Future of Canada's Competition Policy Consultation – What We Heard Report

Table of Contents

I. Introduction

On November 17, 2022, the Minister of Innovation, Science and Industry launched the Consultation on the Future of Canada's Competition Policy, the latest major step in the Government's efforts to modernize the Competition Act (the Act) and its enforcement regime. This initiative followed a significant increase in the Competition Bureau's (the Bureau) funding introduced in Budget 2021, and targeted amendments to address those shortcomings in the law that were readily identifiable, enacted in June 2022.

Against the backdrop of a changing economy and concerns over the effects of business concentration, notably on affordability, Canada's innovation performance and the resilience of supply chains, the Government sought input from Canadian individuals and organizations on the possibility of further and broader changes to the Act. Ultimately, input was sought on how best to position the legal framework and equip the Bureau to better protect consumers and enhance public trust in the contestability and reliability of the marketplace. The public consultation period concluded on March 31, 2023, and this report summarizes the feedback received and raises some considerations around what the government heard from stakeholders.

II. Who we Heard From

The public consultation garnered significant interest, receiving over 130 submissions from identified stakeholders, as well as more than 400 responses from members of the general public. These submissions raised over 100 potential reform proposals. Among the identified stakeholders were academic experts (7%); law practitioners (7%); labour unions, consumer groups, public interest organizations(18%; businesses and their associations (53%); government entities (5%) and others of varied background and experience (10%).

III. Overall Comments from the Public At Large

Interested parties had the option of making unattributed submissions as individual members of the public, responding to thematic questions contained in a scene-setting document. These responses tended to be of a more general nature and reflect the personal experience of members of the public. Summaries of this input are as follows.

1. The Role and Functioning of the Competition Act

The comments received from individual members of the public generally raised what participants largely considered to be the ineffectiveness of the Act in preventing corporate monopolies and oligopolies, leading to challenges for Canadians such as higher costs, reduced choice, decreased innovation, and increased political power for large corporations.

The general sense emanating from the submissions was that the Act must be revised, having failed to prevent concentration from forming in various industries, and resulted in lacklustre enforcement. Suggestions included revising the Act's objectives, updating the law to prevent further acquisitions by dominant companies, and establishing clearer guidelines on collusive conduct. A portion of the participants called for stricter regulations on the proportion of market share that a given company can control.

Many individual respondents stated that they felt that the Act is not being enforced effectively, and that large corporations are gaining too much control over the market, and its essential goods and services. They further believe that the government should have the power to regulate mergers and acquisitions that surpass a certain percentage in market share to ensure that no individual company gains too much power in the marketplace. Many suggested that companies be required to prove that their merger will improve the market for Canadians, and any merger that decreases consumer choice or facilitates collusion should be prevented.

2. The Role and Functioning of the Competition Bureau

There was a concern that select corporations may have an undue amount of power within and control over markets, leading to a lack of consumer choice and high prices, especially in the telecommunications and grocery industries. Accordingly, a large proportion of individual respondents asserted that the Bureau should have a broadened role with more enforcement authority to protect consumers and promote healthy competition. In their view, recent examples, such as the Rogers-Shaw merger, indicate limitations in the current governance and accountability framework. Some respondents felt that the Bureau needs to have more transparency, education, and public input to make informed decisions.

3. The Effectiveness of Remedies and Private Redress Mechanisms

The consensus among the individual responses received is that new or stronger tools are needed to promote compliance with the Act. A common perception was that cases were not being decided in a way that benefits Canadians and that remedies for harmful conduct are not strong enough to restore competition to desired levels. Some participants suggested looking to the European Union as a model.

4. Challenges of Data and Digital Markets

Many individual responses called for stronger regulations to ensure fair competition in critical digital markets, and that sector-specific mechanisms should be should be considered alongside an update of antitrust laws for the digital age. While not principally questions of competition law, consumer privacy and data protection were central themes, with some participants remarking that companies should be held more accountable for damage caused by data breaches and identity theft.

5. Other Pro-Competitive Policies

Many individual respondents believed that there is a lack of competition in the marketplace and want the government to take action, including actively breaking up perceived monopolies. Suggestions included providing more support for small business, including new and simplified grants, promoting green initiatives and reducing subsidies to established businesses.

Strengthened consumer protection legislation, though principally under provincial and territorial jurisdiction in Canada, also arose. Comments also touched upon tax policies, public utility models for certain major players, and wage disparities between executives and workers.

Many individual participants also argued that the Government of Canada should do more to promote competition in industries such as telecommunications and media by opening them up to more foreign competition and updating outdated sectoral legislation.

IV. Feedback on Specific Reform Proposals from Stakeholders

Mergers

Merger review, as the first line of defence against market concentration, draws arguably the largest focus from antitrust experts and casual observers alike. A diverse array of stakeholders shared views on various aspects of merger review raised in ISED's consultation paper, with clear themes emerging about the need to guard against further concentration in certain critical industries (such as grocery or telecommunications) to preserve affordability and consumer choice, while also minimizing administrative burden and unnecessary intervention.

Notification Rules

What we consulted on: While all mergers are reviewable by the Bureau to ensure that they will not cause a substantial lessening or prevention of competition (SLPC), only those that surpass a $400-million threshold for the size of parties, and an annually-indexed threshold for the size of the transaction ($93 million in 2022 and 2023), are currently required to provide advance notification to the Bureau and delay closing until the lapse of statutory waiting periods. The Government is considering the revision of pre-merger notification rules to better capture mergers of interest.

