The Competition Bureau is contemplating a new pre-notification
regime, similar to the regime that currently exists for mergers,
whereby businesses will be permitted (or, potentially, obliged) to
seek advance clearance from the Bureau before entering into
agreements with their competitors. Speaking on a panel at an
American Bar Association conference on March 27, Commissioner of
Competition John Pecman noted that the plan is in its "early
days", and that the Bureau has not decided whether a regime
should be implemented (and if so, whether it should be voluntary or
mandatory), but that it is something the Bureau is considering.
Such a regime could apply to a variety of types of
"normal-course" agreements, such as joint purchasing and
selling agreements, buying groups, information sharing agreements,
R&D agreements, joint production agreements, non-competition
clauses and even joint venture agreements.
The motivation for such a regime may stem from the Competition
Act's dual-track approach to
competitor collaborations. In Canada, two provisions of the Act
govern agreements among competitors. A criminal provision, intended
to capture "naked" price fixing (as well as output
restrictions and market allocation), carries significant fines and
jail terms. A second, civil provision captures only
agreements which adversely affect competition, and carries no such
penalties. Although these provisions are intended to serve
different purposes, it is up to the Bureau to decide which route it
wishes to take when investigating (or prosecuting) any particular
agreement. The Bureau has released a guidance document which
outlines the types of situations in which it will choose to use the
criminal and civil provisions, but this guidance is not binding.
So, a pre-clearance regime may give businesses additional certainty
in knowing that their joint purchasing agreement or non-compete
clause will not be challenged (at least, under the criminal
It is not clear whether the regime would apply to joint
ventures. Many joint ventures, because of their structure, are
currently subject to mandatory pre-merger notification,
but an existing exception exempts
certain types of joint ventures from pre-notification (namely,
where a limited joint venture agreement exists and where no change
in control to any party would result).
The Act already contains a provision which allows any
person to apply to the Commissioner for a binding, written opinion
on the applicability of any provision of the Act to any conduct or
practice that she proposes to engage in. However, this provision is
very rarely used for a number of reasons. First, the Commissioner
is under no obligation to provide an opinion. Second, the
Commissioner may simply reply that the Act "may" apply to
the practice in question. Third, the written opinion process may be
protracted. Fourth, requesting a written opinion may cause the
Bureau to concern itself with an agreement that would not otherwise
have come to its attention.
The introduction of a mandatory regime would certainly require
legislative amendments to the Competition Act. A voluntary
regime may not. In his remarks to the ABA, the Commissioner pointed
to New Zealand as an example of a jurisdiction with an effective
pre-clearance regime. There, the Commerce Act includes a
section permitting (but not
requiring) parties to request authorization to enter into contracts
whose purpose (or likely effect) may be to substantially lessen
competition; the Competition Commission may (but is not required
to) grant authorization if certain criteria are met. Amendments to the Act would
create a similar, voluntary pre-clearance process for "cartel
provisions" in collaborative agreements. As currently drafted,
the amendments would oblige the Commission to give clearance if it
was satisfied that the agreement containing the "cartel
provision" is necessary for a collaborative activity which
will not, itself, be likely to substantially lessen or prevent
competition. The Bureau may use New Zealand as a model if it
proposes its own regime.
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).