1. LEGAL SOURCES.
- What are the recent changes to the legal regime governing competition in Canada?
Competition is at the heart of Canada’s economy. A healthy competitive environment pushes companies to be more responsive to consumer needs, resulting in greater choice, higher quality goods and services, and ultimately lower prices for consumers.
In a significant step towards achieving the above and modernizing Canada’s competition laws, the federal government introduced a series of amendments to the Competition Act (the “Act”). These amendments represent a considerable shift that will bring Canada in line with international best practices. In an effort to enhance competition, deter anti-competitive practices, and protect consumers in an increasingly digital market, these amendments signal a shift in how businesses must navigate their regulatory compliance.
This article will discuss some of the major changes to the Act, that came into force through Bill C-19, Bill C-56, and finally Bill C-59. It is important to note that this article is not intended to be a comprehensive or exhaustive discussion of all the amendments under the Act.
2. Bill C-19.
2.1 Bill C-19 received Royal Assent on June 23, 2022.[1]
2.2 Abuse of Dominance
(a) How does Bill C-19 define an anti-competitive act?
One of the key changes introduced to the Act by Bill C-19 is the codified definition of an “anti-competitive act”. This new definition means that any act with the intention of creating a predatory, exclusionary, or disciplinary effect on a competitor, or one that adversely affects competition as a whole, qualifies as anti-competitive under Subsection 78(1).[2] This clarified definition has closed the alleged “loophole” where dominant firms were avoiding examination when they engaged in conduct that weakened competition indirectly. The expanded list of anti-competitive acts now includes actions such as unfairly targeting competitors to stop them from entering the market or growing, reinforcing the scope of the abuse of dominance framework.
(b) What new factors must be considered when assessing competitive effects?
Bill C-19 also introduced factors to aid in evaluating whether a business practice substantially prevents or lessens competition in the market. These factors include[3]:
- The impact of barriers to entry, such as network effects;
- Effects on price and non-price competition, such as quality, choice, or consumer privacy;
- The nature and extent of change and innovation in the market; and
- Any other factor relevant to the competitive landscape.
These new considerations take into account the more complex ways that competition works and operates today, especially in digital markets.
(c) How have penalties and enforcement mechanisms changed?
To ensure the penalties match the economic harm caused by anti-competitive practices, Bill C-19 and Bill C-56 (which will be addressed below) significantly increased administrative monetary penalties (AMPs).
Under the abuse of dominance provisions (Subsection 79(3.1)), the maximum AMP is the greater of $25 million (or $35 million for subsequent orders) or three times the value of the benefit from the anti-competitive conduct, or 3% of annual worldwide revenue if the benefit amount is indeterminate[4].
These new changes also enable, for the first time, private entities to bring abuse of dominance complaints to the Competition Tribunal with leave. This change is designed to supplement public enforcement with a private right of action.
2.3 Deceptive Marketing and Pricing Practices.
(a) How does Bill C-19 address deceptive marketing and drip pricing?
Deceptive marketing practices have had increased regulatory oversight, particular around drip pricing. Drip pricing refers to the practice of advertising a price that excludes mandatory fees. The Act now explicitly labels drip pricing as deceptive, ensuring companies disclose all applicable fees upfront, barring certain exceptions such as government imposed taxes.[5] Although initially discussed in Bill C-19, drip pricing will be discussed further below, as subsequent bills introduced additional provision and updates.
(b) How have the rules for ordinary selling price (OSP) changed?
Bill C-19 also amended the ordinary selling price (OSP) provisions, Section 74.01(3)[6], which prevent a person from promoting a price as being a discount when, in fact, the advertised price is just the ordinary price of the product. Before the amendments, the Competition Bureau (the “Bureau”) had the onus of establishing that a price claim violated the OSP provisions. However, the amendments now place the burden on the person making a claim regarding the OSP of a product or service. The claim must be substantiated by proving one of the following:
-[The seller has] sold a significant volume of the products at that price or a higher price within a reasonable period of time before or after making the representation, as the case may be; or
-They have offered the product at that price or a higher price in good faith for a substantial period of time recently before or immediately after the making of the representation, as the case may be.[7]
(c) What penalties apply to deceptive marketing?
