SWEEPING CANADIAN COMPETITION ACT
AMENDMENTS (BILL C-59) PASSED JUNE 20, 2024
On June 20, 2024, Bill C-59 was passed (the Fall Economic Statement Implementation Act, 2023), which introduced the third of three significant rounds of amendments to Canada’s federal Competition Act in two years (together with Bill C-19 and Bill C-56). This new round of amendments to the Competition Act completes a sweeping overhaul of the Competition Act across virtually all key provisions of Canada’s competition legislation. These amendments are also the most significant changes to Canadian competition law since the modern Competition Act came into effect in 1986 replacing the former Combines Investigation Act.
The Bill C-59 amendments, among other things, strengthen the Competition Bureau’s powers to enforce key deceptive marketing provisions of the Competition Act (e.g., relating to drip pricing, performance claims and ordinary selling price (OSP) claims), strengthen private party rights to seek Competition Tribunal remedies (e.g., for civil deceptive marketing and violations of the civil agreements provisions of the Act), introduce new penalties (e.g., administrative monetary penalties for violating the civil agreements provisions of the Act and for reprisal actions penalizing individuals for complying with the Act) and introduce a new clearance regime for environmental protection related agreements. Canada’s Competition Act merger review regime was also substantially overhauled, eliminating the efficiency defence, introducing market share presumptions and a more restrictive remedial test for restoring competition.
These amendments, together with those enacted in June 2022 and December 2023 (Bill C-19 and Bill C-56), increase the potential competition law risk for companies, trade and professional associations and other entities, particularly those without credible and effective competition law compliance programs and that have not reviewed their business practices to reflect Canada’s new competition laws. For the Competition Bureau’s summary of the June 20, 2024 Bill C-59 amendments to the Competition Act, see: Guide to the June 2024 amendments to the Competition Act (June 25, 2024).
Our blogs will be updated to reflect these amendments.
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SECTION 76 OF THE COMPETITION ACT
(PRICE MAINTENANCE)
Under section 76 of Canada’s federal Competition Act (Price Maintenance) the Competition Tribunal can make remedial orders where, among other things, a producer or supplier, by “agreement, threat, promise or any like means” influences upward or discourages the reduction of the price at which a customer, or any other person to whom a product comes for resale, supplies, offers to supply or advertises a product in Canada (section 76(1)(a)(i)).
Section 76 of the Competition Act can, therefore, apply to not only minimum resale price and MSRP policies, but also to minimum advertised price (MAP) policies (e.g., where a producer or supplier of a product implements a policy relating to the prices at which resellers advertise their products or similar types of terms in supplier distribution or resale agreements).
CANADA’S AMENDED
PRICE MAINTENANCE PROVISIONS
Unlike Canada’s former criminal price maintenance offences (under section 61 of the Competition Act) that applied to mere attempts to influence upward or discourage the reduction of a reseller’s prices, for section 76(1)(a)(i) to apply, a reseller’s price (or advertised price) must actually be influenced upward by the producer/supplier by “agreement, threat, promise or any like means”.
For more information about the 2009 amendments to the Competition Act, which repealed the former criminal price maintenance offences under section 61, see: Competition Act Amendments.
Section 76 is also broad enough to include influencing a reseller’s prices upward by both direct and indirect means and includes a reseller’s advertised price and not merely its actual resale price.
There has been one case to date decided on the merits under the civil section 76 of the Competition Act since it was enacted in 2009 (Commissioner of Competition v. Visa Canada Corp) (see: Competition Tribunal Releases Public Reasons in Visa/MasterCard Price Maintenance Case).
“AGREEMENT, THREAT OR PROMISE”
Under the former criminal price maintenance provision of the Competition Act (section 61), it was held that an “agreement” – which could be either oral or written – required some constraining effect on another person.
A “threat” has been held to mean an urged course of action that carries with it some sanction or penalty in the form of intimidation, fulmination, harassment or warning.
A “promise” has been held to mean where a supplier offers a customer or reseller some advantage or favourable consequences for maintaining the supplier’s recommended prices.