What we heard: There was a general consensus that a modernization of the notification rules would be beneficial, with the majority of debate centred around whether the Bureau should be made aware of a greater number or a different subset of transactions. Many stakeholders felt that any changes leading to increased notification would only increase regulatory costs for smaller businesses being acquired, unnecessarily burdening the Bureau itself, and disincentivizing investment into start-ups, among other chilling effects. Common recommendations ranged from an increase in the size-of-parties or size-of-transaction thresholds, new exemptions (i.e. upstream oil and gas or real estate), and removing the asset standard entirely. There was more tolerance for including sales into Canada in threshold calculations as long as requirements were relaxed in other ways.

Those in favour of more notifiability were especially concerned over "creeping acquisitions", i.e. a series of smaller acquisitions that might not be individually notifiable on their own. They made recommendations such as: requiring all acquisitions to be reported when a firm exceeds a certain number of acquisitions per year or holds a certain amount of market share; lower thresholds in specific markets of concern; better accounting for assets such as data control; and simply lowering the size-of-transaction threshold. Some requested that parties be required to supply their data behind the transaction size determination.

Other comments recommended: a filing fee proportional to transaction size; collecting new data points at the time of notification; notification only for transactions where both parties have a presence in Canada; longer waiting periods after filing; and separating out direct acquisitions of Canadian assets from global transactions that happen to have a Canadian component.

Limitation Period

What we consulted on: In 2009, the limitation period was reduced from three years to one, to complement the new two-stage merger review system that allowed the Bureau to receive more vital information earlier and as a matter of course. However, no such consideration applies to non-notifiable mergers, which also benefited from the shortened period. The Government is considering an extension of the limitation period for non-notifiable mergers (e.g. three years), or tying it to voluntary notification.

What we heard: Submissions were divided on whether the limitation period to seek a merger remedy should exceed the current one year duration, although many recognized that an extension could be justified for non-notified transactions only, with a voluntary notification scheme being available to attain greater certainty.

Those in favour of change agreed that one year was too short to determine the true impact of a merger, and some felt that businesses can easily delay the clearest signs of lessened competition, such as higher prices, for a year before leveraging their increased market power. Preferred length varied, with proposals to extend the limitation period only in the case of "serial acquisitions", while some suggested beginning the limitation period only upon the Bureau's discovery of the merger. Others felt that there should be no limitation period at all, as even three years is too short to assess the real competitive effects of a merger, and parties will always be incentivized to conceal anti-competitive effects until the expiration of the period.

Those who opposed any extension gave various reasons to maintain the status quo. They argued that a longer limitation period could chill merger activity and decrease investment in Canada due to increased uncertainty, unjustly penalize dealmakers for market conditions outside of their control, and undercut the pro-innovation and pro-competitive effects of the merger by delaying its full consummation.

Interim Relief

What we consulted on: By statute, the Bureau only has 30 days from the provision of information to decide whether a merger must be challenged, at which point it can also seek interim relief to prevent the merger pending litigation (s. 104). The Government is considering easing of the conditions for interim relief when the Bureau is challenging a merger and seeking an injunction.

What we heard: On the question of injunctive powers to prevent a merger from closing before challenge is made, a majority of those who commented were business and legal stakeholders expressing concerns over a more permissive process for issuing an interim injunction under s. 104. Several did not feel the current test was unduly onerous for the Commissioner of Competition (the Commissioner) to meet, and pointed to the potential impact on due process if the Commissioner were empowered to act unilaterally. Comparatively little feedback was received with respect to safeguards during the brief period before an application is heard, however. Some stakeholders outside the business community were in favour of easing conditions and earlier interventions in the name of preventing irreparable harm and ensuring the Bureau can carry out its mandate.

Efficiencies Exception

What we consulted on: The Act's efficiencies exception in section 96 – allowing an anti-competitive merger to avoid challenge where it generates efficiencies great enough to offset the effects of harm to competition – has long been a polarizing issue and focus of claims that the Act is too weak. The Government is resolved to examine possible reform to this exception, from changes to aspects of the defence to its abolishment.

What we heard: The majority of stakeholders supported major changes to the provision, with the divide most visible between larger businesses and civil society groups. However, several voices from within the business community also supported the abolition of a defence that facilitates anti-competitive mergers.

Most called for a full repeal of the provision, but even from those who disagreed there was large scale recognition that the way that the exception is applied must be modified. Those in favour of an efficiencies defence felt that efficiencies are a very important consideration, if not a core tenet of the Act, and felt that Canada continues to require a unique approach to ensure that its firms can scale up and be internationally competitive. They also saw it as an important check on over-enforcement. Most of those who supported maintaining a defence nevertheless suggested reversing aspects of the Supreme Court of Canada's 2015 Tervita decision, that placed a heavy quantification burden on the Commissioner, so as to render the provision more workable.

Those opposed to maintaining the exception felt that the threat of invoking efficiencies in merger review has long dominated Canada's enforcement framework. They cited a lack of clear proof that the trade-off is ultimately beneficial or that all the efficiencies asserted are ever realized, and even if so, took issue with at whose expense they would come. Many felt that an Act allowing anti-competitive transactions undermines the central purpose of competition policy – in which competition itself promotes efficiency over the longer term – and is inconsistent with how it is applied in other jurisdictions. Most if not all opponents of the defence felt that the current quantification burden is unworkable, and that the merging parties have a data advantage over the Commissioner, making the exception too easy to invoke.

Standard for Merger Remedy

What we consulted on: There are at least two possible substantive challenges to applying the merger provisions' competitive effects test to acquisitions in fast-moving digital markets. The first concerns where harms to non-price dimensions of competition, such as innovation, may be difficult to quantify and are, accordingly, given less weight by the Competition Tribunal or appeal courts. The second challenge is the substantive requirement that the Bureau show, on balance of probabilities, that harm to competition is "likely" to happen within a "discernible" time frame, and that this harm would likely be "substantial". Given the complexity, dynamism and pace of change in many markets, especially digital ones, these specific tests may be highly impractical. The Government is considering revisiting the standard for a merger remedy to better protect against prospective competitive harm.

