Canada: Significant Changes To Canadian Competition And Foreign Investment Laws Proposed

Earlier today, the Federal government introduced Bill C-10, the Budget Implementation Act, 2009 (the "Bill"). The Bill proposes significant changes to Canada's Competition Act and Investment Canada Act. The Bill's key amendments in this area include:

  • Replacing the existing conspiracy provisions in the Competition Act with a per se criminal offence for cartel-like agreements between competitors and a civil offence to deal with other types of agreements between competitors that substantially lessen or prevent competition.
  • Amending the current merger notification process to mirror the U.S. Hart-Scott-Rodino Antitrust Improvements Act process and increasing the current merger notification thresholds.
  • Granting the Competition Tribunal the power to order significant administrative monetary penalties for contravention of the abuse of dominance provisions of the Competition Act.
  • Repealing provisions relating to price discrimination, promotional allowances and predatory pricing and de-criminalizing the price maintenance offence.
  • Substantially increasing the Investment Canada Act review threshold for direct acquisitions of Canadian businesses by or from WTO investors (other than acquisitions of cultural businesses).
  • Introducing a national security test to the Investment Canada Act review process.

A more detailed discussion of the Bill's proposals is set out below.

Proposed Amendments to Competition Act

Mergers

  • The Bill proposes that the merger review process in Canada be aligned with the U.S. Hart-Scott-Rodino Antitrust Improvements Act procedure. The proposed process involves an initial 30-day waiting period in which a notified merger may not be completed and the government can assess the likely competitive effects of the proposed transaction. Before that 30-day period expires, the government may choose to issue a "second request" for information, in which case the proposed transaction may not be completed until 30 days after the Commissioner of Competition receives the requested information.
  • The Bill also proposes to increase the thresholds for merger pre-notification. Currently, the Competition Act generally requires that the aggregate value of the assets in Canada or the annual gross revenues from sales in or from Canada of the acquired party exceeds $50 million in order for the notification requirements to be triggered (the value is currently $70 million for amalgamations). The Bill would increase this threshold for all forms of transactions to $70 million initially, with future increases tied to changes in inflation (or as prescribed by regulation).
  • Finally, the Competition Bureau's ability to review mergers after closing would be reduced from the current three years to one year post-closing, providing greater certainty to parties post-merger.

Conspiracy

  • The Bill proposes to repeal the existing conspiracy provisions and replace them with a per se criminal offence for "cartel-like" agreements between competitors to fix prices, affect production or supply levels of a product, or allocate sales, customers or territories. The proposed provision does not require evidence that the conspiracy would be likely to lessen competition or allow for an efficiencies defense. However, liability will be avoided if the agreement is ancillary to a broader agreement that does not contravene the conspiracy offense and necessary for giving effect to the objective of that broader agreement. Maximum penalties under this provision are proposed to be raised to 14 years imprisonment and a $25 million fine, from the current five years and $10 million.
  • The proposed civil provision would apply to other agreements between competitors that have the effect of lessening or preventing competition substantially. Under the proposed legislation, the Commissioner of Competition would apply to the Competition Tribunal for a remedial order where an agreement between competitors is likely to prevent or lessen competition substantially in a market.

Other

Various other Competition Act amendments are proposed, which generally expand the scope of various offences or increase their penalties. These proposals include:

  • Granting the Competition Tribunal the power to order an administrative monetary penalty of up to $10 million for a contravention of the abuse of dominance provisions of the Competition Act and up to $15 million for subsequent offences.
  • Expanding the bid-rigging offence to include situations where a person agrees with another to withdraw their already-submitted bid.
  • De-criminalizing the price maintenance offence and making the offence subject to private actions before the Competition Tribunal, in addition to Competition Bureau enforcement.
  • Expanding the deceptive telemarketing offence to apply to companies targeting foreign individuals.

Proposed Amendments to Investment Canada Act

The Bill includes a number of proposed amendments to the Investment Canada Act, which applies to acquisitions of Canadian businesses by non-Canadians. The two most significant proposed amendments include an increase in the financial thresholds applicable to direct acquisitions of Canadian businesses by or from WTO investors (other than acquisitions of cultural businesses) and the addition of a national security review process.

  • Increased Review Thresholds for Acquisitions by WTO Investors – Direct acquisitions of Canadian businesses (other than acquisitions of cultural businesses) by or from WTO investors would be reviewable under the Investment Canada Act only if the enterprise value of the assets of the Canadian business is equal to or greater than (a) $600 million, in the case of investments made during the first year after the amendments come into force; (b) $800 million, in the case of investments made between the first and second years after the amendments come into force; and (c) $1 billion, in the case of investments made between the second and fourth years after the amendments come into force. This figure would thereafter be adjusted on an annual basis. In addition, the lower thresholds currently applicable to the transportation, financial services and uranium sectors would be repealed. Indirect acquisitions of Canadian business by WTO investors would continue to be subject to only post-closing notification, rather than review.
  • National Security – A new review process for investments that could be injurious to national security would be introduced. The proposed amendments would, among other things, allow the Governor in Council to take any measures that the Governor in Council considers advisable to protect national security, such as prohibiting a non-Canadian from implementing an investment. Time frames for the review of such investments have not yet been determined.

Other proposed amendments to the Investment Canada Act include the following:

  • Reasons for Not Approving Reviewable Transaction – The Minister would be required to provide reasons for any decision that an investment is not likely to be of net benefit to Canada.
  • Potentially Greater Disclosure of Information – The Minister would be permitted to communicate or disclose privileged information obtained as a result of his review of an investment to prescribed investigative bodies, provided that such communication or disclosure is for the purpose of the administration and enforcement of the national security provisions and those bodies' lawful investigations. In addition, unless it would prejudice the investor or the Canadian business, the Minster would be permitted to disclose that an application for review had been filed under the Investment Canada Act (other than an application under the national security review provisions) and at what point the investment (to which the application relates) is in the review process.
  • New Undertakings – If the Minister believes that an investor has failed to comply with written undertakings, the Minster may, after the investment has been implemented, accept new undertakings from the investor.

The proposals to amend the Canadian foreign investment review regime, as well as the proposals to repeal or de-criminalize certain pricing offences in the Competition Act, are welcome initiatives that should enhance Canadian competitiveness and Canada's attraction to foreign investors.

Unfortunately, the proposed amendments to the conspiracy provisions, the adoption of a U.S.-style second request merger notification regime and the introduction of significant penalties for abuse of dominance will undoubtedly increase legislative and market uncertainty at significant cost to the private sector. Whether these changes will come close to the objective of enhancing the efficiency and competitiveness of Canadian businesses is doubtful.

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.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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