The governing federal law for the Canadian competition law or anti-trust law is the Competition Act which came into effect in 1986. The law is administered by the Competition Bureau, through the Commissioner of Competition. Along with the Bureau in implementing the Act is the Competition Tribunal (the Tribunal), which hears and adjudicates cases filed before it which involves alleged violations of the Act. This is also in addition to Canadian common law principles and doctrines.
Competition Act
Canadian competition law generally pertains to the Competition Act, and the regulations or guidelines promulgated by the Bureau implementing the said Act. It ensures that commercial competition is healthy and fair among business – no matter its size – providing equal opportunities for small and medium enterprises to compete in Canadian market. The Canadian Competition Act also ensures that customers or consumers are protected by providing them with competitive prices and product choices resulting from a fair, competitive Canadian economy.
For this purpose, the Competition Act also regulates mergers and acquisitions (M&A) among corporations which may affect Canadian markets. It also prohibits conspiracies among corporations to limit or control competition, since this may result in cartels and monopolies. This is done by specifically prohibiting illegal trade practices and other similar acts.
Mergers
Part VIII and Part IX of the Act provides for the regulatory framework regarding mergers in Canada. A merger becomes reviewable by the Tribunal when a business acquires in whole or in part the business of a competitor, a supplier, or a customer. It may be done directly or indirectly, and through purchase, lease of shares or assets, amalgamation, or a combination of these processes (Section 91).
Under the Canadian Competition Act, regulation of mergers may be divided into two components:
- Pre-Merger Notification
- Substantive Review of Merger
1. Pre-Merger Notification
Section 110 (1) provides that a Pre-Merger Notification is mandatory for the following transactions:
- acquisition of assets;
- acquisition of shares;
- amalgamation; or
- combination of any of these.
Before a merger involving any of these transactions may be considered complete, a Pre-Merger Notification must be filed before the Bureau if the maximum threshold amounts are reached. Although, there are certain exemptions from the filing of the Notification, such as acquisition of voting shares, assets or interests (Section 111); combinations that are joint ventures (Section 112); and other general exemptions found in Section 113.
Upon application by the Commissioner before a judicial court, and by order of the said judicial court after its determination, failure to comply (Section 92 and 123.1) with the mandatory Pre-Merger Notifications may result in the following actions by the court:
- ordering the concerned party to submit the necessary Notification;
- issuance of an interim order prohibiting the completion of the merger;
- order the dissolution of the merger, or the disposal of the acquired assets or shares; or
- order the payment of an administrative monetary penalty in case of a completed merger.
2. Substantive Review of Mergers
In connection with the mandatory Pre-Merger Notification and other powers to them as provided by the Act, the Commissioner is also empowered by the Canadian competition law to substantially review any merger which may result in a “substantial prevention or lessening of competition”.
Section 93 provides for various circumstances where substantial prevention or lessening of competition may occur:
- when a business of a party to the merger would likely fail;
- when there would be a material price increase on the relevant products as a result of a merger;
- when the new entry would not occur in a way that it could prevent the material price increase, or to counteract the effects of such price increase.
Competition Tribunal
The Competition Tribunal and the judicial/regular courts have different jurisdictions among each other regarding civil or criminal cases filed based on the Canadian Competition Act.
Part VIII of the Act outlines the cases under the jurisdiction of the Tribunal. While criminal cases and civil cases for damages are under the jurisdiction of the judicial courts, the Competition Tribunal hears and tries cases under Civil Reviewable Matters. The Tribunal acquires jurisdiction over these cases in two ways – upon application by the Commissioner of Competition; or upon application by a third-party, but if certified by the Commissioner and with leave (with consent) of the Tribunal (Section 103.1).
The Tribunal also has the power to issue remedial orders and administrative monetary penalties. Under Section 103.3 (1) of the Act, the Tribunal may issue an Interim Order, upon ex parte application of the Commissioner, to prohibit the continuation of any of the conduct under Sections 75 to 77, 79, 81, 84 or 90.1; or to prevent any measure to implement a foreign judgment, decree, order, or process (Section 82) or a foreign law or directive (Section 83) which could adversely affect competition in Canada.
What are the illegal acts under the Canadian Competition Act?
Under the Canadian Competition Act, illegal acts preventing healthy competition in Canada’s markets may either be a Civil Reviewable Matter or a Criminal Offense.
Civil Reviewable Matters
The following are Civil Reviewable Matters which will fall under the jurisdiction of the Tribunal, upon application by the Commissioner or any third party:
- Section 75 – Refusals to deal
- Section 76 – Price maintenance
- Section 77 – Exclusive dealing
- Sections 78 and 79 – Abuse of dominant position
- Sections 80 and 81 – Delivered pricing
- Section 84 – Refusal to supply by foreign supplier
If you’re entering into a civil matter in Ontario, we recommend hiring a competition lawyer in Ontario for the job. There can be differences in legislation between provinces, so be sure to find a lawyer near you.
Criminal Offenses
Criminal Offenses under the Canadian competition law are filed before regular courts, and not with the Tribunal. Generally, these are equated to cartelization and market monopolization, which are the main prohibitions under the Act. These Criminal Offenses are:
- Section 45 – Conspiracies, agreements, or arrangements between competitors
- Section 47 – Bid-rigging
- Section 52 – False or misleading representations
- Section 54 – Double ticketing
- Section 55 – Misleading multi-level marketing, including pyramid selling
Offenses under these criminal provisions may also include civil liabilities, in addition to the punishment specified for each criminal offense.
Want to learn more about the Canadian Competition Act and how it may affect your business’ operations? Talk with the best competition lawyers in Canada or comment below your questions regarding the Canadian competition laws.