The Future of Competition Policy in Canada

Submission by the Competition Bureau

March 15, 2023

Table of Contents

1. Introduction
2. Merger Review
   • 1.1. Pre-merger notification rules, information provision and waiting periods
   • 1.2. Mergers should be subject to a longer limitation period
   • 1.3. Merger injunction standards should be more workable
   • 1.4. Structural presumptions would simplify and expedite merger review
   • 1.5. Assessment of competitive harm should focus on the competitive process
   • 1.6. Remedies should eliminate all anti-competitive effects
   • 1.7. The remedial process should be clarified in light of recent jurisprudence
   • 1.8. The efficiencies defence should be repealed and made a factor
3. Unilateral Conduct
   • 2.1. The test for abuse of dominance should be simplified
   • 2.2. The level of deference given to business justifications should be recalibrated
   • 2.3. Assessment of competitive harm should focus on the competitive process
   • 2.4. Certain features of the dominance test are critical to the effectiveness of the Act’s abuse of dominance provisions and should remain unchanged
   • 2.5. The process for obtaining interim relief should be streamlined
   • 2.6. Should amendments to the Act’s other unilateral conduct provisions be contemplated, consideration should be afforded to the provisions’ subtleties
   • 2.7. Limitations on the Commissioner’s filing of simultaneous applications should be removed
4. Competitor Collaborations
   • 3.1. Civilly reviewable competitor collaborations
   • 3.2. Criminal Cartels
5. Deceptive Marketing
   • 4.1. The Act should prescribe the appropriate consumer standard
   • 4.2. Sellers should bear the burden of proving that discounts are genuine
   • 4.3. Greater flexibility is needed for deceptive marketing investigations
   • 4.4. The Act needs better remedies to address deceptive conduct
   • 4.5. The courts should be afforded the tools necessary to temporarily enjoin deceptive marketing while the Commissioner completes an inquiry
   • 4.6. Third parties who facilitate reviewable conduct should be subject to permanent orders
   • 4.7. The court’s powers to freeze assets should be expanded
   • 4.8. The Act’s drip pricing provisions should be further refined
   • 4.9. The Act’s CASL provisions
6. Administration and Enforcement
   • 5.1. Reforms should seek to preserve the Commissioner’s independence
   • 5.2. Formal market study powers
   • 5.3. Amendments that improve information-gathering
   • 5.4. Amendments that enhance administrative efficiency and effectiveness
   • 5.5. Amendments that would encourage greater use of the Tribunal
   • 5.6. The Act should adopt more inclusive and gender-neutral language
7. How to contact the Competition Bureau

Introduction

The Competition Bureau (“Bureau”) is pleased to submit these comments on behalf of the Commissioner of Competition (“Commissioner”) in response to the Government of Canada’s consultation and discussion paper on the Future of Competition Policy in Canada (“Discussion Paper”).

This consultation comes at a watershed moment. Canadians from all corners are recognizing the important role of competition in their lives. They want to see more open and competitive markets. They view our competition policy framework as outdated, weak, complex, slow, and out of touch. And they are not wrong. Now is the time to seize the moment to put in place a more effective competition policy, one that works for all Canadians.

This submission is based on the Bureau’s experience administering and enforcing the Competition Act (“Act”). It builds on the Bureau’s February 2022 submission to a consultation led by Senator Howard Wetston (“Bureau’s 2022 Submission”). A number of recommendations from that submission were ultimately addressed through amendments to the Act in June 2022. Accordingly, this submission will focus on the outstanding areas where the Bureau believes that reform is required.

This submission is organized by the topic areas identified in the Discussion Paper, which are reproduced throughout this submission for ease of reference. The Bureau has interpreted these topic areas broadly and has included reform suggestions beyond areas specifically addressed in the Discussion Paper.

Nevertheless, we have largely confined our recommendations to issues with the Act, as that is the emphasis of this consultation. We note, however, that a robust competition policy agenda would also include a broader whole-of-government commitment to competition, including a coordinated effort to eliminate unnecessary regulatory barriers to competition and internal trade at all levels of government, and to hardwire pro-competition thinking into future policymaking. This was an emphasis of the last major competition policy review in Canada and other countries are embracing such an approach while also making necessary updates to their competition law frameworks. Stronger market study powers, as recommended below, would help the Bureau diagnose competition problems and provide evidence-based advice to policymakers on solutions.

1. Merger Review

The Bureau strongly agrees with the breadth and depth of reforms the Government is considering in the area of merger review. In many ways, merger review is the first line of defence in protecting competition in the Canadian economy. It is a preventative tool that safeguards against the harmful concentration of market power that fuels other types of anti-competitive behaviours.

The Commissioner has been clear that the Act’s merger review framework is weak and needs to be significantly re-tooled along the lines being considered by the Government in this consultation. While only a relatively small proportion of mergers raise serious competition issues, those that do can cause very significant and irreparable harm to Canadians. In these cases, the Bureau must be able to take timely and effective action to protect the public interest in competition.

1.1. Pre-merger notification rules, information provision and waiting periods

1.1.1. Certain pre-merger notification rules should be revised

For merger review to serve as an effective preventative tool against harmful concentration, it is critical that the Bureau be given advance notice of economically significant transactions. The Bureau also needs adequate time to review them and, if necessary, take preventative action before they close. This is the basic rationale for pre-merger notification rules and suspensory waiting periods, which are common in merger review systems globally.

Generally, the Bureau must be given advance notice of proposed transactions when the target’s Canadian assets or revenues exceed $93 million (the “transaction-size threshold”, and a figure that may be adjusted annually to account for economic growth), and when the combined Canadian assets or revenues of the merging parties and their respective affiliates exceed $400 million (the “party-size threshold”).

However, there are a number of significant gaps in Canada’s merger notification rules. Section 2.7 of the Bureau’s 2022 Submission cites evidence that nearly half of the top 30 Canadian public merger transactions by deal size over the past five years were not subject to pre-merger notification in Canada, and that only five acquisitions made by the largest tech firms—Google, Apple, Amazon, Facebook and Microsoft—were notified under the Act over the past decade. The submission goes on to make a number of recommendations for strengthening the notification rules under the Act. The Bureau’s recommendations in this area remain unchanged and fall into two general categories.

First, sales “into” Canada should be counted for notification purposes. Section 110 of the Act provides the transaction-size thresholds for each of the six prescribed notifiable merger structures. In each case, the language for calculation purposes is limited to the aggregate value of the assets in Canada or the gross revenues from sales “in” or “from” – but not “into” – Canada generated from those assets. Sales “into” Canada are economically and competitively relevant, especially for transactions occurring within digital markets, and the Act’s notification rules should be amended to reflect this reality.

Second, there are a number of technical pre-merger notification issues that should be addressed. These are described more fully in the Bureau’s 2022 Submission and include:

• Creeping acquisitions – such as those which occur amongst the same or affiliated parties and are separately not notifiable – should be aggregated for notification purposes;
• The acquisition of a target entity’s components, including shares or interests and assets, as well as amalgamations, should be aggregated for notification purposes;
• Non-corporate joint ventures should be made notifiable under the Act;
• The definition of “voting share” should be amended to include: (i) any class of voting shares; and (ii) any share to which votes may attach in the ordinary course of business;
• Acquisitions of an interest in a combination that “controls an entity that carries on an operating business” should be captured by the Act;
• The notifiable structure of “combinations” should be expanded to include assets contributed by affiliates of the partners in a joint venture; and
• The definition of “operating business” should be amended to include those which are outside of Canada.

1.1.2. Parties should be required to supply transaction-size information with their merger filings

As highlighted above, the Act sets out the statutory framework for pre-merger notification, including specifying the party-size and transaction-size thresholds that cause transactions to be subject to the notification regime. However, there is no requirement that parties actually supply their party-size or transaction-size information to the Bureau as part of their merger filings.

The absence of this data – and that for the transaction-size in particular – makes it difficult to evaluate the effectiveness of the notification regime and determine whether this financial threshold is appropriately calibrated. It also makes it difficult for the Bureau to provide informed advice to Government on the impact of one or more changes, including annual changes to the transaction-size threshold contemplated by subsection 110(8) of the Act.

The Bureau has tried to gather this information on a voluntary basis for a number of years without success as parties generally have no incentive to provide it. The Bureau is cognizant of the incremental burden to parties of having to supply more information as part of their merger filings. However, as parties to notifiable transactions will have already carried out an analysis to determine that their transaction exceeds the thresholds, supplying information on their calculations should not be unduly burdensome (as noted by at least one Canadian merger practitioner, “this information is likely already at hand” and “information of a similar type is collected under the Investment Canada Act”). The Bureau notes that the size of transaction information is also required under US merger notification rules, and that information on the distribution of notified transactions by size is reported annually by the US Federal Trade Commission in aggregated form.

In addition to the above, the Commissioner’s inability to access merging parties’ transaction-size information has implications on other process-related endeavours, including for instance contemplation of alternative filing fee structures for notifiable transactions.

1.1.3. Privilege and confidentiality logs should be required for notifiable transaction filings and supplementary information requests

A “privilege and confidentiality log” is another important piece of information that should be provided in the context of notifiable merger transactions.

Section 116 of the Act provides that parties may withhold information from their pre-merger notification filing or supplementary information request (“SIR”) responses for a variety of reasons, including solicitor-client privilege and “a confidentiality requirement established by law” (both via subsection 116(1)). Though section 116 requires the claiming party to provide the reason for its non-compliance, there is no stipulation for a “privilege and confidentiality log” that would provide basic summary information about the withheld records. Absent a log, the parties’ productions – including exclusions – are left unchecked as the Commissioner must rely solely on the parties to determine the validity of their claim.

Section 116 of the Act should therefore be amended to provide that, when records that are required to be submitted as part of a notification filing or SIR response are either redacted or withheld due to solicitor-client privilege and/or a confidentiality established by law, the party shall, under oath or solemn affirmation and in a written return of information to the Commissioner, provide an index that identifies all records (or parts thereof) for which privilege and/or confidentiality is claimed. That index would include:

1. the title of the record, the date of the record, the name of each author, the title or position of each author, the name of each addressee and recipient, and the title or position of each addressee or recipient;
2. the information requirement to which the record is responsive; and
3. a description of the privilege and/or confidentiality requirement claimed and the factual basis for the claim in sufficient detail to allow the Commissioner to assess the validity of the claim.

As part of this reform, consideration could be given to the bifurcation of subsection 116(1) such that separate provisions would exist for situations in which information cannot be supplied because (i) it is not known or reasonably obtainable; and (ii) of the privilege and/or confidentiality that exists.

1.1.4. The Act should permit oral examinations under oath or solemn affirmation as part of the SIR process

There is value in extending the Commissioner’s SIR powers for notifiable mergers to include oral examinations under oath or solemn affirmation.

Subsection 114(2) of the Act provides that, within 30 days after receiving a notification filing, the Commissioner may issue a SIR requiring the notifying parties to supply additional information that is relevant to the assessment of the proposed transaction. Where a SIR is issued, the parties cannot close the proposed transaction for a subsequent 30-day waiting period that starts once the parties have certified on oath or solemn affirmation that they have provided complete SIR responses.

The information the Commissioner may seek via a SIR is limited to documents, data and written returns. To obtain oral testimony under oath or solemn affirmation from the merging parties, the Commissioner must apply to a court under section 11 of the Act. This can be impractical in the case of mergers given the Act’s prescribed timelines, and there is no guarantee that closing will be prevented pending the completion of any court-ordered oral examinations.

The Commissioner’s ability to compel oral testimony from representatives of the merging parties within the SIR process would complement the information-gathering toolkit that currently exists and allow for more effective and timely review, particularly in industries that are emerging, changing rapidly, or where the Bureau has limited or no experience. For instance, oral examinations under oath or solemn affirmation could be used to clarify information in documents and data produced via a SIR or to better understand relevant aspects of competition affected by the merger. Ultimately, they would allow for better informed enforcement decisions including with respect to consensual remedies.

Regarding process and timelines, the Act could be amended to allow for the following: once all parties have certified complete documentary and data responses to the SIR, the Commissioner may, within 30 days of certified compliance, provide notice of oral examinations. All examinations would occur within 30 days of the notice unless additional time was requested, and an additional 30 day waiting period would commence on the date in which the final examination is completed.

Such a change would provide sufficient time for the Commissioner to carry out the oral examinations and process the information received. Since SIRs are only issued in respect of a very small proportion of notifiable mergers raising complex issues – approximately 5% of the annual notifiable transactions – this change would have no impact on timing for the vast majority of merger transactions. For those that would be affected, the potentially longer timeframe would be reasonable, and would be consistent with the extended timeframes under which many highly complex merger reviews are already conducted. The additional information gathered through the examinations could potentially lead to a faster resolution in some cases.

1.1.5. The Act should adopt a more flexible approach to “gun jumping”

The Act also needs a more flexible approach to address “gun jumping”, namely, instances where a notifiable transaction is closed or partly implemented without notification and/or before the expiry of the applicable waiting period. This can be broken down into the following scenarios:

1. completion of a notifiable transaction without submitting a notification (failure to notify);
2. completion of a notifiable transaction after submitting a notification but prior to the expiration of the applicable waiting period; and
3. completion or implementation of parts of a notifiable transaction among merging parties after submitting a notification but prior to the expiration of the applicable waiting period.

In respect of scenario (a) (failure to notify), the Act provides that parties who fail to notify may have committed a criminal offence (subsection 65(2)), and may be liable to a maximum fine of $50,000. A failure to notify may also represent a civil contravention of section 123 of the Act, which establishes the periods of time during which merging parties shall not close their proposed transaction. These waiting periods are triggered by the Bureau’s receipt of a notification. The available remedies for a contravention of section 123 are set out in section 123.1 and include dissolving the merger, or ordering a party to the transaction to pay an administrative monetary penalty of up to $10,000 a day for non-compliance.

A number of revisions to the Act are warranted. First, the criminal offence under subsection 65(2) should be repealed as, in the Bureau’s experience, it is a blunt instrument for dealing with instances of gun jumping. Enforcement action has never been brought under this subsection in part given the evidentiary requirements for making out a case to the criminal standard.

