Bureau's Draft Guidance Regarding Contracts That Reference Rivals And Self-Preferencing

As discussed in our bulletin of November 5, 2025, the Competition Bureau released its proposed new Anti-Competitive Conduct and Agreements Enforcement Guidelines (the "Draft ACCA Guidelines") for consultation on October 31, 2025, with comments required by January 29, 2026. As previewed, we are releasing a series of follow-up insights of what Canadian businesses need to know about the implications of the Draft ACCA Guidelines, both in terms of how they signal new enforcement approaches by the Bureau and how they show the Bureau interpreting the relevant Competition Act (the "Act") provisions covered by these guidelines (the "ACCA Provisions").¹

This bulletin discusses the approach outlined in the ACCA Guidelines to assessing two common commercial practices under the ACCA Provisions: (i) contracts that reference rivals (including most favoured nations clauses), and (ii) self-preferencing behaviour (when a business gives favourable treatment to its own products). The guidelines indicate that, in many cases, these contracts and behaviours do not raise competition concerns and may in fact be pro-competitive. They also provide insight into the circumstances that may trigger concerns under the Act, in which case businesses should seek further legal advice from competition counsel. We also discuss the relevant ACCA Provisions that could apply to these commercial practices.

(i) Contracts That Reference Rivals

The Draft ACCA Guidelines provide updated guidance on how the Bureau will analyze and act on the anticompetitive effects that may occur when a contract between a customer and supplier contains a term that requires one party to treat the other party in a manner that provides a benefit to that party vis-à-vis its rivals. Examples of such contracts noted in the guidelines include:

• Most favoured customer/nation clausesthat require a supplier to offer the most favourable prices/terms to a buyer.
• Price parity clausesthat require a seller to match prices for competing products between different distribution channels or between suppliers.
• Non-discrimination clausesthat require a distributor not to provide favourable treatment to a supplier's competing products.
• Meet or release clausesthat require a buyer to give its suppliers an opportunity to match a lower-priced offer from a competitor before the buyer can accept the competing offer.
• Right of first refusal clausesthat require one firm to give another firm the option to transact with it before any other party.

The Draft ACCA Guidelines identify three broad categories of anticompetitive effects that may result from contracts that reference rivals:

1. They may reduce the incentives for businesses to actively compete with rival firms. For example, if a dominant retailer were to require a supplier to offer compensation when a competing retailer lowered its price of goods the competing retailer obtained from that supplier, this could discourage price competition among retail competitors, discourage the supplier from offering lower wholesale prices to its other customers, or incentivize the supplier to limit or seek to limit price competition amongst its customers.
2. These contracts may also facilitate coordination in a market by increasing information sharing and reducing incentives for firms to deviate from a coordinated outcome. For example, a meet or release clause may require a buyer to tell its supplier when it receives a lower-priced offer from a competing supplier. This would make market pricing more transparent and could make it easier to detect if a supplier was seeking to deviate from an established level of price coordination or it could discourage a supplier from trying to compete through lowering prices as it knows that its competitor will have the opportunity to match.
3. As well, these contracts may exclude new or existing competitors from entering a market. For example, if a meet or release clause allows an established competitor to match a market entrant's pricing to particular customers, but keep prices to its other customers high, that could make it more difficult for emerging rivals to achieve economies of scale, and thereby limit competition by preventing entry.

In addition to these three categories of anti-competitive effects, the Draft ACCA Guidelines note generally that contracts that reference rivals are more likely to harm competition when they provide benefits to firms with market power and/or where such contracts affect a large portion of a market.

(ii) Self-Preferencing

The Draft ACCA Guidelines also raise self-preferencing as a type of potential anti-competitive conduct that can fall under a number of the ACCA Provisions. Self-preferencing occurs when a firm treats its own products (or products that advantage it in some way²) more favourably than other products with which it deals as a customer or supplier. This can occur when a firm provides products or services to other firms while simultaneously competing with them.

Examples of self-preferencing conduct includes:

• a search engine preferencing its own offerings in its search results over competitors' offerings;
• a grocer placing its own products in more favourable positions on its shelves;
• a company that supports an operating system which sets its own applications as default applications;
• a software developer charging its customers fees to use third-party software offerings that provide complementary services but offering its own complementary services for free;
• a manufacturer creating technical restrictions to make it more difficult for its products to be repaired by third parties;
• a financial advisor who recommends certain products to their customers that result in greater financial benefits for the advisor itself but deliver worse products to the customers.

The Draft ACCA Guidelines explain that self-preferencing is most likely to raise competition issues when engaged in by a firm that controls access to a market. When assessing self-preferencing conduct, the Bureau identifies some key questions that it will use to assess whether self-preferencing is likely to result in anticompetitive effects:

• Does the self-preferencing firm control access to a market?
• Are there other competitors to the firm? Do buyers use competing services at the same time?
• Are there barriers to entry or expansion that would prevent other firms from competing with the firm engaging in self-preferencing in the product that allows them to control access to the market?
• How large of an effect does the self-preferencing have on competitors? How large is the competitive disadvantage?
• Are there other strategies the competitors could use to work around the self-preferencing? If so, how feasible are they?
• Is the firm actively treating products from competitors worse? Is it only improving how it treats its own products?³

