The federal government has proposed a series of amendments to the Competition Act that would give companies more freedom to pursue legal challenges on anti-competitive grounds, exposing businesses to more enforcement activity and higher penalties.
The measures in Bill C-59, or the Fall Economic Statement Implementation Act 2023, also propose to expand the scope for litigation by the Competition Bureau, target “greenwashing” and reform the competition watchdog’s ability to review mergers. It would also build on changes being reviewed under another piece of legislation, Bill C-56.
Bill C-59, tabled by Finance Minister Chrystia Freeland, will implement parts of the fall economic statement and other elements from the March budget. It was introduced by a Notice of Ways and Means Motion on Tuesday and read for the first time in the House of Commons on Thursday.
The changes reflect Ottawa’s efforts to modernize Canada’s competition framework, last updated substantially in 2009, and bring it into line with U.S. and European standards.
While private parties – such as companies – can currently challenge other companies under the Competition Act, they can only do so under a limited number of conditions, said Navin Joneja, co-chair of the competition, antitrust and foreign investment group at law firm Blake, Cassels & Graydon.
The amendments proposed under Bill C-59 would substantially expand the conditions under which companies can bring challenges, including under deceptive marketing and competitor collaboration provisions. The bill also lowers the threshold for private parties to obtain leave to apply to the Competition Tribunal.
“Businesses will need to take a serious look at their competition compliance policies and practices, particularly over the next year, because there is, I think, the prospect of more litigation under the Competition Act,” Mr. Joneja said.
If passed, the bill would also broaden the scope for the Competition Bureau to review mergers by including potential consequences on labour markets, including consideration of the effects from increased concentration, and by allowing the bureau to prevent mergers by filing an injunction to the Competition Tribunal.
It also introduces monetary penalties for competitor collaboration, up to the greater of $10-million ($15-million for subsequent violations) or a designated portion of the benefits derived from the arrangement.
Yet it’s unclear whether the proposed amendments will have a direct effect on consumer prices, Mr. Joneja said. “There’s a fair question as to whether these types of reforms are kind of going to directly provide relief.”
The reforms, which would come into force one year after the bill is passed, reflect the more aggressive approach being taken by the U.S., British and Australian governments and the European Union.
At the same time, the House of Commons is considering Bill C-56, a different bill that proposes to make changes to the Excise Tax Act and the Competition Act. This bill, introduced in September, proposes to eliminate the efficiencies act, and give the Competition Bureau more power to conduct market studies and target “collaborations” that stifle competition. C-56, also known as the Affordable Housing and Groceries Act, is under consideration by the federal standing committee on finance.
A House motion passed on Nov. 14 proposed that the standing committee should also expand the scope of the bill to revise the legal test for abuse of dominance, which determines when a dominant business engages in activity that stops or substantially reduces competition in a market.
This has raised concern among some legal scholars and others, who warn the government about mistakenly condemning pro-competitive behaviour. In a report, the C.D. Howe Institute said the government should exercise caution in altering the current “effects-based” framework, which looks at the effects of a business’s actions instead of the actions themselves.
In a report, the institute’s competition policy council said that altering the current framework would be likely to deter pro-competitive conduct and chill innovation and investment in Canada.