Spawned By 2008 Panel Report May Be Law Within Weeks

In an unusual manoeuvre, significant and far-reaching amendments to the Competition Act are contained in the Budget Implementation Bill C-10 tabled in the House of Commons last Friday, February 6. Unless split off into a separate bill, these amendments could become law within weeks instead of months as would normally be the case.

Competitor Agreements

  • section 45 conspiracy provisions are replaced with a dual-track approach to agreements between competitors, with a per se criminal offence (effect on competition is irrelevant) to address hard core cartel conduct and a civil provision to address other agreements that substantially lessen or prevent competition

Criminal

  • applies to agreements to fix prices, allocate sales, territories, customers or markets, or fix or control the production or supply of a product
  • maximum imprisonment is increased to 14 years (from 5 years) and maximum fine is increased to $25 million (from $10 million)
  • establishes an ancillary restraint defence for an agreement that is part of a broader arrangement where the agreement is reasonably necessary for giving effect to the broader arrangement, which is not itself unlawful (for example, legitimate joint venture activity such as sports leagues wherein restraints on competition are essential if the product is to be available at all)
  • specifically provides for the application of the regulated conduct doctrine (a principle of statutory interpretation providing that in the event a given activity, which would otherwise be contrary to the Competition Act, is authorized and specifically required by other legislation, the Competition Act will not apply on the basis that the other legislation is presumed to be exercised in the public interest)  

Civil

  • a new civil reviewable practice is created whereby the Competition Tribunal may prohibit doing anything under an agreement that prevents or lessens or is likely to prevent or lessen competition substantially
  • specifically provides for an efficiency gains defence
  • Competition Bureau cannot conduct proceedings on both tracks on the basis of facts that are substantially the same
  • new criminal and civil track provisions do not come into force until 1 year after the amendments receive royal assent and within that year any party to an agreement entered into prior to royal assent may apply, without payment of the normal fee, to the Competition Bureau for a written opinion on the applicability of the new provisions to the agreement  

Mergers and Pre-Notification

  • a merger may not be challenged more than 1 year after substantially completed (reduced from 3 years)
  • the Canadian operating business assets/revenues transaction size thresholds are generally increased to $70 million (from $50 million) and provision is made to revise these thresholds annually; the parties to the transaction threshold remains at $400 million
  • a new two-stage pre-notification review process is established for notifiable transactions; initial review period is 30 days subject to the discretionary right of the Competition Bureau to require the production of additional information which extends the review period to 30 days following full compliance with the request for additional information; the Competition Bureau may abridge the waiting periods; the alternative Advance Ruling Certificate notification/review process remains intact
  • failure to notify and provide the required information in respect of a completed transaction can result in an administrative monetary penalty not exceeding $10,000 for each day of non-compliance as well as dissolution of the merger  

Abuse of Dominant Position

  • an administrative monetary penalty of up to $10 million is established for an initial transgression and up to $15 million for each subsequent transgression

Price Discrimination, Promotional Allowances And Predatory Pricing

  • the criminal price discrimination, discriminatory promotional allowances and predatory pricing provisions are repealed; predatory pricing will be dealt with under the abuse of dominance civil reviewable practice provisions

Price Maintenance

  • the criminal price maintenance provisions are repealed and replaced with a civil reviewable practice provision whereby the Competition Tribunal may prohibit price maintenance practices that have an adverse effect on competition upon application by the Competition Bureau or an affected person

Other

  • the bid-rigging offence is expanded to include an agreement withdrawing a bid or tender and maximum imprisonment is increased to 14 years (from 5 years)
  • penalties for obstruction of any inquiry or examination, failure to comply with a section 11 production order or the destruction or alteration of records are substantially increased
  • the civil reviewable practice of consignment selling provision is repealed
  • various changes are made to the misleading advertising provisions, including significant increases to penalties