The amendments have also brought in new maximum penalties for deceptive marketing practices. This is seen in Section 74.01(1)[8], where the maximum penalty for an individual is the greater of $750,000 and, for each subsequent order $1,000,000, and three times the value of the benefit derived from the deceptive conduct, if that amount can be reasonably determined.[9] In the case of a corporation, the penalty is the greater of $10,000,000 and, for each subsequent order, $15,000,000 and three times the value of the benefit obtained from the deceptive conduct.[10] If that amount cannot be reasonably determined, the maximum penalty will be 3% of annual worldwide gross revenues.[11]
2.4 Labour Market Restraints: Wage-Fixing and No-Poach.
(a) What changes have been made to wage-fixing and no-poach agreements?
A key change in protecting workers involves new prohibitions against employers agreeing to fix, maintain, decrease or control wages or other terms of employment (“wage-fixing agreements”) and to refrain from hiring or trying to hire other companies’ employees (“no-poach agreements”).[12] These practices are considered offenses under Section 45(1.1) of the Act.[13] The penalties include fines at the discretion of the court and potential imprisonment for up to fourteen (14) years, reflecting a serious commitment to addressing anti-competitive practices that impact workers’ wages and job mobility.
2.5 Expanded Merger Review and Anti-Avoidance.
(a) What are the new factors for assessing merger and collaborations?
Amendments to Subsections 79(4), 90.1(2) and 93 of the Act include a list of factors that are to be considered when assessing the competitive impact of mergers, business practices, and competitor collaborations.
The factors for competitor collaborations, have been expanded to include[14]:
-Network effects as another example of a barrier to entry in a market;
-The possible entrenchment of leading incumbents’ market positions; and
-Effects on both price competition and non-price competition, such as quality, choice, or consumer privacy.
Similarly, the factors for abuse of dominance have been updated to include[15]:
-Effects on barriers to entry, such as network effects;
-Effects on both price competition and non-price competition, such as quality, choice or consumer privacy;
-The nature and extent of change and innovation in the relevant market; and
-Any other factor that is relevant to competition in the market that is or would be affected by the practice.
(b) How has merger avoidance been addressed?
The amendments have also introduced anti-avoidance provisions under Section 113.1 to eliminate gaps in the mandatory merger notification requirements.[16] These provisions ensure that transactions that are deliberately structured to avoid notification – such as breaking a merger into smaller, independent transactions that individually fall below reporting thresholds – are still subject to review. This change works to ensure that the rules of Act cannot be circumvented, and that all mergers can be evaluated by the regulators.
3. Bill C-56.
3.1 Bill C-56 received Royal Assent on December 15, 2023.[17]
Building on the amendments introduced through Bill C-19, Bill C-56 introduced further changes to the Act. Specifically, these amendments include a modified abuse of dominance framework, new penalties, and increased measures to target unfair pricing and anti-competitive collaborations.
3.2 Formalities required by law.
2 How has the evidentiary burden changed under the abuse of dominance provisions?
The amendments introduced by Bill C-56 have enhanced the abuse of dominance framework by lowering evidentiary thresholds for certain remedies and significantly increasing penalties for violations. These changes have allowed the Bureau to address anti-competitive conduct that hinders competition in Canadian markets.
Previously, three elements were required to be established, under the definition of abuse of dominance, in order for a remedial order to be made. However, the amendments have required the Bureau to prove either (1) that a dominant company engaged in a practice of anti-competitive acts or (2) that its actions are likely to prevent or lessen competition substantially.[18] This requires evidence of anti-competitive intent or anti-competitive effects.
These amendments reflect a more flexible framework to address anti-competitive practices, particularly in cases where companies exploit their market power, or dominant position in the market, without demonstrating that their actions benefit competition.
(a) What penalties apply for violations?
Violations of the abuse of dominance frameworks will result in a fine of which is the greater of $25 million ($35 million for subsequent orders) or three times the value of the benefit derived from the anti-competitive conduct, or 3% of the firm’s annual worldwide gross revenues if the benefit amount cannot be determined.[19]
3.3 Bureau Investigatory Powers and Market Studies.
(a) What new powers does the Bureau have for information gathering?
Responding to concerns raised in a House of Commons report and a market study on grocery sector practices, the Bureau has been granted stronger powers to compel information from companies. Amendments to Sections 10.1 and 11 of the Act now allow the Bureau to obtain a court order requiring businesses or individuals to provide information, such as records, written responses to inquiries, or attendance for examination under oath. This change ensures that the Bureau can conduct thorough market studies, particularly in cases where businesses might otherwise withhold critical data, such as profit margins.
