More Speed and More Haste: Significant Amendments to Canada’s Competition Act Come Into Force
Just two months after the announcement of a series of significant amendments to the Competition Act (the “Act”) in the Canadian federal government’s 2022 budget, the Budget Implementation Act, 2022 (the “BIA”) has now received royal assent. As in prior years, the government has pushed the BIA – an omnibus bill covering various policy objectives – through the legislative process prior to the start of Parliament’s summer recess, meaning that several noteworthy changes to Canada’s competition law regime are now in effect.
The passage of the BIA through both chambers of Parliament did not result in any amendments to the proposed legislative text. A comprehensive summary of the key changes was provided in our prior update. To recap, they include:
- The criminalization of certain buy-side agreements between employers – namely no-poach and wage fixing agreements (although it is not clear of the extent to which this amendment applies to agreements pertaining to self-employed persons and contractors). These amendments will come into force in June 2023;
- A significant increase in the criminal and civil financial penalties available for infringements involving criminal conspiracy, abuse of dominance and civil marketing misrepresentations, as well as expanding rights of access for private litigants to the Competition Tribunal for alleged abuse of dominance infringements;
- Adjustments to the analytical framework described in the Act for abuse of dominance, merger review and competitor collaborations in order to strengthen enforcement in digital markets; and
- The introduction of an anti-avoidance provision for mergers “deliberately structured” to avoid mandatory pre-notification.
Unlike in previous processes that reformed the Act, there has been no public consultation prior to the introduction of these amendments, with the federal government characterizing the changes as closing uncontroversial loopholes in the regime and better aligning Canada’s regime with peer jurisdictions. In reality, the changes are the most significant since the wholesale reform of the Act in 2009. Moreover, they contain some fundamental ambiguities, which would have benefited from a meaningful consultation process with the business community, members of the bar and other relevant stakeholders, and more time for debate as part of the legislative process.
Key Implications for Companies Operating in Canada
- While naked wage fixing and no-poach agreements will be criminalized, there is a 12-month moratorium on these provisions coming into force, which is designed to enable companies operating in Canada to review their current employment practices and consider whether any changes are warranted to reduce the risk of possible criminal investigation from July 2023 onwards. Given the textual ambiguity of the BIA, it will also be important for the Competition Bureau (the “Bureau”) to clarify how it intends to enforce this new provision. For example, the prohibition applies to all agreements between employers affecting “conditions of employment”, a term that is broad enough to capture almost all types of (potentially pro-competitive) collaboration between employers.
- The amendments will require significant adjustments to the Bureau’s various official publications, including the Competitor Collaboration Guidelines, Merger Enforcement Guidelines and Abuse of Dominance Enforcement Guidelines. For example, the Competition Bureau will need to clarify how criminal wage fixing and no-poach agreements will be treated under the Bureau’s Immunity & Leniency program. The Bureau has signaled that it plans to work with stakeholders to implement these changes to its enforcement guidance, as well as announcing an intention to convene online information sessions open to the public in the coming weeks to provide guidance on the amendments. These plans should assist in reducing some of the regulatory uncertainty with the speed and content of the legislative reform process. Thus far, the Guide to the 2022 Amendments to the Competition Act the Bureau has published to clarify the nature of the BIA’s reforms says little about how the Bureau intends to enforce these amended provisions in the Act.
- With the expansion of private rights of access to third parties to pursue abuse of dominance claims before the Competition Tribunal (the “Tribunal”), the Bureau will also need to clarify its position on the circumstances in which it will seek to intervene in such cases. In 2005, the Bureau published an Information Bulletin on Private Access to the Competition Tribunal to provide potential private litigants with guidance on the role the Bureau plays in those private enforcement actions. The addition of abuse of dominance to the list of possible private actions before the Tribunal may necessitate the Bureau to re-visit this framework.
Given this uncertainty, the coming months represent an important opportunity for businesses to assess the status of their compliance programs and business practices in Canada. Combined with a Bureau that is now receiving a substantial uplift in financial resources from the government, the Bureau is expected to become a more assertive enforcer of the Act as it seeks to emulate the aggressive enforcement stance taken by agencies in other countries.
Moreover, the BIA has been characterized as only a “preliminary step” in modernizing Canada’s competition regime. Sources suggest that the next phase of reform – which is anticipated to include some welcome public consultation before proceeding to the legislative process – could be initiated in the summer or fall of 2022. The exact scope of those additional amendments – which may involve the partial or full revocation of Canada’s merger efficiency defence - will therefore likely be subject to the contours of stakeholder debate. This will be a crucial phase in a process that is likely to shape the Canadian competition enforcement landscape for the next decade or more.
For more information, please consult our Competition/Antitrust & Foreign Investment Group.
Competition Act Competition Act Amendments