Second, the Act should be amended to clarify that sections 123 and 123.1 are applicable to situations where a waiting period has not yet started due to a failure to notify. A civil remedy is better suited to address any violation and resulting competitive harm, aligns with international practice and the remedies available under section 123.1 are more flexible, allowing for a civil penalty to be tailored to the particular facts.

In respect of scenario (b) (closing a transaction without observing the waiting period), no change is required as a waiting period will have been triggered in this scenario and the remedies in paragraphs 123.1(1)(c) and (d) of the Act are clearly applicable.

In respect of scenario (c) (partial completion or implementation of a transaction without observing the waiting period), although a waiting period will have also been triggered, this scenario is not captured by section 123.1. Therefore section 123.1 should be expanded to allow the court to make an order remedying partial implementation and preventing further implementation or completion. The modification could read as follows:

If, on application by the Commissioner, the court determines that a person, without good and sufficient cause, the proof of which lies on the person, has completed or implemented, or is likely to complete or implement, all or part of a proposed transaction before the end of the applicable period referred to in section 123, the court may...

Similarly, paragraphs 123.1(1)(c) and (d) should be amended to read, “in the case of a completed or implemented transaction or part of a transaction”.

Taken together, these changes would provide more flexible and proportionate tools to address instances of gun jumping than currently available.

1.1.6. The Act should clarify that notification waivers are only valid for one-year

There can also be issues when parties refrain from closing their transaction for a prolonged period of time following a ‘clearance’ and waiver of notification requirements under the Act.

Merging parties may request that the Commissioner issue an “advance ruling certificate” (ARC) under section 102 of the Act in respect of their merger. Where an ARC is granted, the parties are not required to submit a notification pursuant to subsection 113(b); however, if the proposed transaction does not close within one year, the ARC does not preclude a section 92 challenge by the Commissioner.

Where an ARC is not granted, the Commissioner may still waive the requirement to submit a notification under subsection 113(c) where substantially similar information has already been provided. As neither subsection 113(c) nor any other provision of the Act expressly limit the period of time in which the waiver is valid, the interpretation may be that it lasts indefinitely, which is inconsistent with the one-year limitation that is applicable to other proposed transactions that do not receive an ARC and problematic where there is a prolonged delay in the transaction closing.

As an example, consider a proposed merger in a market where conditions change rapidly, and at the time the waiver is issued, the merger was found to be unlikely to substantially lessen or prevent competition. If the transaction closes only years thereafter, competitors may have exited the marketplace and competitive dynamics may have changed considerably in the interim, such that the decision to issue the waiver would have changed had the parties “re-filed”. The transaction would evade scrutiny only because the prior clearance was ‘banked’ years before.

While the Bureau considers that these types of scenarios are likely to be rare, the loophole should nevertheless be closed. Subsection 113(c) should be amended to limit the validity of a subsection 113(c) waiver to one year after the date in which it was issued, subject to extensions by the Commissioner. This adjustment would:

• require the merging parties to re-apply for the waiver (or submit an advance notification of the transaction) if their closing has not occurred within a year, thereby reducing the risk that an anti-competitive transaction is implemented; and
• address inconsistencies – there is no principled reason that parties who have submitted a notification should need to renotify if the transaction is completed more than a year later, but parties who submitted only an ARC request should not.

1.1.7. The Act should define “significant interest” in the context of mergers

While technically distinct from the issue of notification, the definition of a “merger” under the Act should also be clarified. A merger is defined in section 91 of the Act to include the acquisition of control of an entity, or the acquisition of a significant interest therein. Subsections 2(2) and 2(4) of the Act define the meaning of “control”, however “significant interest” is not defined.

The lack of an explicit definition has allowed for flexibility, and for the Bureau and merging parties to gain experience with the merger provisions of the Act. To provide transparency and predictability to stakeholders, the Bureau’s Merger Enforcement Guidelines (MEGs) describe a “significant interest” as follows:

a “significant interest" in the whole or a part of a business is held qualitatively when the person acquiring or establishing the interest (the "acquirer") obtains the ability to materially influence the economic behaviour of the target business, including but not limited to decisions relating to pricing, purchasing, distribution, marketing, investment, financing and the licensing of intellectual property rights.

The MEGs then list a number of factors that the Bureau may consider, individually or collectively, when assessing whether an interest does, in fact, confer material influence. The Bureau and parties have considerable experience applying these factors to different factual scenarios. Nevertheless, the MEGs are not legally binding and parties sometimes contest the Bureau’s approach to the issue of significant interest.

To provide greater certainty and predictability regarding the definition of what constitutes a merger, the Act should be amended to include a definition of “significant interest” that codifies the principles-based guidance provided in the MEGs.

1.2. Mergers should be subject to a longer limitation period

Section 2.6 of the Bureau’s 2022 Submission recommends that the limitation period for both notifiable and non-notifiable transactions should be expanded to three years. The Bureau’s recommendation remains unchanged.

Section 97 of the Act prevents the Commissioner from filing an application to challenge a merger more than one year after its closing, and the provision applies to both notifiable and non-notifiable transactions. The challenges with the timeframe exist for both categories of acquisitions.

For non-notifiable transactions, the challenges of the short limitation period are obvious. Despite the Commissioner’s best efforts to uncover potentially problematic non-notifiable transactions through intelligence gathering, some acquisitions may not be detected for more than a year after closing. This is especially true given that one year is a short enough time that parties may be able to justify delaying post-merger price increases or service degradations to minimize the risk of complaints being brought to the Bureau’s attention.

However, equally, the short timeframe poses issues for notifiable transactions that have been reviewed by the Bureau prior to closing. Merger review is an imperfect, forward-looking exercise, and markets sometimes evolve in dramatic and unexpected ways. A merger that was thought to be competitively benign at the time of a review may, after a year, be revealed to be anti-competitive. As correctly noted in the Discussion Paper, “mergers may cause competitive harm that is too difficult to forecast with precision at the time of acquisition, yet too late to remedy once it becomes apparent.”

While the Bureau appreciates that extending the limitation period from one to three years would lead to some incremental commercial uncertainty, the Bureau believes that this uncertainty would be negligible for the vast majority of transactions that do not (ever) raise substantive competition issues. And the change would provide an important fail-safe for those rare instances where a transaction raises evident competition concerns more than one year but less than three years post-closing.

Additionally, the change would align with the three-year limitation period for civil abuse of dominance conduct. It would also bring Canada into closer alignment with the approach to merger limitation periods in Australia (where it is three years) and the U.S. (where there is no limitation period at all). The current misalignment with those jurisdictions means that there may be cross-border mergers that the U.S. and Australian competition agencies are reviewing that the Bureau is unable to review from a Canadian perspective.

1.3. Merger injunction standards should be more workable

Section 2.5 of the Bureau’s 2022 Submission explains in detail why the legal standards for injunctive relief are impractical, and why there should be more workable standards to stop anti-competitive mergers from closing. The issues are also well-described in the Discussion Paper. The Bureau considers that there are two distinct issues that need to be resolved.

First, in cases where the Bureau is seeking an injunction to prevent closing (whether under section 100 or section 104), the law should provide automatic short-term interim relief until the injunction application can be heard and decided.

The short statutory timeframes for mergers and the realities of preparing injunction applications are such that applications will almost always come towards the end of a statutory waiting period when parties are within days of being in a legal position to close their transaction even though such applications in merger cases often take weeks to actually hear and decide. Without a short-term stopgap to prevent closing, parties may be able to close before the Tribunal can decide on the injunction application, rendering the entire process moot.

While, in theory, the Bureau could address this risk by applying even earlier for “interim interim” relief, this solution only compounds the problems associated with the short statutory timeframes as it requires a second type of application to be made, and there would be no guarantee that that application would be heard and decided before the end of the waiting period either. Automatic relief - whereby closing would be prevented under the Act as a matter of law, in much the same way that the issuance of a SIR automatically prohibits closing – would provide a much clearer solution for this short-term situation. Such a change would affect only a very small proportion of transactions, and parties would be able to build this possibility into their deal timetables.

Second, for an injunction under section 104, where the Commissioner is simultaneously challenging the transaction under section 92, the test should not require the quantification demanded by current case law. It also should not require a case-specific “balance of convenience” assessment that considers whether the harm to competition is outweighed by the harm to parties from delaying the transaction (e.g. in terms of delayed realization of efficiencies). The entire pre-merger notification system is premised on the notion that the public interest is better served by preventing potentially anti-competitive mergers from closing than trying to address their anti-competitive consequences after the fact. Accordingly, to obtain an injunction pending a full hearing on the merits under sections 92, it should be sufficient for the Bureau to show that there is a serious issue to be tried and that the transaction would likely cause irreparable harm if it was allowed to proceed. As above, the change would affect only a very small (yet important) proportion of transactions, namely those where the Commissioner has determined that the transaction is anti-competitive and where concerns could not be resolved consensually.

1.4. Structural presumptions would simplify and expedite merger review

To prevent an anti-competitive merger, the Bureau needs to prove that it has resulted or is likely to result in a substantial lessening or prevention of competition (“SLPC”). While this is a generally-worded test, it has been given a progressively more specific meaning as the case law has evolved.

In particular, to make out an SLPC, the Bureau is required to show that the merged entity will likely be able to exercise materially greater market power than in the absence of the merger. This has been further interpreted as requiring proof that the merger is likely to result in materially higher prices or materially lower levels of non-price competition relative to those that would likely exist in the absence of the merger. In turn, this has been interpreted as requiring an assessment of the likely magnitude, duration and scope of these price and non-price effects. By any measure, these are complex economic tests, and the Bureau needs to prove them on a balance of probabilities. The Discussion Paper correctly notes that “[g]iven the complexity, dynamism and pace of change in many markets, especially digital ones, these specific tests may be highly impractical.” Simplification is required.

Section 2.2 of the Bureau’s 2022 Submission argues that the merger provisions of the Act should be amended to allow for “structural presumptions” along lines that exist in the US. This would shift the burden to merging parties to prove why a merger that exceeds certain market share or concentration thresholds would be unlikely to substantially lessen or prevent competition. They could do so by showing, for example, that barriers to entry are low, or that there are other countervailing factors that would prevent anti-competitive harm.

This approach is not only logical, it follows the economics-based conclusion that mergers in highly concentrated markets are more likely to be anti-competitive, and ensures that the Bureau’s investigative and litigation resources are used efficiently in cases where the presumption is met.

A minimum initial step towards a structural presumption would be the repeal of subsection 92(2) of the Act, which expressly prohibits the Tribunal from concluding that a merger is likely to harm competition “solely on the basis of evidence of concentration or market share.” Repealing subsection 92(2) would permit, but not require, the Tribunal to adopt structural presumptions. It would most likely result in the Tribunal placing greater weight on evidence of high market share and concentration than it has to date.

However, the Bureau believes there is a need for a more definitive reform in this area and that policymakers should actually legislate a structural presumption with defined thresholds (elaborated in the Act or in follow-on regulation). Those thresholds could be based on the levels of post-merger concentration or market share, and the changes in those levels brought about by the merger, taking inspiration from thresholds outlined in the US’ Horizontal Merger Guidelines or US case law. This would provide certainty and predictability for both the Bureau and for merging parties.

Commentators might argue that US thresholds are not appropriate for Canada as US markets may be able to support a larger number of competitors. However, this argument is not persuasive - it implies that Canada should be more tolerant of anti-competitive mergers because our markets are already less competitive to begin with. It is difficult to understand why, say, a 3-to-2 merger in a properly defined market would be less of a concern in Canada than the US, all else being equal. While it is possible that there are fewer industries in which 3-to-2 mergers could happen in the US relative to the situation in Canada, the anticompetitive consequences of such mergers, and the analytical approach to their assessment, should not be dissimilar.

For greater certainty, the Bureau acknowledges that there are cases where market definition is complex and hotly contested and where excessive focus on market share or concentration may detract from the overall competitive assessment of the merger. Accordingly, any structural presumption should be worded so that it is clear that it is sufficient to shift the burden when the Commissioner establishes that it is triggered, but that it is not a necessary condition for finding that a merger is likely to result in an SLPC.

1.5. Assessment of competitive harm should focus on the competitive process

In addition to structural presumptions, the overarching “likely SLPC” test should be recalibrated to better protect the competitive process. This was partly addressed in Section 2.3 of the Bureau’s 2022 Submission, which described the challenges applying this test to acquisitions of emerging competitive threats or so-called “killer acquisitions” in the digital economy. The Bureau emphasized those types of cases as they were a focus area of Senator Wetston’s consultation, however, the challenges with the SLPC test are not unique to mergers in the digital economy or to mergers that “prevent” future competition - they extend to cases in traditional sectors and to mergers that “lessen” existing competition as well. Accordingly, we expand on our position here (and in sections 2.3 and 3.1.3 of our submission below, which discuss the same issues in the context of the abuse of dominance and competitor collaboration provisions).

Specifically, in respect of cases involving the “prevention” of future competition from new entrants, as a result of the Tribunal’s decision in The Commissioner of Competition v Vancouver Airport Authority (Vancouver Airport Authority), the Commissioner must “identify concrete market opportunities that would likely have been, are or would likely be available to new entrants” and establish, on a balance of probabilities, that,

new entrants would likely have entered or expanded in the relevant market, or would be likely to do so, ‘within a reasonable period of time, and on a sufficient scale, to effect either a material reduction of prices or a material increase in one or more levels of non-price competition, in a material part of the market’.

Such a task is particularly difficult – or even impossible – when it involves the acquisition of a firm that is still developing the products that would challenge other competitors. This is true in all markets, not just digital ones.

In considering the need for change, the Bureau is mindful of earlier jurisprudence from Director of Investigation and Research v Tele-Direct Inc. (Tele-Direct), which recognized the need for a sliding scale approach to the SLPC test. Namely,

[w]here a firm with a high degree of market power is found to have engaged in anti-competitive conduct, smaller impacts on competition resulting from that conduct will meet the test of being "substantial" than where the market situation was less uncompetitive to begin with. In these circumstances, particularly Tele-Direct's overwhelming market power, even a small impact on the volume of consultants' business, of which there is some evidence, by the anti-competitive acts must be considered substantial.

