Change has come again: Federal government introduces further amendments to Canada’s Competition Act

On September 21, the Minister of Finance tabled Bill C-56, which includes, among other things, proposed amendments to the Competition Act (the Act) including (i) extending the Commissioner of Competition’s compulsory powers, exercised subject to court orders, to include market studies conducted at the government’s direction, (ii) allowing the Competition Tribunal (the Tribunal) to make certain orders if the significant purpose of the agreement or arrangement is to prevent or lessen competition in any market, even if the parties to an arrangement or agreement are not competitors, and (iii) repealing the exception available for efficiencies gains brought about by mergers.¹

This comes after the Prime Minister recently announced the government’s intention to introduce a first set of legislative amendments to the Act.² The Minister of Innovation, Science and Industry (the ISED Minister) had also previously announced his intention to undertake a review of the Act,³  and the Government of Canada launched a consultation process for the review of the Act and published a corresponding discussion paper on the modernization of the Act on November 17, 2022.⁴  The consultation process concluded on March 31, 2023, and the government published a report on the feedback it had received and some considerations raised.⁵

The first phase of targeted amendments to the Act received royal assent in June 2022.⁶

The proposed amendments included in Bill C-56 are:

• Compulsory powers for market studies
  • Enabling the ISED Minister to direct the Commissioner of Competition to conduct a market or industry study.
  • Granting the Competition Bureau (the Bureau) the ability to obtain a court order on an ex parte basis under Section 11 of the Act to compel businesses or individuals to provide information for the purposes of a market study conducted by the Bureau.
    • To grant a section 11 order, the court must be satisfied that the business or individual is likely to have information that is relevant to the inquiry.
    • Section 11 court orders can compel an individual or a business to (i) attend an examination conducted by the Bureau on any matter that is relevant to the inquiry, (ii) produce documents, or (iii) provide written responses to inquiries contained in the order.
• Repealing the efficiencies defence
  • The proposed amendments would repeal section 96 of the Act, otherwise known as the efficiencies defence. The efficiencies defence provides a defence for mergers that will have, or are likely to have, the effect of preventing or lessening competition where the merger has brought about or is likely to bring about gains in efficiency that will be greater than, and will offset, any anti-competitive effects.
  • The government’s discussion paper published in conjunction with its consultation process for the review of Act discussed the possibility of restricting the application of the efficiencies defence to instances where consumers or suppliers would not be harmed by the merger. The proposed amendment in Bill C-56 goes significantly further in removing the defence entirely.
  • The transitional provision in Bill C-56 states that section 96 of the Act will continue to apply to proposed transactions notified under the Act before the coming into force of the amendments as well as substantially completed mergers.
• Civil orders against collaborations that lessen or prevent competition, even among non-competitors
  • The proposed amendments would allow the Tribunal to make an order under section 90.1 of the Act prohibiting parties from taking, or requiring them to take, any action if the Tribunal finds that a significant purpose of any agreement or arrangement, or any part of it, is to prevent or lessen competition in any market. The Tribunal would be able to make an order even if none of the parties to the agreement or arrangement are competitors.
  • The proposed amendment to section 90.1 of the Act would only come into force one year from the day on which the amendments receive royal assent.

Key takeaways

Bill C-56 was tabled one week after the Prime Minister’s announcement on the government’s intention to further amend the Act, suggesting the government plans to have the proposed amendments implemented as quickly as possible. The bill will be debated and revised in committee in the House of Commons and Senate.

It is important to note these are likely only the next set of amendments to the Act, and further amendments are expected as part of the broader “comprehensive review” of the competition framework in Canada. We will continue to monitor the developments in this area and provide further analysis on any resulting amendments to the Act.