On November 17, 2022, the Minister of Innovation, Science and Industry, launched a public consultation for potential amendments to the Competition Act (the Act) and published a discussion paper titled The Future of Competition Policy in Canada (the Paper). 

A first round of amendments to the Act were included in the Budget Implementation Act, 2022, No.1 (the BIA), which obtained Royal Assent in June 2022. The Competition Bureau (the Bureau) had previously stated that the BIA amendments were a “preliminary phase in modernizing Canada’s competition regime” and represented the first step in a comprehensive review of the Act.[1] The current public consultation and Paper mark the beginning of the second phase and potentially more significant changes to the Act.

The consultation is meant to be a wide-ranging review of Canadian competition law and whether the Act is fit for purpose, particularly in “a modern economy that continues to evolve quickly”.[2] The Paper outlines five key areas for potential reform of the Act: merger review; unilateral conduct; competitor collaborations; deceptive marketing; and administration and enforcement of the Act.

The Paper presents open-ended questions, identifies issues for discussion and invites interested parties to make submissions to the Government of Canada by February 27, 2023. Set out below is a summary of issues raised in the Paper for consideration – and potential future amendment.

Merger review

• Revision of the pre-merger notification rules and thresholds. The Paper suggests the thresholds may be too high and may not adequately capture foreign transactions;
• Extension of the one year limitation period for non-notifiable transactions. The Paper proposes potentially extending the limitation period to three years (which applied prior to the 2009 amendments to the Act), and/or making the limitation period applicable only in circumstances where the parties notify the transaction to the Bureau (i.e., request positive clearance, even if clearance is not required to close under the Act);
• Changing the rules and/or timing for the Bureau to seek an interim injunction;
• Eliminating or significantly weakening the efficiencies defence; and
• Changing the current “substantial lessening or prevention of competition” standard and focusing on consumer welfare for the Bureau to obtain, among other things, remedies for potential “killer acquisitions” (acquisitions of nascent competitors) and/or protecting against negative effects of mergers on labour. As a general matter, these potential amendments may be problematic, as it is difficult to predict when start-ups could emerge as future competitors and lower labour costs resulting from a merger can result in lower consumer prices for goods and services.

Unilateral conduct

• Revision of the definition of dominance or joint dominance. To address situations of de facto dominant behaviour (either by a sole actor or persons acting jointly);
• Adopting a simpler test for a remedy, which could include eliminating the requirement for intent and/or anti-competitive effects;
• Creating bright line rules or presumptions for dominant firms or platforms, with respect to behaviour or acquisitions, potentially in alignment with other enforcement agencies internationally; and
• Condensing the various unilateral conduct provisions (refusal to deal, resale price maintenance, exclusive dealing, tied selling, market restriction, and delivered pricing) into abuse of dominance or “abuse of market power” provision.

Competitor collaborations

• Introducing mandatory notification or a voluntary clearance process for pharmaceutical patent litigation settlements;
• Deeming or inferring agreements in certain forms of civilly reviewable conduct, such as algorithmic coordination or concerted action, where no agreement is otherwise present;
• Broadening and/or strengthening the Act’s civil competitor collaboration provisions to discourage more intentional forms of anti-competitive conduct, including the examination of past conduct (which is not currently covered) and introducing monetary penalties;
• Making collaboration that harms competition reviewable on a civil basis even if not between direct competitors, as the Act currently requires; and
• Adding buy-side collusion (beyond labour coordination) into the Act’s criminal cartel conspiracy provision, or considering a civil per se approach for certain buy-side conduct.

Deceptive marketing

• Adopting additional enforcement tools for modern forms of commerce, to better account for digital advertising. The Paper suggests that the Act could be further amended to better define false or misleading conduct, similar to the drip pricing amendments introduced recently in the BIA.

Administration and enforcement of the Act

• Enhancing the Bureau’s decision-maker role by introducing, as an example, simplified information-collection powers or a first-instance ability to authorize or prevent forms of conduct;
• Introducing new forms of civil enforcement as alternatives to criminal prosecution for certain actions;
• Allowing private parties to seek compensation for damage suffered from civilly reviewable conduct under the Act (for example, abuse of dominance). This does not appear to be proposed to apply in the context of mergers; and
• Creating a process for the collection of information outside of the enforcement context. The Paper suggests that information could be required to be produced for the purpose of market studies.

Takeaways

The areas for reform raised in the public consultation and discussed in the recently released Paper have the potential to significantly transform Canadian competition law as currently practiced and lead to new and more aggressive standards for enforcement, with more litigation (both from private actors and public enforcers including the Competition Bureau), all of which may lead to uncertainty and complexity for business. While the proposals discussed in the Paper would be radical if all were implemented, the government might not act on every issue or select the most extreme proposal(s) discussed, particularly where there is strong stakeholder opposition or serious concerns expressed.

Members of Dentons Canada’s Competition and Foreign Investment Review Group, with its long and deep experience in Canadian competition law, are here to help you better understand how these potential reforms may affect your business and can assist you to participate in the public consultation.

If you have questions or concerns about the changes discussed in ISED’s Paper, or this topic, we would be pleased to discuss them with you. Please reach out to the authors, Adam S. Goodman, Simon Kupi, Sandy Walker, Barry Zalmanowitz, and Camila Maldi.

[1] Competition Bureau, “Guide to the 2022 amendments to the Competition Act” (June 24, 2022), online: https://ised-isde.canada.ca/site/competition-bureau-canada/en/how-we-foster-competition/education-and-outreach/publications/guide-2022-amendments-competition-act 

[2] Statement from Minister Champagne on the launch of the Competition Act review (November 17, 2022), online: https://www.canada.ca/en/innovation-science-economic-development/news/2022/11/statement-from-minister-champagne-on-the-launch-of-the-competition-act-review.html