Canada: Competition Act Amendments to Address "Unjustified" Canada-US Price Discrimination

On December 9, 2014, the Minister of Industry introduced the Price Transparency Act ("Bill C-49") which is aimed at the perceived problem of higher retail prices of some products in Canada as compared to the United States. Bill C-49 will give the Commissioner of Competition (the "Commissioner") new powers to investigate and publicize cross-border price discrimination, but no power to take any enforcement action against it.

The Federal government first signalled a concern about what it calls "unjustified cross-border price discrimination" in its 2013 Speech from the Throne, and again in the Federal budget tabled in February 2014. The original intention was to prohibit geographic price discrimination that is not justified by higher operating costs in Canada. This proposal was widely criticized in the business, legal and policy communities as unworkable and intrusive price regulation (see McMillan's earlier bulletins here and here).

Bill C-49 instead addresses cross-border price discrimination through possible investigation and public exposure. It contains three key measures:

  1. If the Commissioner has reason to believe that the retail price of a product in Canada is higher than the retail price of an identical or similar product in the United States (the price differential need not be material) the Commissioner may commence an investigation to determine the facts, including the extent of and the reasons for the price difference. Unlike the other matters that the Commissioner has the power to investigate, the Commissioner cannot be required to conduct an inquiry into cross-border price discrimination by way of an application under oath from any six Canadian residents or a direction from the Minister of Industry. In contrast, under Bill C-49, the Commissioner has the sole discretion to initiate such an investigation. This will reduce but not eliminate the possibility that investigations are commenced in response to media or political pressures.

  2. The Commissioner is given extensive powers to obtain court orders to compel the production of records or written returns under oath, and these orders purport to be enforceable against persons outside of Canada, as well as the affiliates of the target of any investigation. (Bill C-49 also broadens the definition of "affiliate", which has important implications not only in this area but for merger-pre-notification, affiliate defenses for conspiracy conduct and other matters – see McMillan's bulletin).

  3. The Commissioner is required to publish the findings from any inquiry into cross-border price differences.

When he announced Bill C-49, the Minister stated that these amendments to the Competition Act (the "Act") "will not set or regulate prices in Canada", but will "create the tools necessary to investigate and expose cases of unjustified price discrimination". It should be expected that the potential for negative publicity and reputational damage that a company may suffer due to a finding of unjustified price discrimination will be used to deter such conduct.

This is a novel approach. Even though some of the most problematic aspects of the originally proposed regulatory approach have been avoided, there are serious concerns related to due process and the protection of confidential (and potentially competitively sensitive) information. There is also no substantive guidance on the framework for determining whether a particular differential is justified.

Assessing the Justifications for Differences

For the Commissioner to reach an appropriate conclusion about whether the cross-border price difference of a product is "justified by higher operating costs in Canada", the Commissioner must first have a defensible measure of cross-border prices and costs. Economies of scale, product safety or other regulatory standards, freight and importation costs, and the constantly fluctuating exchange rate, among other things, are all legitimate reasons for a cross-border price gap. It is unclear how the Commissioner will assess whether price discrimination is "unjustified" and how the Commissioner will identify and account for all of the legitimate reasons for a price gap for each individual product subject to investigation.

In the anti-dumping context, the Canada Border Services Agency engages in a comparison between actual export prices and home market prices to determine whether exporters that sell into Canada are engaged in dumping. The framework for this analysis is set out in detail in the Special Import Measures Act and Special Import Measures Regulations. The rules are a complex system with the result that the investigation process can be time-consuming and costly, but there is an established framework that must be followed. In the price comparisons under Bill C-49, the Commissioner will have enormous discretion since there is no guidance as to how price comparisons are to be undertaken.

Due Process

While Bill C-49 provides the Commissioner with expanded investigative powers, it does not establish any rights or procedures for the targets of investigation to respond to allegations and an inquiry conducted by the Commissioner. For all other conduct that may be subject to investigation by the Commissioner, the Commissioner acts as a law enforcement official who must bring allegations and evidence before the Competition Tribunal or a court in a proceeding in which the target can fully respond. In contrast, under Bill C-49 the Commissioner will act as both the investigator and judge, with the power to reach and publicize a conclusion unilaterally. Given the intended consequence of public shaming, clear and strong procedural protections are needed for persons that are subject to such investigations.