When a firm with significant market power extinguishes a nascent competitive threat – even one with only modest probability of success – it can substantially harm the competitive process. Even in situations where the probability that an emerging firm would develop a competitive product is believed to be modest, the acquisition of that firm by an incumbent with market power could eliminate any potential for pro-competitive impact. As outlined in the Bureau’s 2022 Submission, many jurisdictions are actively considering ways of adjusting competition tests to accommodate these realities so that their competition agencies can better safeguard the competitive process.

Moreover, even in cases where competitive entry can be established as “likely”, the SLPC test described above requires more. It requires proof that such entry would occur in a timeframe and on a scale that would result in materially better prices or non-price outcomes than in the absence of the merger. This issue extends to cases involving a “lessening” of competition where, as noted above, the SLPC test requires proof of how the merger will affect specific indicators of competitive intensity.

These challenges are discussed in more detail in the “Unilateral Conduct” section below as the SLPC test is also applicable in abuse of dominance cases and raises similar issues in that context (as well as in respect of civilly reviewable competitor collaborations). Consistent with section 2.3 of this submission, one suggestion would be to specify in section 92 that an SLPC may be inferred from a merger that appears reasonably capable of having anti-competitive effects or of making a significant contribution to the creation, maintenance, or enhancement of the ability to exercise market power.

1.6. Remedies should eliminate all anti-competitive effects

Section 2.4 of the Bureau’s 2022 Submission argues that the remedial standard for mergers – which does not require that competition be restored to pre-merger levels – is insufficient and should be revised. The Bureau’s recommendation remains unchanged.

The Supreme Court held in Canada v. Southam Inc., [1997] 1 S.C.R. 748 that remedies for anti-competitive merger transactions need to “restore competition to the point at which it can no longer be said to be substantially less than it was before the merger.” For transactions that result in an SLPC, the standard is too lax.

Canada’s remedial standard for anti-competitive mergers should be amended to require that competition be restored to levels that would prevail but for the anti-competitive merger, such that no lessening or prevention is permitted. The reasons are threefold. First, preserving competition is the principal objective of competition law, and so the endorsement and subsequent acceptance of a remedy that falls short of doing so is counterintuitive. Second, such a change would be consistent with other civil provisions in the Act – namely subsections 77(2) and 79(2) of the Act – which explicitly mention the restoration of competition for circumstances in which competition is substantially lessened or prevented. Third, when addressing anti-competitive harm, other jurisdictions - including the US, EU, and UK - require a remedy that maintains the same level of competition post-merger, and there is no justifiable reason why Canada should adopt a more permissive approach to anti-competitive mergers. The Bureau acknowledges that under this approach, transactions that do not cause a likely SLPC would face no remedy, whereas transactions that do cause a likely SLPC would face a full remedy. However, this is not a bad policy as it discourages merger transactions that are likely to cause the most harm.

1.7. The remedial process should be clarified in light of recent jurisprudence

In addition to the remedial standard, the remedial process for mergers needs to be addressed in light of recent jurisprudence. This encompasses three issues: (i) the Commissioner should have sufficient time and information to evaluate merger remedy proposals prior to closing; (ii) the Tribunal’s jurisdiction should be limited to analysing the competitive effects of the transaction as it existed when it was challenged by the Commissioner with parties bearing the burden of proving the effectiveness of any subsequent remedies or transaction modifications; and (iii) behavioural commitments offered by parties should not be relied upon by the Tribunal to conclude that a remedy is effective absent the Commissioner’s consent. Collectively, these changes would bring much-needed structure to the remedial process and guard against the risk of strategic behaviour by parties to anti-competitive mergers to circumvent the merger review process or avoid enforceable orders.

1.7.1. The Commissioner should have sufficient time and information to evaluate merger remedy proposals prior to closing

First, regarding timing, the Act should provide sufficient time for the Commissioner to evaluate proposed remedies prior to the parties being in a legal position to close. Without such an amendment there is a risk that parties will formalize their own “remedies” late in the merger review process and the Bureau will be left “litigating the fix” – including potentially having to seek an injunction to prevent closing of the modified transaction – without having been given adequate time and information to evaluate the effect of the change. This undermines the logic of the pre-merger notification system and creates room for abuse. As one Canadian law firm put it in a recent bulletin summarizing takeaways from the Rogers-Shaw merger: “This gives merging parties another way to get a deal through; they can wait to see the Bureau’s case and then craft an acceptable remedy to undermine it.”

It is possible, of course, that some remedy proposals would be significant enough to constitute a material change to the transaction necessitating a new pre-merger notification filing (or lead to multiple new transactions requiring new filings) and that this might provide the Commissioner with additional time and information. However, this may not always be the case and, in any event, the Act should provide clarity in these circumstances. Likewise, in Commissioner of Competition v. Rogers Communications Inc., 2023 FCA 16, the Federal Court of Appeal leaves open the possibility that changes in a transaction may be so late and so significant that a hearing before the Competition Tribunal is no longer fair. However, this does not cover a circumstance where the Bureau has not yet challenged a transaction but may be nearing the end of a statutory waiting period. It is also not clear when changes to a transaction will be so late and so significant as to constitute procedural unfairness. Again, the Act needs to provide more clarity, both for parties and the Commissioner.

1.7.2. Parties should bear the burden of proving the effectiveness of post-challenge remedies or deal modifications

Second, regarding jurisdiction and burden, the Federal Court of Appeal found that the Tribunal is not “shackled” to the transaction actually investigated and challenged in the Commissioner’s section 92 application and is able to consider post-challenge remedies or deal modifications made by the parties in the lead-up to a hearing, absent procedural fairness concerns. This has the effect of shifting the burden to the Commissioner to prove that the “new” transaction (or transactions) will lead to an SLPC. This is an untenable situation. Decisions to challenge a merger are not taken lightly and typically involve significant investigative work and economic analysis. While there should always be the possibility for the Commissioner and parties to resolve concerns consensually after a merger is challenged, parties should not be able to unilaterally change the case that the Commissioner has to meet once litigation is commenced. Divestitures and other deal modifications can dramatically change the competition assessment, potentially bringing in new parties, new affected markets, and new theories of harm that may not have been considered in reviewing the original transaction. Investigating these party-led changes and conducting new analyses within an already compressed litigation timetable, or demonstrating procedural unfairness from having to do so, is not a sound approach or a good use of public resources. Importantly, the Bureau distinguishes this from changes that may happen post-challenge that are outside the parties’ control, such as the entry or exit of competitors, changes in laws, etc. To the extent possible such changes should be taken into account, by both sides.

Accordingly, the Commissioner recommends amending the Act to clarify that the Tribunal’s jurisdiction is limited to analysing the competitive effects of the transaction challenged by the Commissioner with parties bearing the burden of proving the effectiveness of any subsequent remedies or transaction modifications.

1.7.3. Unenforceable behavioural commitments should not be relied upon to conclude that a remedy is effective

Lastly, regarding behavioural commitments, the Federal Court of Appeal found that the Tribunal could consider long-term network access agreements and pricing commitments between Rogers and Videotron notwithstanding there was no consent of the Commissioner to monitor and enforce those commitments.

Reliance on behavioural commitments is problematic in competition analysis because these commitments often require firms to act against their own self-interest. Fundamentally, they substitute the competitive process for industry self-regulation and are, at best, only temporary in nature. The competitive significance of behavioural commitments is also tied to the effectiveness of available enforcement mechanisms, the ability to detect non-compliance and obtain timely and cost-effective resolution of disputes, among other things. Challenges relating to the likely effect of behavioural commitments in a competition assessment are particularly pronounced when a competitor is required to provide a key input to its downstream competitor given its incentive to minimize and avoid commitments that will reduce its revenues and profits.

Accordingly, the Commissioner recommends amending the Act to clarify that the Tribunal may not rely on behavioural commitments offered by parties to conclude that a remedy is effective, absent the Commissioner’s consent.

1.8. The efficiencies defence should be repealed and made a factor

Section 2.1 of the Bureau’s 2022 Submission explains in considerable detail why the section 96 efficiencies defence should be repealed, and why efficiency gains should instead be incorporated into the list of factors that the Tribunal can consider in determining whether a merger substantially lessens or prevents competition. This is one of the most significant areas where reform is needed, and the Bureau’s recommendation remains unchanged.

As outlined in the Bureau’s 2022 Submission, the efficiencies exception is no longer supportable. It permits anti-competitive mergers that are harmful to Canadians. It is inconsistent with international best practices. It is difficult—if not impossible—to properly implement. And it suffers from a misguided original policy intent. Repealing the defence and making efficiencies a factor would address all of these problems.

Some commentators would propose alternative half-measures, such as preserving the defence but stipulating that the Commissioner need not lead quantitative evidence on anti-competitive effects, or bear any burden at all under the defence. These solutions would not change the way that cases are litigated in practice, and would not address the fundamental issue with the defence, which is that it tries to draw a distinction between ‘good’ anti-competitive mergers and ‘bad’ anti-competitive mergers. A competition law that does not accept as a premise that competition leads to beneficial economic outcomes is doomed to be tied in knots.

In terms of operationalizing the Bureau’s recommendation, the Bureau favours a new section 93 factor that would mirror the general language of the other discretionary factors. The text should not include overt reference to quantification, welfare trade-offs or balancing, which have led to significant administrability challenges under the current defence. However, it may be useful to emphasize that efficiency gains must be “pro-competitive” in order to clarify and limit the types of gains that are relevant under this new approach. Illustrative language may include, “the nature and extent of [pro-competitive] efficiency gains likely to be brought about by the merger.” Importantly, to be an effective factor in the analysis, efficiencies should be objectively verifiable.

2. Unilateral Conduct

Canadians deserve open and competitive markets, where firms are able to succeed or fail on their own merits. Unfortunately, at present, there are significant substantive challenges with the application of the abuse of dominance provisions under the Act, giving powerful firms undue ability to shape how competition evolves.

In broad terms, the Bureau believes that the bar for establishing an abuse of dominant position is too high to properly protect competition, and out of line with our international counterparts. At present, abuse of dominance is a three-part test that requires establishing dominance, anti-competitive intent, and substantial anti-competitive effects. There are three principal issues with this approach:

• The requirement to show both anti-competitive purpose and effects is a high bar and unusual internationally;
• Within the analysis of anti-competitive purpose, recent case law has shown an undue level of deference to justifications offered by dominant firms; and
• Analysis of competitive effects has come to focus too much on how conduct affects particular indicators of competitive intensity, rather than focussing on harm to the competitive process, which the Bureau considers to be the most significant issue.

These challenges are closely linked as they all relate to the substantive test under section 79, but are distinct. Any reforms to the Act must consider how these issues interact, to ensure that the abuse of dominance provisions are appropriately calibrated.

2.1. The test for abuse of dominance should be simplified

Requiring that the Commissioner prove that conduct has both anti-competitive intent and effects significantly frustrates the Commissioner’s ability to intervene against anti-competitive conduct and is out of step with most international counterparts, including the US, the EU, and Australia. Consider, for instance, the examples below.

• Even when a dominant firm’s conduct is clearly anti-competitive and lacks a legitimate justification – such as one’s deliberate destruction of a competitor’s factory – harm cannot be presumed and the Commissioner must prove that the conduct has resulted, or is likely to result in significant anti-competitive effects. Depending on the case, this could require complex economic evidence and modelling, and a battle of economic experts to determine whether the conduct was ultimately abusive.
• Conversely, for conduct that has clearly caused significant harm to competition (such as higher prices, diminished product quality, and less innovation) the Commissioner must prove that the conduct was purposefully anti-competitive. Accordingly, companies who willfully fail to document their anti-competitive intent, or that take care to paper and emphasise a pretextual justification, may escape scrutiny. Companies, particularly large dominant companies are increasingly sophisticated about antitrust compliance and are trained on words and concepts to avoid in their internal communications. The need to prove intent is also an exception to international best practices, as in the US, EU, and Australia where intent may be considered a factor in the determination as to whether the conduct engages the law.

In light of the above, abuse of dominance cases are unpredictable, lengthy and unnecessarily difficult and resource-intensive to prove. An amendment to section 79 and, in particular, one that streamlines the provision and more efficiently allocates the burdens of proof, would better protect competition by ensuring the Act can reach harmful conduct by dominant players. Such change would also align Canada’s treatment of this important pillar of competition law with its international counterparts. In order to do so, two potential options could be considered.

First, the abuse of dominance provisions could be satisfied by a two-part test where the Commissioner could obtain an order by establishing that: (i) a firm is dominant (or a group of firms are jointly dominant); and (ii) they engaged in a practice with either anti-competitive intent or effect. This would align with Australia where is it illegal for businesses with substantial market power to do anything that has the purpose, effect or likely effect of substantially lessening or preventing competition.

A second option would be to retain the current three-part test, but introduce an element of burden-shifting. For example, if the Commissioner proved that a dominant firm engaged in a practice with anti-competitive intent the burden then could shift to the dominant firm to prove that the conduct was not capable of substantially harming competition. This approach takes inspiration from the U.S, where burden shifting is a common element of monopolization cases. Similarly, where a SLPC is shown it may be appropriate to presume conduct has an anti-competitive purpose (or, alternatively, if a SLPC is established there would be no need to also show an anti-competitive purpose for the abuse of dominance provisions to be engaged).

Other models could also be explored. Regardless of the model adopted, the Bureau is not seeking to discourage aggressive competition on the merits. For example, the Bureau would support an ancillary amendment to section 79(4) to make it more clear that simply being a more effective competitor is not an abuse of dominance.

2.2. The level of deference given to business justifications should be recalibrated

As previously stated, section 79 currently requires that the Commissioner establish anti-competitive intent. As part of this analysis, it is possible for a firm to argue that it was instead motivated by a pro-competitive or efficiency enhancing purpose – a legitimate business justification – which can counterbalance evidence of anti-competitive intent. If so, there can be no remedy for what would otherwise be an abuse of dominance.

