Ottawa announces review of Canada’s competition law, with focus on wage fixing, deceptive pricing and ‘anti-consumer practices’

Following years of debate about whether the Competition Act should be amended, the Canadian government has announced plans to “carefully evaluate potential ways to improve its operation”, touching on several concerns previously identified by the Commissioner of Competition.

In a press release on February 7, 2022, the Honourable François-Phillipe Champagne, the federal Minister of Innovation, Science and Industry, announced plans for a review of the Competition Act in order to improve its operation. There have been discussions and debates for some time about potential amendments to the Act. Most notably, Matthew Boswell, the Commissioner of Competition, advocated for a comprehensive review of the Act in a “call to action” speech he gave during the Canadian Bar Association’s Competition Law Fall Conference in October 2021. However, prior to Minister Champagne’s announcement there was not much discernible, public activity on the subject from the broader federal government.

In the press release Minister Champagne highlighted six areas where the Canadian government will examine potential amendments to the Act:

• Fixing loopholes that allow for harmful conduct: The Minister’s announcement did not elaborate on the types of loopholes the government will address, and whether they are technical (as the word would suggest) or substantive. However, in an interview with the Toronto Star (paywalled) he indicated that a review of the “efficiencies defence” would be part of a broader review of the Act. The Commissioner and the Competition Bureau have long advocated for the removal of the efficiencies defence, which allows mergers that the Bureau otherwise considers anticompetitive to proceed if the anti-competitive effects are outweighed by efficiency gains. Whether the efficiencies defence should be understood as a “loophole” is, however, a contentious point. It is an explicit defence that has been embedded in the Act since 1986 and which Canadian courts, including the Supreme Court of Canada, have upheld and indeed bolstered in the case law over the course of many years. In any event, it is somewhat unclear whether any changes to the efficiencies defence are contemplated as part of the review.
• More clearly addressing drip pricing: Drip pricing is a deceptive marketing practice that occurs when the price a consumer pays for a product or service ends up being higher than the advertised price due to additional fees tacked on at later stages in the sale process. In recent years misleading advertising has been an enforcement priority of the Competition Bureau and it has reached multiple settlements with companies addressing marketing practices related to disclosure of fees. Accordingly, it is not immediately clear whether or what statutory amendments may be necessary to address drip pricing concerns.
• Tackling wage fixing agreements: Unlike other jurisdictions, “buy-side” agreements between competitors are not subject to a criminal prohibition in Canada, as Parliament explicitly removed buy side agreements from the cartel provision in the amendments made to the Act in 2009. The federal Standing Committee on Industry and Technology called for these agreements to be added to the Act’s criminal cartel prohibition in a report issued in June 2021 and the Commissioner noted that the exclusion of buy-side agreements from the cartel provision is a gap in the law. Anti-competitive buy-side agreements can be subject to the Act’s civil provision on competitor collaborations, but no such cases have been brought since 2009.
• Increasing access to justice for those injured by harmful conduct: During the Commissioner’s speech in October 2021, he identified the absence of private enforcement tools for certain provisions in the Act, notably abuse of dominance, as a concern affecting meaningful enforcement action for the protection of competition in Canada. Other reviewable matters under the Act, such as refusal to deal and price maintenance, already allow limited private rights of action with leave of the Competition Tribunal, which are almost never used.
• Adapting the law to today’s digital reality to better tackle emerging forms of harmful behaviors in the digital economy: Adapting to the digital economy is a key theme in the Competition Bureau’s Strategic Vision for 2020-2024 and protecting competition in the digital economy has been an enforcement priority under Commissioner Boswell. In late 2019 the Competition Bureau issued a call-out to market participants for information on potentially anti-competitive conduct in the digital economy in order to better understand digital markets and how certain characteristics affect competition.
• Modernizing the penalty regime to ensure it serves as a genuine deterrent against harmful business conduct: During the Commissioner’s speech in October 2021, he called the maximum available criminal fines and civil penalties “weak” and posited that they do not meaningfully deter anti-competitive conduct or promote compliance. By way of illustration, the maximum civil penalty available in Canada is $10 million (or $15 million for subsequent breaches), while the American Federal Trade Commission was able to fine Facebook US$5 billion for privacy violations (the Competition Bureau secured a fine of $9 million against Facebook for the same conduct).

The last major changes to the Act were implemented in 2009. It appears that the appetite for major change has returned in the broader Canadian government and that they are listening closely to the concerns expressed by the Commissioner in 2021. Businesses and practitioners in Canada and abroad should pay close attention as these developments unfold, as they may result in significant impacts on how businesses interact with Canadian competition laws.