Kara Sears
Canada has a federal law, the Competition Act, which governs competition in the country and contains both criminal and civil provisions aimed at preventing anti-competitive practices in the marketplace. The Act includes provisions relating to ordinary, lawful business practices that may occasionally have anti-competitive effects on the Canadian economy and consumers. It also covers agreements between competitors that are likely to cause a substantial prevention or lessening of competition (SPLC) in any relevant market. The abuse of dominance provisions in the Act allow the Tribunal to issue prohibition and other orders, including administrative monetary penalties, in response to anti-competitive acts.
| Characteristics | Values |
|---|---|
| First legislation dealing with competition in Canada | The Anti-Combines Act, 1889 |
| First legislation's purpose | Prohibit conspiracies and agreements by businesses in restraint of trade |
| First legislation's status | The first antitrust statute in the industrial world |
| Current legislation | The Competition Act |
| Current legislation's status | Contains both criminal and civil provisions aimed at preventing anti-competitive practices in the marketplace |
| Current legislation's scope | Applies to all economic activities (both goods and services) except those specifically exempted |
| Current legislation's exemptions | Collective bargaining, amateur sports, securities underwriting, or activities subject to other legislation |
| Current legislation's amendments | June 23, 2022, as part of Canada's Budget Implementation Act, 2022 (Bill C-19) |
| Current legislation's proposed changes | Removal of the "efficiencies defence" in merger cases |
| Current legislation's enforcer | The Competition Bureau |
| Current legislation's adjudicator | The Competition Tribunal |
| Current legislation's penalties | Prohibition and other orders, including monetary penalties up to $10 million for an initial order or $15 million for any subsequent violation |
| Current legislation's penalty calculation | Three times the value of the benefit obtained from the anti-competitive conduct or 3% of annual worldwide gross revenues |
| Current legislation's notable cases | US-based Archer Daniels Midland (ADM) fined $14 million and $2 million for conspiracies involving lysine and citric acid, respectively |
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What You'll Learn
Canada's Competition Act
The Competition Act is enforced and administered by the Competition Bureau, an independent law enforcement agency. The Bureau is responsible for protecting and promoting competition, ensuring lower prices, better services, and more choices for Canadian consumers and businesses. The Competition Tribunal, a specialised administrative body, has exclusive jurisdiction to hear certain competition matters. The Tribunal can make remedial cease-and-desist orders and issue prohibition orders, including administrative monetary penalties, for anti-competitive practices.
The Act includes provisions for both horizontal and vertical mergers, aiming to prevent substantial prevention or lessening of competition (SPLC). The Commissioner of Competition reviews mergers by considering factors such as market share, product substitutes, barriers to entry, and effects on price and non-price competition. The abuse of dominance provisions in the Act addresses anti-competitive acts by persons or entities with market power, with penalties of up to $15 million for violations.
The Competition Act has been amended multiple times to strengthen its effectiveness. Notable amendments include those in 1996, 2002, 2009-2010, 2022, and 2024. The 2024 changes particularly focused on enhancing the Competition Bureau's ability to protect competition and prevent anti-competitive mergers and conduct. The Act continues to evolve to address emerging competition issues and ensure a fair and efficient Canadian economy.
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Anti-competitive acts
Canada has a federal law, the Competition Act (French: Loi sur la concurrence), which governs competition in the country. The Act contains both criminal and civil provisions aimed at preventing anti-competitive practices in the marketplace. The Act applies to all economic activities (both goods and services) except those specifically exempted, such as collective bargaining, amateur sports, and securities underwriting. The administration and enforcement of the Competition Act are handled by the Competition Bureau, which is headed by the Commissioner of Competition. The Commissioner reviews mergers to determine their potential impact on competition, considering factors such as market share, product substitutes, and barriers to entry.
The Competition Act in Canada includes provisions to address anti-competitive acts and ensure a fair and competitive market. The abuse of dominance provisions in the Act addresses situations where individuals or entities with market power engage in anti-competitive practices that substantially prevent, lessen, or likely to lessen competition. The Act enables the Tribunal, on the Commissioner's application, to issue prohibition orders and impose administrative monetary penalties of up to $10 million for the initial order and $15 million for subsequent violations. These penalties can also be calculated as three times the value of the benefit obtained from the anti-competitive conduct or 3% of annual worldwide gross revenues if the benefit amount cannot be reasonably determined.
The Act also contains civil provisions known as "reviewable practices", which relate to ordinary and generally lawful business practices that may occasionally have anti-competitive effects. These practices are presumptively lawful and will only be prohibited if there is proof of anti-competitive effects. This includes agreements between competitors that are likely to cause a substantial prevention or lessening of competition (SPLC) in any relevant market. The Tribunal can issue cease-and-desist orders for such agreements, and joint ventures, strategic alliances, and similar collaborations between competitors may be subject to review and potential prohibition.
Canada has a history of competition and anti-combines laws dating back to 1889 with the Anti-Combines Act, which was the first antitrust statute in the industrial world. Since then, the legislation has evolved through various iterations, including the Combines Investigation Act in 1910, 1923, and 1937. The Competition Act, which came into effect in 1986, replaced the previous legislation and introduced more effective provisions regarding civil mergers. Amendments to the Competition Act have continued over the years, with the most recent changes proposed in 2023 as part of the Affordable Housing and Groceries Act (Bill C-56). These proposed changes include removing the "efficiencies defence" in merger cases to further strengthen Canada's anti-trust laws.