While it is without doubt that careful consideration should be afforded to ensure that the abuse of dominance provisions do not prevent pro-competitive conduct, recent case law has given too much deference to the asserted justifications of the dominant firm that may not be borne out in reality. This could be fixed by requiring that a dominant firm prove that its justification is objectively valid to be considered under the abuse of dominance provisions.

In Vancouver Airport Authority, the Tribunal found that VAA had exclusionary intent with respect to certain competitors, but nonetheless concluded that VAA did not act with anti-competitive intent on the basis of justifications it put forward. In reaching this decision, the Tribunal relied heavily on the evidence of the decision-making offered by VAA executives despite arguments put forth by the Commissioner that VAA conducted a superficial analysis and failed to consider readily available information that demonstrated the concerns were not well-founded. In doing so the Tribunal noted that:

VAA’s decision not to consult airlines or third-party sources may look cavalier or complacent to outside observers. However, the Tribunal is satisfied that this cannot be equated with an anti-competitive purpose or willful blindness. In determining whether explanations from business people amount to legitimate business justifications, as contemplated by paragraph 79(1)(b), the Tribunal considers that it should not insert itself into or second-guess the decision- making process of businesses and impose upon them an arbitrary burden that they would not otherwise impose upon themselves, when acting in good faith (...)

However, the question is not whether VAA’s senior management was as correct and as thorough as the Commissioner would have preferred or some observers might expect. Rather, it is whether the individuals in question made a genuine and good faith decision on the basis of information that was sufficiently robust to withstand an allegation of having been so superficial that it lacked credibility or was otherwise inadequate.

If applied in other cases, the Tribunal’s approach in Vancouver Airport Authority would mean that conduct could significantly harm competition but be permitted to continue because the firm convinces the Tribunal it sincerely believes a justification that does not hold up to objective scrutiny. This risk is especially elevated when dealing with sophisticated firms who may take care to not document anti-competitive motives and emphasise pretextual justifications in the documentation of their decision-making.

A dominant firm should not be shielded from an order to restore competition on the basis of one or more unsound justifications. Accordingly, to the extent intent continues to be part of the abuse of dominance analysis, the Bureau recommends that for a business justification to be cognizable, the firm must prove it was objectively valid in addition to the other requirements established in the jurisprudence.

Further refinements or alternatives may also be considered. For example, in Australia, where purpose may also be considered to establish a misuse of market power, it is not necessary for it to be the only purpose for engaging in an act as long as it is a substantial purpose. Indeed, this approach is in contrast to Canadian jurisprudence whereby the “overall character” of the act is deemed paramount.

2.3. Assessment of competitive harm should focus on the competitive process

Section 3.2 of the Bureau’s 2022 Submission notes that the standards established for assessing anti-competitive conduct directed at emerging businesses are much too high to properly protect competition. The Bureau’s position remains unchanged but more about these standards, that also apply to mergers and competitor collaborations, should be emphasized.

At a fundamental level, competition law exists to protect the competitive process. Unfortunately, recent jurisprudence has lost sight of this focus and, instead, is preoccupied with assessing the outcomes of the competitive process, in the form of how conduct affects specific indicators of competitive intensity. This problem is particularly serious in the context of the abuse of dominance provisions, and in the Bureau’s view, is the most serious issue with those provisions at the present time.

As described in the Bureau’s 2022 Submission, in Vancouver Airport Authority, the Tribunal set out the burden that the Commissioner would have to meet in cases involving a “prevention” of competition:

Normally, as part of an analysis of likely past, present or future entry, the Commissioner is expected to provide evidence regarding the proportion of the market that was, is or is likely to be available to new entrants. As part of this exercise, it is incumbent upon the Commissioner to identify concrete market opportunities that would likely have been, are or would likely be available to new entrants. In other words, the Commissioner has the burden to establish that new entrants would likely have entered or expanded in the relevant market, or would be likely to do so, ‘within a reasonable period of time, and on a sufficient scale, to effect either a material reduction of prices or a material increase in one or more levels of non-price competition, in a material part of the market’.

To obtain a remedy, the Commissioner must have sufficient evidence to prove these elements on a balance of probabilities. Such a task may be particularly difficult—or even impossible—when it involves the acquisition of a firm that is still developing the products that would challenge other competitors. Even when it is uncertain, or where there is only a low probability that an emerging firm would develop a competitive product, any acquisition of that business completely extinguishes this possibility. Predicting the future is hard at the best of times, but it can be particularly problematic in industries characterized by rapid technological progress.

This Canadian case law stands in stark contrast to US case law. In United States v Microsoft Corp., the DC Circuit Court of Appeals recognized that:

the question in this case is not whether Java or Navigator would actually have developed into viable platform substitutes, but (1) whether as a general matter the exclusion of nascent threats is the type of conduct that is reasonably capable of contributing significantly to a defendant’s continued monopoly power and (2) whether Java and Navigator reasonably constituted nascent threats at the time Microsoft engaged in the anticompetitive conduct at issue.

In this decision, the court further recognized that “it would be inimical to the purpose of [US competition law] to allow monopolists free reign to squash nascent, albeit unproven, competitors at will”. Canadian courts have no such overarching power or provision in the Act to protect the competitive process. Instead, the Act requires the Commissioner to identify, in the particular context of each case, the “concrete market opportunities” through which the emerging business would bring about greater competition.

The Bureau’s 2022 Submission focussed on how this approach limits its ability to act on the acquisition, or exclusion, of emerging competitive threats. However, and as noted above in the mergers section, the reality is that challenges with emerging competitors are a particularly acute manifestation of a broader problem: the focus in the jurisprudence on establishing the success or failure of competitors to determine the particular benefits they would bring – showing that “new entrants would likely have entered or expanded in the relevant market, or would be likely to do so, ‘within a reasonable period of time, and on a sufficient scale, to effect either a material reduction of prices or a material increase in one or more levels of non-price competition, in a material part of the market’” - rather than looking to protect the competitive process itself and trusting it will provide benefits.

Assessing these impacts on indicators of competitive intensity often involves evidence to establish a counterfactual of what competition would look like “but for” the conduct, which is challenging to do with precision in a wide variety of scenarios. In particular, in cases that involves a “prevention” of competition – that is, where conduct prevents the emergence of new competition – it is often difficult to provide concrete evidence about how that new competition would play out. Comparing competition before and after the practice began is not very informative, as the prevented competition was not present before the practice. Instead, the Bureau may attempt to bring evidence from potential entrants and/or customers about the benefits of entry or look to “natural experiments” in similar markets where the conduct has not occurred. However, evidence from entrants or customers may be insufficient – indeed, the quotes above from Vancouver Airport Authority come in the context of dismissing evidence from entrants and customers as unpersuasive. For their part, natural experiments may not exist at all, or it may not be possible to control for differences between markets to make a valid comparison. More fundamentally, abuses of dominance can exclude competitors who have not yet even considered entering a market, or can make entry conditions so unattractive that no competitor would consider entering a market. As such, it is inappropriate to focus on the success, and competitive significance, of particular known entrants.

Even where competition is alleged to be “lessened” – that is, competition that previously existed is diminished – there are challenges that are particularly significant under the abuse of dominance provisions to establishing a counterfactual. Although “before and after” comparisons may be theoretically possible, the effects of conduct can take time to manifest and market dynamics may evolve, making it difficult to claim that the world as it existed before the conduct is still a good proxy for what it would otherwise look like today.

A more appropriate analysis should focus on the principles of competition law and the protection of the competitive process. In this light, the necessary questions posed should be: does the conduct create barriers to entry or expansion? Does it lessen incentives to compete? And does it preserve the position of a dominant firm? Where there is evidence of adverse effects on price or non-price dimensions of competition that evidence could be taken into account, and may be dispositive when it exists, but it should not be necessary to find an SLPC. This would be consistent with the recent amendments to the Act in June 2022 which clarify that “the effect of the practice on price or non-price competition, including quality, choice or consumer privacy” is a discretionary factor that the Tribunal “may” consider as part of the SLPC test for abuse of dominance, mergers and competitor collaborations.

The Bureau therefore endorses the suggestion in the Discussion Paper that the showing of a SLPC can be accomplished by showing conduct is “capable of having anti-competitive effects”. This approach would be better focussed on the competitive process itself, and consistent with the US jurisprudence cited above in Microsoft. More specifically, inspired by the Microsoft case, one option would be an interpretative provision that provides that a SLPC may be inferred from conduct that appears reasonably capable of making a significant contribution to the creation, maintenance, or enhancement of the ability to exercise market power. Alternatives, however, may also be considered. Analogous approaches could be adopted for mergers and competitor collaborations.

2.4. Certain features of the dominance test are critical to the effectiveness of the Act’s abuse of dominance provisions and should remain unchanged

A question has arisen as to whether “dominance” and “joint dominance” should be more clearly defined to address situations of de facto dominant behaviour. While the Bureau has no specific recommendations at this time, it does believe that certain features of the current dominance test should be flagged as critical and should remain intact despite any potential forthcoming amendments.

First, paragraphs 79(1)(a) through (c) of the Act may currently be applied to matters concerning multiple firms, or so-called situations of “joint dominance”. Historically, such cases have been rare and the term’s meaning has yet to be clarified by the courts. However, as the Discussion Paper notes, the amendments introduced in June 2022 clarify that behaviours that soften competition between competitors are now clearly caught by the abuse of dominance provisions. Accordingly, joint dominance cases may arise more frequently.

Second, jurisprudence has established that a firm can be dominant in a market for the purpose of paragraph 79(1)(a) by virtue of its: (i) ability to exclude or restrict the output of another actual or potential market participant; and (ii) consequential and profitable impact on price. A logical and important extension of this finding is to “gatekeepers”, including large digital firms, who can control competition, through various means, in a range of markets.

Third, the Bureau considers that paragraph 79(1)(a) can be satisfied where a firm attains dominance through a practice of anti-competitive acts, provided that the firm is dominant at some point in time when the practice is ongoing. This ensures Canadians are protected against abusive practices that contribute to a dominant position.

2.5. The process for obtaining interim relief should be streamlined

Section 103.3 of the Act provides an avenue by which the Commissioner may seek an ex parte interim order to prevent the continuation of certain prohibited conduct while an inquiry is ongoing. As with interim relief in the merger context, this provision is not very practical in its present form and could be improved.

First, the period of time in which an interim order is valid is too short. According to the Act, the initial ex parte order is effective for 10 days, and while it may be extended twice, the duration of each continuation is limited to 35 days (for a total of 80 days). To further prolong the period, the Commissioner must, among other things, establish that certain information requested for the purpose of the inquiry has not yet been provided, or that more time is needed to review the information which has been received. Furthermore, the information must have been requested in a specific form, within a specific timeframe.

The complex nature of abuse of dominance matters means that the associated investigations are lengthy, typically lasting in excess of 18 months. The available information gathering mechanisms are also laborious and time consuming, and often exceed the maximum 80 days provided in the Act. Notably, production orders issued by the Federal Court often provide for a 90-day return period. The prescribed time periods for interim orders are therefore too brief and do not provide sufficient time to conduct an abuse of dominance investigation. This is before considering that the structure of section 103.3 requires the Commissioner to make repeated applications to the Tribunal to obtain the initial order and the extensions. As each of the filings are detailed, cumbersome and time consuming, resources are necessarily re-directed from the time-constrained inquiry to the filing of materials. In the Bureau’s experience, these sorts of procedural matters are often a significant distraction from the investigation for the case team and legal counsel.

The process prescribed by section 103.3 for obtaining interim relief should be simplified and the time periods available should be recalibrated to properly account for the realities of the Commissioner’s complex inquiries. One potential solution is to amend the provision to afford the Tribunal the discretion to determine the appropriate order duration, either by making the process one that may be contestable by the parties at the outset or by adopting a two-pronged approach that retains an initial ex parte process, followed by a contested one with greater discretion.

Although section 103.3 should be amended regardless of any other amendments, it bears keeping in mind that interim relief acts as a complement to the substantive provisions. The Bureau’s goal is not to enjoin conduct only to later determine it did not violate the Act. Properly calibrated tests under the substantive provisions are necessary to ensure investigations can more quickly determine if the Act is engaged so that the Commissioner can apply for a remedial order on the merits expediently.

2.6. Should amendments to the Act’s other unilateral conduct provisions be contemplated, consideration should be afforded to the provisions’ subtleties

The Bureau agrees there would be merits in finding ways to consolidate the restrictive trade practices provisions as suggested by the Discussion Paper. Certain of the Act’s provisions, like sections 80 and 81 concerning “delivered pricing”, have never been enforced. And others, like sections 75 to 77, have not been successfully enforced in recent years, whether upon application by the Bureau or private parties.

As noted in the Discussion Paper, these auxiliary restrictive trade practices provisions can overlap with the abuse of dominance provision in many, if not most, cases. That said, the legal tests applied to those provisions may still be more appropriate in circumstances where section 79 in its current form does not apply. A properly calibrated abuse of dominance provision could render the other provisions redundant and offer an opportunity to better align Canada's approach with the international best practice, one which tends to favour general purpose unilateral conduct provisions.

In light of the above, any removal or repositioning of the other restrictive trade practices provision should first ensure that the abuse of dominance provisions apply in all cases that would have previously engaged the other provisions. Should this not occur, an enforcement gap would be introduced whereby certain anti-competitive activities that were previously and properly prohibited would escape the scrutiny they deserve.

2.7. Limitations on the Commissioner’s filing of simultaneous applications should be removed

The Act allows for the Commissioner’s simultaneous filing of applications for matters which concern refusal to deal (section 75); exclusive dealing, tied selling and market restriction (section 77); and abuse of dominance (section 79). It precludes, however, the making of applications on the basis of facts that are the same or substantially the same for any of the following conduct: (i) price maintenance (section 76); (ii) abuse of dominance (section 79); (iii) agreements or arrangements that prevent or lessen competition substantially (section 90.1); and (iv) mergers or proposed mergers (section 92). This preclusion is unnecessarily restrictive.