It was further held under the former section 61 of the Competition Act that it was insufficient to show that a supplier attempted to maintain prices by mere discussion, persuasion, complaints, suggestions, requests or advice.
The Competition Bureau’s position, in its Price Maintenance Enforcement Guidelines, is that an “agreement, threat, promise or any like means” also includes the following: (i) a supplier implicitly or explicitly conferring a benefit on a retailer who adheres to the supplier’s recommended resale or advertised prices or (ii) imposing a penalty on a retailer for disregarding a supplier’s recommended resale prices.
COMPETITIVE EFFECTS TEST
(ADVERSE EFFECT ON COMPETITION)
For the Competition Tribunal to make an order under section 76(1)(a)(i) it must also be proven that the price maintenance conduct had, is having or is likely to have an adverse effect on competition in a relevant market (i.e., merely influencing a reseller’s price or advertised price upward is not sufficient to obtain a Tribunal order without the required competitive effects test also being established).
While likely not determinative, in evaluating whether price maintenance conduct has an adverse effect on competition, whether a supplier possesses market power would likely be a key factor. In this respect, the Competition Bureau’s position is that a market share of less than 35% will typically not prompt further examination under section 76.
It remains unclear, however, how the Competition Tribunal will approach market definition and the competitive effects test under section 76 in relation to MAP, minimum price and similar types of supplier/producer policies given the relative lack of case law to date under the amended civil price maintenance provisions of the Competition Act.
SECTION 76 DEEMING PROVISION
In addition to section 76(1)(a)(i), the Competition Act also includes a deeming provision (section 76(6)), under which a supplier’s publication of an advertisement that mentions the resale price for a product is deemed to satisfy the “influencing upward” element under section 76(1)(a)(i) unless the price is expressed in a way that makes it clear to anyone reading the advertisement that the product may be sold at a lower price.
The Bureau has provided suggested disclaimer language in its price maintenance guidance that, in its view, will meet this requirement.
ENFORCEMENT AND PENALTIES
UNDER SECTION 76 OF THE COMPETITION ACT
Under the civil price maintenance provisions of the Competition Act, the Competition Bureau or private parties granted leave by the Competition Tribunal to make an application to the Tribunal may commence price maintenance applications seeking remedial orders.
The Competition Tribunal may order that price maintenance conduct stop or, in the case of a refusal to deal under section 76, order a supplier to accept a person as a customer within a specified period of time on usual trade terms.
No civil fines (administrative monetary penalties or AMPs) are available under section 76, either to the Competition Bureau or private parties that have obtained leave from the Competition Tribunal to make private price maintenance applications. Also, like the other civil reviewable matters under the Competition Act, no damages actions can be commenced under section 76.
The routes to a remedy under section 76 are, therefore, the following: (i) a complaint made to the Competition Bureau in which the Bureau makes a price maintenance application to the Tribunal (or negotiates a remedy with the party being investigated, such as a civil consent agreement); (ii) a price maintenance application brought before the Competition Tribunal by the Competition Bureau directly; or (iii) an application to the Competition Tribunal by a private party that has obtained leave from the Tribunal.
MONETARY PENALTIES AVAILABLE
AS OF JUNE 20, 2025
Following amendments to the Competition Act on June 20 2024, the Competition Tribunal will be able to award monetary penalties in addition to remedial orders as of June 20, 2025 (which is the coming into force date for this penalties related amendment).
In this respect, the Competition Tribunal will be able to award successful private applicants or any other person affected by the price maintenance conduct, an amount up to the value of the benefit derived from the conduct that is the subject of a Tribunal order.
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For more information about price maintenance under the Competition Act, see: Price Maintenance, Competition Act Amendments, Minimum Price Policies, Competition Law Enforcement and Refusal to Deal.
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SERVICES AND CONTACT
We are a Toronto based Canadian competition and advertising law firm that helps clients in Toronto, Canada and the United States practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
Our Canadian advertising/marketing law services include advice in relation to anti-spam legislation (CASL), Competition Bureau complaints, the general misleading advertising provisions of the federal Competition Act, Internet, new media and social media advertising and marketing, promotional contests (sweepstakes) and sales and promotions. We also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
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