On September 21, 2023 the federal government proposed key amendments to the Competition Act (Act). The proposed amendments follow the Prime Minister's recent announcement that the government would introduce changes to the Act designed to "enhance competition across the Canadian economy, with a focus on the grocery sector, which would help drive down costs for middle-class Canadians."
The proposed amendments are significant, introducing three key changes to the Act:
- New market study powers. Although the Commissioner of Competition (Commissioner) had sought the power to independently initiate market studies on the state of competition in an industry, the proposed amendments allow for market studies to be initiated only by the Minister of Innovation, Science and Industry. However, the Commissioner will be able to seek a court order compelling third parties to produce information to assist the Commissioner in conducting the market study.
- Expanded scope of civil collaborations. The amendments will expand the civil collaboration provision to empower the Competition Tribunal to issue a prohibition order in respect of agreements or arrangements where "a significant purpose of the agreement or arrangement, or any part of it, is to prevent or lessen competition in any market," even where the parties to the agreement are not competitors. Currently, the Act's civil collaboration provision only applies to agreements or arrangements between competitors, and only where the agreement or arrangement substantially prevents or lessens competition.
- Elimination of the "efficiencies defence." The efficiencies defence has played a role in a few thousand mergers reviewed by the Competition Bureau since it was first introduced in 1986. Despite this, the government has proposed to eliminate the efficiencies defence, which allows mergers with economic efficiency gains to proceed if those efficiency gains outweigh the anti-competitive effects from the merger. A potential consequence of the proposed amendments as drafted is that mergers could be remedied or blocked even where that merger would create cost savings significant enough to lower prices for consumers.
Other Proposed Changes
The proposed amendments arise at a time when the role of competition law in Canada and the potential modernization of the Act has been the centre of considerable discussion. In particular:
- The Canadian government's review of competition policy remains ongoing, including the release of a What We Heard report summarizing responses to the consultation.
- Earlier this week, the New Democratic Party leader introduced a private member's bill proposing even more significant changes to the Act, including expanding the abuse of dominance provision to capture "excessive and unfair selling prices," imposing harsh bright-line presumptions for mergers, and increasing maximum financial penalties for a range of practices under the Act.
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