Consider, for instance, the following scenario. The Bureau becomes aware of a recent acquisition by a dominant firm that it believes is anti-competitive, and is also part of a broader practice of anti-competitive acts that substantially lessens or prevents competition. In such an instance, the ability to bring simultaneous applications (or a single combined application) under both sections 92 and 79 of the Act would enable the Commissioner to challenge the recently completed transaction and the broader practice. In other words, the Commissioner could seek an order to dissolve the merger under section 92 and to prohibit the dominant firm from making future acquisitions or engaging in other anti-competitive conduct under section 79. However, such simultaneous applications are not currently possible if the applications are based on “facts that are the same or substantially the same”. While it may be possible to establish that the facts are sufficiently different to justify the simultaneous applications, this may not always be the case. And in such a circumstance, the Commissioner would be faced with having to determine which provision was more likely to address the harm to competition and result in a successful remedial order.

Investigations routinely consider the facts of a case under the lens of multiple provisions and have resulted in simultaneous applications to the tribunal in the past. This has been the case in Canada (Director of Investigation and Research) v NutraSweet Co.; Tele-Direct; and Commissioner of Competition v. Canada Pipe.

Where the civil provisions under Part VIII of the Act are concerned, flexibility should be afforded to the Commissioner to apply for relief under any combination of provisions simultaneously in order to effectively remedy harmful activity. The Tribunal would retain its jurisdiction to consolidate or bifurcate proceedings as appropriate and its discretion to ensure its remedial orders are not overbroad or unnecessarily duplicative.

3. Competitor Collaborations

The Bureau will address issues with the civil agreements provision (section 90.1) and then turn to issues with the criminal cartel provisions.

3.1. Civilly reviewable competitor collaborations

The Bureau’s 2022 Submission provides extensive detail on the shortcomings of section 90.1 and the need for reform. In the Bureau’s view, reforms to the Act’s civil competitor collaboration provisions are one of the most urgent areas for reform. Agreements or arrangements between competitors are one of the core concerns of competition law, and accordingly, section 90.1 should be one of the keystone provisions of the Act. Unfortunately, as currently framed, section 90.1 is undermined by a range of fundamental shortcomings that render it inadequate to protect Canadians from a wide variety of harmful competitor collaborations.

3.1.1. The Act needs new remedies to address competitor collaborations

Section 4.1 of the Bureau’s 2022 Submission argues that the currently available remedies for section 90.1 contraventions are insufficient. The Bureau’s recommendation remains unchanged.

Not only is it the case that prohibition orders, the principal remedies for civilly reviewable competitor collaborations, may fail to overcome the negative effects of an anti-competitive agreement, there is no possibility for the Tribunal to impose an AMP to promote compliance with the section.

3.1.2. Past agreements and past harm should be addressed under the Act

Section 4.2 of the Bureau’s 2022 Submission notes that the applicability of section 90.1 to past agreements and past harm is unnecessarily limited. The Bureau’s recommendation remains unchanged.

First, the provision applies solely to “existing or proposed” competitor agreements, and so past agreements are not subject to recourse even if they produced enduring anti-competitive effects that could and should be remedied. Second, and relatedly, the provision provides relief for competitive harm that is presently happening or likely to happen, and so past harm is not subject to recourse. In addressing these gaps, the Bureau would support a limitation period within which the Commissioner must bring an application in respect of a past agreement, similar to that which applies to abuse of dominance applications where a practice has ceased.

3.1.3. Assessment of competitive harm should focus on the competitive process

Section 90.1 has the same SLPC test that exists under the mergers and abuse of dominance provisions. Consistent with Section 4.4 of the Bureau’s 2022 Submission and the discussion in the mergers and unilateral conduct components of this submission above, the SLPC test should be recalibrated to focus on harm to the competitive process.

3.1.4. The efficiencies defence should be repealed and made a factor

Section 90.1 has the same efficiencies exception as exists for mergers. Consistent with Section 4.3 of the Bureau’s 2022 Submission and the discussion in the mergers component of this submission above, the efficiencies exception should be repealed and efficiency gains should be included as a subsection 90.1(2) factor.

3.1.5. Private access to the Tribunal should be available for competitor collaborations

As explained in Section 4.6 of the Bureau’s 2022 Submission, currently only the Commissioner can bring applications to the Tribunal under the competitor collaborations provision of the Act. In some circumstances, it may be appropriate for a private litigant to bring a case. In a resource constrained world, the Bureau must prioritize certain cases over others. Private access provides an avenue for all those with a legitimate complaint to seek relief in front of the Tribunal. Such an extension of private access would serve to more rapidly expand valuable case law, and bring these sections into sharper relief for both the Commissioner and Canada’s business community.

The Bureau’s recommendation remains unchanged. While the June 2022 amendments to the Act extended the private access regime to the abuse of dominance provisions, the same should be done for competitor collaborations. As discussed elsewhere in the Bureau’s submissions, this extension should be coupled with amendments easing the test for leave.

3.1.6. Pharmaceutical patent litigation settlement agreements should be notified

Section 4.5 of the Bureau’s 2022 Submission recommends that the Bureau should be made aware of pharmaceutical patent litigation settlement agreements. The Bureau’s recommendation remains unchanged.

Patent litigation settlement agreements arise from legal disputes concerning a particular product’s patent status. Despite the fact that some of these agreements amount to competitor collaborations and result in competitive harm, they are largely private in nature and hence go undetected. As a result, a notification regime, like that which exists in the US, should be adopted and should require the parties’ production of all of their patent litigation settlement agreements.

3.1.7. Private access settlement agreements should be notified even where they are not registered as consent agreements

An additional area where mandatory notification of agreements may be required pertains to settlements of private access applications under the Act.

Currently, parties can bring applications for leave to the Tribunal for a selection of the Act’s reviewable conduct provisions, namely: (i) refusal to deal (section 75); (ii) price maintenance (section 76); (iii) exclusive dealing, tied selling and market restriction (section 77); and (iv) abuse of dominance (section 79). Such applications are commonly referred to as “private access” cases.

The Act requires parties to a private access case under section 103.1 of the Act to notify the Commissioner if a consent agreement is filed with the Tribunal for registration. This provides the Commissioner with an opportunity to consider whether the agreement has or is likely to have anti-competitive effects and apply to the court for a variation or revocation of the consent agreement if necessary. However, registration of a consent agreement is not mandatory and parties can elect to settle a matter privately, leaving the door open for parties to enter into private settlement agreements that have the potential to harm competition.

The Act should be amended to require that parties to any private access settlement agreement, including those which are settled privately, notify and serve a copy to the Commissioner. The mere provision of the settlement agreement to the Commissioner is not a resource intensive exercise and ensures that the private access process is not used as a vehicle to further anti-competitive conduct or otherwise harm competition.

3.2. Criminal Cartels

3.2.1. Buy-side cartels should be treated the same way as supply-side cartels under the Act

Section 5.1 of the Bureau’s 2022 Submission recommended that harmful buy-side conspiracies should be subject to criminal provisions of the Act. The Bureau’s recommendation was addressed, in part, through amendments to the Act in June 2022, which added a new criminal offence prohibiting wage-fixing and no-poaching agreements between employers. While this was a positive step, workers are not unique in deserving protection from buy-side cartels. Competition law is meant to protect the competitive process in general, and there are myriad other industries and groups whose livelihood depends on there being competitive downstream markets in which to offer their goods and services – from farmers, fishers, and loggers, to authors, musicians, and artists, and a multitude of small and medium-size producers. The wider economy also suffers when producers are forced to exit the marketplace or reduce output in response to egregious buyer cartels. Viewed another way, the Federal Court has said that when sellers agree to fix prices, allocate markets or restrict output, it is hard core cartel conduct “analogous to fraud and theft” and “nothing less than an assault on our open market economy” because “[b]uyers in free market societies are entitled to assume that the prices of the goods and services they purchase have been determined by the forces of competition”. It is reasonable to ask why this same logic does not apply when buyers engage in hard core cartel conduct vis-à-vis sellers. For example, if large agricultural players conspire to suppress prices paid to farmers, would free market competition be any less distorted, or would farmers be any less victimized, simply because the conspiracy is on the buy-side of the transaction?

Accordingly, as a starting point, policymakers should examine whether there is a need to have different rules for hard core buyer and seller cartels under the Act. The purpose of the Act is to maintain and encourage competition in Canada and most provisions do not distinguish between competitive harm on the sell-side or the buy-side of the market. Notably, the longstanding OECD Recommendation concerning Effective Action against Hard Core Cartels makes no distinction between buyer and seller cartels. The OECD recently observed that “many jurisdictions treat buyers’ and sellers cartels symmetrically” and “do not require analysis of the effect of a buyers’ cartel to find an infringement”. This is the longstanding approach under US antitrust law where “buyer cartels have always been treated just as seller cartels” and are unlawful per se. Likewise, EU competition law “makes no distinction between cartels among sellers and those among buyers” with buyer cartels being considered a “by object” restriction of competition.

Of course, as outlined in the Bureau’s 2022 Submission, and as is the case with supply-side agreements, some buy-side agreements can be pro-competitive or benign and should not be subject to per se criminal sanction. An example would be an agreement between purchasers to form a buying group or joint purchasing co-operative to take advantage of volume discounts, centralize ordering, combine warehousing or distribution functions, or otherwise deal more efficiently with suppliers. Such collaboration can result in economic benefits to both the sellers and the buying groups in the course of transacting, as well as competitive prices and choices in downstream markets. However, as outlined in the Bureau’s Competitor Collaboration Guidelines, the cartel provisions of the Act generally avoid sanctioning these types of agreements by targeting naked restraints on competition that are not implemented in furtherance of a legitimate collaboration, strategic alliance or joint venture. For example, parties to a joint venture agreement can rely on the ancillary restraints defence and parties to a joint-bidding arrangement can avoid criminal liability by making their arrangement known to the person calling for bids or tenders (see discussion at 3.2.3 below). Other jurisdictions apply similar concepts to distinguish hard core buyer cartels that merit per se treatment from other types of buy-side agreements that should be examined under a civil effects-based standard. The distinction can be further clarified by enforcement guidelines to provide greater certainty. Moreover, if buyer cartels are required in certain sectors for legitimate public policy reasons, these can be authorized by legislation as is the case for sell-side cartels. This would provide a more targeted and transparent policy approach than the status quo, which carves out buy-side cartels as a whole.

Policymakers should therefore consider the merits of applying the same dual-track framework for buy-side agreements as exists for sell-side agreements under the Act (and as recently enacted with respect to wage-fixing and no-poaching agreements). Barring such a change, there is limited deterrence, no compensation for victims, and the Bureau is left with only a relatively weak civil competitor collaboration provision to prohibit egregious buyer cartels. As noted above, the worst consequence that parties currently face for contravening the competitor collaboration provision is an order from the Tribunal to stop the conduct. There is no possibility of AMPs to promote compliance, no private access by injured parties to the Tribunal (or private actions for damages), and no ability to bring enforcement action against past agreements. If these gaps are addressed in line with the Bureau’s recommendations above, the Bureau would at least have a stronger civil tool for dealing with buyer cartels.

3.2.2. The limitations regarding criminal conspiracy proceeding commencements should be expanded to include the recent wage-fixing and no-poaching provision

Section 45.1 of the Act prohibits the Commissioner from commencing proceedings under the criminal conspiracy provision (subsection 45(1)) if orders are sought for the same facts under any one of the following provisions: (i) price maintenance (section 76); (ii) abuse of dominance (section 79); (iii) civil agreements (section 90.1); or (iv) mergers (section 92).

As noted above, as part of the June 2022 amendments to the Act, a provision governing wage-fixing and no-poaching agreements between employers was added to the existing criminal conspiracy provisions of the Act as subsection 45(1.1). This new provision will come into force on June 23, 2023.

The reference to the criminal conspiracy provision in section 45.1 is currently limited to proceedings commenced under subsection 45(1), and should be changed to refer to “section 45” in order to include proceedings commenced under subsection 45(1.1).

3.2.3. “Made known” should be made a defence limited to joint bidding

Section 5.2 of the Bureau’s 2022 Submission recommended that the “made known” element of the bid-rigging provision of the Act be converted to a defence that may be asserted only when the conduct is directly related to the submission of a single joint bid. The Bureau’s recommendation remains unchanged.

Section 47 of the Act makes “bid rigging” a criminal offence. However, the provision is not triggered if an agreement between parties is “made known” to the person requesting the bids or tenders at or prior to the time in which the parties make their submission. The “made known” element was intended to spur competition in the tendering context by allowing complementary firms to submit a single joint-bid in response to a call for bids or tenders for which they individually would not qualify.

Nevertheless, the “made known” element is unduly broad for two reasons. First, it may apply to circumstances in which multiple bidders submit multiple agreed-upon bids, which harms competition. Second, because it is an element of the offence, the Crown has the extraordinary burden of proving that the agreement was not made known by the parties to the person requesting the bids or tenders. A “made known” defence would put the onus on the alleged conspirators to prove that their conduct was made known.

3.2.4. The “conspiracy relating to professional sport” provision should be repealed

Section 48 of the Act prohibits conspiracies amongst teams or clubs operating within the same professional sport league. The Act should be amended to repeal this section for several reasons.

First, the provision is no longer needed as the conduct is likely to be subsumed within the more general wage-fixing and no-poaching provision that comes into force in June 2023. Indeed, retaining section 48 in this context may generate confusion and/or unnecessarily limit the general application of the new provision. Competition law generally favours rules of general application over sector-specific prohibitions.

Second, to date, section 48 has not generated any enforcement utility, and judicial consideration is extremely limited. Since its introduction in 1975, no cases have been referred to the Public Prosecution Service of Canada (PPSC) under section 48.

Third, the provision lacks definitions for ambiguous terms such as “unreasonably” and “desirability”, which presents significant challenges to its enforcement in the criminal context. As such, the Bureau stated publicly that it would not take action under the provision in its current form.

3.2.5. Sanctions for criminal cartel conduct should be consistent

Section 49 of the Act criminalizes agreements or arrangements between federal financial institutions that concern interest rates, service charges, loans and other matters, and violations thereof may be punishable by a fine of up to $10 million and imprisonment of up to five years.

The sanctions should be amended to align with those stipulated by the Act’s other criminal cartel sections – namely, sections 45 (as of June 2023) and 47 – where the fine amount is left to the discretion of the court and the maximum sentence is 14 years. As a matter of consistency, criminal cartels involving federal financial institutions should be treated as severely as cartels in other sectors.