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Abuse of dominance
Canada's antitrust laws are governed by the Competition Act (French: Loi sur la concurrence), which contains both criminal and civil provisions aimed at preventing anti-competitive practices in the marketplace. The Act is enforced and administered by the Competition Bureau, and cases are adjudicated by the Competition Tribunal.
Previously, the Tribunal could find that abuse of dominance had occurred only when a dominant firm had engaged in anti-competitive acts, which were predatory, exclusionary, or disciplinary, or intended to harm competition. However, amendments to the abuse of dominance regime have been made, with the Affordable Housing and Groceries Act (Bill C-56) proposing three changes to the Competition Act, including the removal of the "efficiencies defence" in merger cases.
The under-enforcement of the abuse of dominance provisions is not new, with only 14 abuse of dominance proceedings brought before the Competition Tribunal since 1986. This is partly due to the Commissioner of Competition lacking the resources to effectively police monopolists in Canada. The recent amendments are a welcome change, as they reduce the emphasis on effects, which often required complex economic evidence to establish harm to competition.
The abuse of dominance provisions of the Competition Act have been historically under-enforced, and allowing private abuse of dominance proceedings would be pro-competition and pro-consumer, bringing Canada in line with its international peers.
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Reviewable practices
Canada's Competition Act, which came into effect in 1986, contains a number of civil provisions referred to as "reviewable practices". These practices relate to ordinary, lawful business practices that may occasionally have anticompetitive effects on the Canadian economy and consumers.
The Competition Act defines a merger as the acquisition or establishment—whether by purchase or lease of shares or assets, or by amalgamation, combination, or otherwise—of control over or a significant interest in all or part of a business. The Bureau has adopted an expansive interpretation of this definition, indicating that it will generally not consider the acquisition of less than 10% of the voting shares of a corporation to be a merger. It may consider the acquisition of between 10% and 50% to be a merger, depending on whether the purchaser will acquire the ability to materially influence the economic behaviour of the target.
Mergers that exceed certain thresholds must be notified to the Bureau pre-closing and may not be completed until either the statutory waiting period has expired or the Bureau has completed its review and rendered a disposition that permits closing. Notification is required if both of the following thresholds are exceeded: the party size (the combined assets or annual gross revenues of the merging parties in Canada) exceeds $400 million, and the acquired business size (the value of the assets in Canada to be acquired or the annual gross revenues generated by those assets) exceeds $93 million.
Amendments to the Act in 2022 and 2024 have expanded the scope of reviewable practices and strengthened private enforcement mechanisms. The amendments introduced new private access rights to cases involving deceptive marketing practices and civil provisions dealing with anti-competitive agreements, allowing private litigants to enforce nearly all civil provisions of the Act before the Tribunal. Additionally, the Tribunal can now award monetary relief for anti-competitive conduct, providing an incentive for private parties to bring matters directly to the Competition Tribunal.
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Tribunal orders
The Competition Act (French: Loi sur la concurrence) is a Canadian federal law that governs competition in the country. The Act contains both criminal and civil provisions aimed at preventing anti-competitive practices in the marketplace. The Act is enforced and administered by the Competition Bureau, and cases are adjudicated by the Competition Tribunal. The Competition Tribunal is a specialised administrative body with exclusive jurisdiction to hear certain competition matters.
The Act was first introduced in 1889 as the Anti-Combines Act, the first antitrust statute in the industrial world. It prohibited conspiracies and agreements by businesses in restraint of trade. In 1912, the Supreme Court of Canada ruled in Weidman v Shragge that the purpose of the anti-combines provisions in the Criminal Code was to protect the public interest in free competition. The Anti-Combines Act was replaced by the Competition Act in 1985, which came into effect in 1986.
The Competition Act contains five principal categories of provisions:
- Merger provisions, including pre-merger notification
- Criminal offences in relation to competition, including conspiracies/cartels and bid rigging
- Civil reviewable practices provisions, including non-criminal agreements between competitors, abuse of dominant position, and other restrictive trade practices
- Various deceptive marketing practices (civil and criminal offences)
- A provision establishing a private right of action for damages
The abuse of dominance provisions in the Act states that where one or more persons have market power and engage in anti-competitive acts, the Tribunal may, on application by the Commissioner, issue prohibition and other orders in respect of the conduct, including orders for administrative monetary penalties. The Tribunal may also prohibit the continuation of anti-competitive practices or impose requirements to overcome their effects.
The Act also allows the Commissioner to seek an interim order from the Tribunal to prevent the completion or implementation of a merger while an inquiry is ongoing. The Act previously included an "efficiencies defence", which prevented the Tribunal from issuing a remedial order in connection with an otherwise anti-competitive merger if it found that the efficiency gains outweighed the anticipated anti-competitive effects. However, this defence is proposed to be removed in 2023.
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Frequently asked questions
The Competition Act (French: Loi sur la concurrence) is a Canadian federal law governing competition in Canada. The Act contains both criminal and civil provisions aimed at preventing anti-competitive practices in the marketplace.
An anti-competitive act is any act that is intended to have a predatory, exclusionary, or disciplinary negative effect on a competitor or to have an adverse effect on competition. For example, exclusive dealing occurs when a supplier requires a customer to deal primarily in products supplied by them.
If the Tribunal finds an abuse of dominance, it may issue prohibition and other orders in respect of the conduct, including orders for administrative monetary penalties.