What we heard: There was significant engagement on whether or not the merger substantive test for a remedy, "substantial lessening or prevention of competition" or SLPC, should be changed, reinterpreted or nuanced. Those in favour had a variety of reasons. Some felt that the 'substantiality' element of the test limited how protective the Bureau could be of emerging harm, with some preferring a "balance of harms" approach considering both likelihood and severity of harm. Many asked for non-price effects to take greater prominence in the competitive analysis – particularly with respect to the amalgamation of data, the decrease in product quality, the effects on labour markets, and/or the effects on marginalized people and consumers generally, among other possible elements. Several also felt that the burden on the Bureau was too great to prove a 'prevention' of competition even when the number of potential competitors was clearly decreasing following a transaction. These views implied that the Competition Tribunal (Tribunal) may be too focused on the shorter-term plans of current market participants rather than the foreclosure of future chances for market entry.

Conversely, many expressed the view that the SLPC test is a well-recognized international standard, and deviation from it not only risks bringing Canada out of sync with major partners, but could also invite the Tribunal to block mergers for nebulous or speculative reasons. Apprehension was expressed, for example, about an "appreciable risk of harm" approach, with critics feeling that it amounts to a carte blanche to block most mergers. Many felt that the Bureau is more than capable of bringing non-price effects into its analysis already, particularly after 2022 amendments to the Act emphasized them further.

Mirroring the question of notifiability, the topic of serial or "creeping" acquisitions by larger firms was often raised in the context of remediability as well. Many commenters felt that the law must be able to account for the cumulative effect of these, even if individual acquisitions are too small or uncertain to be able to prove an SLPC. Those who disagreed felt that such patterns were inevitable and valuable in the innovation process, and intervening more easily may risk disrupting the exit strategies of start-ups, forcing them to look for outside sources of capital or face failure.

There was also significant engagement on the possibility of using presumptions in merger review. Most submissions raising this prospect sought to use market shares as a starting point. Some felt that the SLPC test should instead be reversed to proving a lack of harm once a firm reaches a certain market share, with others feeling that surpassing a certain market share should result in a total prohibition on acquisitions. Some called for a combination of both approaches. The market share percentages suggested for these presumptions ranged from 20% to 65%.

Views opposing presumptions indicated that market shares were too imperfect in predicting competitive effects, particularly in innovative or dynamic markets. Their relevance should instead be one of the issues considered by the Tribunal. There was concern that presumptions would lead to a lack of due process unless parties had more access to information held by the Bureau. There was also a sentiment that any market share presumptions simply reframe the legal battle as one of market definition instead of market effects.

Labour Effects of Mergers

What we consulted on: The Act considers the effect of a merger or proposed merger on competition and, as discussed above, on efficiency gains. With the importance of human capital as a unique input, and Canada's commitment to inclusive growth, one may fairly question whether effects on labour ought to have a more prominent role in the equation. The Government is considering revisiting the standard for a merger remedy to better account for effects on labour markets.

What we heard: The substantive merger test in s. 92 of the Act already considers both upstream and downstream effects of a merger. Nevertheless, given a clear historical focus on downstream markets, ISED's consultation paper raised the question of whether purchasing competition, especially for labour, should factor more explicitly into merger review. Commentators were divided on this area. Numerous respondents felt that the statute poses no obstacle to a full consideration of upstream effects and that competition law is not well-suited or an appropriate instrument to address labour concerns directly. For example, some noted that downsizing following mergers is an express feature of the reallocation of resources that pro-competitive mergers allow, ultimately reducing deadweight loss in the economy. Meanwhile, other legal regimes are specifically dedicated to addressing related or even directly resulting labour issues.

However, others highlighted the particularly significant impact that mergers (and other business actions subject to antitrust scrutiny) have on labourers, such as the fact that efficiencies claimed in mergers are often derived from layoffs. Moreover, they feel that effects on labour markets are simply not receiving due consideration in merger analysis, and some felt the Bureau ought to examine employment contracts to appreciate likely effects following a merger. Some noted that more active probing by the Bureau under its existing mandate may mean there is no need for an amendment. Both sides of the debate commented on the Bureau's labour expertise, with some noting that it does not possess enough to bring a new labour lens to merger review, while others hoped that establishing such expertise, including by way of dedicated analysts, would be in the Bureau's future.

Merger Remedies and their Evaluation

Beyond issues related to the standard of review, a significant amount of commentary on merger remedies was received. Some called for more straightforward and direct remedies – such as divestitures – rather than relying on less certain behavioural commitments, including an ability to separate different lines of business. Certain of these commentators reflected a central concern over preserving the competitive process above all, with harm flowing from a lack of competition being a greater problem than overenforcement. This included a proposed requirement, shared by the Bureau itself, that remedies seek to restore competition to its full pre-merger levels rather than just to eliminate the "substantiality" of a substantial lessening. Critics of this approach, however, felt that such a requirement is unworkable and unrealistic, particularly as mergers that lessen competition in a less-than-substantial manner are not even subject to remedy under the law.

Understanding the results of mergers and the remedies applied to them has been central in competition policy discourse, and a particular concern of the Bureau as well. The majority of stakeholders offering comment on this point felt that the Bureau required better access to information to know whether the outcomes are proving beneficial. Many expressed concern over a lack of accessible post-merger data to make this assessment, particularly as impacts of a merger may take a long time to materialize.

Responses included recommendations for information-seeking powers that may be sought to review past mergers on occasion, while others called for a mandatory review after 10 years had elapsed for large enough transactions. Some wished for these results to be reported to Parliament, or disclosed publicly. Opponents feel it is unfair to subject merging parties to further scrutiny and administrative burden when anti-competitive concerns should already have been mitigated at the outset.

