Joshua Krane and Mark Opashinov are partners at the law firm of McMillan LLP.
While working to bring Canadian competition law into the 21st century, Minister of Innovation, Science and Industry François-Philippe Champagne extended this month the consultations on potentially significant changes to Canada’s Competition Act.
The proposed changes build upon smaller tweaks to the act that the minister has made in recent months. The government tinkered around the edges last June, when it made wage-fixing and no-poach agreements punishable by jail time and fines at the discretion of the court. Now, through these consultations which will inform long-promised legislative updates to the act, Mr. Champagne is considering additional changes that could criminalize even more marketplace activity.
But when it comes to the complexities of enforcing competition law, criminal law isn’t necessarily the best tool to achieve the desired policy outcomes. So, we would caution the government not to make the same mistake twice in this next round of amendments to the Competition Act.
The challenge with using a criminal hammer to regulate competition is that the Competition Bureau, which has the subject matter expertise, isn’t the agency that can bring forward a prosecution. Instead, Crown prosecutors are required, which adds a second layer of administration and enforcement when bringing a case.
Unlike civil cases, where the burden of proof is lower, the criminal law imposes very high standards on the Crown to prove wrongdoing. The protections in the Canadian Charter of Rights and Freedoms require continuing disclosure by the Crown to defendants, which can be costly and time consuming for prosecutors. Prosecutors are also under a time pressure to prosecute cases when charges are laid, meaning that prosecutors might not bring charges until the case is ready for prosecution, which can take many years. That kind of lag time is bad for both sides.
Another issue is that, in recent years, criminal law has been essentially enforced by enterprising lawyers, not through private prosecutions, but through class-action litigation alleging that companies that violated the criminal law are liable for their deeds and must pay damages. So, now that the government has criminalized wage-fixing agreements, private practice lawyers will, based on recent history, likely take the lead in pursuing employer agreement cases, not the Competition Bureau and Crown prosecutors.
This suggests that instead of having to account to an enforcement agency for suppressing wages or labour mobility, businesses should anticipate a wave of litigation – much of which will be nuisance litigation – from class-action lawyers. This could lead to further problems.
Under the government’s new rules, wage fixing is a “per se” offence, meaning the act of agreement is a violation of the law on its face. As a result, it is enough for class-action plaintiffs’ lawyers merely to allege an agreement exists for the case to move forward. Employers could easily find themselves dragged into a lengthy trial. And given the exceedingly long waiting times for trials, businesses may find it easier to simply settle the matter and “pay the problem away” to class-action plaintiffs and their lawyers, rather than wait years to defend themselves, at significant expense, thereby avoiding the kind of accountability the new law is trying to create.
Civil processes can help deliver justice quickly when the right institutional frameworks are in place. The recent experience before the Competition Tribunal in the Rogers/Shaw matter showed Canadians that even a complex multibillion-dollar merger case can be brought, tried and adjudicated in about eight months.
It’s important for government, business leaders, lawyers and consumers to consider whether changes to Canada’s competition laws are needed to adapt the law to the digital age. The current consultation process is a welcome development as a result. But whatever changes Parliament does make, we would caution against using the criminal law too readily. Doing so might not yield the desired outcomes from a policy or from an enforcement perspective.