Bill C-10, the Budget Implementation Act, 2009 received
Royal Assent on March 12, 2009. The bill introduced significant
changes to the Competition Act (Act), most notably in the
area of competitor conduct. While the majority of changes came into
force upon Royal Assent, some of the most significant amendments
will come into force in March 2010.
last issue of the McCarthy Tétrault Co-Counsel:
Business Law Quarterly we discussed the changes to the merger
review provisions of the Act. In this issue, we discuss other
changes to the Act that have been made under the bill and that will
be of interest to our business clients.
A. Reform of Criminal Provisions
Per seConspiracy Offence and
a Dual-Track Approach — Under the current
Section 45, the Crown must demonstrate beyond a reasonable doubt
that agreements among competitors "unduly" lessen
competition. When the amendments to the conspiracy provisions come
into force on March 12, 2010, that burden will be removed for
so-called "hard-core" cartels (i.e., agreements among
competitors to fix prices, allocate markets or restrict supply),
making it easier for the Crown (and civil plaintiffs) to prove
price-fixing conspiracies. Parties to an agreement may defend a
charge under the amended provision if they can prove the
arrangement is ancillary and necessary to a broader agreement that
is not within an impugned hard-core category. However, this defence
may not alleviate all risk that arrangements between competitors,
such as co-marketing agreements or other joint ventures, could be
captured by the new provisions.
Agreements or arrangements between
competitors other than hard-core cartels that substantially prevent
or lessen competition will be civilly reviewable. The Commissioner
of Competition may bring an application to the Competition Tribunal
for an order prohibiting any person from doing anything under the
agreement, but the conduct would not be subject to monetary
penalties or criminal sanction.
The Competition Bureau has issued
draft Competitor Collaboration Guidelines that describe
the approach it will take in applying the dual-track regime to
collaborations between competitors. Although still out for public
consultation, the guidelines clarify some potential areas of
uncertainty — suggesting, for example, that vertical
agreements between suppliers and customers, as well as
dual-distribution agreements between a single supplier and
distributor, will be assessed under the civil, rather than
criminal, provisions. Bill C-10 also provides that parties may
apply prior to March 12, 2010 for an advisory opinion on how the
new laws will apply to existing agreements without having to pay
the standard service fee.
Higher Penalties — When the
amendments to the conspiracy provisions come into effect on March
12, 2010, the maximum fine for conspiracy will increase from $10
million to $25 million, and the maximum prison term will increase
from five years to 14 years.
Penalties for obstructing an
investigation and bid-rigging also increased on Royal Assent: a new
indictable category of obstruction offence was added with a maximum
sentence of an unlimited fine and/or 10 years in prison. The
maximum prison sentence for bid-rigging increased from five to 14
years, while the maximum unlimited fine was maintained.
No Criminal Sanction for Price Maintenance, Predatory
Pricing or Price Discrimination — The provisions
for criminal sanction for predatory pricing, price discrimination
and price maintenance have been repealed, and a new provision added
to the civil enforcement track for price maintenance. Moving price
maintenance to the civil enforcement track removes the prospect of
criminal sanction and civil actions for damages, but allows private
parties to seek leave from the Tribunal to bring applications to
regain supply on usual trade terms or other remedial orders.
However, predatory pricing — and, potentially, price
discrimination — will continue to present risks for those
who possess market power, since the Commissioner of Competition
will be able to seek administrative monetary penalties (AMPs) under
the Act's abuse of dominant position provisions (as discussed
Effect on Civil Actions — Section 36
of the Act permits parties to sue for loss or damages suffered as a
result of conduct that is contrary to the criminal provisions of
the Act. Bill C-10 may make it easier for private plaintiffs to
prove violation of the new conspiracy provision as the
"unduly" element will be removed, but price
discrimination, predatory pricing, and price maintenance are no
longer subject to civil damage claims under the Act.
B. Changes to Reviewable Conduct Provisions
$10- to $15-Million Fines for Abuse of Dominant
Position and Deceptive Marketing Practices —
Those found by the Tribunal to have abused their dominant position
(other than airlines) were previously not subject to monetary
penalties, though the Tribunal was able to order a party to cease
an offending practice and/or impose other potentially broad
remedial orders. Corporations found to have engaged in civil
deceptive marketing practices were subject to orders to cease the
offending conduct, publish a notice, and pay an AMP of up to
$100,000 for the first order and up to $200,000 thereafter.
Effective immediately, AMPs of up to
$10 million are available for a first finding of abuse of dominant
position or deceptive marketing practices and AMPs of up to $15
million are available for each subsequent finding.
Other Changes — Other changes to the
civil provisions of the Act include: interim injunctions for
misleading representations, repeal of the consignment selling
provisions, private applications for price maintenance (with leave
of the Tribunal), and repeal of airline-specific provisions.
The amendments to the Act present significant risks for
businesses but may also create some opportunities, particularly in
the area of pricing. Companies should review their competition law
compliance programs to ensure that their business practices do not
run afoul of the new laws, as well as to ensure that they identify
new opportunities to improve their business.
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.
The Commissioner of Competition addressed innovation, enforcement and policy initiatives at the Competition Bureau in his keynote speech, "Strengthening Competition: Innovation, Collaboration and Transparency."
Used car listing website operator CarGurus Inc.'s attempt to force rival Trader Corporation to supply it with vehicle listing data has encountered a dead end as the Competition Tribunal denied it leave to commence a private application under several provisions of the Competition Act.
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).