Other

Other themes that emerged from stakeholder submissions included: granting the Bureau more power at first instance, subject to appeal; public and provincial input into the review of large mergers; and extra scrutiny on the digital sector and the control of data.

Considerations

Stakeholder reaction in this area established a common theme that would be observed in each of the subsequent topics considered. While there was a broad consensus on the societal value of more competitive markets, a divide emerged between two general perspectives on priorities for immediate reforms. On the one hand, those concerned with having the system better equipped to ensure beneficial outcomes – contestable, dynamic and unconcentrated markets – wished for more oversight and suspicion of mergers generally. They were of the view that the Act was currently underenforced leading to a detrimental entrenchment and accumulation of market power. The desire was to put greater emphasis on the broader public interest before the narrower private interests of merger parties. Above all, these views were held by consumer groups, civil society, most academics as well as several sectoral business associations. On the other hand, a second perspective – held mostly by cross-sectoral businesses associations and legal practitioners – prioritized preserving certainty in compliance and predictability in doing business, fearing that undue government intervention could chill investment and disrupt the natural functioning of markets and innovation.

It was apparent that many felt that the law, in its present application, tended to "miss the forest for the trees" by focusing too narrowly on individual markets, forecasting the fates of specific firms or calculating efficiencies over the short term, while missing deepening concentration across the country and loss of economy-wide efficiency over the long term as a result. Others insisted there was no justiciable alternative in a credible and predictable system.

There should be ways in which both sets of concerns can be accommodated, by adjusting the parameters of merger review to better confront enforcement shortcomings, without letting go of a principled, evidence-based system. For instance, some of the blind spots of a one-size-fits-all legal test may be mitigated by modifying the amount of leeway that the Bureau has to act on less foreseeable harm before it is too late for any other recourse under the Act. Meanwhile, granting the parties the means to obtain certainty sooner in exchange for cooperation could respond to concerns of both sides. This may also lessen the need to introduce new statutory presumptions, particularly if additional guidance is offered to the Tribunal through clearer definitions or considerations, to help guard against perceived gaps. Similarly, while the standard for granting temporary injunctions may be well-established and appropriate, temporary safeguards before the matter can be decided may help to ensure that the system functions as intended.

While SLPC continues to be an international standard as the threshold for a remedy, this further means that the government must be confident that any exceptions from its broad application do not undermine the Act's effectiveness in reaching its ultimate objectives. It is also clear that highly technical adjustments, for example to notification criteria, may benefit from ongoing dialogue with the parties most invested in this aspect of the law, and potentially a more flexible system to allow adjustments in the future.

6. Unilateral Conduct

A running theme in stakeholder commentary on unilateral conduct was that more countervailing power was necessary to ensure that small numbers of firms could not dictate the terms of Canada's economy. It was clear that many consumers and small businesses had strong concerns about becoming passive or marginalized players in the market, while others cautioned against drifting into a "big is bad" approach that would result in protecting competitors over competition, to the ultimate detriment of productivity and innovation.

Dominance and Oligopoly

What we consulted on: Harm to competition can arise through the actions of firms that may not be unmistakably dominant, but together exert substantial influence on the market, whether as vendors or purchasers. The Government is considering better defining dominance or joint dominance to address situations of de facto dominant behaviour, such as through the actions of firms that may not be unmistakably dominant on their own, but which together exert substantial anti-competitive influence on the market.

What we heard: A division was apparent, mainly as between civil society and business groups, on the prospect of broadening the application of the dominance threshold. Those in favour felt that Canada has an oligopoly problem, and that by focusing on a situation more akin to monopoly, the current law is ill-suited to tackle anti-competitive conduct in highly concentrated markets. A singularly dominant target may not be present, and in practice the law does not seem to be able to capture any form of joint dominance, thereby unable to address markets suffering from the effects of conscious parallelism or soft competition among a few major players.

Those opposed to change worried that an expansion of joint dominance could disincentivize good parallel conduct or the following of standard industry practices, forcing companies to monitor competitors and come up with alternative strategies to avoid administrative monetary penalties. In this vein, some submissions insisted that smaller market players would necessarily have to be beyond the scope of any joint dominance. Some felt that effects of joint dominance have not been shown to exist or have not proven harmful, while others felt it was best addressed by the courts, with existing guidelines being sufficient.

Substantive Remedy Test

What we consulted on: The requirement for the Commissioner to prove that the anti-competitive practice is resulting in, or likely to cause, an SLPC may be unduly strict. For similar reasons that market dynamics in an evolving economy may complicate merger analysis (such as disruptive but small start-ups, zero-revenue or low-asset models), the assumptions behind competitive effects may need to be revisited. The Government is considering crafting a simpler test for a remedial order, including revisiting the relevance of intent and/or competitive effects.

What we heard: The current test for an abuse remedy in s. 79 requires that the Bureau prove both that a dominant company intended to leverage its market power against competition or competitors, and that it succeeded or was likely to succeed in creating a measurable anti-competitive effect. In light of the historical difficulty in bringing cases, a division among stakeholders was apparent as to whether the standard was too rigid. Proponents of change, including the Bureau itself, felt that as long as the provision is meant to safeguard competitive markets, establishing only one or the other should be sufficient grounds for intervention. This was consistent with calls to increase the social welfare rationale of the provision, focusing it ultimately on consumer needs in the market. Others felt that presumptions that shift part of the burden would make application of the tests more reasonable. Some also expressed the view that limiting business justifications for conduct with likely anti-competitive effects would be worthwhile.

