In brief
On 20 June 2024, Bill C-59, The Fall Economic Statement Implementation Act, 2023 (“Bill C-59“), which contains the final, and most significant in a series of, amendments to Canada’s Competition Act (the “Act“) came into effect. These amendments will make it easier for the Commissioner of Competition (the “Commissioner“) to take enforcement action, including by introducing structural presumptions in merger review, incentivize private parties to bring actions for all manner of civilly reviewable conduct, and broaden the scope of the Act by introducing a certificate regime for environmental competitor collaborations and a right to repair, among other things. While most amendments to the Act came into effect immediately, the amendments introducing structural presumptions in merger review will apply to all transactions that have not yet been notified to the Competition Bureau (the “Bureau“), and the amendments expanding private access and introducing a disgorgement remedy for civilly reviewable conduct will come into effect on 20 June 2025.
Key takeaways
Bill C-59 implements the most significant amendments to the Act since it was first introduced in its present form 38 years ago on 19 June 1986.
While we have highlighted the proposed amendments to the Act in a series of client alerts since Bill C-59 was first introduced on 21 November 2023, here are the amendments that should be top of mind for businesses as we enter this new dawn for Canadian competition law and enforcement:
Merger Review
- Structural Presumptions in Canadian Merger Control. Canada’s merger control regime now presumes mergers that “significantly increase” concentration or market share will substantially prevent or lessen competition. The parties to the merger have the burden of rebutting this presumption. Historically, all mergers were presumptively lawful in Canada and the Commissioner had the burden of establishing that a merger would result in a substantial prevention or lessening of competition. Structural presumptions will apply to all mergers that have not yet been formally notified to the Bureau.
- Stronger Merger Remedy Standard for Contested Mergers. The Competition Tribunal (“Tribunal“) now has the discretion to order the parties to an anti-competitive merger or any other party to take steps to “restore” or “preserve” competition to the level that would have prevailed or would prevail but for the merger. Previously, the Tribunal could only issue an order to address the “substantial” aspect of the merger’s prevention or lessening of competition. This new merger remedy standard came into effect immediately upon Bill C-59 being passed.
- More Mergers Subject to Pre-Closing Notification. The legal tests underpinning the pre-merger notification “Size of Transaction” financial threshold have been expanded to include revenues from sales into Canada. Certain mergers that were not previously subject to pre-merger notification in Canada because revenues were derived from sales into Canada from assets outside of Canada may now require notification.
- New Factors in Assessing Competitive Effects. The list of factors to be considered when assessing a prevention or lessening of competition has been expanded to include network effects within a market, the change in concentration or market share, and any likelihood that the merger will result in express or tacit coordination between competitors in a market.
- Longer Post-Closing Review Period for Non-notified Mergers. The Commissioner now has the ability to scrutinize and challenge non-notified mergers up to three years after they have closed. Previously, the Commissioner could only challenge any merger within a year after closing. Parties to non-notified mergers now face increased risk of post-closing scrutiny, particularly for mergers involving dynamic markets or the acquisitions of nascent competitors.
Civilly Reviewable Conduct
- Administrative Monetary Penalties (“AMPs”) for Civil Agreements. The remedies available under the civil agreements provision have been expanded from only a prohibition order to include alternative orders requiring the parties against whom the order is sought to take actions that are reasonable and necessary to overcome the effects of an agreement, and AMPs. The AMPs may be up to the greater of (1) CAD 10 million (CAD 15 million for subsequent orders) and (2) three times the value of the benefit derived from the agreement or, if that amount cannot be reasonably determined, 3% of a party’s annual worldwide gross revenues.
- Refusal to Deal Provision Expands to Include a Right to Repair. The right to repair has been enshrined in the Act. The refusal to deal provision now explicitly identifies the “means of diagnosis or repair” as a separate type of product that a supplier may offer and permits the Tribunal to, among other things, issue an order requiring that the supplier make the “means of diagnosis or repair available” to a person on appropriate terms and within a specified time period where a refusal to deal has been established.
Environmental Agreements
- New Certificate Regime for Environmental Agreements. Bill C-59 introduces a new certificate regime that will immunize environmental agreements made for the purpose of protecting the environment from challenge by the Commissioner or private parties under the criminal conspiracy or civil competitor collaboration provisions of the Act where the agreements do not substantially prevent or lessen competition.
Private Actions
- Private Access Rights Expanded to Include Civil Agreements and Deceptive Marketing. Private access to the Tribunal has been expanded to include conduct under the civil agreements and deceptive marketing provisions of the Act. Previously, private applicants could only seek leave to challenge conduct under the refusal to deal, price maintenance, exclusive dealing, tied selling, market restriction, and abuse of dominance provisions. The Tribunal will continue to hear such private actions on the merits with leave. These amendments will come into effect on 20 June 2025.
- New Form of Group Action for Civilly Reviewable Conduct. A new form of group action has now been created to challenge civilly reviewable conduct – refusal to deal, price maintenance, exclusive dealing, tied selling, market restriction, abuse of dominance, and civil agreements – that permits private applicants to obtain a disgorgement remedy of up to the value of the benefit derived from the conduct. The Tribunal has the power to establish a payment, claims, and notice process that is similar to the powers available to courts in Canadian class actions. These amendments will come into effect on 20 June 2025.
- Lower Standard to Obtain Leave from the Tribunal. The test to obtain leave from the Tribunal for private actions has been lowered and a new “public interest” leave test has been introduced. Private actions for deceptive marketing practices will be permitted only under the new “public interest” leave test. These amendments are intended to incentivize private parties to challenge allegedly anticompetitive conduct directly before the Tribunal rather than through complaints to the Bureau. These amendments will come into effect on 20 June 2025.
Deceptive Marketing Practices
- False or Misleading “Greenwashing” Claims are Explicitly Prohibited. The false and misleading advertising provisions of the Act now include an explicit prohibition for environmental or “greenwashing” claims related to products and the benefits of a business or business activity. Representations to the public in the form of a statement, warranty, or guarantee about a product’s benefits for “protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change” that are not based on an adequate and proper test are now prohibited. In addition, representations to the public about the benefits of a business or business activity for “protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change” that are not based on adequate and proper substantiation in accordance with internationally recognized methodologies are now prohibited. Previously, enforcement actions in these areas could only have been taken under the general false and misleading advertising provisions.