On November 17, 2022, the Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry, launched the much anticipated public consultation for potential amendments to the Competition Act (the "Act").
As discussed in our previous blog post, a first round of amendments to the Act were included in the Budget Implementation Act, 2022, No.1 (the "BIA"). According to the Competition Bureau (the "Bureau"), these amendments, most of which become effective on June 23, 2022, were a "preliminary phase in modernizing Canada's competition regime" and represented the first step in a comprehensive review of the Act. This newly launched public consultation, and the accompanying discussion paper, mark the beginning of the second – and much more substantive – phase of amendments to the Act.
In his letter to stakeholders, Minister Champagne notes that "[t]his consultation is meant to be a wide-ranging review of our ground rules and an exploration of all aspects of the Competition Act and if they are fit for purpose" – particularly in "a modern economy that continues to evolve quickly". To that end, the call for public engagement highlighted that the review will focus on:
- The role and functioning of the Act;
- The role and powers of the Bureau;
- The effectiveness of remedies and private redress mechanisms;
- Addressing challenges of data and digital markets; and
- Other pro-competitive policies.
The accompanying discussion paper published by the Department of Innovation, Science and Economic Development ("ISED") (The Future of Competition Policy in Canada) (the "ISED Paper") elaborates on these themes and outlines potential options for amendments to the Act. As noted in the ISED Paper, the government believes that reforms may be warranted in a number of areas, including the following:
- better addressing potentially harmful mergers that currently escape scrutiny or remedy, including through the operation of the efficiencies defence, in a timely fashion;
- ensuring the necessary elements are in place to remedy unilateral forms of anti-competitive conduct, such as abuse of a dominant position, notably with regard to large online platforms;
- more broadly recognizing and penalizing coordinated action between businesses that is harmful to competition, such as competitor collaborations;
- better considering effects on labour throughout the Act;
- taking into account the implications of new technology and business practices for deceptive marketing provisions;
- bolstering the effectiveness of the Bureau's powers in today's economy, including the limits on its ability to make binding decisions or seek information within and outside enforcement; and
- potentially expanding the scope of private recourse, and ensuring the effective operation of the Competition Tribunal.
In general, the ISED Paper opines that, while the Act is a law of general application (and is sector-neutral), consideration must be given to whether the law is sufficiently agile to keep pace with a rapidly evolving economy, particular with respect to the idiosyncrasies of large digital and data-driven markets. Other key themes and issues considered in the paper include affordability (i.e. cost of living) concerns in the wake of recent supply-chain disruptions and challenges faced by workers and small and medium sized enterprises in participating in "an economy increasingly dominated by mega-players".
The ISED Paper considers numerous issues and potential areas of reform, including the following::
- Merger Review:
- The revision of pre-merger notification rules to better capture mergers of interest;
- Extension of the limitation period for non-notifiable mergers (e.g. extending the existing one year limitation period to review completed mergers to three years), or tying it to voluntary notification;
- Easing of the conditions for interim relief when the Bureau is challenging a merger and seeking an injunction;
- Changes to the efficiencies defence (e.g. restricting its application to circumstances where consumers or suppliers would not be harmed by the merger); and
- Revisiting the standard for a merger remedy (e.g. to better protect against prospective competitive harm, or to better account for effects on labour markets).
- Unilateral Conduct
- Better defining dominance or joint dominance to address situations of de facto dominant behaviour, such as through the actions of firms that may not be unmistakably dominant on their own, but which together exert substantial anti-competitive influence on the market;
- Crafting a simpler test for a remedial order, including revisiting the relevance of intent and/or competitive effects;
- Creating bright line rules or presumptions for dominant firms or platforms, with respect to behaviour or acquisitions, as potentially a more effective or necessary approach, particularly if aligned with international counterparts and tailored to avoid over-correction; and
- Condensing the various unilateral conduct provisions into a single, principles-based abuse of dominance or market power provision. Alternatively, the unilateral conduct provisions outside of abuse of dominance could be repositioned for different objectives of the Act, such as a fairness in the marketplace.
- Competitor Collaborations
- Deeming or inferring agreements more easily for certain forms of civilly reviewable conduct, such as through algorithmic activity, especially given the difficulty of applying concepts like 'agreement' and 'intent' in the age of artificial intelligence;
- Broadening and/or strengthening the Act's civil competitor collaboration provisions to discourage more intentional forms of anti-competitive conduct, including through examining past conduct and introducing monetary penalties;
- Making collaborations that harm competition civilly reviewable even if not made between direct competitors;
- Introducing mandatory notification or a voluntary clearance process for certain potentially problematic types of agreement; and
- Reintroducing buy-side collusion – beyond labour coordination – into the Act's criminal conspiracy provision, or considering a civil per se approach to it.
- Deceptive Marketing
- Adopting additional enforcement tools suited for modern forms of commerce, given the nature and ubiquity of digital advertising. For example, further amendments to better define false or misleading conduct, such as the 2022 drip pricing amendments, could be considered.
- Administration and Enforcement of the
- Making the administration of the law, and enforcement before
the Competition Tribunal or courts, more efficient and responsive
whether public or private, without unreasonably compromising
procedural fairness. For example:
- Giving the Bureau more leeway to act a decision-maker (e.g. through simplified information-collection, or a first-instance ability to authorize or prevent forms of conduct);
- Introducing new forms of civil enforcement as alternatives to criminal prosecution for certain actions; and
- Allowing private parties to seek compensation for damage suffered from civilly reviewable (non-merger) conduct under the Act.
- Pursuing a reasonable path with respect to the collection of information outside of the enforcement context, such as for the purpose of market studies, taking both public value and private burden into account.
- Making the administration of the law, and enforcement before the Competition Tribunal or courts, more efficient and responsive whether public or private, without unreasonably compromising procedural fairness. For example:
Notably, the ISED Paper does not include discussion of revisions to the "purpose clause" of the Act (which establishes the general direction of competition law1). For the purpose of its recommendations, the ISED Paper "assumes that the objectives of the Competition Act have for the most part not changed, and focuses on how the substantive provisions of the law could be improved to better achieve them in the current environment". That being said, the call for public consultation does invite comment on the purposes clause and the objectives of the Act, and asks: "Do the objectives of the Act need to be revised or rebalanced?"
Finally, the ISED Paper notes that, with respect to the first round of amendments introduced in June 2022 through the BIA, despite the fact that these have already passed into law, the government "fully expects and welcomes discussion on ways of improving or reinforcing them within the wider conversation on reform".
Canadians can make written submissions to the consultation online and have until February 27, 2023 to do so. A series of roundtables will also be held with a variety of stakeholders.
1. The purpose clause notes as follows: "The purpose of this Act is to maintain and encourage competition in Canada in order to promote the efficiency and adaptability of the Canadian economy, in order to expand opportunities for Canadian participation in world markets while at the same time recognizing the role of foreign competition in Canada, in order to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy and in order to provide consumers with competitive prices and product choices."
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