This bulletin is the third in our subject-matter specific series explained in the article: \u201cA new playing field: Summarizing sweeping reforms to the Canadian Competition Act<\/em><\/a>\u201d, which summarizes key changes to Canada\u2019s Competition Act<\/em> (the \u201cAct<\/strong>\u201d). Over the last two years, the Act has been substantially reformed through three separate rounds of amendments, most recently on June 20, 2024, by Bill C-59, known as The Fall Economic Statement Implementation Act<\/em>.[1]<\/a><\/p>\n\n\n\n This bulletin focuses on the expansion of the scope of review and range of penalties now in force as they relate to the civil competitor collaboration provisions in section 90.1 of the Act. These provisions previously allowed the Canadian competition regulator, the Competition Bureau (the \u201cBureau<\/strong>\u201d) to challenge competitor agreements that might be anti-competitive but did not meet the high threshold of \u201ccriminal conspiracies.\u201d While the Competition Tribunal (the \u201cTribunal<\/strong>\u201d) could previously stop parties from participating in these agreements, it could not: impose fines, look at past agreements, remedy third parties adversely affected, or hear cases not brought by the Commissioner of Competition (the \u201cCommissioner<\/strong>\u201d).<\/p>\n\n\n\n In addition, this bulletin discusses how these amendments prompted the Bureau to issue a statement on its enforcement position related to \u201cproperty controls\u201d as well enhancing the \u201cRefusal to Deal\u201d provisions under section 75 of the Act.<\/p>\n\n\n\n The existing civil competitor collaboration provisions allow the Bureau and the Commissioner to target agreements or potential agreements between competitors that have the effect of preventing or lessening competition substantially in a market. These agreements include those that do not fall within the more severe offence of \u201ccriminal conspiracy,\u201d which carries more serious penalties (including incarceration), but correspondingly requires a more specific characterization to establish a violation.<\/p>\n\n\n\n Previously, the Tribunal only had the authority to make an order prohibiting any contravening person from participating in an impugned agreement. It could not impose monetary penalties or remedies. Furthermore, only potential agreements or agreements that existed at the time a case was brought by the Commissioner were captured by these provisions. As discussed below, the amendments have materially increased the scope of the Act\u2019s civil competitor collaboration provisions and the Tribunal\u2019s powers.<\/p>\n\n\n\n The amendments to the Act allow for the Tribunal to review a much broader scope of agreements by now capturing collaboration\/agreements between firms that are not competitors, but whose agreements can be shown to have the substantial lessening of competition as an actual effect or as a significant purpose.[2]<\/a> Businesses should therefore be aware of compliance before entering into agreements, particularly those agreements listed in the Bureau\u2019s guidelines.[3]<\/a><\/p>\n\n\n\n Additionally, the amendments update the non-exhaustive list of factors that will be used in determining the competitive impact of collaborations to include:<\/p>\n\n\n\n The amendments also expand the temporal scope of agreements subject to section 90.1 of the Act. The Bureau will no longer be restrained to agreements that exist in the present or were likely to in the future; instead, they will be permitted to review past agreements going back up to 3 years.[5]<\/a> Importantly, past and present agreements will be measured by whether or not they have<\/em> substantially harmed competition, and future agreements will be measured whether they will be likely<\/em> to substantially harm competition.<\/p>\n\n\n\n Finally, the amendments remove the efficiency defence, which previously made an exception for anti-competitive agreements that could create gains in efficiency that were sufficiently large so as to offset the anti-competitive effects.<\/p>\n\n\n\n Along with a broader scope in terms of reviewable civil collaboration agreements, the amendments permit the Tribunal to order, in addition to their existing powers, an administrative monetary penalty against those who violate these provisions, in an amount not exceeding the greater of:<\/p>\n\n\n\n These amounts signify the maximum amount that can be imposed by the Tribunal, but no minimum is specified. The amendments also include guidance on the relevant factors that the Tribunal will consider in determining the appropriate amount, which broadly deal with the relative impact on competition in the relevant market, the financial benefits acquired by the participating firms, and historic compliance with the Act.[7]<\/a><\/p>\n\n\n\n In 2023, the Bureau also undertook a \u201cRetail Grocery Market Study\u201d in which it recommended that provincial and territorial governments take measures to limit property controls in the grocery industry, including prohibiting their use entirely. On August 7, 2024 the Bureau published a statement related to its preliminary enforcement approach related to property control mechanisms based on the amendments to the Act. The named controls include:<\/p>\n\n\n\n The Bureau\u2019s statement outlines that these controls may be justified insofar as they protect incentives for a retailer to make investments to enter into a market and therefore increase competition. However, this justification must be established based on the facts surrounding the terms of the agreement and the circumstances. Restrictive covenants, as opposed to exclusivity clauses, are typically long-lasting and are exclusionary, such that the Bureau has stated that their use is not justified except in exceptional circumstances.