Earlier today, Deputy Prime Minister and Finance Minister, Chrystia Freeland, introduced in Parliament Bill C-56, the Affordable Housing and Groceries Act, which proposes to amend both the Excise Tax Act and the Competition Act. With respect to the Competition Act (the “Act”), Bill C-56 introduces the measures announced by Prime Minister Trudeau last week which, according to the Prime Minister, are designed to enhance competition and drive down grocery prices for middle-class Canadians.
Key measures included in Bill C-56 in respect of the Act include:
- Repeal of the Efficiencies Defence for Mergers: Bill C-56 would bring an end to the “efficiencies defence” in merger review, which prohibits the Competition Tribunal from issuing an order against a merger that is likely to bring about efficiency gains that are greater than, and offset, the anti-competitive effects that are likely to result from a merger where those efficiencies would be lost if the Tribunal were to issue an order. Notably, and in contrast to recommendations from the Competition Bureau (the “Bureau”) and numerous other stakeholders, the Bill does not include a corresponding amendment to introduce efficiency gains into the list of factors that the Competition Tribunal can consider in determining whether a merger substantially lessens or prevents competition. This amendment would eliminate the efficiencies defence only as it applies to mergers, while the defence will continue to apply to specialization agreements and competitor collaboration agreements.
- Formal Market Study Powers: Bill C-56 would introduce formal market study powers into the Act. However, the power to initiate a market study would lie with the Minister of Innovation, Science and Industry (the “Minister”) rather than with the Bureau itself. The Minister is required to consult with the Commissioner of Competition to determine whether the inquiry would be feasible, including with respect to budget and the duration of the inquiry, which cannot exceed 18 months. In connection with a market study, the Bureau would be able to seek a court order to compel the production of information but would not itself have the authority to compel the production of information from market participants.
- Competitor Collaborations: To address anti-competitive collaborations within and beyond the grocery sector, Bill C-56 would expand the Competition Tribunal’s power to issue orders in respect of anti-competitive agreements or arrangements between competitors that substantially prevent or lessen competition to include arrangements between non-competitors where a significant purpose of the agreement or arrangement, or any part of it, is to prevent or lessen competition in any market. The amendments do not alter the Competition Tribunal’s powers such that enforcement is principally limited to a prohibition order.
The proposed amendments are narrow in scope and exclude many of the proposals set forth by the Bureau and other interested parties as part of the Government of Canada’s consultation on the “Future of Competition Policy in Canada”. This said, Bill C-56 may not be the end of the road, as the government has recently released a report summarizing the submissions it received in the course of this consultation. The government’s press release accompanying the Bill also states that “The government plans to introduce comprehensive legislative reforms to the Competition Act in the coming months”. Only time will tell whether this wish comes to fruition.