3.4 Excessive and Unfair Selling Prices.
(a) Are there new provisions targeting unfair pricing?
Bill C-56 also introduced a new category of anti-competitive acts, targeting excessive and unfair selling prices, as indicated in Section 78(k) of the Competition Act.[20] Dominant firms are now prohibited from directly or indirectly imposing such prices. This measure addresses public concerns about “greedflation” (using inflation as an excuse for price increases), “shrinkflation” (reducing product sizes without lowering prices), and exploitative supplier fees imposed by large retailers. By restricting these practices, the amendments aim to create more fair pricing across industries, especially in essential markets such as the grocery sector.
3.5 Anti-Competitive Collaborations and Lease Restrictions.
(a) How has the scope of reviewable agreements expanded?
The Bureau’s power to address anti-competitive collaborations, including agreements between non-competitors that substantially lessen competition, was further increased through amendments to Section 90.1(1.1) of the Act.[21] This change which will become effective December 15, 2024, closes a significant gap in enforcement by allowing the Bureau to prohibit agreements aimed at restricting competition, even if the parties involved are not direct competitors.
(b) Is there an example to demonstrate this change?
For example, in the grocery sector, the Bureau can now scrutinize the control of property, such as lease agreements preventing landlords from renting space to independent grocers. Both landlords and tenants involved in such agreements may be investigated, reflecting a more aggressive stance against barriers to market entry.
3.6 Repeal of the Efficiencies Defence.
(a) What is the significance of repealing Section 96?
One of the major changes to the Act was the repeal of the longstanding “efficiencies defence” under Section 96. This defence allowed mergers or agreements that were otherwise anti-competitive to proceed if parties could demonstrate that the efficiency gains from the transaction outweighed the harm to competition. By addressing this defence, the amendments show an effort to maintain fair markets and protect consumers from the harmful effects of large mergers and unfair agreements. While businesses may face greater scrutiny, the shift brings Canadian competition policy closer in line with international best practices and lays the groundwork for a more balanced and competitive marketplace.
4. BILL C-59.
4.1 Bill C-59 received Royal Assent on June 20, 2024.[22]
The final bill that has introduced amendments to the Act is Bill C-59. Bill C-59 has introduced significant changes across four main areas: (1) merger review, (2) ordinary sale pricing, (3) drip pricing, and (4) environmental claims.
4.2 Merger Review: Presumptions and Oversight.
(a) What is the significance of repealing Section 96?
The amendments bring substantial changes to how mergers are reviewed, focusing on more effective oversight of anti-competitive transactions. Key updates include[23]:
-Mergers that significantly increase market concentration are now presumed to be anti-competitive. Merging parties must rebut this presumption by proving, on a balance of probabilities, that the merger will not substantially lessen or prevent competition.
-Remedies now aim to restore or preserve the level of competition that would exist without the merger, a shift from the previous approach of merely mitigating harm.
-The Tribunal can now consider harm to labour markets and risks of coordination between competitors when assessing mergers.
-The changes expand the range of mergers requiring advance notification and extend the Bureau’s ability to challenge mergers from one year to three years after completion.
– Parties are now prohibited from closing potentially harmful mergers while the Bureau seeks an injunction.
These changes align Canada’s merger control with international best practices and enhance the Bureau’s ability to address competition risks proactively.
4.3 Pricing Transparency: Ordinary Selling Price and Surge Pricing.
(a) What are the new requirements for substantiating sale pricing?
Bill C-59 brought in amendments to reinforce rules around ordinary sale pricing (OSP) to ensure that advertised discounts reflect genuine price reductions. Key updates include[24]:
-Suppliers must now prove that their advertised discounts are genuine by demonstrating compliance with either the volume test (a substantial volume of sales at the regular price) or the time test (offering the product at the regular price for a significant period).
-Businesses are encouraged to maintain detailed pricing records to substantiate claims and avoid liability under the OSP provisions.
These changes emphasize the importance of transparency in pricing and hold businesses accountable for misleading discount claims.
(b) Are there implications for dynamic pricing models?
