Canada: Overview

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The importance of Canada’s competition laws continues to grow. The ever-increasing vigilance and enforcement activity of the Canadian competition authorities mandates that investors and businesses must, now more than ever, take the Competition Act into account in the conduct of their affairs and when considering investing in Canada.

The Competition Act

On 12 March 2009, the Budget Implementation Act (Bill C-10) received royal assent. Bill C-10 brought about the most significant amendments to the Competition Act (the Act) in 25 years. Despite the fundamental nature of these amendments, they resulted from relatively limited pre-legislative consultation. Most of the changes were based on recommendations by the government-appointed Competition Policy Review Panel as well as some proposals stemming from the Conservative Party election platform and announced in the Budget in January 2009. The result of the changes has been to bring Canadian competition laws closer to those of the US, particularly with respect to cartel law and merger review. Bill C-10 also included changes to the Investment Canada Act, adding, amongst other amendments, a national security review mechanism.

The Competition Act is the oldest antitrust statute in the western world, enacted in 1889 (one year before the Sherman Act in the US). The Act comprehensively sets out the competition law of Canada, from hard-core cartels to merger review. With few exceptions, it applies to all businesses in Canada. In enacting the legislation, it was parliament’s intent to encourage competition, promote greater economic efficiency and enhance Canada’s position in world markets. The Act prohibits certain criminal offences (such as price-fixing and bid-rigging conspiracies). The Act also contains non-criminal provisions that allow the Competition Tribunal (the Tribunal) to review mergers and certain business practices (such as price maintenance, tied selling, exclusive dealing, refusal to deal and abuse of dominance), and, in certain circumstances, to issue orders prohibiting or correcting the conduct so as to eliminate or reduce its anti-competitive impact. Private parties may also apply to the Tribunal seeking a review of certain business practices (such as refusal to deal, price maintenance, tied selling and exclusive dealing). The Act also requires pre-merger notification.


The commissioner of competition

The commissioner of competition (the commissioner) is the most senior antitrust official in Canada, entrusted with the administration and enforcement of the Act. Melanie L Aitken is the new commissioner, appointed in August 2009. Ms Aitken has a wide breadth of experience, including her previous senior roles at the Competition Bureau (the Bureau) and as an antitrust practitioner. A permanent commissioner is expected to be appointed in the latter part of 2009.

The Competition Bureau

The commissioner has a staff of approximately 400 at the Bureau that assist in the administration of the Act. The Bureau is divided into units that administer different aspects of the Act, including the following branches: mergers, civil matters, criminal matters and fair business practices. There is also a pre-merger notification unit. The commissioner and the Bureau have published numerous bulletins, interpretation guidelines, press releases and updates in respect of the various aspects of Canadian competition law. The bulletins and guidelines, along with other useful publications, can be accessed on the website maintained by the Bureau at

The Competition Tribunal

Applications to the Tribunal for remedial orders in respect of reviewable practices and mergers may be brought by the commissioner. The Tribunal is a mixed quasi-judicial adjudicative body consisting of judicial and lay members. The Act provides for private access to the Tribunal (ie, private litigants may apply to the Tribunal for a remedial order) for certain reviewable practices, such as refusal to deal, price maintenance, tied selling, exclusive dealing and market restriction. The Tribunal also maintains a useful website at

Attorney general

Canada’s attorney general (through the director of public prosecutions) prosecutes breaches of the criminal provisions of the Act in the criminal courts. Prosecutions are initiated on the recommendation of the commissioner, pursuant to an investigation conducted by the Bureau.


The commissioner and the staff at the Bureau have numerous tools at their disposal to investigate alleged breaches of the Act, reviewable practices and mergers. Usually, much of the information that the Bureau collects in the course of formal and informal inquiries is provided on a voluntary basis by the parties. There has, however, in recent years been an increase in use by the commissioner of so-called ‘section 11 orders’, which compel the production of documents and information (by parties under investigation and other parties who may possess relevant information). Responding to a section 11 order can be onerous and very time-consuming. These orders are issued in respect of the criminal provisions of the Act, and also with respect to reviewable practices (such as abuse of dominance). The commissioner can avail herself of powers relating to search and seizure, and oral examinations under oath. Finally, wire-tapping is also available in respect of certain provisions.

International cooperation

The commissioner has entered into cooperation agreements with the United States (1995), Mexico (2001), the European Commission (1999), and Australia and New Zealand (2000), among others. These agreements provide for coordination and cooperation among agencies, notification of certain enforcement activities, avoidance of conflicts and regular meetings. Canada has also entered into mutual legal assistance treaties (MLATs) with various countries, which allow Canadian and foreign officials to use their respective local investigative powers on behalf of the other jurisdiction in respect of antitrust and other criminal matters. The Act also provides for a regime for international cooperation in the administration of civil competition law and criminal competition matters not subject to MLATs, allowing the gathering of evidence for and from foreign jurisdictions in a manner that mirrors existing arrangements in MLATs.

