On November 28, 2023, the Canadian government unveiled another round of amendments to the Competition Act that had been previewed in its Fall Economic Statement the previous week. These changes, together with several amendments already introduced in September 2023, represent the most significant changes to Canadian competition law since the Competition Act was introduced in 1986.

In short, the amendments expand the scope and incentives for private litigation in Canada, and materially loosen the requirements for a finding of anti-competitive behaviour in several key areas. The principal winner here appears to be the plaintiff-side bar, something we expect that Parliamentarians passing these laws in haste are unlikely to appreciate. The losers are likely to be businesses in Canada who will now have to assess a broader array of their business practices through the lens of whether a competitor, strategic litigant or "public interest" group may sue them. The role of the Competition Tribunal in Canadian competition law may also increase significantly as it will likely be asked to decide more cases, under new legal tests.

By way of context, these proposed changes follow a years-long lobbying campaign by the Commissioner of Competition and a coterie of Canadian academics who have taken the position that the Competition Act is not fit for purpose. This argument that competition laws must be amended has ebbed and flowed over the years, typically swelling in response to litigation losses, which in turn lead to a call for amendments rather than a careful examination of the circumstances of the litigated cases. The last major amendments to the Competition Act, then characterized as "massive", were in 2009 at which time the then Commissioner declared enthusiastically: "The result is an updated Competition Act that facilitates more effective enforcement, aligns us with our international counterparts, and ensures that both businesses and consumers benefit from a competitive marketplace. It is our job to ensure we take that opportunity and make the most of it." So much for that.

More recently, the Canadian government last amended the Competition Act in 2022, introducing severe criminal sanctions for wage-fixing and related practices, together with a number of relatively non-contentious changes to the law. Following those amendments, the government launched consultations on the future of Canada's competition policy, seeking feedback on a discussion paper that canvassed a broad array of themes. These consultations generated over 130 submissions from stakeholders, and more than 400 responses from members of the general public.

The government then introduced one set of amendments on September 21, 2023, which appear to be on the verge of becoming law, with the government showing great determination to push them through as quickly as possible. On November 21, 2023 the government previewed additional amendments as part of its Fall Economic Statement, noting that these changes, together with several amendments announced earlier this year, amounted to generational changes to Canada's competition laws. The text of the second set of amendments was released in the bill implementing the Fall Economic Statement on November 28, 2023.

Unlike the last major round of amendments to the Competition Act in 2009, which were somewhat balanced in loosening some enforcement standards and tightening others, the November amendments are expressly designed to "strengthen the tools and powers available to the Competition Bureau." The potential cost of non-compliance has increased in a number of areas, and with increased scope for private actions, companies may be subject to more opportunistic or strategic litigation.

We will have more to say about the amendments in future posts, but the key highlights and their potential impact on businesses in Canada are outlined below.