Those opposing change felt that broadening the test would chill business conduct, making business agents uncertain of the legality of their actions and refraining from making otherwise pro-efficiency or pro-competitive business decisions. Many felt that the amendments made in June 2022, broadening the understanding of intent, were enough to correct course and that the government should await the results before further action. Some took issue with an "anti-competitive by object" standard, and felt that without effects, there is no prerogative for state intervention. Others viewed intent as the core element, separating justified from unjustified means of achieving the same result. Others still felt that effects and intent together function as a safeguard against government overreach.

There were some requests to include a variety of new business practices in the non-exhaustive list of "anti-competitive acts" in s. 78 that illustrates the intent component. Some stakeholders wished for more recognition for monopsony abuses, or the leveraging of power in one market to affect adjacent markets, as well as digital economy hot topics like self-preferencing and misuse of customer data. There were also requests to include refusal by manufacturers to provide repair data, as well as any obstacles to interoperability between devices.

Other comments on the substantive remedy standard included concerns that digital markets required new considerations, including that the Bureau should look beyond price and focus on data ownership and diffusion, product quality, and impediments to interoperability and data portability.

Bright Lines or Presumptions

What we consulted on: Increasingly, legislators are turning to the possibility of preventive rules or presumptions applied to dominant firms or platforms, with respect to both acquisitions and business practices such as self-preferencing and data use, rather than conducting extensive economic analyses in each case. The Government is considering creating bright line rules or presumptions for dominant firms or platforms, with respect to behaviour or acquisitions, as potentially a more effective or necessary approach, particularly if aligned with international counterparts and tailored to avoid over-correction.

What we heard: Many stakeholders had views on whether certain practices should be prohibited outright or presumed harmful, and much attention was paid to self-preferencing by platforms in particular. Most businesses, their associations and law practitioners were generally united in opposing the idea of bright-line tests over case-by-case analysis. Joined by certain academics and economists, they saw this as a recipe for over-correction and inefficient outcomes, as most targeted forms of behaviour are not inherently harmful. For example, self-preferencing in app platforms is consistent with a proprietary storefront, and establishing one's own ecosystem in products like smartphones or computers can result in better and more innovative technology overall. There was concern about sacrificing real, short-term benefits to guard against more uncertain and distant harms. There was also a fear that hard rules or presumptions would ultimately be designed to protect competitors over the competitive process, which involves winners and losers. This would be risky in dynamic industries, especially as rules evolve and change too slowly for the market, risking drags on productivity or innovation.

Other stakeholders including consumer groups were more open to introducing bright-line rules and presumptions to various degrees, some calling for further studies or a carefully measured approach in designing the rules. There was a sense that the Bureau was too unable to curb harmful conduct by dominant companies, as well as some suggestions that the current framework did not sufficiently address threats to dynamic competition. It was recognized that per se bright line rules might reduce flexibility, but would increase predictability.

In addition to self-preferencing behaviour, some presumptions or bright-line rules raised were market share thresholds resulting in a reversal of burden of proof, mandates for interoperability and data portability, a block against serial acquisitions, and exclusive dealing leveraged against competitors. There was also a major concern that dominant platforms have the power to misuse their collected data, such as impacting adjacent markets, and that they may be deserving of additional commercial rules.

Separate Unilateral Conduct Provisions

What we consulted on: The Act contains other provisions that deal with specific forms of unilateral conduct (e.g. exclusive dealing and refusal to deal). While previously, private cases could be brought to the Tribunal only under these provisions, since June 2022 this recourse is available for abuse of dominance as well. The discussion paper therefore raised the question whether these provisions had become redundant, whether their subtle differences meant that they remained useful, or whether they might even be repurposed as marketplace conduct rules without a competitive effects test. In this sense they would be more akin to the Act's deceptive marketing approach, or some of the "unfair trade practices" regimes seen abroad.

What we heard: There was not a great deal of feedback on these points. Some recognized utility in folding the Act's other forms of unilateral conduct into the abuse of dominance provision, expecting that it would simplify enforcement and compliance, and discourage overly narrow interpretations. Others were concerned about a loss of clarity and jurisprudence in the absence of clear guidance from the Bureau, or that the net result would be a lowered burden – such as the "widespread in a market" standard – yet with stronger abuse remedies.

There was also noted support for better accommodating after-market repair in a designated provision, if not in abuse of dominance itself. Some called for a provision that could be invoked to enable would-be repairers to bring cases, such as a refusal-to-deal framework focused on access to necessary parts or data to enable repair. Some also mentioned protection against the use of intellectual property rights to prevent repair.

Uneven Business Relationships

What we consulted on: The discussion paper also noted that some foreign competition authorities administer "unfair competition" provisions, such as with respect to unconscionable conduct in Australia, or abuse of superior bargaining position in several jurisdictions.

What we heard: A modest number of stakeholders wished for the law to recognize a broader scope of unfair behaviour by large firms, less in the sense of proscribed business practices as discussed under the previous heading, but rather covering exploitative relationships with other firms or consumers. Some competition authorities abroad enforce provisions with respect to unconscionable or exploitative conduct by dominant firms, or abuses of dependency or superior bargaining position. Certain stakeholders felt that similar rules in Canada could help protect more vulnerable consumers, workers and small businesses, acting as a check on unmitigated market power. Comments made reference to 'excessive pricing' and the imposition of unclear or unfair contract terms on workers or client businesses, although recognized that up-front clarity on what this would entail would be essential.

Those opposed argued that defining the limits of these forms of conduct is challenging if not impossible, and risks overlap with other areas of law such as consumer protection or sectoral regulation. They also cautioned that such an expansion in mandate would tempt the Bureau or Tribunal to seek or make orders that protect competitors rather than competition, or deny substantial consumer benefit gained through aggressive competition.

