Copyright 2008, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on Competition, September 2008
As part of the Conservative election platform, Prime Minister Stephen Harper announced today that, if re-elected on October 14th, his government will introduce a package of amendments designed to "strengthen" Canada's competition laws and "to protect Canadians from anticompetitive practices and from other abuses".
The proposals reflect the current government's view that the enforcement provisions in the Competition Act are "no longer significant enough to effectively deter anticompetitive behaviour" and contemplate sweeping changes to the Act as follows:
- An increase in the maximum penalties for cartels and bid-rigging to a C$25 million fine and 14 years in prison. (The current maximum penalties are C$10 million and five years).
- The introduction of a non-criminal track with a corresponding lower evidentiary threshold for offences such as price discrimination, promotional allowances and predatory pricing.
- The introduction of administrative monetary penalties (up to C$10 million, and C$15 million for repeat offenders) for companies found to have breached the abuse of dominance provisions of the Act.
- Increased civil penalties for deceptive marketing – up to C$750,000 for a first civil offence, and up to C$1 million thereafter. (The current maximum is C$50,000).
- Increased maximum prison terms for criminal deceptive marketing from five years to 14 years.
- Empowering the Competition Tribunal with the ability to order restitution to victims of deceptive marketing practices, including the ability to freeze assets and prevent the disposal of property to ensure that money remains available for restitution.
- An increase in penalties for obstructing Competition Bureau investigations to a C$100,000 maximum fine and up to 10 years imprisonment. (The current maximum penalties are C$5,000 and two years).
According to the government backgrounder, these proposals are "based on the recommendations of the Competition Policy Review Panel" released last June. Interestingly, however, these proposals reach much further than the panel's recommendations and appear to be based, at least in part, on Bill C-454, a private member's bill introduced by a Bloc MP, which received second reading and was in Committee at the time Parliament was dissolved for the upcoming election.
While some of the Prime Minister's proposals are non-controversial, such as the introduction of a non-criminal track for price discrimination, other areas are likely to generate significant pushback amongst interested stakeholders. For example, the introduction of high monetary fines for contravention of the civil provisions of the Act runs the risk of chilling pro-competitive behaviour, as companies may shy away from aggressive and legitimate competition for fear of being fined. Such provisions may also be subject to constitutional challenge, as high monetary fines arguably are criminal in nature but, under the proposed changes, could be imposed based on a civil burden of proof.
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