The Competition Bureau Canada is inviting Canadians to provide feedback on its preliminary enforcement approach to competitor property controls in the wake of recent amendments to the federal Competition Act, 1985.
The news release urged Canadians to submit their feedback on the guidance and to raise any other relevant issues by Oct. 7 through the Bureau’s online feedback form. The Bureau specifically asked for input from those with experience in competitor property controls, including tenants, lessors, and landowners.
The recent legislative changes are a part of the federal government’s efforts to modernize competition laws. The amendments expanded the scope for reviewing collaborations among firms and enhanced the Bureau’s ability to prevent abuse of dominance.
Some of the new provisions took effect immediately. Others are scheduled for implementation by December 2024.
The Bureau’s consultation aims to shape how it assesses the competitive impact of these property controls moving forward. The Bureau’s website will publish all responses unless the one submitting requested confidentiality, the news release said.
Guidance from Competition Bureau
The Competition Bureau’s preliminary guidance offers an initial interpretation of how the changes to the law will affect competitor property controls so that Canadians can understand and comply with the updated regulations.
Competitor property controls, which are common across Canada, refer to restrictions on the use of commercial real estate, which can limit competition by preventing businesses from opening new locations. Examples of competitor property controls include exclusivity clauses and restrictive covenants, said the Bureau’s guidance.
Exclusivity clauses in commercial leases restrict how land can be used by a tenant’s competitors, the guidance explained. On the other hand, restrictive covenants prevent a property’s purchaser or owner from leasing to competing businesses.
These practices can insulate firms from competition, the guidance stated. However, in limited cases, such controls are justified if they are necessary to facilitate new market entry or investments that ultimately increase competition.
The Bureau’s guidance encouraged businesses to review their use of competitor property controls to ensure compliance with the law. The Bureau suggested evaluating whether such controls were necessary for market entry or investment and whether they could be narrower in scope regarding time, product, or geographic area.
The Bureau warned that property controls failing to comply with the criteria in the new regulations could face enforcement action under the amended Competition Act.
The Bureau, an independent law enforcement agency, seeks to promote competition to benefit Canadian consumers and businesses, to drive lower prices, to promote innovation, and to support economic growth.