4. Deceptive Marketing

4.1. The Act should prescribe the appropriate consumer standard

It is important that the Act be clear that all consumers, including those who are less sophisticated and more vulnerable, be protected from deceptive marketing practices. Should it not, the proper functioning of the marketplace will be distorted in each instance that a consumer is misled into transacting with misleading advertisers rather than honest competitors.

The Act has yet to prescribe a consumer standard for deceptive marketing conduct, and so the matter has been left to the courts to adjudicate. This has resulted in a lack of consensus and, in many instances, the introduction of standards that fall short of ensuring adequate protection. To correct this, the Act should be revised to articulate an appropriate threshold, and in doing so should adopt the standard set by the Supreme Court of Canada (SCC) in Richard v Time (Time). That case concerned the test for false and misleading representations under Quebec’s Consumer Protection Act’s (CPA). The SCC acknowledged that the CPA language in question was based upon certain text located within the Combines Investigation Act and is now analogous to that found within the Act.

In Time, the “average level of intelligence, scepticism and curiosity” standard set by the Court of Appeal of Quebec was rejected as it was deemed to be incompatible with the objective of consumer protection. Instead, the SCC held that the “general impression” given by a commercial representation must be considered from the perspective of a “credulous and inexperienced consumer”, one “... who is not particularly experienced at detecting falsehoods or subtleties found in commercial representations”. Therefore, someone who believes what they read and is not expected to know any differently. The imposition of a greater level of intelligence or sophistication was said to be incorrect as it would result in the deprivation of a proper safeguard.

In addition, the SCC articulated the realistic and pragmatic consumer experience when it comes to advertising and the role the courts shall play in their analysis. They are “ordinary hurried purchasers” it said, adding that consumers “… take no more than ordinary care to observe that which is staring them in the face upon their first contact with an advertisement”. With this in mind, the SCC found that the courts must not “conduct their analysis from the perspective of a careful and diligent consumer” or “approach a written advertisement as if it were a commercial contract by reading it several times, going over every detail to make sure they understand all its subtleties”.

Time is contrasted with other case findings. For instance, in R v International Vacations Ltd. (International Vacations), the Ontario Court of Appeal found consumers to be rather knowledgeable and discerning, stating that “the average reader interested in making an overseas trip can be taken to be literate, intelligent and unlikely to make a relatively large monetary commitment without carefully reading the advertisement” [emphasis added]. In Canada (Competition Bureau) v Chatr Wireless Inc.(Chatr), the Ontario Superior Court of Justice considered Time but ultimately tweaked the standard set by the SCC, raising it to a level where the consumer is found to be “credulous and technically inexperienced” as it found that one’s experience with the product in question should add to the formulation of the appropriate standard.

The problem with the International Vacations decision is that the standard is much too high. For Chatr, the issue is that it necessitates comprehension of the victim’s interaction with or knowledge of a product. Where there is either no victim or they are too numerous to assess the characteristics of, the standard becomes difficult or impossible to apply.

The Act should therefore be amended to prescribe the appropriate consumer standard for deceptive marketing practices and adopt that set by the SCC in Time namely, the “credulous and inexperienced consumer”. Such an inclusion will clarify the obligations of businesses and encourage compliance with the Act, both of which will serve to maintain fair competition.

4.2. Sellers should bear the burden of proving that discounts are genuine

Section 6.2 of the Bureau’s 2022 Submission refers to subsections 74.01(2) and 74.01(3) of the Act, otherwise known as the ordinary selling price (“OSP”) provisions, and argues that the framework incorrectly places a hefty burden on the Commissioner to prove that savings claims are deceptive. It then argues that the onus should be reversed, such that the advertiser is required to demonstrate that its represented claim is in fact a genuine discount. The Bureau’s recommendation remains unchanged.

In addition to the above, one other shortfall concerning discounts should be flagged. In its current state, the Act addresses two kinds of savings claims – namely, those which concern discounts off of an advertiser’s regular price; and those which compare an advertiser’s price to the prices of other market suppliers.

Though the first claim is truly the classic savings claim and is far and away the more common of the two, the Act does not reflect this reality. Rather, it presumes that an advertiser’s savings claims are comparisons to competitors’ prices unless the advertisement clearly specifies that the savings claim is referring to a discount off of the advertiser’s own regular price (subsection 74.01(3)).

As a remedy, the Act should be amended to eliminate the reference to “clearly specified” in subsection 74.01(3) as this change would remove the presumption and modernize the provisions. It would also harmonize the English and French versions of the Act – interestingly, the “clearly specified” requirement is present in only the English version of the Act’s subsection, which generates confusion as to whether the presumption is actually intended to operate.

4.3. Greater flexibility is needed for deceptive marketing investigations

Section 6.3 of the Bureau’s 2022 Submission argues that the Act should provide both criminal and civil tracks to allow the seriousness of deceptive conduct to dictate how compliance with the Act will be addressed. The Bureau’s recommendation remains unchanged.

For reasons that remain unclear, the Act’s deceptive marketing provisions provide for criminal and civil sanctions in an inconsistent manner – in some instances it is one but not the other; and in others, it is both. A choice amongst the two tracks should be feasible in all instances as a particular violation may warrant only criminal but not civil sanction (and vice versa). Further, the disparities can result in the nonsensical bifurcation of matters where both a criminal and civil provision were engaged.

It should be noted that the Bureau’s approach to choosing whether to pursue the criminal or civil track with respect to misleading representations and deceptive marketing practices is set out in the Bulletin titled, Misleading Representations and Deceptive Marketing Practices: Choice of Criminal or Civil Track under the Competition Act.

4.4. The Act needs better remedies to address deceptive conduct

Section 6.4 of the Bureau’s 2022 Submission highlights the fact that the Act should provide a wider range of remedies to counteract deceptive practices, including remedies that are not currently available to address breaches of the Act but are available to private litigants in other court proceedings. The Bureau’s recommendation remains unchanged.

In addition to the above, the Act’s remedies do not allow for the correcting or unwinding of marketplace distortions that are caused by reviewable conduct. In particular, there is no means to address situations where deception results in a consumer being contractually bound to an advertiser.

Consider the following example: a salesperson offers to install what they claim is the highest-efficiency central air conditioner on the market, claims that it is certified by a third party for its energy efficiency, and claims that it will more than pay for itself with the savings on electricity. The consumer agrees to a contract that requires monthly payments for a decade. The consumer subsequently learns that the air conditioner is the lowest efficiency model available on the market, is uncertified by any third party for efficiency, and that the consumer’s electricity bills are actually higher than they were before.

Section 74.1 of the Act affords the courts certain remedial tools, including the authority to order AMPs and restitution (in limited circumstances), and to require the publication of a notice advising of a particular violation. Nevertheless and in light of the example above, the remedies available are largely deterrent in nature and do not permit the undoing of market distortions and competitor harm through the rescinding of deceptive contracts. Consequently, deceptive practices may be used as a means to ensure lengthy consumer obligations whereby the affected consumers’ capital is unwillingly occupied and honest competitors lose a consumer base. In this light, the Act should therefore be amended to grant the courts the ability to cancel contracts where there has been deceptive marketing.

Lastly and in respect of restitution, paragraph 74.1(1)(d) of the Act limits its application to conduct that is reviewable under paragraph 74.01(1)(a), or the making of misleading representations to the public. Restitution should be made available to all other deceptive marketing practices (which would include, for instance, the provision that prohibits making unsubstantiated performance claims about a product). Such a change would enrich the courts’ ability to promote compliance with the deceptive marketing practices provisions of the Act.

4.5. The courts should be afforded the tools necessary to temporarily enjoin deceptive marketing while the Commissioner completes an inquiry

Subsection 74.11(1) of the Act permits the Commissioner to apply to the court for a temporary order to stop a person from engaging in reviewable deceptive marketing conduct. Specifically, the language states that, “[o]n application by the Commissioner, a court may order a person who it appears to the court is engaging in conduct that is reviewable under this Part ...”. The text “is engaging in the conduct” could be interpreted as limiting such orders to situations in which the conduct is actually ongoing at the time an application is made.

Such an interpretation is concerning as it means that if an advertiser stops the advertisement in question just prior to the Commissioner’s application filing, the courts may not have the ability to issue a temporary order prohibiting the advertiser from making the claims again while the Commissioner completes his inquiry. Since advertisers can stop and re-start digital advertising campaigns very quickly, the current model is not only impractical and resource intensive, it also is internally inconsistent with the rest of the deceptive marketing practices provisions where a court is authorized to make permanent orders in circumstances where the conduct has stopped.

In view of the foregoing, the Act should be revised to allow the court to temporarily order recently ceased conduct from re-occurring or substantially similar conduct from occurring.

4.6. Third parties who facilitate reviewable conduct should be subject to permanent orders

The Act’s criminal provisions for misleading advertising can address the conduct of third parties who aid and abet persons who contravene the law by virtue of section 21 of the Criminal Code. The Act’s civil provisions for deceptive marketing practices, however, contain no equivalent mechanism to permanently enjoin third parties.

Subsection 74.11(1.1) of the Act authorizes a court to order persons: (i) to refrain from supplying a product to another person who it appears to the court is or is likely to use said product in the commission of reviewable conduct; or, (ii) to do any act or thing that could prevent another person from engaging in reviewable conduct where serious harm is likely to ensue. However, the court’s jurisdiction in this instance is limited to the issuance of temporary orders, and there is no current mechanism for permanent orders of this kind. This shortcoming is problematic.

For instance, in situations in which a court finds that a person is engaging or has engaged in reviewable conduct, it may enjoin a party from supplying the person temporarily but the party would be free to do so once again after the order’s term expires. For many cases, interim orders will fall short of providing the adequate relief that permanent orders would achieve.

4.7. The court’s powers to freeze assets should be expanded

Section 74.111 of the Act allows the court to issue an interim injunction prohibiting a person from disposing of certain articles (i.e., freezing assets) where the court finds that: (i) a person is making or has made a materially false or misleading representation to the public (i.e., a breach of paragraph 74.01(1)(a)); (ii) the person is disposing of articles or is likely to dispose of them; (iii) the Commissioner intends to seek restitution (i.e., via paragraph 74.1(1)(d)); and (iv) the person’s disposal of the articles would substantially impair the enforceability of a restitution order.

What the court cannot do, however, is prevent a person from disposing of articles: (i) for the purpose of frustrating orders where the conduct was reviewable under another section of the deceptive marketing practices provisions; or (ii) in respect of misleading representations where the Commissioner is not seeking restitution.

Accordingly, the Act should be amended to allow the court to temporarily prevent the disposition of articles where it finds that there is a strong prima facie case that a person is engaging or has engaged in deceptive marketing practices of any reviewable kind; the person is or is likely to dispose of the articles; and that such disposal would substantially impair the effectiveness of a remedial order.

4.8. The Act’s drip pricing provisions should be further refined

Section 6.1 of the Bureau’s 2022 Submission recommended that drip pricing should be explicitly prohibited by the Act. On June 23, 2022, as a result of the 2022 Budget Implementation Act, a new drip pricing provision was added to both the civil and criminal prohibitions on false or misleading representations. This amendment confirms that representing a price that a customer cannot actually attain because of mandatory fixed additional charges or fees is a false or misleading representation, unless the obligatory charges or fees represent only an amount imposed by or under an Act of Parliament or the legislature of a province, such as sales taxes.

The purpose of the exemption was to ensure that the Act did not consider price representations to be false or misleading where consumers are charged customary taxes when they purchase goods and services, because not including sales tax in the price of many products is consistent with consumer expectations in Canada. However, the exemption, as it currently stands, has created a loophole allowing advertisers to drip their own costs for complying with various laws onto Canadian consumers in a way that consumers would not expect.

Notwithstanding its recent introduction, the provisions therefore require further refinement to indicate that the exemption to the drip pricing law only applies to obligatory charges or fees that represent federal, provincial or territorial sales taxes.

Second, there is no explicit mention of drip pricing in the Act’s electronic messaging provisions, and it is unclear whether the recent drip pricing provisions would apply absent a specific reference. This could be resolved by clarifying that the drip pricing provisions apply to all false or misleading representation provisions of the Act.

4.9. The Act’s CASL provisions

In 2017, the Act was amended to reflect Canada’s Anti-Spam Legislation (CASL), which included the introduction of three reviewable practices that govern electronic messages (see section 74.011). In each instance, the purpose of the change was to afford the Commissioner the tools necessary to combat the false or misleading representations and the deceptive marketing practices that occur through electronic means. Two changes are nevertheless required.

4.9.1. The administrative remedies that are available for false or misleading representations that occur via electronic message should be expanded

Section 74.1 of the Act provides an assortment of administrative remedies, and subsection 74.1(6) lists the scenarios in which an order is considered a “subsequent order” for certain prescribed reviewable conduct. However, the conduct governed by section 74.011 – that is, the provision of false or misleading representations in electronic messages – is not currently caught by subsection 74.1(6). The omission is merely a drafting oversight that occurred at the time the Act was updated to reflect CASL and should be corrected.

4.9.2. The Act’s criminal and civil CASL provisions should be harmonized

Sections 52.01 and 74.011 of the Act are the criminal and civil provisions respectively which prohibit the sending or causing to be sent of a false or misleading representation in electronic messages.

For the criminal provision, the Act expressly states that to establish a contravention the Commissioner need not prove that a person was deceived or misled. This clarification, however, is absent from the Act’s civil equivalent. As the success or the breadth of the effect of a representation should not be determinative as to whether it constitutes reviewable conduct for the purposes of the Act, section 74.011 should be amended to adopt the section 52.01 language for consistency.

5. Administration and Enforcement

5.1. Reforms should seek to preserve the Commissioner’s independence

The Bureau agrees with the Discussion Paper that the administration and enforcement of the Act should be more efficient and more responsive, without unreasonably compromising procedural fairness. Another bedrock principle that should be considered as part of any reform process is the need to preserve the Bureau’s independence as a law enforcement agency.

