Last June, we reported that the Competition Policy Review Panel
had recommended major changes to Canada's Competition
Act. These changes are now imminent. On February 6, the
federal government tabled Bill C-10, which, in addition to
implementing the government's January 27 budget, will amend the
Competition Act in a number of important areas. The most
notable of the proposed changes, which we expect to become law
within weeks, are the following:
Merger Notification and Review. The time period
for the Competition Bureau's review of notifiable mergers will
be increased to a minimum of 30 days in all cases, and the
Commissioner of Competition will be empowered to initiate a
second-stage review that will extend the review period until 30
days following compliance with a "second request" for
Agreements Between Competitors. The existing
conspiracy provision will be replaced with a new offence
− with significantly increased criminal penalties
− for agreements or arrangements between competitors to
fix prices or to allocate customers, products or markets. And a new
civil provision will be enacted that will permit the Commissioner
of Competition to challenge other agreements and arrangements
Pricing-related Offences. The criminal price
discrimination, promotional allowances and predatory pricing
provisions of the Act will be repealed and the criminal price
maintenance provision will be replaced with a new civil
New Fines for Abuse of Dominance. The
Competition Tribunal will be empowered to impose administrative
monetary penalties of up to $10 million (up to $15 million for
"repeat offenders") for abuse of dominant position.
We applaud a number of the proposed changes, such as the repeal
of the current price discrimination provision, which has long been
criticized as being out of step with modern economic thinking;
however, the merits and implications of the changes to the merger,
conspiracy and abuse provisions of the Competition Act are
far from clear. It is also fair to say that many of the changes are
controversial and that they have not received a level of public
consultation that is either consistent with prior amendments or
appropriate, given the fundamental changes to our competition law
that will result from their implementation.
We expect the changes to the merger review regime to result in
longer reviews for even the most straightforward mergers, and the
new second-request process – which is similar to the
much-criticized U.S. model – to result in longer reviews
and significantly higher regulatory costs for businesses involved
in more complex merger transactions.
The changes to the conspiracy provision will eliminate the
requirement that the proscribed conduct − the limits of
which are unclear − have an adverse economic impact
before it will constitute a criminal offence. This is likely to
result in increased enforcement activity, and may trigger a wave of
litigation as defendants, faced with criminal fines of up to $25
million and jail terms of up to 14 years, test the boundaries of
the new legislation. The new civil provision will significantly
broaden the types of agreements and arrangements between
competitors that will be subject to review and challenge by the
Monetary penalties for abuse of dominance have been widely
debated in Canada, with no consensus as to their desirability. The
concern is that it is often difficult to distinguish between
vigorous but legitimate competition and abusive behaviour. In many
cases, it is not possible to determine with certainty whether a
firm has a dominant market position. Although monetary penalties
for abuse are common in Europe, there has been concern in Canada
that the prospect of heavy fines may chill legitimate competitive
behaviour to the detriment of Canadian consumers.
Finally, by including the proposed Competition Act
amendments in a budget implementation bill, which is expected to
receive cross-party support, the government has effectively ensured
that these changes will become law with limited, if any, meaningful
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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