Consequences of anti-competitive acts

The consequences of violating the criminal provisions of the Act can be severe. Criminal offences are punishable by fines of up to C$10 million per count or imprisonment for periods of up to seven years, or both. As of 12 March 2010, criminal conspiracy will be subject to fines of up to C$25 million and imprisonment of up to 14 years. The Bureau has published an immunity programme and answers to frequently asked questions that set out its policy regarding recommending to the attorney general that immunity from prosecution be granted to parties to a criminal offence (in specified circumstances and on certain conditions including ongoing cooperation with the authorities). The Act also provides for the recovery of civil damages to compensate for harm suffered as a result of a violation of a criminal provision of the Act, or as a result of a breach of an order of the Tribunal. The application of the non-criminal provisions of the Act can also have significant consequences since orders of the Tribunal can force businesses to put an end to some of their practices or to change them with the result that significant costs may have to be incurred (for example, if a merger is prevented or a distribution system must be changed).


A merger is defined by the Act as the acquisition of control over, or of a significant interest in, the whole or part of a business. Canadian antitrust merger law consists of both substantive provisions that empower the commissioner to challenge mergers that are anti-competitive and procedural provisions relating to pre-merger notification.

Criminal offences

As it now stands, the Act provides that it is an offence to ‘conspire, combine, agree or arrange’ with another person to prevent or lessen competition unduly. The classic and most obvious form of illegal conspiracy is price fixing. However, all agreements that lessen competition can presently constitute a criminal offence. Conspiracy is not yet a per se offence in Canada: the prosecution must establish that it results in an undue lessening of competition – ie, that it confers a certain degree of market power. As of 12 March 2010, the current conspiracy provisions will be replaced by a new dual-track regime. Certain ‘hardcore’ cartel behaviour (such as price fixing, market allocation and output restriction, agreements between competing or potentially competing suppliers) will become criminal per se offences. The Crown will not be required to show that competition has been lessened to secure a conviction. The new conspiracy law provides that in certain circumstances there is a defence to the criminal prohibition if the prohibited conduct (eg, the price-fixing, market allocation or output restriction agreement) was ancillary to a broader or separate agreement. This new conspiracy law has the potential of making it easier to secure convictions and prove allegations in civil actions based on violation of the criminal provisions of the Act.

As of 12 March 2010, the following agreements between competing or potentially competing suppliers will constitute per se criminal offences:

  • to fix, maintain, increase or control the price for the supply of a product;
  • to allocate sales, territories, customers or markets for the production or supply of a product; and
  • to fix, maintain, control, prevent, lessen or eliminate the production or supply of a product.

Price-fixing agreements are those that most obviously can violate the Act. The offence extends to agreements setting or maintaining not only the actual price but also price components such as discounts, rebates, allowances or price concessions.

Agreements among competing suppliers relating to levels of production or allocating customers or markets will also constitute per se criminal offences. Other types of agreements between competitors will, as of 12 March 2010, be subject to a new civil provision (see below).

Bid rigging

Bid rigging is an arrangement with any other person either not to bid or on the contents of the bid. Bid rigging is a per se offence. A defence is however available if it is established that the person calling for the bid had been made aware of the arrangement before the opening of the bid.

Trade associations

In Canada, as elsewhere, trade associations are legitimate, as they perform many important and valuable functions. However, as with any other contact with competitors, trade associations present significant antitrust risk, and extreme care should be taken both in setting up such associations and in attending meetings so as to avoid discussion of competitively sensitive matters. It is strongly recommended that trade associations take steps to minimise the risks of violating the Act. They should, for example, have formal procedures that are carefully followed, including the preparation and circulation of written agendas and minutes of meetings. In addition, the activities of the association and any minutes and agendas should be periodically reviewed by counsel retained by the association to ensure that discussions are limited to legitimate issues such as lobbying, promoting the industry and environmental control. The exchange of information between members of a trade association is particularly delicate and should be discussed with counsel.

Relations with customers

As a result of the March 2009 amendments, the criminal provisions dealing with predatory pricing and price discrimination were repealed. The price maintenance provision was the decriminalised and transformed into a reviewable practice under the civil provisions of the Act. Relations with customers are therefore largely dealt with by the civil reviewable practices regime discussed in greater detail below.

Reviewable practices (non-merger)

The Act contains many civil provisions dealing with certain trade practices that are not objectionable as such, and are therefore not prohibited. If, however, certain conditions are fulfilled – notably, in most cases, where the conduct has the effect of lessening competition – the commissioner can refer the matter to the Tribunal for review. If the Tribunal finds that the conditions are met, it may issue an order prohibiting the continuance of such practice and in some cases make such other orders to overcome the anti-competitive effect of the practice or even, in some situations, order the payment of significant monetary penalties. The Act also affords private litigants a limited right to seek relief from the Tribunal, with leave, from certain reviewable practices (refusal to supply, exclusivity, tied selling, price maintenance and market restriction). The following trade practices are subject to review.

