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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“Which brings me to the Bureau’s role in promoting compliance. Specifically, the Bureau promotes compliance through enforcement and it provides the education and the tools that assist the corporate community in developing corporate compliance programs. We all know businesses and individuals have a duty to act lawfully — and, the Bureau expects that businesses and their senior management, on the whole, want to comply with the law. It is our hope that by now, it is clear that the legal, economic and reputational risks of non-compliance far outweigh any perceived advantages. Non-compliance costs businesses dearly – not just in terms of financial and legal penalties, but through negative publicity, loss of business opportunities and lost management time.”
(Commissioner of Competition)
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OVERVIEW OF COMPETITION LAW
COMPLIANCE IN CANADA
Competition law compliance programs are not mandatory in Canada (i.e., they are not required by the federal Competition Act or by the Competition Bureau, which administers and enforces the Competition Act).
Competition law compliance programs are, however, highly advisable for companies, trade and professional associations and other organizations that may be exposed to potential competition law risk.
Competition compliance programs may also, in some cases, be ordered by a court, agreed to as part of a settlement with the Competition Bureau (e.g., a term of a negotiated consent agreement) or required as a condition of the Competition Bureau not pursuing enforcement action (i.e., as part of an alternative case resolution in an enforcement matter).
There is no single form of competition law compliance program in Canada. They should be tailored to, among other things, a company’s or other organization’s particular operations and potential competition law risks.
Competition law compliance programs typically include the following elements:
1. A compliance policy (e.g., a one-page statement reflecting a company’s commitment to comply with the letter and spirit of competition laws).
2. A compliance program document (i.e., the core compliance document that sets out the relevant competition laws and the organization’s compliance policies and procedures).
3. Compliance guidelines for relevant activities and events (e.g., conduct of meeting guidelines, information exchange guidelines, document creation/retention guidelines and search and seizure guidelines).
4. A form of employee certification letter.
5. Regular training and education (e.g., for sales and other personnel that are most at risk of violating competition laws, new directors and officers, etc.).
BENEFITS OF A CREDIBLE AND EFFECTIVE
COMPETITION LAW COMPLIANCE PROGRAM
A credible and effective competition law compliance program has a number of benefits.
These include to: (i) maintain a good reputation for a company, association or other organization, (ii) minimize the risk of potential non-compliance with competition laws, (iii) help detect potential competition law violations, (iv) potential favorable treatment in sentencing, (v) reduce potential director and officer liability and (vi) identify potential competition law violations early to seek immunity or leniency under the Competition Bureau’s Immunity and Leniency Programs.
COMPETITION BUREAU COMPETITION LAW
COMPLIANCE GUIDANCE
In March 2023, the Competition Bureau launched a new online competition law Compliance Hub.
When the Competition Bureau launched its new online resource, it said that it was intended to help businesses stay on the right side of Canadian competition and labelling laws and that its core principles about competition law compliance programs had not changed.
The Bureau’s new Compliance Hub replaces its former Corporate Compliance Programs Bulletin (Compliance Bulletin), which had been its key compliance guidance relating to Canadian competition law compliance programs.
Overall, the Bureau’s new Compliance Hub is a more user-friendly and interactive resource than its previous Compliance Bulletin and largely reflects its previous approach to competition law compliance, including core principles that compliance programs must be tailored and scaled to an organization’s operations and risks, the need for senior management support and effective training.
The Compliance Hub includes an overview of Canadian competition law compliance programs and the core principles of an effective compliance program, which, according to the Competition Bureau, are building a culture of compliance with management support, assessing competition law risks, implementing tailored compliance policies, procedures and controls, training and communicating the program, using effective reporting mechanisms, adopting monitoring, auditing measures and incentives for compliance and discipline for non-compliance and periodic evaluation and revising the program.
The Compliance Hub also includes overviews of key potential areas of competition law risk and related case studies, including criminal conspiracies, bid-rigging, wage-fixing and no-poaching agreements, deceptive marketing practices, mergers and abuse of dominance. See: here.
For more information about these provisions of the Competition Act, see: Abuse of Dominance, Bid-Rigging, Conspiracy (Cartels) and Misleading Advertising.
Competition Law Compliance
For Trade and Professional Associations
With respect to trade and professional associations, like the Competition Bureau’s former competition compliance guidance over the years, it provides specific recommendations for association related compliance.
This includes encouraging trade associations to have credible and effective competition law compliance programs and requiring associations to have compliance programs in place as a condition of participation.
The Competition Bureau also provides the following specific compliance recommendations for competition law compliance and trade associations:
1. Participate in trade association activities only if the association implements a credible and effective competition law compliance program.
2. Document all contact with competitors and keep proper records. If your external trade association activities could create an appearance of collusion, make the necessary changes to avoid that.
3. Create a clear written agenda when meeting with competitors and do not stray from the agenda.
For more information about competition law compliance for trade/professional associations, see: Associations.
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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.
For more information about our services, see: services
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
