On November 21, 2023, the Federal Government released its 2023 Fall Economic Statement (the "Statement"). The Statement lays out the Federal Government's multifaceted plan to improve housing in Canada, support the middle class, bolster the economy and create a stable financial sector. Additionally, the Statement outlines the Federal Government's desire to strengthen competition in Canada through proposed amendments to the Competition Act (the "Act"). More specifically, the Statement discusses changes aimed at combatting alleged dominance abuses by large companies, modernizing merger reviews, protecting consumers from misleading claims and enabling private entities to engage in legal proceedings related to anti-competitive practices. These changes, according to the Statement, "will help bring Canada into alignment with international best practices to ensure that our marketplaces promote fairness, affordability, and innovation."
Some of the Statement's proposed amendments are currently included in Bill C-56 (which is in its second reading before the House of Commons and was discussed in our previous blog post). Other proposed amendments (outlined in summary form) are new and summarized below, together with salient takeaways for business:
- Abuse of Dominance: The Statement proposes amendments to "[s]trengthen the tools and powers available to the Competition Bureau to enable it to crack down on abuses of dominance by bigger companies, such as predatory pricing." Notably, abuse of dominance has been an ongoing focus during the consultation on the modernization of the Act. While this focus is affirmed by the inclusion of this issue in the Statement, it is unclear from the Statement specifically what changes the Federal Government is considering in order to "strengthen" the existing abuse of dominance provisions.
That being said, while the existing text of Bill C-56 does not include amendments to the abuse of dominance provisions, a motion before the House of Commons on November 16, 2023 (the "Motion") suggests that the text of Bill C-56 will be amended to "revise the legal test for abuse of a dominant position prohibition order to be sufficiently met if the Competition Tribunal finds that a dominant player has engaged in either a practice of anti-competitive acts or conduct other than superior competitive performance that had, is having or is likely to have the effect of preventing or lessening competition substantially in a relevant market." On a plain reading, it appears that this proposed change to Bill C-56 would mean that abuse of dominance would only require that the Competition Bureau (the "Bureau") show either a practice of anticompetitive acts (which includes anticompetitive intent) or an anticompetitive effect (in the form of a substantial lessening or prevention of competition). This is in contrast with the current version of the abuse of dominance provision, which requires both anticompetitive intent and effects.
The Statement however, also calls out predatory pricing specifically, suggesting that the Federal Government may be considering further changes to the abuse of dominance provisions, or other unilateral conduct provisions, in addition to those changes discussed in the Motion.
- Merger Review: The Statement proposes amendments to "[f]urther modernize merger reviews, including by empowering the Competition Bureau to better detect and address "killer acquisitions" and other anti-competitive mergers."
Outside the removal of the efficiencies defence, there are no proposed revisions contained in Bill C-56 that address merger provisions. However, the government's report summarizing its consultation on amendments to the Act (the "Consultation Report") highlights a number of changes which could be considered in order to address so-called "killer" acquisitions. These include amending the substantive test for merger reviews with respect to future harms (allowing the Bureau to "act on less foreseeable harm before it is too late for any other recourse under the Act"), changing the merger notifiability rules to capture a series of smaller acquisitions that might not be individually notifiable on their own (i.e. "creeping acquisitions"), or extending the period after closing within which the Bureau may review a transaction.
However, until further particulars are provided by the Federal Government, it is not clear which, if any, of these changes are being seriously considered.
- Misleading Advertising: The Statement proposes amendments to "[e]nhance protections for consumers, workers, and the environment, including by prohibiting misleading "greenwashing" claims and improving the focus on worker impacts in competition analysis."
While "greenwashing" is currently captured under the general false or misleading advertising provisions of the Act, this proposed amendment suggests that the Federal Government may be considering amendments which more explicitly address greenwashing (similar to the 2022 amendments to the Act which explicitly recognized drip pricing as a form of misleading advertising, prior to which drip pricing was considered as captured by the general false or misleading provisions of the Act). While there are no proposed revisions contained in Bill C-56 which address environmental protections, this issue was considered in the Consultation Report with stakeholders suggesting the enactment of specific regulations for greenwashing.
It also bears noting that the Statement refers to enhanced protections for "consumers, workers and the environment". This suggests that the changes being considered may extend beyond the false or misleading advertising provisions of the Act, and may include other types of prohibitions.
- Civil Competitor Collaboration: The Statement proposes amendments to "[e]mpower the Commissioner of Competition to review a wider selection of anti-competitive collaborations and seek meaningful remedies to ensure that harmful conduct is not repeated."
Currently, Bill C-56 does include targeted amendments which, at least potentially, address this proposal. The proposed amendment in Bill C-56 would expand the competitor collaboration provisions in the Act (which currently only apply to collaborations between competitors or potential competitors) to also capture collaborations among parties which are not competitors, to the extent a "significant purpose" of the collaboration is anticompetitive (notably, the proposed amendments do not elaborate on when an anticompetitive purposes would be considered a "significant purposes."). As such, the competitor collaboration provisions would potentially apply to essentially any commercial agreement – including agreements with customers and suppliers.
That being said, this may not be the extent of the amendments which should be expected in this area. Notably, the Statement refers to amendments allowing "meaningful remedies" in relation to competitor collaborations. Currently, the only remedies available are prohibition orders or a remedy on consent of all parties. Moreover, the Consultation Report noted that "Canada's approach to several aspects of reviewing competitor collaborations are noticeably out of step with international practice" [emphasis added].
- Private Access: The Statement proposes amendments to "[b]roaden the reach of the law by enabling more private parties to bring cases before the Competition Tribunal and receive payment if they are successful."
Currently, private rights of action are only available for a limited number of civil provisions of the Act, and private parties are not entitled to seek damages. The Statement suggests amendments that would broaden the availability of private rights of action and permit private parties to seek damages.
- Costs Awards: The Statement proposes amendments to "to ensure legal cost awards during case adjudication do not prohibit a robust defence of competition."
This proposed amendment is presumably addressing the potential for the Commissioner of Competition to be ordered to pay significant costs awards arising from an adverse finding before the Competition Tribunal. The Statement suggests special treatment for the Commissioner as a party to litigation.
- Right to Repair: The Statement proposes amendments to "prevent manufacturers from refusing to provide the means of repair of devices and products in an anti-competitive manner."
In this regard, the Statement notes that "Canadians are frustrated by throwing out items because they can't find proper repairs" and that "throwing out these valuable goods wastes money and creates unnecessary waste for landfills."
So-called "right to repair" laws already exist in other jurisdictions, that seek to ensure that consumers can have devices serviced or repaired by independent firms (that is, firms other than the original manufacturer). These laws require, for example, that manufacturers make the parts, tools, and documentation needed to diagnose, maintain, and repair consumer electronic devices and appliances available to independent repair shops and consumers at fair and reasonable prices.
"Right to repair" laws are not without controversy. They can result in expansive theories of harm being asserted, whereby enforcers and private plaintiffs target companies that manufacture products for policies and practices that allegedly "influence" how consumers can repair those goods, notwithstanding compelling business justifications.
If you have questions about the ongoing Competition Act amendment process, you can reach out to any member of Fasken's Competition, Marketing & Foreign Investment group. Our group has significant experience advising clients on all aspects of Canadian competition law.
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.