Refusal to deal

If the Tribunal finds that there is a refusal to supply and that:

  • the would-be purchaser is substantially affected in its business by the refusal;
  • such person is unable to obtain adequate supplies because of insufficient competition among suppliers (for example, the refusing supplier has a monopoly or a very strong market position);
  • such person is willing and able to meet the usual trade terms of suppliers;
  • the product is in ample supply; and
  • competition is adversely affected,

the Tribunal may order the supply of the product on usual trade terms. The Act does not prohibit a refusal to supply based on valid business reasons, such as the buyer not meeting the supplier’s standard credit policies or the supplier having legitimately concluded that it has enough distributors in a given market.

Exclusive dealing

Exclusive dealing is the practice of requiring or inducing a customer to deal only or primarily in products of the supplier by means of more favourable terms or conditions. Exclusivity agreements are subject to review if:

  • the supplier is a major supplier of the product;
  • the practice impedes entry or expansion of a firm or product in a market or has some other exclusionary effect in the market; and
  • the practice is likely to substantially lessen competition.
  • If the practice is carried on for a reasonable time only in order to facilitate entry of a new supplier or a new product into the market, the Tribunal will not prohibit the practice.

Tied selling

Tied selling is the practice of requiring or inducing a customer to buy a product as a condition of supplying the customer with another product. The Tribunal will not prohibit this practice unless the conditions referred to above relating to exclusive dealing are met. However, even if such conditions are met, no order will be issued if the Tribunal finds that the practice is reasonable, having regard to the technological relationship between the products.

Market restriction

Market restriction is the practice of requiring a customer to sell a product only in a defined market as a condition of supplying that product. Again, if the practice is engaged in by a major supplier and is likely to result in the exercise of market power such that competition is substantially lessened, the Tribunal can put an end to the practice. It will not, however, make an order if the practice is engaged in for a reasonable period of time only to facilitate entry of a new supplier or a new product into a market.

Agreements among competitors

As indicated above, as of 12 March 2010, the Act will be amended to provide for per se criminal violations for certain hard-core cartel activity (price fixing, market allocation and output restriction). At the same time, a new civil reviewable practice provision will come into force that will apply to agreements among competitors. If the commissioner can show that the agreement substantially lessens or prevents competition, then the Tribunal has the power to prohibit anyone from doing anything under the agreement or, on consent, to require anyone to take any other action.

Abuse of dominant position

In Canada, a dominant position is not in itself illegal. Abuse of a dominant position by resorting to anti-competitive acts in a market can, however, give rise to an order by the Tribunal if such abuse results in substantial restriction of competition. In addition to an order to discontinue the abuse or take other steps to overcome the effects of the anti-competitive practice, the recent amendments to the Act provide that corporations found to be abusing their dominant position may be liable to an order to pay an administrative monetary penalty (AMP) of up to C$10 million for the first finding of abuse of dominance and of up to C$15 million for each subsequent finding.

In order for the Tribunal to issue an order in respect of abuse of dominance there are essentially three conditions that must be met:

  • there has to be dominance of an entity or joint dominance by more than one entity;
  • there must be an abuse of such dominance, discussed below; and
  • such abuse must have the effect of preventing or lessening competition substantially in a market.

The existence of a monopoly is not a prerequisite to establishing dominance, but there should be a relatively high market share allowing the firm (or firms) in question to substantially dictate market conditions and exclude competitors. The commissioner has indicated in the Enforcement Guidelines on the Abuse of Dominance Provisions that the Bureau’s general approach in evaluating allegations of abuse of dominance is as follows. A market share of 35 per cent or more will generally prompt further examination. In the case of a group of firms alleged to be jointly dominant, a combined market share equal to or exceeding 60 per cent will generally prompt further examination.

The Act includes a non-exhaustive list of acts that could constitute anti-competitive acts that may result in an abuse of a dominant position. These include: a vertically integrated supplier charging more advantageous prices to its own retailing divisions; selling at prices lower than the acquisition cost; inducing a supplier to refrain from selling to competitors; acquisition in advance of scarce resources. What characterises an anti-competitive act is that it is adopted with a predatory or exclusionary intent.

Misleading advertising and other deceptive practices

The Act contains numerous and important criminal and civil provisions relating to misleading advertising and promotion. The Act also contains criminal provisions regulating deceptive telemarketing. In accordance with the new changes to the Act, the tribunal may impose an administrative monetary penalty (the AMP) of up to C$10 million for a first finding of deceptive marketing practice and up to C$15 million for subsequent findings.

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