Where the Commissioner concludes that a person has "unjustifiably" priced products at higher prices in Canada than in the United States, Bill C-49 provides no avenue for the person to appeal the Commissioner's conclusion. Given the potentially serious reputational consequences, this is a major concern.

Evidence Gathering From Affiliates

Under the existing subsection 11(2) of the Act, the Commissioner can obtain court orders to compel a person under investigation to produce records that are in the possession of its Canadian or foreign affiliates. Given the wide definition of "affiliate" in the Act, a person under investigation may not be in a position to influence or control its affiliates. For example, when the Canadian corporation under investigation is a subsidiary of a foreign parent company, it may not be able to force an unwilling foreign parent to disclose records. Yet, the corporation, and its officers and directors, could be subject to significant criminal penalties for failure to comply with the order.

In 2010, subsection 11(2) and a production order made under this provision were subject to constitutional challenge in the Toshiba case,1 among other things, for violation of the right to be free from unreasonable search and seizure and for violation of the right to life, liberty and security of the person not in accordance with the principles of fundamental justice. The constitutional issues were left unresolved in this case after the court denied Toshiba access to documents that it sought to support its constitutional challenge. Soon after in 2012, similar constitutional arguments were made in the Royal Bank of Scotland2 case against subsection 11(2). This case was resolved on consent before the constitutional concerns could be addressed.

Bill C-49 expands the Commissioner's investigative power under subsection 11(2) in three ways. First, the parties that could be subject to a subsection 11(2) court order have been expanded to include individuals, in addition to corporations. Second, the range of potential affiliate sources from whom the Commissioner could compel disclosure is expanded with a broadened definition of "affiliate", which will apply more fully to partnerships, sole proprietorships, trusts and other unincorporated entities. Third, the type of documents the disclosure of which can be compelled now also includes written returns under oath, in addition to records. This is potentially a very intrusive power in situations where a party does not have control or influence over its affiliate and does not have the information necessary to prepare the required written return. It would have been desirable to limit these powers to situations where the affiliate is an entity under the control of the target of the investigation.

Protection for Confidential Information

Bill C-49 does not impose a duty of confidentiality on the Commissioner when he publishes a report on a cross-border price discrimination inquiry. Any confidential information about the person under investigation that the Commissioner collects in the course of the investigation could potentially be made public. In fact, Bill C-49 puts a positive obligation on the Commissioner to publicize a conclusion and, by implication, information required to support that conclusion. The Commissioner appears to have some discretion regarding the level of supporting detail that is necessary to explain the conclusion. However, there is no statutory guidance in respect of this crucial issue and no guarantee as to whether the Commissioner will exercise its discretion in a manner similar to the approach followed when enforcing other provisions of the Act.

Concluding Observations

In addition to the specific difficulties with Bill C-49 discussed above, a more fundamental question should also be addressed: What is the evil sought to be remedied? While the Government has referred to a widespread perception that Canadians pay more than Americans for a variety of products, it is not clear that this is a competition concern. Economists generally consider price discrimination to have benign or ambiguous effects, rarely causing economic injury. It is typical to see different levels of costs and competition as well as different consumer demand in different markets. In 2011, the Standing Senate Committee on National Finance studied cross-border price differences and found that they would be better addressed by import tariff reductions and regulatory reforms. The Commissioner's new responsibilities seem to be a solution in search of a problem, and may divert resources from other areas in which the Competition Bureau already has abundant work and constrained resources.

In summary, these proposed amendments establish a process through which a business may be found to be engaging in unjustified price discrimination and is subjected to substantial reputational damage, without a clear framework for determining what is "unjustified", without clear procedural protections to make its case, without assurance that its confidential information will not be publicly disclosed by the Commissioner, and without any avenue of appeal, all without a clear economic policy justification.

1 Canada (Commissioner of Competition) v. Toshiba of Canada Ltd., 2010 ONSC 659, leave to appeal denied, 2011 ONSC 949.

2 Royal Bank of Scotland v Commissioner of Competition, Ontario Superior Court of Justice (East Region), Court File 13010-11.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2014

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

James B. Musgrove
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions