Nearly six years after the Standing Committee on Industry, Science and Technology released its report "A Plan to Modernize Canada's Competition Act," and more than two years after the death of Bill C-19 on the parliamentary order paper, Parliament is once again considering a proposal to make significant amendments to the Competition Act.
A private member's bill, introduced by Bloc Québécois MP Roger Gaudet last October, has received second reading in Parliament, and will now move to Committee for debate. If passed in its current form, it would entail such significant - and controversial - changes as:
- enabling the Commissioner to commence an inquiry into an
entire industry sector whenever she "has reason to
believe that grounds exist" for doing
so1;
- removing the word "unduly" from section 45
(thus turning agreements with any negative
impact on the named aspects of commerce or competition into
per se criminal offences) but introducing a reverse
onus defence if the accused can establish that the agreement
is "reasonably necessary to attain gains in efficiency
or encourage innovation";
- increasing the maximum fine under section 45 from $10
million to $25 million;
- deleting the criminal prohibitions against price
discrimination and predatory pricing (thus making them
amenable of redress only under the civil abuse-of-dominance
provision);
- adding a general definition of "anti-competitive
act" to section 78 (abuse of dominance): "abusive
exploitation of a dominant position in the
market";
- deleting the airline-specific definitions of
anti-competitive act from section 78, as well as section 4.1
in its entirety2;
- giving the Competition Tribunal the ability to impose not
only large fines for abuse of dominance (up to $10 million
for a first offence, and as much as $15 million for each
subsequent order, or greater amounts so long as they are not
more than the gross revenues earned as a result of the
practice of anti-competitive acts), but also to award damages
to private complainants in abuse cases (section
79)3;
- giving the Tribunal the ability to award damages to a
private party in "refusal to supply" (section 75),
and "vertical restraint" cases (exclusive dealing,
tied selling and market restriction, section 77);
- increasing fines for civil deceptive-marketing practices
by 10 times or more for individuals (e.g., from a
maximum of $50,000 for a first offence to $750,000) and by
100 times or more for corporations (e.g., from a
maximum of $100,000 for a first offence to $10 million) while
leaving criminal fines at existing levels (in the discretion
of the court for conviction on indictment, but a maximum of
$200,000 for conviction on summary conviction);
- further toughening the civil misleading-advertising
provisions to permit courts to order restitution to ultimate
purchasers of the purchase price for the articles in question
in civil deceptive-marketing cases, and to issue preserving
orders to prevent the disposition of assets in order to
frustrate attempts to satisfy an order for damages;
- reducing the notification threshold, under the merger
control provisions, of amalgamations involving one or more
Canadian businesses to $50 million from $70 million for the
combined size of the Canadian assets or revenues of the
amalgamating businesses (while failing to update the
thresholds for the assets and revenues of the target in a
share or asset acquisition, which have since been updated by
Regulation and are thus incorrect as they appear on the face
of the statute).
Clearly, Bill C-454 as written would elicit some support, and much opposition, from many stakeholders. For example, the repeal of the criminal predatory-pricing and price-discrimination provisions has long been supported by many parliamentarians and members of the competition bar, as has the repeal of the airline-specific provisions. Giving the Tribunal the ability to impose fines for abuse of dominance is certainly not uncontroversial, and was included in Bill C-19, the previous government's attempt to amend the Act, and it had all-party support before it died on the order paper with the calling of a federal election. Similarly, Bill C-19 also proposed to significantly increase maximum fines for civil misleading advertising. That said, Bill C-19 did not propose that private parties be permitted to bring abuse cases before the Tribunal, much less that the Tribunal be empowered to award them damages in addition to imposing fines.
Also bound to be controversial would be the proposed deletion of the word "unduly" from section 45, thus criminalizing all agreements with any negative impact on competition. The new Bill proposes to add in an efficiency defence of sorts, but without the caveat found in the existing efficiency defence to mergers that the efficiencies must be "greater than and offset" the anti-competitive effects of the merger and not otherwise attainable. Given the Commissioner's ongoing review of section 45 with a view to creating a criminal per se prohibition of "hard-core" cartel behaviour, as well as a companion civil provision to cover otherwise anti-competitive agreements, not to mention the work of the Competition Policy Review Panel (due to report in June), it is difficult to imagine that such a proposal will survive review in Committee.
Bill C-19 would also have given the Commissioner the ability to launch industry-wide investigations, without grounds to believe that an order should issue from the Tribunal or that an offence had been committed. Again, however, that aspect was not uncontroversial, as many in the petroleum industry in particular remember the thirteen-year investigation by the Restrictive Trade Practices Commission into price-fixing in that industry in the 1970s and 80s, which failed to uncover any illegal behaviour. Concerns include the high public and private cost of such studies, the lack of necessity for such powers of investigation, the need for procedural safeguards and the risk that such inquiries would become "politically charged"-not to mention the practical problem that such investigations would require additional resources that the Bureau simply does not have.
Because Bill C-454 is a private member's bill, its chances of becoming law in its current form are inherently slim - but anything can happen with a minority government. The bill has received support from Members of all three opposition parties, and its progress in Committee deserves to be followed closely in the months ahead. Hearings before the House Standing Committee on Industry, Science and Technology have not yet been scheduled.
Footnotes
1. No specification of the circumstances that would give rise to such grounds are given, and presumably it would not be necessary to believe that an offence has been committed or that grounds exist for an order under the civil provisions.
2. Section 4.1 exempts collective bargaining over commissions by travel agents with a dominant domestic air carrier (at least 60% of revenue passenger-kilometres from domestic services in a given year) from the prohibitions against conspiracy and price maintenance under sections 45 and 61, respectively.
3. Currently, only the Commissioner can bring an abuse-of-dominance case before the Tribunal. Private parties have no right to do so, although they can bring an application based on refusal to supply (s.75), exclusive dealing, tied selling or market restriction (s.77) before the Tribunal, with leave of the Tribunal. Moreover, the Tribunal is not currently empowered either to issue fines or to award damages to any party.
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