Other

Other themes that emerged from stakeholder submissions included: relaxation of the limitation period for abuse of dominance; unambiguous rules around tied selling, self-preferencing and algorithmic transparency by dominant firms that are vertically integrated; special scrutiny for dominant digital firms; ensuring that the regulated conduct defence is not available for abuse of dominance; codes of conduct for concentrated industries; various views on the intellectual property rights carve-out from abuse of dominance; proscribing planned obsolescence.

Considerations

It is clear that there is a great deal of concern among stakeholders about the ability to ensure that powerful firms are held in check, and that their business practices do not lead to a sub-optimal marketplace. Obviously there is a fine line between "harm to competition" and "harm to competitors", with many submissions blurring the two in how they wished for the law to be applied, and others expressing concern about such an outcome.

As with feedback on mergers, the divide between those seeking better or more equitable outcomes through a strengthened law stood in contrast to those preoccupied by ensuring predictable compliance, and being free from undue government intervention. Feedback in certain areas was largely inconclusive, such as with abusive conduct presumptions or uneven business relationships. Yet on some of the core concerns around the Act's legal tests for unilateral conduct, there appear to be paths forward to enable more responsiveness to problematic markets without bringing to bear the full force of the law on unwitting actors.

It must be borne in mind that the purpose of civil competition law enforcement is primarily to protect markets for the benefit of the public, not to censure individual firms for wrongdoing. As with any government oversight, this means that intervention may be warranted in the name of protecting the public policy goal – in this case competition – even when affected parties may not be solely responsible, or specifically aiming, for the undesirable result. By analogy, being ordered to move one's vehicle to allow maintenance on a road is not the same as receiving a ticket for parking unlawfully. Similarly, the threshold for, and consequence of, remedial intervention can be recalibrated with balance in mind to enhance the Bureau's public interest function without resorting to the most onerous consequences in every case.

7. Collaborations

In contrast to mergers and unilateral conduct, observations on the competitor collaborations provisions of the law were more focused on principle, and ensuring the ability for the law to respond effectively when called upon, more so than relief from ongoing market circumstances.

Deemed/Inferred Collaboration

What we consulted on: Conduct by non-human actors may raise a number of enforcement challenges. The Government is considering deeming or inferring agreements more easily for certain forms of civilly reviewable conduct, such as through algorithmic activity, especially given the difficulty of applying concepts like "agreement" and "intent" in the age of AI.

What we heard: An overwhelming majority of those who opined on the question called for caution with respect to deeming or inferring agreement between parties, e.g. when coordination results from the effects of artificial intelligence. Several commentators insisted that the issue would be better addressed by, or in collaboration with, the future AI and Data Commissioner (proposed under Bill C-27). Those in opposition pointed to potential overenforcement and chilling effects it may have on procompetitive conduct such as price-monitoring and price-matching that are ultimately beneficial to consumers and the overall economy. Others were concerned more broadly about chilling future research and development of AI and other technical software. Even those in favour also urged for caution that any reform on this front should be accompanied by sufficient evidence of negative effects of algorithmic activity on competition and consumer outcomes. There was also a suggestion that supported expanding the relevance of circumstantial evidence in both criminal and civil provisions.

Past Conduct and Remedies

What we consulted on: Unlike the Act's other civil enforcement provisions, the collaborations provision in s. 90.1 only applies to ongoing and future conduct, but not past events, and offers only a prohibition order remedy (other than by way of consent) without further consequences. The Government is considering broadening and/or strengthening this section of the Act to discourage more intentional forms of anti-competitive conduct, including through examining past conduct and introducing monetary penalties.

What we heard: While the current provisions arguably reflects the civil review function of protecting markets rather than punishing wrongdoers, many stakeholders – including the Bureau itself – feel that it falls short of its potential. The concern is that the current framework essentially absolves market participants from taking into account the likely impact of any collaboration that falls short of a criminal conspiracy, and invites non-compliance until detection, as well as a return to non-compliance in the absence of a prohibition order or consent agreement.

Stakeholders favouring reform expressed that the provision ought to have more scope and teeth if the Bureau is to be able to tackle harmful collaborations when called upon. In this respect it is notable that Canada's approach is an outlier compared to most international counterparts, such as the United States or European Union, where authorities are not limited to naked cartel conduct in being able to review past conduct or seek penalties. Those in opposition warned of a potential chilling effect on procompetitive collaborations were the scope of enforcement to be expanded. Generally, the opposition was more vocal about the introduction of administrative monetary penalties rather than the review of past conduct as such, with some acknowledging that the latter may be appropriate with a limitation period and the possibility of non-monetary remedies to restore competition.

Vertical Collaborations

What we consulted on: Limiting civil review to collaboration between competitors (i.e., horizontal collaborations) shields potentially anti-competitive conduct by other entities (i.e., vertical collaborations, such as supply, licensing or franchise agreements) from the Bureau's scrutiny, unless they fall under a different provision of the Act, such as tied selling. The Government is thus considering whether s. 90.1 should also apply to collaborations by entities that are not direct or potential competitors if an SLPC can nevertheless be demonstrated.

What we heard: Stakeholders were relatively evenly split on this matter. Some felt that other provisions of the Act such as abuse of dominance could adequately fill any gap (although there are more criteria to prove under this provision), and the other unilateral conduct provisions such as price maintenance or tied selling may even be relevant. Several of those opposed felt that the competitive risks of vertical conduct are too low to merit scrutiny, in light of the possibility that procompetitive efforts would be chilled. On the other hand, those in favour of expanding the law found it unprincipled that an SLPC stemming from a business collaboration should not be reviewable simply because of the relationship of the parties involved. The origin of the harm is not particularly consequential to consumers, and making such a distinction risks leaving arbitrary gaps in the law. Notably, most other jurisdictions do not make the vertical/horizontal distinction, but are empowered to take action to address any anti-competitive collaboration. The example of restrictive covenants between businesses and landlords to preclude entry from possible competitors in a given neighbourhood was raised as an example of vertical conduct that may not fit cleanly under other provisions of the Act.