With greater emphasis on pricing transparency, attention has also turned to the growing use of surge pricing. Major grocery stores have been exploring technologies such as digital price tags to implement dynamic pricing.[25] Dynamic pricing is a system where the prices of products can change frequently, often based on factors like demand or approaching expiration dates. Digital price tags have increasingly been used to replace traditional paper or sticker labels. Retailers, such as Kroger, argue that electronic shelf labels (ESLs) are more environmentally friendly and save time for employees. Various studies have suggested that the use of ESLs can lead to a decrease in the average price per unit sold, while also increasing the quantity of items purchased. This has been seen to benefit both businesses and consumers. However, surge pricing, a temporary price increase in response to high demand for specific products, has raised concerns about fairness and transparency for consumers, raising potential questions about the impact on competition.
4.4 Drip Pricing.
(a) How does Bill C-59 address drip pricing?
The Act explicitly prohibits “drip pricing,” which is where an advertised price omits mandatory fees that make the final cost unattainable. Amendments to Sections 52 and 74.01 classify drip pricing as a false or misleading representation under both civil and criminal provisions.[26] As a result of the amendments introduced through Bill C-59, businesses must include all mandatory charges in advertised prices unless those charges are government-imposed, for example sale taxes. Drip pricing prohibitions now extend to electronic messaging provisions, ensuring that the regulations cover all forms of communication, making enforcement more consistent.[27] These changes aim to improve price transparency and ensure that consumers are fully informed about the true cost of products and services.
(b) How have the new provisions been enforced?
Recently, the Tribunal applied the drip pricing provisions of the Act. In September 2024, the Tribunal ruled in favour of the Bureau and found that Cineplex Inc. (“Cineplex”)[28], engaged in drip pricing by adding an online fee ranging from $1.00 – 1.50 for tickets that were purchased online or through the app. The Tribunal found that the online booking fee was misleading and contained drip pricing because the existence and amount of fee was not initially disclosed when consumers were making their purchases. The fee only became visible after the tickets were selected and the purchaser proceeded to the next screen. Cineplex was ordered to pay a penalty of $38.5 million, which is the amount that Cineplex collected from consumers through the fee during the period of June 2022 to December 2023.
4.5 Environmental Claims.
(a) How does Bill C-59 address greenwashing?
Bill C-59 amendments introduce prohibitions against misleading environmental claims, a practice which is often referred to as “greenwashing”. Key amendments include[29]:
-Civil provisions now cover product-specific greenwashing, requiring claims about environmental benefits to be properly substantiated.
-Beginning in June 2025, private parties can seek leave to bring claims for deceptive environmental claims. Leave may be granted if the Tribunal finds that it is in the public interest.
-Any representation about a product’s environmental benefits must be supported by “adequate and proper” testing. The burden of proof lies on the party making the representation. While the focus is on ensuring accuracy and substantiation, questions remain regarding the definition of “adequate and proper testing”, as the Bureau has yet to provide detailed guidance.
-Broader claims about a business’s environmental benefits (e.g., net-zero goals or sustainability initiatives) must be substantiated using an internationally recognized methodology.
-Courts and the Tribunal will assess not only the literal accuracy of a claim but also its “general impression” on consumers. For example, an environmental claim may still be deemed misleading if it implies a product is environmentally beneficial when it is not, even if the claim contains some technical accuracy.
4.6 Strengthened Powers.
(a) How has the Bureau’s enforcement power expanded?
In addition to the four areas described above, Bill C-59 provided the Bureau with the powers to address anti-competitive agreements, including those between non-competitors. The updates now permit retroactive review, which allows agreements that have harmed competition within the past three years to be challenged.[30] Additionally, the Tribunal has been granted authority to impose monetary penalties and require parties to take corrective actions to restore competition. Private parties can now also directly bring challenges to anti-competitive agreements before the Tribunal.[31]
4.7 Private Enforcement and Expanded Remedies.
(a) What role can private parties now play in enforcement?
Bill C-59 brought changes to empower private parties to play an active role in enforcing the Act. These reforms lower barriers to private enforcement and provide opportunities for affected parties to seek direct remedies, including monetary damages, for anti-competitive conduct.
(b) What is the new standard for private applications to the Tribunal?
Private parties can now also seek leave to apply to the Tribunal even if the alleged misconduct affects only part of their business. This represents a shift from the previous standard requiring the entire business to be “substantially affected”.[32] Claims can also proceed if they are deemed to be in the public interest. Beginning June 2025, private parties will be able to bring claims for monetary remedies directly to the Tribunal. For the first time, private parties can bring applications to the Tribunal to challenge agreements and arrangements that contravene Section 90.1 (civilly reviewable anti-competitive agreements).[33] Previously, only the Commissioner of Competition could initiate such actions. Private claimants will be able to seek damages up to the amount of the “benefit” derived from the conduct, with the Tribunal determining how the damages are to be distributed among the applicant and other affected parties.
