On December 9, 2014, new legislation, referred to as the
Price Transparency Act, was tabled in Parliament to target
"unjustified" cross-border price
discrimination.1 The proposed law is not intended to set
or regulate prices in Canada, nor does it provide for penalties or
other remedies. Instead, the Commissioner of Competition will be
given powers and tools to investigate and "expose" gaps
between U.S. and Canadian selling prices and the reasons for that
difference.2 Industry Minister James Moore has indicated
that some higher prices are justified by legitimate higher costs of
doing business on this side of the border. Within one year of
receiving information that the Commissioner considers sufficient
for the inquiry, the Commissioner must issue a public report
setting out the conclusions of the inquiry. Minister Moore has said
that it is then up to Canadians to decide if they want to continue
supporting a particular company.
Significantly, the proposed legislation will expand the
Commissioner's investigative powers applicable to all inquiries
under the Competition Act, not just inquiries into the
difference between selling prices in Canada and the United States.
The legislation gives the Commissioner the authority to seek court
require a person, located in or outside Canada, to attend an
examination, to produce documents or to make a written return in
order to provide the Commissioner with information relevant to the
inquiry. Currently, the Competition Act does not provide
for such orders to be made against a person who is located outside
require a person to provide the Commissioner with records or
written return of information that an affiliate of the person,
located in or outside Canada, is likely to have and that is
relevant to the inquiry. In this regard, the definition of
affiliate has been expanded.
Empowering a Canadian court to issue orders compelling
information from persons outside Canada is an extraordinary
measure. The legality and enforceability of such orders will
undoubtedly be challenged before the courts.
In addition, the Price Transparency Act includes
proposed amendments that expand the concept of affiliation to
include a broader range of organizations, such as trusts. This will
potentially increase the situations in which pre-merger
notification requirements apply. Such amendments will also clarify
the application of the affiliate exception to criminal conspiracy
and bid-rigging and to civilly reviewable practices (such as price
maintenance, exclusive dealing, market restriction, tied selling
and agreements among competitors).
1. Earlier this year, the federal government announced
its plans to take steps to address price discrimination between
Canada and the United States for identical goods when such price
discrimination cannot be "justified by higher operating costs
in Canada." See our article
2. The proposed amendments to the Competition
Act may be found here.
The Canadian Competition Bureau issued a template document for use as a form of Consent Agreement, to be filed with the Competition Tribunal to resolve concerns the Bureau may have with proposed mergers.
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