  • Private damages for "reviewable conduct" such as resale price maintenance and exclusive dealing: Currently, a party found to have engaged in a reviewable trade practice, such as refusal to deal, price maintenance, exclusive dealing, market restriction, or tied selling, can only face a prohibition order of the Competition Tribunal requiring them to stop engaging in the conduct or to take some other action designed to remedy the effect of the conduct. The proposed amendments will empower the Tribunal, where a private action has succeeded, to order payment by the respondent of an amount, not to exceed the value of the benefit derived from the conduct that is the subject of the order, to the applicant and any other person affected by the conduct. No methodology for the calculation of the amount, or the mechanics of distributing the funds, is provided.
  • Private damages for "abuse of dominance": The 2022 amendments introduced the ability to commence private actions in respect of an alleged abuse of dominance. However, a successful litigant was not entitled to receive any payment from the respondent; any monetary penalty was payable to the government. The current amendments permit the Competition Tribunal, as described above, to order payment be made to a successful applicant and any other person similarly affected by the conduct. In addition, the September amendments will loosen the test for finding that an abuse of dominance has occurred.
  • Increased scope for private actions: Private actions are currently available only for the reviewable trade practices outlined above and for abuse of dominance. The current amendments propose expanding the ability for individuals, groups and businesses to commence their own private actions before the Competition Tribunal to include claims related to deceptive marketing and agreements that lessen or prevent competition substantially. Successfully challenging an agreement that substantially lessens or prevents competition may result in a payment to the applicant and any other person similarly affected.
  • Broader definition of "anti-competitive agreements" and private damages: The Competition Act includes a civil provision for agreements that are likely to lessen or prevent competition substantially. This provision is different from the criminal restrictions on cartels (g., price-fixing and market allocation agreements), and is intended to apply to a broader universe of agreements that may have anti-competitive effects, but are not as transparently problematic as a cartel. When this provision was first introduced in 2009, it applied to agreements between or among competitors, which included potential competitors. The September amendments would broaden the provision such that it would apply to agreements between parties who are not competitors if a significant purpose of the agreement is to prevent or lessen competition. The current amendments, in addition to introducing a private right of action in respect of such agreements, will also introduce significant administrative monetary penalties, payments to successful applicants and others similarly affected, and an ability to order parties to take certain actions (without their consent) to eliminate the anti-competitive effects of their agreement. These changes will significantly broaden the reach of this provision and significantly increase the costs of non-compliance.
  • Protections against reprisals: A new provision to punish "reprisals" against those who communicate or cooperate with the Competition Bureau will be added. Where the Competition Tribunal is satisfied this provision has been breached, the Tribunal may make an order prohibiting the conduct and also impose an administrative monetary penalty of up to $10 million against a corporation (and up to $15 million for subsequent breaches).
  • Various merger amendments lower the bar for the Commissioner: The current amendments include an automatic prohibition against closing of a transaction if the Commissioner files an application for an injunction, until the injunction application has been decided. Non-notified mergers will be subject to potential "call-in" review for up to three years after they are substantially completed, up from the current one-year limit. The September amendments also would eliminate the efficiencies defence, meaning that an M&A transaction that enhances overall economic efficiency can no longer be saved by the Competition Tribunal. In addition, currently the Tribunal is barred from making an order against a merger on the basis of market share alone. The proposed amendments would repeal this, leaving the door open for the Tribunal to adopt US-style structural presumptions if it chooses to do so. Two new factors have been proposed for the Tribunal's consideration of whether a merger is anti-competitive: the effect of changes in concentration or market share; and the likelihood that the merger will result in express or tacit coordination between competitors in a market. Neither of those factors is new, but the amendments will codify them in the Competition Act.
  • No litigation costs against the Commissioner: Clearly still stinging from having to pay costs to Rogers and Shaw of approximately $13 million following the Competition Tribunal's determination that the Commissioner behaved intransigently in his unsuccessful challenge to the acquisition of Shaw by Rogers, the government has included an amendment that will bar the Tribunal from awarding costs against the government unless the failure to do so would imperil confidence in the administration of justice or have a substantial adverse effect on the other party's ability to carry on business – a very high bar.
  • Agreements to protect the environment: The package of current amendments contains many swords; the one shield may be in respect of agreements to collaborate "to protect the environment." Where parties request, and the Commissioner is satisfied that the agreement will not substantially lessen or prevent competition, the agreement will be shielded from allegations under the conspiracy, bid rigging, agreements between financial institutions, and civil anti-competitive agreements provisions. The certificate can last for up to 10 years and may be renewed for up to a further ten years. Also on the environmental front, an explicit prohibition on "green-washing" has been added to the deceptive marketing provisions.

Next Steps

The amendments were introduced as part of the implementing legislation for the government's Fall Economic Statement. Unfortunately, this follows a familiar path for recent significant amendments to the Competition Act. Omnibus budget legislation was used to pass the last major amendments in 2009 as well as the amendments in 2022. Using omnibus budget legislation tends to limit the opportunity for meaningful debate on the merits of the proposals. We will continue to monitor these amendments as they make their way through the legislative process and provide updates as they arise.

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.