As recognized by the OECD, independence is a prerequisite for the effective administration and enforcement of competition rules. It enables competition authorities to take decisions based solely on legal and economic grounds rather than on political considerations, consistent with the rule of law. When a competition agency is not independent – or not perceived to be independent – it undermines predictability and public confidence in marketplace rules, and encourages wasteful lobbying behaviour by firms.

The Bureau currently enjoys a high degree of independence as a law enforcement body while remaining accountable through public reporting obligations, service standards, and general financial and administrative oversight. In the past, various commentators have pressed for new Ministerial vetoes or public interest overrides over the Bureau’s work, or new governance frameworks that would provide external direction over Bureau enforcement priorities and use of formal powers. Policymakers should resist such suggestions and ensure that the Bureau’s independence is preserved as part of any reform.

5.2. Formal market study powers

The Bureau strongly agrees with the suggestion in the Discussion Paper of pursuing a reasonable path with respect to formal information-gathering powers for market studies.

Sections 7.1 and 7.2 of the Bureau’s 2022 Submission note that the absence of formal market study powers, and the lack of any requirement for implicated bodies to respond to Bureau advocacy recommendations, represent key gaps in Canada’s competition policy toolkit. The benefits of addressing those gaps is well-summarized in an OECD recommendation to Canada in 2016:

One area where Canada could benefit is in the extension of public advocacy powers and market studies for the [Competition Bureau] whereby they are granted the power to require provision of relevant information in the context of conducting such studies. This would strengthen their ability to examine and publicly report on government policy, regulations or market participant behaviour that may inhibit competition. Many OECD countries have benefited from having such prerogatives, which can enhance transparency and openness in the policymaking process, enabling a more informed public discussion of a particular issue or industry’s performance. They also provide governments at all levels with an understanding of how their current or proposed regulations may impact industry structure, consumers and, in the long run, economic growth. These powers are more effective when supplemented by a requirement for government entities subject to recommendations to provide a written response within a fixed time period, as is done in the United Kingdom.

The case for formal market study powers has become even more evident in recent months as policymakers have turned to the Bureau to provide expert insights into whether competition issues are contributing to historic price increases in the retail grocery sector. While the Bureau has launched a study, the Bureau cannot require businesses to provide data and information to support its analysis, and instead must rely on information that is publicly available or supplied voluntarily. This poses obvious challenges and stands in contrast to similar studies carried out by foreign competition agencies, such as the US FTC and the UK Competition and Markets Authority (CMA), where formal information-gathering tools are being used to get to the bottom of issues. The UK’s House of Commons committee on Business, Energy and Industrial Strategy recently issued a report recommending that the CMA conduct more market studies to help the Government drive higher economic growth. The UK government and CMA issued a joint response acknowledging the important role of the CMA in this regard while affirming the CMA’s independence in deciding whether and how to conduct market studies.

As the Discussion Paper suggests, formal market study powers could be designed in a way that addresses legitimate stakeholder concerns surrounding burden, procedural fairness and confidentiality. The Act already has mechanisms to address these concerns in the context of “inquiries”, and market studies could be framed as a new type of inquiry that is subject to the same general safeguards. Regardless of approach, these concerns are clearly not unique to Canada, and have been addressed by other peer countries in the context of their market study systems. The UK, Australia, New Zealand, and US provide good practices in this regard.

While there are many possible designs that could be considered, at a high level, the Bureau would support a market study regime with the following features:

• Independent authority to commence a market study: The regime should expressly authorize the Commissioner to launch a study. Studies would be carried out, and findings and recommendations developed independently by the Commissioner, as is the case with the Bureau’s enforcement work. The Bureau would caution against a mechanism whereby the Government could direct the Bureau to conduct a study. While this is a feature in a small number of market study regimes, such as those in Australia and New Zealand, OECD research shows that the majority of jurisdictions provide independent discretion to the competition authority to decide whether to launch a study. The Bureau would be concerned that a Government direction mechanism would lead to lobbying and political pressure on the Government to mandate Bureau studies into a wide-range of hot-button issues that may not raise substantive or long-term competition concerns. This could compromise the Bureau’s ability to prioritize higher impact work, as well as its independence. While there are mechanisms under the Act for the ISED Minister to direct the Commissioner to commence an enforcement inquiry or to make representations to federal regulators, these are circumscribed, and they have not been invoked since prior to the modernization of the Act in 1986. Of course, as now, nothing would prevent policymakers from bringing issues to the Bureau’s attention or asking the Bureau to consider conducting a study. The Bureau already prioritizes competition advocacy work in areas where the Government has signalled an interest in promoting greater competition and a formal market study regime would assist the Bureau in this regard. For similar reasons, the Bureau would also caution against a mechanism requiring the Minister to authorize the launch a study or approve the terms of reference of a study. In addition to raising independence concerns, this could prevent the Bureau from studying issues that the government is interested in hearing about at arms-length but would be politically sensitive to “authorize”. This is one of the benefits of the Bureau’s independence as a competition advocate.
• Requirement to publish terms of reference: The regime should require the Commissioner to publish a notice setting out terms of reference for the study, including the products and services to which the study relates, the scope of competition issues to be examined, and the timeframe for the study. This would promote transparency and address stakeholder concerns that market studies would be used as general “fishing expeditions”. While the Bureau anticipates that studies would not ordinarily take longer than 18 months to complete, there should be flexibility for the Bureau to specify shorter or longer timeframes based on the scope of the study. There should also be a process to update the public terms of reference, including timeframes, as necessary.
• Information-gathering powers: The regime should allow the Bureau to compel information or seek production orders consistent with the process for enforcement inquiries, and subject to the same due-process protections. This would address stakeholder concerns surrounding burden and proportionality of the Bureau’s information requests. Consistent with the Bureau’s current practice, if information disclosed to the Bureau through a market study revealed a potential contravention of the Act, the Bureau would be able to use that information for enforcement purposes, although such enforcement would of course be separate from any market study.
• Confidentiality safeguards: The regime should subject information gathered to the same confidentiality protections that apply to other information obtained under the Act.
• Authority to publish a report: For greater certainty, the regime should expressly allow the Bureau to publish a market study report summarizing its findings as well as its recommendations, if any, subject to the confidentiality safeguards noted above.
• Response requirements for government entities subject to recommendations: While any Bureau recommendations flowing from market studies would be non-binding, the regime should require government entities subject to the Bureau’s recommendations to provide a public response within a reasonable timeframe after the report is published. Such a requirement could, if necessary, be limited to recommendations directed at federal government entities. Some mature market study regimes, like the UK’s, go further and allow the competition agency to impose structural or behavioural remedies, or accept undertakings from market participants, to address identified competition concerns. While there are obvious advantages to such an approach, the Bureau considers that this would be a significant change and may raise complex institutional design considerations given the overall prosecutorial orientation of Canadian competition law. As such the Bureau favours a lighter, more incremental approach that could be implemented immediately.

The above would represent a measured and balanced approach to the adoption of market study powers that is consistent with international best practice. As part of any such reform, the Bureau would commit to publishing guidance in consultation with stakeholders on its approach to market studies, to provide further predictability and transparency.

5.3. Amendments that improve information-gathering

5.3.1. The Act’s definition of “record” should be modernized

Subsection 2(1) of the Act defines a number of terms, including that for “record”. The meaning of “record”, however, is considered outdated as it fails to account for the realities of modern information retention, including that provided for by computers and cloud storage.

In the recent past, other federal legislation has been amended to adopt technology-neutral “record” definitions to reflect not only the current information storage realities, but also those of the future. For instance, in the revised Access to Information Act (ATIA), “record” means “any documentary material, regardless of medium or form”. Bill C-27 currently proposes to amend the Consumer Privacy Protection Act to adopt this same definition.

Having regard for the ATIA’s approach but being cognizant of the differing word choices between it and the Act (such as “documentary material” versus “information”), it is recommended that the Act’s definition of “record” be changed to, “any information registered or marked on a medium regardless of form”.

5.3.2. Civil information gathering powers should be streamlined

Section 8.3 of the Bureau’s 2022 Submission recommends that civil information gathering powers should be streamlined. The Bureau’s recommendation remains unchanged.

Effective information gathering tools are essential to the administration and enforcement of the Act. The Bureau needs access to relevant marketplace information in a timely manner in order to advance its investigations. Delays inhibit the Commissioner’s ability to determine whether the Act is being contravened and to intervene swiftly to safeguard competition when necessary.

Section 11 of the Act provides the Commissioner with the power to seek ex parte court orders compelling a person to provide oral testimony, records or written returns. Such production orders are a standard investigative tool in civil matters. To obtain a section 11 order, the Commissioner needs to satisfy the court of two basic statutory requirements: (i) that an inquiry is being made under the Act; and (ii) that a person has or is likely to have information that is relevant to that inquiry.

Historically, obtaining a section 11 order was a routine and efficient exercise. Over the years, however, the courts have required significantly more information to be provided and procedures to be followed before agreeing to issue these orders.

Currently, the pre-application process involves the preparation of an affidavit and written representations with voluminous supporting materials, including a description of the inquiry, the information already obtained from the respondent in the course of the inquiry, as well as any relevant information previously provided by the respondent in other contexts under the Act (which can require a search and review of internal Bureau records across vastly different enforcement areas). In extreme cases, the Bureau’s application for a production order can be hundreds of pages in length with dozens of exhibits.

The pre-application process also generally involves providing the target with a draft of the order so that they can provide feedback on the information being sought and raise any concerns with respect to relevance, proportionality, excessiveness or burden. These concerns are then brought to the court’s attention as part of the Commissioner’s application with an explanation of the target’s concerns, the bases for those concerns and how, if at all, the draft order was modified to address those concerns. While this pre-application dialogue is intended to be collaborative, in the Bureau’s experience, targets often have an interest in raising concerns simply to delay the process or to whittle down the Bureau’s information requests. In extreme cases, this dialogue can extend across multiple meetings and weeks of back and forth with the investigative team.

Where section 11 orders are required against multiple parties in the same investigation, procedural requirements can multiply. Furthermore, once orders are issued, parties are often provided up to three months to comply, particularly in non-merger matters. From start to finish, it can easily be over 6 months between the time that the Bureau decides it needs information as part of an inquiry and the time that information is actually provided.

In addition to the delays in obtaining information, the courts have also exercised a greater supervisory role with respect to the information being sought by the Bureau through section 11 orders. It is increasingly common for the court to engage in a specification-by-specification review of the order and to refuse to order information that the Commissioner is seeking. For example, in one case, the court exercised its discretion to narrow a Bureau data request, despite testimony from the Bureau’s chief economist that the data was necessary to support robust econometric analysis (which various tests in the Act require). In other cases, the court has narrowed requests for “all records” pertaining to particular matters because of the broad definition of record under the Act and the associated burden of complying with such a request. In another case, the court removed questions that might not be relevant if the Commissioner was able to conclude based on the other questions that there was unlikely to be a contravention of the Act – essentially, inviting the Commissioner to come back and apply for a subsequent order at a later date, if needed, following the same lengthy process.

Lastly, notwithstanding the lengths to which the Commissioner must go to obtain a production order, even after such an order is issued, the respondent has the right to challenge the order under the Federal Courts Rules, which can cause further delays and result in further narrowing of the requested information.

While procedural safeguards are appropriate, in the Bureau’s experience, the requirements for obtaining production orders have become disproportionate and are unduly delaying investigations. There are other civil information-gathering approaches that may be more efficient. For example, commissioners appointed to conduct a public inquiry under the Inquiries Act have the same power as the courts to summon witnesses and compel evidence. The Privacy Commissioner is granted similar powers, as are many provincial securities commissions. Many international competition agencies also have such powers and seek similar information in their investigations as the Bureau.

The Bureau recognizes that any approach to compulsory information gathering needs to include procedural safeguards to ensure that production orders are reasonable, but they also need to allow for timely and robust fact gathering. Should amendments be made to the Act’s civil information gathering provisions, they should be done in a manner that provides such safeguards while also ensuring that the Bureau ultimately receives all the information it needs in a more timely fashion.

5.3.3. The remuneration rates for “presiding officers” should be adjusted for inflation

Subsection 13(2) of the Act requires that “presiding officers” be paid remuneration for the performance of their duties under the Act. However, the remuneration rates were set in 1994 by the Governor in Council, and there is no mechanism by which they are automatically adjusted to account for inflation. Because the rates have remained unchanged for almost 30 years, they reflect neither the true value of the duties performed nor industry expectations. The discrepancy in pay amplifies as time elapses, and limits the willingness of many qualified candidates to act as presiding officers. Fixing new rates and including an indexation mechanism in subsection 13(2) would resolve this issue.

5.3.4. Targets of an investigation should be barred from examinations

Section 8.5 of the Bureau’s 2022 Submission states that subsection 12(4) of the Act should be repealed. The Bureau’s recommendation remains unchanged.

Paragraph 11(1)(a) of the Act is an investigative tool that allows the courts to order a person to be examined on oath or solemn affirmation in connection with an investigation. However, subsection 12(4) permits a target of an investigation and their counsel to be present at the examination. Among other things, this provides an opportunity for the corporate target of an investigation to attend examinations of current and former employees and other third parties.

While the Bureau can seek orders to have targets excluded (and often does so), the requisite process is cumbersome and time consuming for all participating persons. Further, there is no prejudice to excluding a target from an examination, and the question of procedural fairness may be addressed at subsequent proceedings should they occur.

5.3.5. Solicitor-client privilege claim provisions should be amended

Section 19 of the Act provides a mechanism to which persons who are the subject of certain information production requirements or where records are seized pursuant to a search warrant may assert solicitor-client privilege over the records sought or seized.

An amendment is needed to bring section 19 into conformity with recent SCC decisions. Specifically, subsection 19(5) requires a judge to order that a record be delivered to the Bureau upon the Commissioner’s ex parte application if the person asserting solicitor-client privilege has not made an application within thirty days of their record being placed into custody.

Having regard for the SCC’s decisions in Lavallee et al. v Fink and Alberta v University of Calgary, subsection 19(5) is problematic in that it does not explicitly require a judge to determine the validity of a privilege claim prior to providing the records to the Commissioner. It is unsafe to assume that the failure by a person to file an application in respect of the records in question means that they were in fact not privileged. Subsection 19(4) provides a mechanism for determining a claim of privilege and, provided the 30-day deadline in subsection 19(4) is removed, there is no need for an additional ex parte process in subsection 19(5), and subsection 19(5) should therefore be repealed.