(c) What are the implications of these changes?
By allowing private applications for damages and granting the Tribunal authority to manage their distribution, the amendments encourage accountability for anti-competitive behavior and provide new pathways for addressing consumer and market harm.
5. IMPLICATIONS.
5.1 General Implications of the Amendments.
(a) What are the implications of these changes?
The amendments discussed above, and others, which were introduced through Bills C-19, C-56, and C-59, aim to address anti-competitive practices, enhance transparency, and empower private enforcement. However, their broader impact remains uncertain.
In particular, the amendments are not anticipated to have a large impact on grocery prices in the short term. However, over time, more competition from independent grocers, which may result from these reforms, might help to improve the market. Although it is unlikely that this will lead to a noticeable savings or reductions to grocery bills.
(b) How might enforcement affect pricing in the grocery sector?
The Bureau’s ability to request information about profit margins and product sizes could allow for investigations into “excessive and unfair” prices, as a misuse of market dominance. However, a more practical solution suggested in the Bureau’s Market Study, is the introduction of unit pricing for grocery items, which could address concerns about misleading or unclear pricing. Grocery chains may also want to compare their fees to their competitors.
(c) What criticisms have been raised?
The amendments to the Act are not without criticism. Critics have argued that the amendments are reactionary, were passed rapidly, and were without sufficient economic study. In particular, although the United States has pursued similar enforcement for wage-fixing and no-poach agreements, Canada’s prohibitions seem to be broader in their application and more aggressive. Finally, as briefly touched upon above, the vague and undefined terms such as “adequate and proper testing”, leave business unclear about their compliance obligations.
John Sotos, IDI country expert for distribution in Canada
Bailee Kleinhandler
[1] C-19, An Act to implement certain provisions of the budget tabled in Parliament on April 7, 2022 and other measures, First Session, 44th Parl, 2022, (assented to June 23, 2022) [Bill C-19].
[2] Bill C-19, supra note 1 at cl 15.
[3] Ibid.
[4] Ibid.
[5] Ibid.
[6] Competition Act, RSC, 1985, c C-34, s 74.01(3) [Competition Act].
[7] Ibid.
[8] Ibid at s 74.01(1)
[9]Government of Canada, “Guide to the 2022 amendments to the Competition Act”, (24 June 2022) online: https://competition-bureau.canada.ca/how-we-foster-competition/education-and-outreach/publications/guide-2022-amendments-competition-act#sec05 [Government of Canada].
[10] Ibid.
[11] Ibid.
[12] Government of Canada, supra note 9.
[13] Competition Act, supra note 6 at s 45(1.1).
[14] Government of Canada, supra note 9.
[15] Ibid.
[16] Ibid.
[17] C-56, An Act to amend the Excise Tax Act and the Competition Act, First Session, 44th Parl, 2023, (assented to 15 December 2023) [Bill C-56].
[18] Competition Act, supra note 6 at s 79(1).
[19] Ibid at s 79(3.1).
[20] Ibid at s 78(k).
[21] Ibid at s 90.1(1.1).
[22] C-59, An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, First Session, 44th Parl, 2024, (assented to 20 June 2023) [Bill C-59].
[23] Ibid at cl 6, s 249(2)-(3).
[24] Bill C-59, supra note 22 at cl 6, s 236(3).
[25] Sara Ruberg, “Kroger and Walmart Deny ‘Surge Pricing’ After Adopting Digital Price Tags” (23 October 2024) online (New York Times): https://www.nytimes.com/2024/10/23/business/kroger-walmart-facial-recognition-prices.html.
[26] Bill C-59, supra note 22 at cl 6, s 233.1 and s 234(1).
[27] Competition Act, supra note 6 at s 52.01(4.1).
[28] Canada (Commissioner of Competition) v Cineplex Inc , 2024 Comp Trib 5.
[29] Government of Canada, “Guide to the June 2024 amendments to the Competition Act”, (25 June 2024) online: https://competition-bureau.canada.ca/how-we-foster-competition/education-and-outreach/guide-june-2024-amendments-competition-act [Guide to Amendments].
[30] Guide to Amendments, supra note 29.
[31] Ibid.
[32] Ibid.
[33] Bill C-59, supra note 22 at cl 6, s 248.
