Proposed Amendments to Canada’s Competition Law Expected to Significantly Expand the Scope of the Competition Act | Blake, Cassels & Graydon LLP

Following recent announcements by the Minister of Innovation, Science and Industry, the Government of Canada has now proposed amendments that would significantly expand the scope of the competition law (Law). These amendments are included in the Canadian government’s budget legislation and should therefore be enacted by the end of June. The proposed changes and key takeaways for businesses are:

KEY CHANGES TO THE COMPETITION LAW

  • Wage-fixing/non-poaching agreements: For the first time, the law would contain specific criminal provisions regarding agreements or arrangements between unaffiliated employers to fix wages or other “terms of employment” or not to hire or solicit the employees of others. Such agreements can result in a prison term of up to 14 years, a fine, or both. Violations of this new offense would also be subject to private actions (including class actions) for damages. These provisions would come into force one year after the day the law receives Royal Assent, to allow businesses to prepare to comply with the new law.

  • Significantly higher financial penalties: The proposed amendments will significantly increase the amount of Administrative Monetary Penalties (AMPs) potentially available to combat behaviors such as deceptive marketing and abuse of dominance, particularly for global companies doing business in Canada. While current legislation provides maximum amounts for AMPs (e.g. C$15 million for abuse of dominance), the new legislation allows AMPs up to three times the financial benefits from anti-competitive conduct or 3% annual income global gross income (no ceiling).

  • Private access for abuse of dominant position: Private parties will be allowed to go directly to the Competition Tribunal (with leave) for allegations of anti-competitive behavior by dominant firms. This, combined with the possibility of much higher financial penalties as well as an expanded definition of the conduct covered by the abuse of dominance provision, could result in a much higher number of “abuse” cases brought before the Competition Tribunal.

  • Misleading price representations: The new legislation would enact specific criminal and civil provisions to combat the practice of “drip pricing” representations (advertising a price that ultimately cannot be obtained due to fixed mandatory charges or fees ), defining the practice as false or misleading.

  • New anti-avoidance rule for merger notification: The pre-merger notification rules under the Act are based on objective financial thresholds that apply to particular transaction structures. While these rules would not change, there would now be a specific anti-avoidance rule designed to encompass more mergers under the pre-merger notification regime.

KEY POINTS FOR COMPANIES

  • The scope of the law is considerably widened. This is very much in line with a movement – ​​in Canada and around the world – towards greater competition law enforcement and the need for businesses to be even more vigilant about competition law compliance. .

  • Companies will need to review their current compliance practices regarding discussions with competitors and ensure that their hiring practices and policies will comply with the new law. The proposed amendments would criminalize agreements or understandings between employers to fix wages, salaries or other conditions of employment, as well as agreements or understandings not to hire or solicit each other’s employees.

  • Companies doing business in Canada should also carefully consider their conduct with respect to their relationships with smaller competitors, merger notices and marketing practices. The proposed legislation creates a new private right of access to the Competition Tribunal for abuse of dominance and significantly higher monetary penalties (encompassing a percentage of worldwide turnover) for abuse of dominance and deceptive marketing practices.

The proposed legislation contemplates additional changes, including expanding the range of factors relevant to analyzing anti-competitive behavior, mergers and collaborations between competitors in digital industries (e.g. network effects, non-price competition, innovation) as well as the explicit expansion of the scope of production orders to persons outside of Canada doing business in Canada.

The full text of the proposed changes is available here (from page 320).