On June 20, 2024, Bill C-591 received royal assent and has become law, just one day after it completed its third and final reading in the Senate. With its passage, Bill C-59 implements a number of important amendments into the Competition Act (the "Act") that will have a significant impact on Canada's business environment.
This bulletin summarizes the key amendments implemented through Bill C-59. While most of the amendments came into force immediately upon Bill C-59 becoming law, the following amendments, which are detailed further below, will come into force on June 20, 2025:
- The amended leave test for private access under section 103.1 of the Act for conduct under the refusal to deal, price maintenance, exclusive dealing, tied-selling, market restriction, and abuse of dominance provisions of the Act (sections 75, 76, 77, and 79, respectively);
- The new private access regime for deceptive marketing under section 74.1 and civil collaborations under section 90.1 of the Act;
- Potential disgorgement orders for private applications under sections 75, 76, 77, 79 and 90.1 of the Act; and
- Provisions to allow for consent agreements resulting from private litigation (section 74.131, and sections 106.1 to 106.4).
1. Substantive and Procedural Updates to the Merger Regime
The Act's amended merger control regime will both increase the number of transactions subject to mandatory merger review and recalibrate the substantive review framework:
Merger Notification
Merger notification thresholds have been amended. For the test based on the target and its subsidiaries or on the assets being acquired (referred to as the size of transaction threshold), relevant revenues to be considered has been expanded to include revenues from sales into Canada (in addition to sales in and from Canada, to which the threshold was previously limited), provided that the target carries on an operating business in Canada (or the assets being acquired from an operating business in Canada).
Separately, for all mergers that are not notified to the Bureau, whether mandatorily under Part IX of the Act or voluntarily through a request for an advance ruling certificate, the Bureau will not have three years post-closing to bring a challenge before the Competition Tribunal. The limitation remains one-year for all notified mergers.
Merger Review
One of the most significant changes to the Act's merger control regime is the inclusion of new structural presumptions, pursuant to which a merger that results in, or is likely to result in, increased market share or concentration beyond prescribed thresholds is presumed to be anti-competitive, unless the merging parties can prove otherwise on a balance of probabilities. These structural presumptions would not apply to any mergers that were notified or "substantially completed" before June 20, 2024 (i.e., the day on which Bill C-59 received Royal Assent). The new structural presumptions mimic those in the U.S. 2023 Merger Guidelines however, unlike the US guidelines that can be revoked at any time, these new structural presumptions are part of the law, creating a much more permanent result on the Canadian market.
Sections 92 and 93 of the Act have also been amended to expressly include new substantive assessment factors under the merger control provisions. While the list is not exhaustive, the set of factors that the Tribunal may now consider in determining whether a substantial lessening or prevention of competition is likely to result from a proposed merger (or has resulted from a completed one) now expressly includes (a) a transaction's impact on the labour markets, (b) concentration or market shares as well as (c) the potential for tacit coordination.
Merger Remedies
Under the prior regime, the Competition Tribunal (the "Tribunal") was able to make a remedy order requiring that the parties "restore competition to the point at which it can no longer be said to be substantially less than it was before the merger". The amendments have implemented a new remedial standard for mergers, allowing the Tribunal to make orders requiring the party to restore competition to the pre-merger level, thereby expanding the scope of the Tribunal's remedial powers.
Finally, Bill C-59 has established an immediate and automatic prohibition on closing a merger when the Bureau applies for an interim order to enjoin closing (either under section 100 or 104 of the Act), until the injunction has been heard and disposed of by the Tribunal.
For more information on the amendments to the merger review process, please see our bulletin here.
2. Expanded Private Access
Private access has now been extended to include sections 90.1 (civil collaborations) and 74.1 (deceptive marketing practices) of the Act.
Private applications to the Tribunal are also subject to a new, lower leave test. For refusal to deal (section 75), price maintenance (section 76), exclusive dealing, tied selling and market restriction (section 77), abuse of dominance (section 79), and civil collaborations (section 90.1), leave may be granted even if only part of an applicant's business is affected, or if the Tribunal determines it is in the "public interest" to grant leave. For deceptive marketing practices (section 74.1), leave may be granted only where the Tribunal is satisfied that it is in the public interest to do so.
Potential disgorgement awards for private litigants have also been added for an amount up to the value of the benefit derived from the conduct for applications under sections 75, 76, 77, 79, and 90.1.
Except for the amended leave test for deceptive marketing practices (section 74.1) which comes into effect immediately, these amendments do not come into effect until June 20, 2025.
3. Increased Scope of Anti-Competitive Collaborations
Bill C-59 has expanded the scope of conduct that would be captured by the civil collaboration provisions in the Act and the available remedies. Where section 90.1 previously applied only to "existing or proposed" agreements or arrangements, the Tribunal can now also make orders in respect of past agreements or arrangements, provided they have not been terminated for more than three years. Moreover, in addition to prohibition orders, the Tribunal can now also impose conduct orders (including requiring divestitures) and significant administrative monetary penalties.
For more information on the recent amendments to section 90.1 of the Act, please see our bulletin here.
4. Environmental Claims
The Act now includes two new anti-greenwashing provisions that makes it a deceptive marketing practice to
- make a representation in the form of a statement, warranty, or guarantee regarding a product's benefits for protecting or restoring the environment or mitigating the environmental, social and ecological effects of climate change that is not based on an adequate and proper test; or
- make a representation to the public with respect to 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 is not based on adequate and proper substantiation in accordance with internationally recognized methodology.
Environmental claims regarding the benefits of a business or business activity must be supported by adequate and proper substantiation "in accordance with internationally recognized methodology", which is not defined in the amendments or elsewhere in the Act. Although the Bureau has not yet provided guidance as to what substantiation will be necessary for these types of claims, the agency has stated that it could include testing as well as other non-test forms of substantiation.
The Act now also includes a mechanism for requesting a certificate from the Commissioner of Competition (the "Commissioner") to exempt certain agreements relating to the environment from the competitor collaboration provisions of the Act.
For more information on the recent amendments to the environmental claims and environmental certificate provisions of the Act, please see our bulletin here.
5. Other Key Amendments
Bill C-59 has also implemented a number of other discrete amendments to the Act, including:
- Drip Pricing: In its previous form, the Act's restriction on drip pricing did not specify on whom an unavoidable amount must be imposed for it to be excluded from the upfront price of a product or service, allowing sellers to exclude their own regulatory charges or fees from the upfront price of a product or service. In its amended form, the restriction specifies that the charges or fees that can be excluded from the upfront price of a product/service are only those imposed directly on the purchaser by law, effectively requiring sellers to use "all in pricing."
- Ordinary Price Selling: Rather than requiring the Commissioner of Competition to prove that a seller's discounted price is false or misleading, the Act now shifts the onus onto sellers or advertisers to prove that their discounts are genuine.
- Right of Repair: The Act now includes an express right to repair, preventing manufacturers from refusing to provide to third-parties the "means of diagnosis and repair", provided that it does not require disclosure of any trade secrets; and
- Reprisal Action: The Act includes a new civil regime wherein the Commissioner or an affected party can apply to the Federal Court or provincial superior court for a prohibition order and/or an administrative monetary penalty to protect those who assist the Commissioner from retaliatory conduct intended to "penalize, punish, discipline, harass or disadvantage" their cooperation.
The Road Ahead
Additional guidance from the Bureau on the interpretation of these amendments is forthcoming but, given the scope of these amendments, will likely take some time. In the meantime, businesses across all industries should take stock of their day-to-day operational practices and strategic initiatives to assess any implications of the updated Act.
Footnote
1 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
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