Guide to the 2022 amendments to the Competition Act

June 24, 2022

Important amendments to the Competition Act became law on June 23, 2022. This guide provides an overview of the most important changes to the law in the areas of fines and penalties, business collusion, drip pricing, abuse of dominance, merger review, and evidence gathering during investigations.

The guide is not a legal document and does not replace legal advice. The Competition Bureau will be reviewing and updating its enforcement guidance to ensure transparency and predictability for the business and legal communities.

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Introduction

The Government of Canada has made amendments to the Competition Act in 2022 as a preliminary phase in modernizing the Canada’s competition regime. The amendments fix certain loopholes in the law, tackle business practices harmful to workers and consumers, increase penalties and access to justice, and adapt the law to today's digital reality.

Increased fines and penalties

Fines and administrative monetary penalties play an important role in ensuring compliance with the Competition Act by providing a financial incentive for businesses to comply with the law.

  • For criminal agreements between competitors to fix prices, restrict supply or allocate markets (under section 45), the $25 million limit on fines will be removed and fine amounts will be at the discretion of the court (subsection 45(2)).
    • This provision will not come into force until June 23, 2023.
  • The limits on civil administrative monetary penalties, which are available for deceptive marketing practices (subparagraphs 74.1(1)(c)(i) and (ii)) and abuse of dominance (subsection 79(3.1)), have increased.
  • For deceptive marketing practices provisions,
    • The new maximum penalty for individuals is the greater of:
      • $750,000 ($1 million for each subsequent violation); and
      • three times the value of the benefit derived from the deceptive conduct, if that amount can be reasonably determined.
    • Previously, penalties for individuals were capped at $750,000 ($1 million for each subsequent violation).
    • The new maximum penalty for corporations is the greater of:
      • $10 million ($15 million for each subsequent violation); and
      • three times the value of the benefit obtained from the deceptive conduct. If that amount cannot be reasonably determined, the maximum penalty will be 3% of annual worldwide gross revenues.
    • Previously, penalties for corporations were capped at $10 million ($15 million for each subsequent violation).
  • For abuse of dominance provisions,
    • The new maximum penalty is the greater of:
      • $10 million ($15 million for each subsequent violation); and
      • three times the value of the benefit obtained from the anti-competitive conduct. If that amount cannot be reasonably determined, the maximum penalty will be 3% of annual worldwide gross revenues.
    • Previously, penalties were capped at $10 million ($15 million for each subsequent violation).

Wage-fixing and no-poaching agreements between employers will be criminally prohibited

This is a new provision within the existing criminal conspiracy provisions of the Competition Act to protect workers from agreements between employers that fix wages and restrict job mobility (subsection 45(1.1)).

  • The amendments will make it an offence for employers to agree to fix, maintain, decrease or control wages or other terms of employment (“wage-fixing agreements”) and to refrain from hiring or trying to hire one another’s employees (“no-poach agreements”). The penalty for violating this provision includes imprisonment for up to fourteen years or a fine to be set at the discretion of the court, or both.
  • This provision will not come into force until June 23, 2023.

Drip pricing is explicitly recognized as a harmful business practice

The amendments add a new provision regarding drip pricing to both the civil and criminal prohibition on false or misleading representations (sections 52 and 74.01). Drip pricing involves offering a product or service at a price that is unattainable, because consumers must also pay additional non-government-imposed charges or fees to buy the product or service.

The Commissioner has successfully taken enforcement action against this practice using the general false or misleading representations provision of the Competition Act (section 74.01).

  • The amendments confirm that representing a price that a customer cannot actually attain because there are mandatory fixed additional charges or fees is a false or misleading representation (subsections 52(1.3) and 74.01(1.1)).
    • This does not apply to charges or fees that are entirely government imposed (such as sales-tax).

Expanded list of factors to determine an impact on competition

The Competition Act contains lists of factors to be considered when assessing the competitive impact of mergers, business practices and competitor collaborations (subsections 79(4), 90.1(2) and section 93). These non-exhaustive lists have been expanded to include some that may arise in digital commerce, although they are applicable more broadly as well.

  • For competitor collaborations and mergers, the factors have been updated to include:
    • network effects as another example of a barrier to entry in a market;
    • the possible entrenchment of leading incumbents’ market position; and
    • effects on both price competition and non-price competition, such as quality, choice or consumer privacy.
  • For abuse of dominance, the factors have been updated to include:
    • effects on barriers to entry, such as network effects;
    • effects on both price competition and non-price competition, such as quality, choice or consumer privacy;
    • the nature and extent of change and innovation in the relevant market; and
    • any other factor that is relevant to competition in the market that is or would be affected by the practice.

Abuse of dominance enforcement framework clarified

The amendments clarify the definition of an “anti-competitive act” for abuse of dominance (subsection 78(1)).

  • The Competition Act now defines an anti-competitive act as one that is intended to have a predatory, exclusionary, or disciplinary negative impact on a competitor, or to have an adverse effect on competition.

The Competition Act contains a non-exhaustive list of examples of business practices that may be considered under abuse of dominance.

  • The amendments add a new example to the list: a selective or discriminatory response by a dominant player to make it more difficult for a competitor to enter a market or grow, or to remove a competitor from a market.

Private access to the Competition Tribunal for abuse of dominance cases

Private access allows private parties to apply directly to the Competition Tribunal if they are directly and substantially affected by the conduct of another party. Private access is already available for some provisions of the Competition Act.

  • The amendments extend private access to abuse of dominance cases (subsection 103.1(1)).
    • Persons seeking private access must continue to obtain leave from the Tribunal under the existing legal standard.

Expanded evidence-gathering powers

  • The amendments make it clear that a person must provide information under a court order obtained by the Bureau if they carry on business in, or sell into, Canada, even if the person is located outside of Canada (subsection 11(5)).
  • The amendments also add a new power to compel written information from both foreign and domestic affiliates of a corporation.
    • The circumstances in which such court orders can be obtained have also been expanded to include cases where the affiliate “has or is likely to have records or information relevant to the inquiry.” Previously it was necessary to show that the affiliate “has records” that are relevant to the inquiry (subsection 11(2)).

Fixed loopholes in the merger review notification requirements

This is a new provision in the Competition Act. Mergers that meet certain thresholds must be notified to the Commissioner before they are completed. The Commissioner reviews such transactions to determine whether they are likely to harm competition.

  • The amendments add a provision to ensure that the mandatory merger notification requirements will apply to transactions that have been designed to avoid notification (section 113.1).

Clarifications to the merger review process

  • The amendments introduce clarifications related to timing, including what days are holidays for the purpose of calculating waiting periods under the Competition Act (subsection 108(3)). Saturdays, Sundays, other publicly-observed holidays and weekdays following publicly-observed holidays that fall on a weekend are considered holidays for the purpose of calculating waiting periods.
  • The changes also confirm business hours for filing (subsection 108(4)). Information received after 5pm ET will be counted as received on the next day that is not a holiday.