5.3.6. Cooperation with international competition authorities can be deepened

Section 8.8 of the Bureau’s 2022 Submission asks that additional, stronger tools be made available to further the Commissioner’s international cooperation. The Bureau’s recommendation remains unchanged.

The Bureau’s cooperation with its international competition authority counterparts is critical to the fulfillment of its mandate and may be improved by:

• Developing tools to facilitate timely information sharing amongst competition authorities;
• Establishing multilateral legal assistance treaties; and
• Enabling heightened compatibility amongst privacy laws.

5.4. Amendments that enhance administrative efficiency and effectiveness

5.4.1. The “six-resident” application process should be repealed or revised to clarify the Commissioner’s discretion

This submission has already outlined a number of measures that could be taken to speed up investigations and enforcement actions, and enable the Bureau to be more nimble. To make the most of these measures, however, the Bureau also needs to be able to prioritize its work.

Currently, there is a unique mechanism under section 9 and paragraph 10(1)(a) of the Act that requires the Commissioner to commence a formal inquiry into all such matters as the Commissioner considers necessary when six residents file a complaint meeting certain prescribed criteria. While the Commissioner can decide the extent of that inquiry, in practice, even relatively weak complaints made through this statutory mechanism can require hundreds (if not thousands) of hours of work given the formalities of opening, carrying out and discontinuing an inquiry under the Act. Given the Bureau’s finite resources, this necessarily means that less investigative resources are available for higher priority enforcement work.

The Bureau’s enforcement units have well-established mechanisms that intake and triage a large volume of complaints annually. The Bureau has also developed a Digital Enforcement and Intelligence Branch whose expertise focuses on technology and data and who will serve as an early-warning system for potential competition issues. Through these groups and their respective processes, the Commissioner is afforded the discretion to, among other things, determine the priorities; the degree of capital and labour dedication, if any; and, finally, the exigency for an inquiry.

The six-resident process was put in place long before these processes were developed and before there was even a dedicated competition enforcement body at all. The mechanism dates back to the Combines Investigation Act of 1910 and was the means by which an ad hoc board of investigation could be established to investigate a competition matter. Even then, the six residents had to persuade a judge that there were reasonable grounds for such an investigation and that it was in the public interest that an investigation be held.

The six-resident process has been maintained through subsequent structural and institutional reforms of Canada’s competition law framework and no longer serves the same purpose. Moreover, the Bureau has found that most Canadians do not actually use this mechanism and that it is increasingly being used strategically by competitors or sophisticated parties. The Bureau is increasingly concerned about the equity and inclusivity of the six-resident process, which by definition excludes complaints made by individuals or smaller groups, residents under 18, and those unable or unwilling to navigate the technical requirements, which includes filing a “statement in the form of a solemn or statutory declaration”. The Bureau is also concerned that some six-resident inquiries, opened because they meet basic technical requirements, can have real reputational and operational consequences for the targets of those inquiries. The Bureau is also not aware of other jurisdictions having a similar type of provision within their competition frameworks.

While some six-resident complaints are useful and meritorious, they should be triaged like the thousands of other complaints and investigative leads the Bureau receives each year, and should no longer be given special treatment simply due to their form. An amendment repealing the six-resident process, or clarifying the Commissioner’s discretion to open an inquiry in response to a six resident application, would better enable the Bureau to prioritize its work.

5.4.2. The requirement that all inquiries shall be conducted “in private” should be repealed

Subsection 10(3) of the Act provides that all section 10 inquiries “shall be conducted in private”, whereby “private” is not a defined term.

Section 29 is the Act’s confidentiality clause, and its purpose is to protect information obtained by or provided to the Bureau, including the identities of the persons who provided information and any details that could reveal their identities. This provision governs all Bureau activities in respect of the administration and enforcement of the Act.

The predecessor to subsection 10(3) was first enacted in 1910, and first applied to a Board of Inquiry under the Combines Investigation Act. Subsequent versions applied to the Restrictive Trade Practices Commission, whose functions have since been divided between the Competition Bureau and the Competition Tribunal. The legislative history of subsection 10(3) suggests that it simply means that the Bureau does not conduct public hearings, and courts have confirmed that subsection 10(3) does not impose an additional confidentiality requirement beyond what is prescribed by section 29 (see, Canada (Director of Investigation and Research) v Air Canada; Canada (Director of Investigation and Research) v Washington; or Canada (Commissioner of Competition) v Sears Canada Inc). However, some stakeholders have questioned this interpretation. Since the Bureau no longer performs the adjudicative functions of the former Restrictive Trade Practices Commission, subsection 10(3) is no longer required and it should be repealed to avoid confusion.

This clarification would also confirm that the Bureau may make certain information publicly available for the purposes of the administration and enforcement of the Act, whether or not the Commissioner has been or is on inquiry. The release of such information benefits, in many matters, both the general public as well as certain other market participants.

5.4.3. Civil litigation should be simplified and accelerated

Section 8.1 of the Bureau’s 2022 Submission argues that the length of litigated civil competition matters may negatively impact market participants and that litigation should be simplified and accelerated where possible. The Bureau’s recommendation remains unchanged.

Civil competition litigation cases are complex examples of public interest litigation where all litigants shall be afforded their right to procedural fairness and due process, and the courts must be permitted time to consider all evidence before them. That said, the fact that the vast majority of fully litigated cases take years to complete is concerning from both a resource and time perspective, but also for the consumers and businesses who participate in rapidly changing markets.

5.4.4. A civil standard should exist to address consent agreement compliance

Section 8.6 of the Bureau’s 2022 Submission contends that civil mechanisms, such as AMPs, should be made available to the Commissioner to enforce compliance with consent agreements.

Consent agreements, which hold the same force and effect as a court or Tribunal order, are often preferred over litigation as they are less costly and time-consuming.

That said, they are cumbersome to enforce, and breaches thereof are either criminal or (in the case of contempt proceedings) quasi-criminal, therefore attracting the “beyond the reasonable doubt” standard; and for criminal offences, the PPSC – not the Commissioner – makes the decision to prosecute.

Notwithstanding the fact that criminal liability for non-compliance is important, a civil mechanism for pursuing consent agreement compliance should be introduced into the Act.

5.4.5. The procedural requirement for a preliminary inquiry when charges are laid under Part VI of the Act is unnecessarily cumbersome and should be removed

In 2019, Parliament removed an accused’s statutory right to a preliminary inquiry for offences that have a maximum penalty of less than 14 years, allowing for more timely criminal prosecutions. This change did not affect most criminal offences under the Act, which carry a maximum penalty of 14 years.

To ensure timely prosecutions, in light of the complexity and volume of information that must be considered in the course of Bureau investigations, section 67 of the Act should be amended so that anyone charged with an offence and prosecuted on indictment cannot elect to have a preliminary inquiry. The updated provisions could follow language in section 536 of the Criminal Code.

5.4.6. Corporations facing criminal charges should be permitted to be tried with a jury to limit bifurcation of proceedings

When facing a criminal indictment, subsection 67(1) of the Act affords an accused, other than a corporation, the option to be tried with or without a jury. However, subsection 67(4) requires that corporations charged with an indicatable offence be tried without a jury.

The effect of the application of subsections 67(1) and 67(4) may be the bifurcation of proceedings which relate to the same criminal matter. To exemplify, should charges be laid against a corporation and its directing mind and the directing mind elects a trial by jury, the corporation necessarily faces trial by judge alone. This resulting divergence in approach is inefficient and necessitates the commitment of additional resources, including costs, to a substantial degree.

Pursuant to subsection 11(f) of the Canadian Charter of Rights and Freedoms (Charter), corporations are not guaranteed the same rights as natural persons, and so a legislation’s denial of a corporation the choice of jury or judge alone does not constitute a violation. With this in mind and in an attempt to curb future bifurcation issues, subsection 67(4) of the Act should be revised to provide that,

67(4) Notwithstanding anything in the Criminal Code or in any other statute or law, except as provided in this section, a corporation charged with an offence under this Act shall be tried without a jury.

(4.1) Where one or more individuals and one or more corporations are charged in the same indictment, unless the court is satisfied that the ends of justice require otherwise,

• if the individuals elect or re-elect to be tried without a jury, the corporations shall be tried without a jury;
• if the individuals elect or re-elect to be tried with a jury, the corporations shall be tried with a jury; and
• if one or more but not all individuals elect or re-elect to be tried without a jury, notwithstanding section 567 of the Criminal Code the Attorney General shall in his discretion determine the manner in which each corporation is tried.

5.5. Amendments that would encourage greater use of the Tribunal

5.5.1. The Commissioner should be immunized against adverse cost awards

Section 8.2 of the Bureau’s 2022 Submission recommends that the Commissioner, whose mandate is to serve the public through the protection and promotion of competition, should be immunized against adverse cost awards in litigation matters. The Bureau’s recommendation remains unchanged.

Clear-cut cases are relatively rare in competition law and are typically resolved without litigation. The Bureau must bring cases to litigation that are inherently uncertain, so the risk of adverse cost awards can be high, even when cases are responsible and in the public interest to bring.

As outlined by the Tribunal in The Commissioner of Competition v Visa Canada Corporation and MasterCard International Incorporated, “[c]ompetition law in Canada will not advance if a Commissioner is afraid to lose cases which ought to be brought. The courage to advance these cases is in the public interest. Gaps in our laws and policy will not be identified or remedied. Canadian competition law will develop more opaquely behind the scenes.” Nevertheless, in two recent contested cases the Commissioner has been ordered to pay costs exceeding $1 million.

Adverse cost awards are either paid out of the Bureau’s budget or the Bureau requests special funding through ISED. Neither outcome is ideal. When cost awards are paid out of the Bureau’s budget, there are less funds available for other matters and there is a significant multiplier effect. The Bureau conservatively estimates that it saves consumers $50 for every dollar spent, meaning that a $1 million cost award could translate into more than $50 million in foregone consumer savings. When the Bureau relies on ISED to pay cost awards, there are also opportunity costs as that money would have been used for other purposes; however, there are also broader implications for the Bureau’s independence. Moreover, when the Bureau is successful and respondents are ordered to pay costs, these funds are paid into general revenues and do not flow back into the Bureau’s operating budget. This means that the Bureau effectively only internalizes the downside financial risk from the cost award regime, further demonstrating why it is inapt in this context.

Success is never assured in competition law litigation, and the prospect of significant adverse cost awards chills public interest enforcement. Moreover, the potential liability the Commissioner faces stands in contrast to other public officials, such as the Commissioner of Patents, that do not have to pay cost awards under their legislation. Similarly, the Bureau understands that US competition agencies do not have to pay cost awards if they lose a case, except potentially in limited circumstances under the Equal Access to Justice Act where a case involves a small business or individual with a net worth below a prescribed amount and where the government’s position was not substantially justified.

5.5.2. Leave requirements for private access to the Tribunal should be eased and a damages regime should be considered

Section 8.7 of the Bureau’s 2022 Submission notes that businesses’ ability to obtain leave to make an application for some civilly reviewable provisions of the Act may be too restrictive and thus the standard should be eased if possible. The Bureau’s recommendation remains unchanged.

When applying for leave to make an application under sections 75, 77 or 79 of the Act, the applicant must demonstrate that they are “directly and substantially affected in the applicant’s business” by the conduct. This means that only businesses can seek leave to bring a case to the Tribunal, not other groups that can be directly harmed by anti-competitive conduct like consumers or workers. Moreover, the test has been interpreted to require an examination of whether the business as a whole has been substantially affected rather than simply examining whether a particular product or product line of that business has been materially affected. This stands in contrast to the leave test for applications under section 76 of the Act, which only requires applicants to establish that they are “directly” affected by the conduct.

In addition to the restrictive leave tests, there is no possibility for injured parties to seek compensation for damages suffered from civil contraventions of the Act. This further disincentivizes private enforcement and stands in contrast to the US and many other regimes. The Bureau agrees with the Discussion Paper that a “more robust framework for private enforcement, encompassing both ‘private access’ to the Competition Tribunal and ‘private action’ to provincial and federal courts for damages, would complement resource-constrained public enforcement by the Bureau, clarify aspects of the law through the development of jurisprudence, and lead to quicker case resolutions.” The Bureau also agrees that any such change should be designed to avoid unmeritorious or strategic litigation – the courts have traditionally played an important gatekeeping role in this respect, and the Bureau anticipates that this would continue.

5.6. The Act should adopt more inclusive and gender-neutral language

The Act’s reference to persons, including the Commissioner, is often not gender-neutral. In many instances, the Act only makes use of masculine pronouns or nouns, such as: (i) the adoption of the terms “fishermen” and “workmen” in section 4; and (ii) use of “him” in section 11.

Legislation which makes use of gender-specific language is now considered inappropriate and should be amended for gender-neutrality. This is because gender neutrality is more respectful, more reflective of reality and more consistent with certain of Canada’s principal laws, such as the Charter.

Indeed, the list of the Act’s use of gender-specific words is relatively long. While a complete inventory has been compiled, it has not been included in this submission owing to its length and the consultation portal’s character limits. Nevertheless, the list will be made available. An overview of the desired changes are as follows:

• Replace references to “his” or “her” with “their”;
• Replace references to “him” or “her” with “them”; and
• Replace references to “he” or “she” with “they”.

How to contact the Competition Bureau

Anyone wishing to obtain additional information about the Competition Act, the Consumer Packaging and Labelling Act (except as it relates to food), the Textile Labelling Act, the Precious Metals Marking Act or the program of written opinions, or to file a complaint under any of these acts should contact the Competition Bureau's Information Centre:

Web site
www.competitionbureau.gc.ca

Address
Information Centre
Competition Bureau
50 Victoria Street
Gatineau, Quebec
K1A 0C9

Telephone
Toll free: 1 800 348 5358
National Capital Region: 819 997 4282
TTY (for hearing impaired) 1 866 694 8389

Facsimile 819 997 0324