Canada: Highlights From The Competition Bureau's Session On Changes To The Competition Act

On September 8, the Competition Bureau hosted a public information session about the 2022 amendments to the Competition Act. The session included guidance on the Bureau's approach to enforcing new provisions related to abuse of dominance, drip pricing and wage-fixing and no-poaching agreements. Businesses can expect updated guidelines to be published by the Bureau following its consultations with the public.

In April, the federal government introduced significant amendments to the Act in budget legislation. The changes came into effect on June 23, 2022 (except for the amendments to add wage-fixing and no-poaching agreements to the criminal cartel law, which comes into force on June 23, 2023).

The Bureau's discussion about the changes to the Act provides insights into its intended enforcement of the new provisions.

Abuse of Dominance: "Anti-Competitive Acts" Definition and Private Access Claims

The amendments updated the definition of "anti-competitive acts" (for purposes of defining what is an abuse of dominance) to explicitly reference behaviour that is intended to have a predatory, exclusionary or disciplinary negative effect on a competitor or to have an adverse effect on competition.

In the Bureau's view, the updated definition ensures that the Act's abuse of dominance provision is broad enough to capture conduct that harms competition or the competitive process, but not merely particular competitors. The changes to the definition of "anti-competitive acts" codify the legal standard that had been set in prior case law, which the Bureau confirmed.

The Bureau plans to engage in public consultations in the late fall in anticipation of updated written guidance on abuse of dominance. The updated guidelines will attempt to clarify the kinds of scenarios that would draw scrutiny from the Bureau.

The amendments also introduced the ability for private parties to seek leave to sue each other before the Competition Tribunal for alleged abuse of dominance (but not to obtain monetary damages). The Bureau indicated that it will not be in a position to opine about private litigation relating to alleged abuse of dominance.

Deceptive Marketing Practices: Drip Pricing

"Drip pricing" refers to situations where a company advertises a low headline price but applies additional mandatory fees and charges during the checkout process such that the low headline price is unattainable, and the real price is higher. The amendments added a civil law to prohibit drip pricing.

In the past, the Bureau took action against drip pricing practices under the pre-existing general false or misleading advertising provision in the Act. To the Bureau, explicit reference to drip pricing in the Act codifies the practice as being false or misleading.

The Bureau shared that its enforcement approach to the new drip pricing provisions will be very similar to actions it brought in the past for false and misleading advertising. These enforcement actions, the Bureau said, have been shown to be a "sound application of the law". The Bureau indicated that it will rely on the new drip pricing provisions for future enforcement actions.

The Bureau noted that it will revise its current guidance to address the new drip pricing provisions in more detail. Businesses may still refer to the Bureau's current guidance on deceptive marketing practices (which discuss drip pricing practices) to inform their compliance obligations regarding price representations.

Criminal Conspiracy: Wage-Fixing and No-Poaching Agreements

The amendments added wage-fixing and no-poaching agreements (among unaffiliated employers) to the scope of the criminal conspiracy provision. This new criminal provision will come into effect on June 23, 2023. The Bureau said the reason for the delay is to allow businesses to have enough time to become compliant with the law and adjust their business practices. However, in the Bureau's view, the new provision will not include a "grandfathering" provision exempting agreements that predate the coming-into-force of the new law.

The Bureau confirmed that enforcement of the new wage-fixing and no-poaching provisions will include tools historically used for competition-related offences under the Act. These tools include information provided by complainants, interviews with various parties like employees, employers, suppliers, customers and competitors, and other investigative tools such as search warrants, production orders and wiretaps. Businesses will continue to be able to rely on all relevant statutory and common law defences (including the "ancillary restraints defence", which in certain cases exempts from criminal liability agreements that are necessary to give effect to a broader, separate pro-competitive agreement).

Regarding the application of the prohibition on no-poaching agreements, the Bureau's position was that the clause will apply to all agreements, including agreements that are one-sided, two-way or in the context of a sale of a business. According to the Bureau, it will also apply the no-poaching clause to arm's length commercial agreements. The Bureau noted that in such instances, its enforcement approach will take into consideration different business structures, such as franchise agreements.

Guidelines regarding the new wage-fixing and no-poaching provision will be published by the Bureau following consultations with the public in the coming months.

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