Bureau Enforcement Activities with Respect to Contracts that Reference Rivals and Self-Preferencing Conduct

As we discussed in our bulletin on the Bureau's new holistic enforcement approach, Bureau investigations will look at the behaviour of market participants comprehensively. In order to assess whether contracts that reference rivals and self-preferencing conduct will attract potential enforcement action, it is helpful to look at all potential anti-competitive behaviour:

• Does the conduct exclude rivals, either directly or indirectly by raising their costs, reducing their revenue, foreclosing inputs, denying access to customers, increasing switching costs for customers, or otherwise reducing interoperability of products?
• Does the conduct reduce incentives for market participants to compete, whether by preventing unilateral competitive efforts, or lessening the benefits of discounting or innovation?
• Does the conduct facilitate coordination, whether by increasing pricing transparency, punishing deviations from the rest of the market, or making firms more similar?

Looking at a firm's behaviour, the Bureau will assess if markets would be more competitive "but-for" the alleged anti-competitive contract that references rival(s) or self-preferencing conduct. Competitive effects will be assessed broadly, including impacts on innovation, quality, privacy and choice, not just price.

For contract that reference rivals and self-preferencing, the principal ACCA Provisions that the Bureau will consider using alone or in combination with each other to challenge any perceived anticompetitive conduct are as follows:

• Section 75 (Refusal to Deal): This ACCA Provision may be relevant for self-preferencing conduct. If the Bureau proceeds under section 75 of the Act in respect of a refusal to deal, the Bureau can seek an order from the Competition Tribunal for a person to accept another person as a customer within a specified period and on typical trade terms.
• Section 77 (Exclusive Dealing, Tied Selling and Market Restriction): This ACCA Provision may be relevant for contracts that reference rivals and self-preferencing conduct. Where the Bureau proceeds under section 77 of the Act in respect of exclusive dealing, tied selling, or market restriction, the Bureau can seek an order from the Competition Tribunal to stop the conduct, or an order containing any other requirement that is necessary to restore or stimulate competition in relation to the product.
• Section 78 and 79 (Abuse of Dominance): These ACCA Provisions may be relevant for contracts that reference rivals and self-preferencing conduct. If the Bureau proceeds under the abuse of dominance provisions of the Act, the Competition Tribunal can order a dominant firm or group of jointly dominant firms to stop the relevant anti-competitive conduct. If the Tribunal determines that an order to stop the conduct will be insufficient to restore competition in the affected market(s), the Tribunal may also order the divestiture of assets or shares, as needed, in addition or in lieu of a prohibition order, in order to restore competition. Additionally, the Bureau may seek, and the Tribunal may order, the payment of administrative monetary penalties ("AMPs"), the maximum of which is the greater of:
  • (i) $25,000,000 for the first order under the abuse of dominance provisions (or $35,000,000 for any subsequent order); and
  • (ii) three times the benefit derived from the anti-competitive conduct (or, if that amount cannot be reasonably determined, 3% of the firm's annual worldwide gross revenues).
• Section 90.1: This ACCA Provision may be relevant for contracts that reference rivals and self-preferencing conduct. If the Bureau proceeds under section 90.1 of the Act in respect of an agreement that harms competition, the Competition Tribunal can order any person to refrain from doing anything under the anti-competitive agreement. If the Tribunal determines that an order to stop the conduct will be insufficient to restore competition in the affected market(s), the Tribunal may also order the divestiture of assets or shares, as needed, in addition or in lieu of a prohibition order, in order to restore competition. Additionally, the Bureau may seek, and the Tribunal may order, the payment of AMPs, the maximum of which is the greater of:
  • (i) $10,000,000 for the first order under the abuse of dominance provisions (or $15,000,000 for any subsequent order); and
  • (ii) three times the benefit derived from the anti-competitive conduct (or, if that amount cannot be reasonably determined, 3% of the firm's annual worldwide gross revenues).

Key Takeaways

• Businesses should be mindful that the Bureau is assessing carefully contracts that reference rivals and self-preferencing conduct – and should consider the impact of such contracts or conduct to determine whether they could lead to potential harm to competition, in which case the businesses should seek legal advice.
• If you are a business that believes it is being harmed by contracts that reference rivals or self-preferencing conduct, there may be avenues available to challenge such conduct.

1. See our bulletin of December 9, 2025 discussing the Bureau's new holistic enforcement approach.

2. While not explicitly described in the ACCA Guidelines, the reference to "products that advantage it in some way" likely refers to an alleged self-preferencing party finding ways to preference certain third-party products that provide better margins or other benefits for the self-preferencing entity compared to competing products. For example, a grocer placing third-party products in favourable shelf positions that generate higher margins for the grocer compared to other third-party competitor products, or a company that supports an operating system choosing to make its default applications those of third-parties that are known to cross-sell other products of the company through their applications.

3. We note that we are not sure how one would distinguish between these two questions, both of which would appear to show the alleged self-preferencing party treating its own products better than competitors. It is possible that the Bureau is referring to a situation where competitor products are being treated the same way as other third-party products offered by the alleged self-preferencer in markets where there is no competing product of the self-preferencer. In such a situation, it appears the Bureau would be less concerned where it can be shown that third-party products in a market in competition with the alleged self-preferencer are being treated identically to third-party products in markets not in competition with the alleged self-preferencer.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2025