Buy-Side Collusion

What we consulted on: The Act's lack of mirror-image criminal provisions to the vendor cartel provisions in s. 45 – that might address coordination on price, territory or volumes by competing purchasers – has been noted by commentators in the past, most notably the Bureau itself. The most classic example of buy-side coordination, wage coordination by employers, has been addressed through a 2022 amendment to the Act, but other market distortions by purchasers are currently only remediable civilly where an SLPC can be proven. The Government is thus considering reintroducing buy-side collusion – beyond only labour coordination – into the Act's criminal conspiracy provision, or introducing a civil per se approach to it.

What we heard: Of those stakeholders who commented on this area, a significant majority were opposed to the introduction of a new criminal provision, or alternatively a novel civil provision that did not require proof of an SLPC. While the consultation paper specifically addressed carving out pro-competitive buying groups (i.e. similarly to bid-rigging, the concern revolves around secretive collusion, not up-front arrangements), many commentators nevertheless felt uncomfortable with amendments that might be seen to proscribe a form of activity most closely associated with a pro-competitive rationale, especially where small and medium enterprises (SMEs) may be alarmed or dissuaded. The fact that private lawsuits for loss recovery are permitted under the Act for criminal conduct was an additional consideration in exposing unsuspecting businesses to liability. These stakeholders cited Parliamentary intention behind decriminalization in 2009, where only the most unambiguous cartels were made per se illegal. Several of these commentators also believed that civil review under s. 90.1 was adequate to address harmful buy-side collaborations causing an SLPC. Others also noted that the 2022 wage-fixing amendment was sufficient to address the main buy-side concerns, and experience should first be gained with this provision.

The minority who believed that reform was appropriate found that civil review with an SLPC test was insufficient to capture or deter cartel-like behaviour by purchasers, and that the distortions to competition caused by buy-side collusion were of no less consequence for the market than that among vendors. Some therefore called for either a criminal or per se civil approach, with adequate carve-outs for pro-competitive activity. Others acknowledged that strengthened remedies under s. 90.1 could help fill any gaps instead.

Notification of Certain Agreements

What we consulted on: The Government is considering introducing mandatory notification or a voluntary clearance process for certain potentially problematic types of agreement, such as pharmaceutical patent litigation settlements, so as to ensure detection and review.

What we heard: Comments in favour of introducing either mandatory notification or voluntary clearance for certain potentially problematic types of agreement were cast more generally and broadly. These stakeholders were open to the idea in the abstract, subject to further detail on what might be included.

Those in opposition were aware of the traditional focus on the pharmaceutical industry, and argued that so-called "pay for delay" arrangements between patent holders and generic manufacturers are already adequately addressed by a web of pharmaceutical regulatory regimes, and that movement toward notification risked singling out a single industry. Many noted that the Bureau is not prevented from challenging any of these agreements under s. 90.1 once detected, that third-party complaints may still occur, and that court records were publicly accessible in any event. Some also noted that the Canadian regulatory regime incentivized settlement in a way that differed from the United States, where such settlements are notified, and it would be unfair to regard the results with suspicion. Additional concerns were raised about the possibility of making adverse inferences from non-notification under any voluntarily system, as well as the risk of a chilling effect on procompetitive collaborations. As an alternative to notification, some also suggested reinforcing the Commissioner's advisory opinion function under s. 124.1 of the Act as a form of preclearance.

Environmental Collaborations

One area not canvassed in the discussion paper, but raised by numerous stakeholders, was the creation of an exception for collaborations with an environmental purpose, that may otherwise run afoul of the Act's criminal or civil provisions. A number of environmental organizations, and a selection of other stakeholders, recommended allowing an exception to the application of s. 90.1 where there are benefits to the environment greater than the effects of any prevention or lessening of competition. There was also a call to decriminalize collaborations directed at protecting the environment under s. 45. These stakeholders highlighted the importance of encouraging collaborations aimed at establishing environmental standards, coordination to reduce environmentally harmful substances, and sharing the costs of environmental protection measures. Referring to the Australian public interest model, some suggested that as long as these agreements generate sufficient and substantiated environmental benefits and competition is not completely eliminated, the restriction on competition is worthwhile to attain the benefits.

Other

Other topics explored by stakeholders ranged from calls to eliminate the efficiencies exception under s. 90.1, private access to the Tribunal (canvassed below), and repeal of the dedicated provision for financial institutions, among others.

Considerations

Business collaborations are another area where it should be possible to accommodate those concerned with improved outcomes, without introducing an undue amount of compliance uncertainty. The bedrock requirement for an SLPC in civil cases ensures that Bureau enforcement action is only taken where a public protection rationale is present, and it is not unreasonable to expect the Bureau to have the right tools to ensure that result, even if instances are not frequent.

It is clear that Canada's approach to several aspects of reviewing competitor collaborations are noticeably out of step with international practice. A short record of case enforcement cannot on its own be held out as a reason why the law does not need improvement, since its current limited scope may very well be one of the main reasons for a lack of enforcement opportunity or justification. Similarly, a contention that most collaborations are beneficial is no reason not to ensure that the law is better equipped to deal with those that are not – the same reasoning applies to merger review, for instance.

The question of new exceptions from the law for public policy objectives raises its own considerations. Outside of the two efficiencies exceptions and protection of intellectual property rights, the Act generally allows for competing objectives to be realized through the exercise of other governmental authorities, such as a regulated conduct doctrine – ensuring that conduct authorized by other laws will not be prosecuted – or empowering an official such as the Minister of Transport or Finance to grant approvals in the public interest. This ensures that the entire market operates under the same ground rules, and it is not left to self-interested private actors to determine whether their action is, on balance, beneficial to the public. The government can explore different possibilities in order to determine how or whether special dispensation for certain types of collaborative agreement may be offered.