[9]<\/a><\/p>\n\n\n\n Lessors and landowners, who may not directly compete with the parties to their existing lease agreements, may still be in violation of the Act if the property control provisions found in their leases have the effect of substantially harming competition. Under the new amendments to the Act, offending parties will be open to the same potential penalties under the civil collaboration provisions of section 90.1 (including administrative monetary penalties and prohibition orders). In addition, the Bureau\u2019s statement outlines that it may also take enforcement action under the Abuse of Dominance provisions as well as the criminal offence section 45 of the Act in egregious circumstances.<\/p>\n\n\n\n The Bureau\u2019s statement encourages all businesses that use competitor property controls to ask themselves:<\/p>\n\n\n\n The Bureau has also emphasized that its enforcement position will soon be formally reviewed and updated to \u201censure transparency and predictability for the business and legal communities in light of the changes to the Competition Act.\u201d[10]<\/a><\/p>\n\n\n\n Beginning in June 2025, the amendments will permit private parties to bring applications to the Tribunal to challenge new categories of civilly reviewable conduct, including anti-competitive agreements which previously were only available to the Commissioner.<\/p>\n\n\n\n In addition, the legal threshold requirements to bring a case directly to the Tribunal have been lowered. Businesses will now only need to show that part<\/em> of their business has been affected by the alleged conduct, rather than the previous requirement that their entire<\/em> operations were directly and significantly impacted by the anti-competitive behavior of a competitor. Further, a private party can also obtain permission to bring a case to the Tribunal if the Tribunal is satisfied that it is in the public interest to do so.<\/p>\n\n\n\n These private parties may be incentivized by the potential for disgorgement awards that can be ordered by the Tribunal, which grants an amount to be distributed among the applicant and any other person affected, up to a maximum of the value of the benefit derived from the conduct (similar to a class-action claim).<\/p>\n\n\n\n The amendments also make new updates to the Act\u2019s refusal to deal provisions. These provisions give the Tribunal the power to order a supplier to accept a person as a customer if their business is substantially affected due to an inability to acquire supplies on usual terms. The new amendments will add the refusal to supply the \u201cmeans of diagnosis or repair,\u201d which includes: \u201cdiagnostic information, technical updates, diagnostic software or tools, and any related documentation and service parts.\u201d[11]<\/a> Like the private right of action, they also expand the refusal to deal provision to include cases where only part of a business is substantially affected, rather than the business in its entirety.<\/p>\n\n\n\n The new changes to the competitor collaboration, civilly reviewable conduct, and refusal to deal provisions reshapes the regulatory landscape with respect to interactions between firms. Businesses should be aware of the following:<\/p>\n\n\n\n Should you have any questions regarding civil competitor collaboration agreements or refusal to deal provisions, please reach out to Eric Dufour (edufour@millerthomson.com<\/a>) or Devin Persaud (dapersaud@millerthomson.com<\/a>) of Miller Thomson\u2019s Competition \/ Antitrust team<\/a>.<\/p>\n\n\n\n [1]<\/a> Bill C-59, An Act to Implement Certain Provisions of the Fall Economic Statement, 1st Sess, 44th Parl, 2024, cl 236(1) (Assented to 20 June 2024).<\/p>\n\n\n\n [2]<\/a> Comes into force in December 2024 – Competition Bureau, \u201cGuide to the December 2023 Amendments to the Competition Act<\/em>\u201d, December 18, 2023, online: https:\/\/competition-bureau.canada.ca\/how-we-foster-competition\/education-and-outreach\/guide-december-2023-amendments-competition-act<\/a><\/p>\n\n\n\n [3]<\/a> Competition Bureau, \u201cCompetitor Collaboration Guidelines\u201d, May 6, 2021, online: https:\/\/competition-bureau.canada.ca\/how-we-foster-competition\/education-and-outreach\/competitor-collaboration-guidelines.<\/a> The Competitor Collaborations Guidelines discuss six common forms of agreements between competitors; namely: commercialization agreements, information sharing agreements, research and development agreements, joint production agreements, joint purchasing agreements and non-compete agreements.<\/p>\n\n\n\n [4]<\/a> \u201cFirst round of significant and expansive amendments to the Competition Act in effect\u201d, July 27, 2022, online: https:\/\/www.millerthomson.com\/en\/published-articles\/significant-expansive-amendments-competition-act\/<\/a><\/p>\n\n\n\n [5]<\/a> Competition Bureau, \u201cGuide to the June 2024 Amendments to the Competition Act<\/em>\u201d, June 25, 2024, online: https:\/\/competition-bureau.canada.ca\/how-we-foster-competition\/education-and-outreach\/guide-june-2024-amendments-competition-act<\/a><\/p>\n\n\n\n [6]<\/a> Supra, note 1.<\/p>\n\n\n\n [7]<\/a> Ibid.<\/p>\n\n\n\n [8]<\/a> Competition Bureau, \u201cCompetitor property controls and the Competition Act<\/em>\u201d, August 7, 2024, online: https:\/\/competition-bureau.canada.ca\/how-we-foster-competition\/education-and-outreach\/competitor-property-controls-and-competition-act<\/a><\/p>\n\n\n\nOverview of civil competitor collaboration provisions (s.90.1)<\/h2>\n\n\n\n
Changes to civil competitor collaboration and civilly reviewable conduct<\/h2>\n\n\n\n
1. Broader scope of reviewable collaborations<\/h4>\n\n\n\n
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2. New potential penalties for violations of civil collaboration provisions<\/h4>\n\n\n\n
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3. Competitor property controls<\/h4>\n\n\n\n
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4. Private right of action to challenge civilly reviewable conduct<\/h4>\n\n\n\n
5. Right to repair<\/h4>\n\n\n\n
Key takeaways<\/h2>\n\n\n\n
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