More change is coming: Federal government launches Competition Act review and consultation process

On November 17, the Government of Canada launched a consultation process for the review of the Competition Act (the Act) and published a discussion paper setting out several proposals to modernize the Act. This is the first comprehensive review of the Act since 2007 and follows similar competition law reviews conducted in the US, EU, UK and Australia. This follows the announcement by the minister of innovation, science and industry (the Minister) earlier this year to undertake a comprehensive review of both the Act and Canada’s competition policy framework. The first phase of targeted amendments to the Act was passed in June 2022, with the promise of more change to come.¹ This consultation process will likely result in significant changes to the Act and its enforcement. 

When he announced the review, the Minister indicated the government is considering broad changes to Canada’s competition framework and the associated consultation overview identifies the key themes for the review. The scope of the review includes both the substantive provisions of the Act and the role and powers of the Competition Bureau (the Bureau). The initial phase of the consultation invites interested parties to provide submissions in response to the discussion paper by February 27, 2023.² What is less clear is how the process will unfold afterwards.  

We will continue to monitor the next steps in the consultation process and likely timing for the tabling of any amendments to the Act. In 2009 and 2022, significant amendments to the Act were incorporated in budget legislation –a process that typically involves far less scrutiny than is otherwise the case for substantive amendments to legislation that can significantly impact how companies do business in Canada. The possible amendments to the Act set out in the discussion paper could have broad ramifications for the Canadian economy, making the process and timing of possible amendments critical for companies to understand.

Proposed areas for review and possible amendment 

The discussion paper canvasses significant possible changes to many areas of Canadian competition law, including:

Merger Review

• Revising the pre-merger notification rules to better capture potentially anti-competitive mergers.
• Extending the limitation on the review period for non-notifiable mergers to three years, or tying it to a voluntary notification regime for mergers that do not meet the notification threshold.
• Easing the conditions for the commissioner to obtain interim relief in challenging mergers and seeking injunctions.
• Restricting the application of the efficiencies defence to instances where consumers or suppliers would not be harmed by the merger. 
• Revising the standard for a merger remedy to, for example, better protect against prospective competitive harm or better account for labour market effects. 

Abuse of Dominance

• Including de facto dominant behaviour in the definition of dominance or joint dominance to capture actions of firms that are not clearly dominant on their own but together exert substantial anti-competitive influence on a market.
• Creating presumptions or bright-line rules for the behaviour of dominant firms or platforms, related to their behaviour or acquisitions, to better align Canadian competition law with other jurisdictions, while still avoiding over-enforcement.
• Simplifying the test for a remedial order, including reconsidering the relevance of intent and/or competitive effects as is the case under the current approach. 
• Consolidating the unilateral conduct provisions into a single abuse of dominance or market power provision, or re-orienting these provisions outside of abuse of dominance to address different objectives of the Act such as fairness in the marketplace.

Competitor Collaborations

• Introducing a mandatory notification or voluntary clearance process for certain potentially problematic agreement types.
• Reintroducing buy-side collusion, beyond labour coordination, under the Act’s criminal provisions or by establishing a civil per se regime (i.e., no need for the conduct to actually harm competition).
• Making collaborations that harm competition civilly reviewable even where they do not involve direct competitors.
• Broadening the civil competitor collaboration provisions to discourage intentional forms of anti-competitive conduct by implementing monetary penalties and examining past conduct. 
• Inferring agreements more easily for civilly reviewable conduct, for example to address algorithmic activity, given the difficulty in applying concepts such as “agreement” and “intent” to AI-related processes.

Deceptive Marketing

• Adopting better enforcement tools to address modern forms of business, possibly in the form of better defining false or misleading conduct in the Act. 

Administration and Enforcement

• Increasing the efficiency of the administration and enforcement of competition law by, for example,
  • Giving the Bureau greater scope to make decisions through simplified information collection or a first-instance authority to allow or prevent forms of conduct;
  • Allowing for civil enforcement as an alternative to criminal prosecution, including for conduct involving buy-side coordination for which the government proposes introducing a civil per se regime; and
  • Allowing private parties to obtain monetary damages for harm resulting from civilly reviewable non-merger conduct. 
    
• Granting the Bureau the ability to compel businesses to provide information outside the enforcement context, for example in market studies.

It is clear that, after over a decade of Canada’s competition laws being largely on the back burner, the desire for change has now reached the boiling point – with the key questions being the extent of the reforms and how quickly they will come. This process will require balancing the strong desire of stakeholders (the Bureau, in particular) to make enforcement action easier or to increase the Bureau’s advantage in settlement discussions with the need to prevent over-enforcement and a lack of predictability for businesses. In addition, there seems to be a strong desire to emulate changes that have been made in other jurisdictions, without fully assessing their potential impact.  

The possible changes put forward by the government include proposals that would lower the burden of proof and create presumptions of harm to be refuted by businesses, with little reference to the importance of preventing over-enforcement. While the government’s desire to review the Act and Canada’s competition law enforcement framework is well intentioned, it is critical to ensure that the desire to make change is informed by facts and sound policy objectives, as opposed to making change for change’s sake.   

Norton Rose is actively monitoring developments in this area, and we will provide more detailed analysis on possible reforms to the Act as this process evolves.