisdiction provision, Canadian
authorities routinely investigate and penalize foreign conspiracies
that have effects in Canada. As well, the Act makes it an offence
for a corporation to implement a foreign conspiracy in Canada (s.
46), even if it did not know it was implementing the
Bid rigging is dealt with in a separate provision (s. 47), and
carries equally stiff penalties: up to 14 years in jail, or a fine
in the discretion of the court. Private parties that are harmed by
bid-rigging can sue for damages.
Other agreements between competitors can be prohibited by the
Tribunal if they lessen or prevent competition substantially (s.
90.1). The Act mandates a competitive effects analysis, including
factors such as foreign competition, barriers to entry, removal of
a renegade competitor, and change and innovation. Efficiency gains
that outweigh any competitive harm provide a complete defence. No
penalties or damages can be imposed on parties to such
anti-competitive agreements; the only remedy is an injunction.
Abuse of dominance
Canada's Competition Act deals with
anti-competitive conduct by large firms through a number of
discrete provisions. These include a general abuse of dominance
provision, and several specific provisions, the most important of
which deal with exclusive dealing, tied selling, market
restriction, and refusal to deal.
Abuse of dominance (s. 78-79) occurs where a firm that has
market power (dominance) engages in a practice of anti-competitive
acts, causing a substantial lessening or prevention of competition.
Conduct is considered anti-competitive if it is intentionally
exclusionary, disciplinary, or predatory. Examples of
anti-competitive conduct include: margin squeezing, pre-emption,
exclusionary contracting practices, and predatory pricing.
The principal remedy for abuse of dominance is an injunction.
Where an injunction is not enough, the Tribunal can order the
parties to take steps to restore competition, including
divestitures. The Tribunal can also impose an administrative
monetary penalty (AMP) of up to $10 million ($15 million for repeat
Exclusive dealing, tied selling, and market restriction are not
illegal in Canada unless they harm competition, in which case the
Tribunal can issue an injunction prohibiting the practice under a
specific provision (s. 77). Since these practices can also
constitute abuse of dominance, AMPs may be available under the
general abuse of dominance provision. No damages are available.
The refusal to deal provision (s. 75) allows businesses that are
substantially affected by a refusal to deal to obtain an order from
the Tribunal forcing a supplier to resume supply in certain very
limited circumstances. No damages are available, however.
Mergers and pre-merger notification
The Competition Act provides substantive remedies for
mergers that harm competition, and procedural requirements to
notify the Competition Bureau of mergers that exceed certain
thresholds before the merger closes.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Commissioner of Competition addressed innovation, enforcement and policy initiatives at the Competition Bureau in his keynote speech, "Strengthening Competition: Innovation, Collaboration and Transparency."
Used car listing website operator CarGurus Inc.'s attempt to force rival Trader Corporation to supply it with vehicle listing data has encountered a dead end as the Competition Tribunal denied it leave to commence a private application under several provisions of the Competition Act.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).