ARTICLE
7 July 2025

Commercial Leasing: New Competition Act Rules Empower Private Parties

ML
McKercher LLP

Contributor

McKercher LLP is a full-service law firm with offices in Saskatchewan, Canada with roots tracing back to 1926. With over 70 lawyers and locations in both Saskatoon and Regina, we have played an integral role in Saskatchewan’s most significant commercial projects and have led litigation cases that have shaped Canadian law.
As of June 20, 2025, private parties now have the right to bring applications under section 90.1 of the Competition Act (the "Act"). For commercial landlords and tenants, this marks a major new enforcement risk...
Canada Real Estate and Construction

The competition rules affecting commercial leasing in Canada have just changed.

As of June 20, 2025, private parties now have the right to bring applications under section 90.1 of the Competition Act (the "Act"). For commercial landlords and tenants, this marks a major new enforcement risk: exclusivity clauses that restrict competition may now be directly challenged not just by the Competition Bureau, but by private businesses – including competitors, suppliers, or even potential tenants.

The focus of this post is commercial leasing; however, the same considerations will apply to franchises, grocers, and suppliers. This post explores what affected parties need to know about the expanded powers under section 90.1, and how exclusivity clauses could now trigger fines, damages, and legal scrutiny.

What Is Section 90.1 and Why Does It Matter?

Section 90.1 of the Act is designed to address agreements that prevent or lessen competition substantially in a market. Historically, it was a niche enforcement tool with two key limitations:

  • It only applied to agreements between competitors.
  • It only allowed the Competition Tribunal (the "Tribunal") to issue prohibitive or prescriptive orders – no fines, no damages.

That changed with a series of amendments between 2022 and 2025 (outlined below) and a final significant change for commercial leasing that just came into force:

As of June 20, 2025, private parties can apply to the Tribunal for leave to bring a claim under section 90.1 and seek compensation.

This expands and partly shifts enforcement from government regulators to directly affected businesses, bringing section 90.1 from the periphery to the forefront of commercial risk management.

Key Changes to Section 90.1

1. Exclusivity Clauses Now in Scope

Since December 15, 2024, section 90.1 no longer applies only to competitor agreements. It now captures agreements between non-competitors where a "significant purpose" is to prevent or lessen competition – including agreements between landlords and tenants.

For example, if a lease prevents a landlord from renting space to a competitor of a current tenant (e.g., another burger chain or pharmacy), that clause may now be subject to enforcement – even if the parties are not competitors themselves.

2. Efficiency Exception Repealed

Previously, a party could argue that anti-competitive agreements created market efficiencies (e.g., attracting an anchor tenant). That efficiency defence is now gone, increasing uncertainty and risk for landlords relying on that rationale.

3. Retroactive Exposure

The Tribunal can now review terminated agreements going back up to three years, meaning that old exclusivity clauses may still trigger liability even after they are removed.

4. Hefty Monetary Penalties

The Tribunal may impose administrative fines of the greater of:

  • Up to $10 million for a first offence (or $15 million for repeat offences); or
  • 3x the benefit derived from the agreement; or
  • 3% of global revenues, if the benefit is difficult to quantify.

5. New Private Right of Action – Now in Force

The biggest shift? The private enforcement mechanism is now live as of June 20, 2025.

Under the amended Act:

  • Private parties (e.g., tenants, competitors, suppliers) can apply to the Tribunal for leave to challenge an agreement under section 90.1.
  • To be granted leave, applicants must show that at least part of their business is "directly and substantially affected" or that it is in the public interest to allow the claim.
  • If successful, applicants can seek compensation up to the value of the benefit derived from the anti-competitive conduct.
  • The Tribunal may award damages, not only to the applicant, but to "any other person affected by the conduct."

This opens the door to a quasi–class action model, where one affected party may bring a claim on behalf of others and distribute compensation accordingly.

Unlike the Competition Bureau, which often investigates the largest and most egregious cases, private claimants may pursue smaller or more localized issues – including exclusivity clauses in specific malls, commercial plazas, or lease portfolios.

What Should Landlords and Tenants Do?

Landlords and Tenants should review all leases to determine whether they contain exclusivity clauses or similar anti-competitive clauses. If a lease contains an exclusivity clause, the Competition Bureau has provided four questions for businesses to consider:

1. Is the property control necessary to allow a new business to enter the market or to encourage a new investment?

2. Could this property control last for a shorter period of time?

3. Could this property control cover fewer products or services?

4. Could this property control cover less geographic area?

In answering the above questions, an exclusivity clause should be as limited in scope as possible to ensure that it remains onside the Act and doesn't "prevent or lessen competition substantially in a market."

A Note on Restrictive Covenants

It is important to note the amendments discussed in this post will also apply to restrictive covenants on land. The Competition Bureau has indicated that the use of restrictive covenants tends to be long-lasting, and therefore, the Competition Bureau does not consider their use justified outside of exceptional circumstances.

Conclusion: A New Era of Competition Enforcement

The Act's new enforcement regime means commercial landlords and tenants must reassess their leasing practices. Significant uncertainty remains over how the Competition Bureau will use its expanded powers and how private parties will exercise their new right of action. Exclusivity clauses are no longer low-risk – they now carry the potential for multi-million-dollar fines, damages, and private legal action.

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.

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