8. Deceptive Marketing

Most questions raised in the consultation paper pertained to concerns around antitrust policy often raised by stakeholders, with a focus on corporate concentration and exclusion of competitors. Truthful information is still an essential ingredient to ensure that business performance is rewarded for the right reasons, and feedback was sought on a more general level in the area of deceptive marketing.

Additional Tools, Clarifications or Presumptions

What we consulted on: The emergence of new technologies and digital platforms in recent years has created new opportunities for businesses to sell their products, while also giving rise to the potential for novel deceptive marketing practices. The Government is considering adopting additional enforcement tools suited for modern forms of commerce.

What we heard: Submissions demonstrated a variety of views on whether the Act's deceptive marketing provisions were sufficient. Those who were satisfied felt that the Bureau need only release enforcement guidelines as necessary to provide enhanced clarity. Some felt that to the extent new provisions were necessary, the government should first work with stakeholders to establish where gaps lie, and then later seek to make additions. By contrast, some felt this process was better handled by other agencies or legislative regimes altogether. Some stakeholders expressed support for a more explicit standard of consumer aptitude in the Act. Certain stakeholders argued that purchasers are today better-informed than ever, and therefore thorough in their understanding and intentional in their purchases, while to the contrary, the Bureau itself has called for the law to presume a more credulous consumer. SMEs and associations representing them also warned that it is often their members who may be more likely to err in representations to the public, and so any increase in severity may hit that sector the hardest.

Certain topics raised by stakeholders included the burden involved in proving an ordinary selling price and addressing failure to disclose material facts. Practices specific to digital commerce, such as the use of personalized advertisements, opt-out services, and deceptive "dark patterns" in website design, were also raised. There were also requests for greater transparency on the Bureau's enforcement decisions and plans, greater focus on representations pertaining to product quality, and more leniency for smaller businesses and first time offenders. General calls were also heard for a more readily enforceable regime or expeditious results. The possibility of a contract annulment remedy was also raised by certain stakeholders, including the Bureau itself.

Some voices cautioned that business practice regulation was not appropriate in the Act where the concern was not deceptive marketing. For example, concern over the use of personalized ads is a separate question from false or misleading representations, and these can carry consumer benefits. On the topic of digital commerce, some felt it unnecessary to focus on disciplining platforms who are both already incentivized to filter out bad conduct, and more likely to design flexible and innovative solutions.

Greenwashing and Sustainability Claims

While the focus of the consultation paper was on emergence of new technologies and digital platforms, numerous organizations highlighted a desire for the Act to be stronger in its response to deceptive or unverifiable environmental or sustainability claims, so called "greenwashing". These stakeholders were fervent in wanting to see additional and more prescriptive measures. Stakeholders felt that under the present regime there is a massive lack of enforcement, allowing companies to profit from sustainability related claims that are not backed by sufficient evidence, misleading well-intentioned consumers into thinking their choices help the environment and disadvantaging companies who are more scrupulous about their publicity, or who truly have undertaken pro-sustainability measures. Emphasis was placed on the inability of individual consumers to identify the false or misleading nature of most sustainability claims following a purchase, unlike many other forms of deceptive marketing, and therefore necessitating more protective rules.

Suggestions for reform frequently alluded to the need to establish recognized environmental standards that could be enforced, the enactment of specific regulations for greenwashing, a need to publicly and proactively substantiate any environmental claims and disclose climate risks, and larger penalties or more tailored remedies for deceptive marketing that leads to environmental impact. There was also a request to implement specific prohibitions, such as making generic claims like "environmentally-friendly" or against planned obsolescence. A common concern was also a need for updated and more prescriptive enforcement guidelines from the Bureau.

Some also recognized the more regulatory and standalone nature of such proposals, believing it must be the product of a whole-of-government effort, with direct input and involvement from domestic and international standards associations.

Other

Other topics surfaced under the general rubric of deceptive marketing included: clearer definitions of concepts in the Act; anonymous online sales; advertisement of stolen goods; clarity in setting monetary penalties where zero-price goods and services are concerned; marketing to youth; deception in business-to-business contracting; inter-agency cooperation in enforcement; and representations as to employee pay and benefits.

Considerations

With the exception of calls for additional greenwashing measures, most felt that general-application provisions supported by practical Bureau guidance continued to be appropriate for an economy-wide framework law such as the Act. While some voiced concern over emerging deceptive practices in the digital economy, there was not an obvious conclusion to be drawn that the Act's current provisions were unable to tackle these instances, insofar as they truly involved deceptive marketing, as opposed to other concerns over consumer well-being. Rather there was more of a recognition that novel facts or circumstances may be more difficult to identify, and enforcement efforts may be challenging.

The government is committed to reviewing all levers available to it to protect and promote environmental sustainability. An example is the ongoing efforts by Environment and Climate Change Canada to develop a regulatory framework for plastic packaging and labelling rules for recyclability and compostability. ISED notes in this respect that the establishment of external legal regimes, at both federal and sub-federal levels of government, also helps to fix the legal landscape against which the truthfulness of vendor claims can be measured under the Act.

9. Administration and Enforcement of the Law

The functions of the Bureau and enforcement procedures are an overarching topic in the background of any discussion of reform to substantive enforcement provisions. Stakeholders offered a variety of views on many different topics, with a select few garnering the most interest.

Bureau Decision-Making Authority

What we consulted on: Canada's system is highly adversarial and adjudicative: the Bureau must seek authorization to compel any form of information other than a supplementary information request in merger review, and it has no ability to render binding decisions or set down rules. The Government is considering giving the Bureau more leeway to act as a decision-maker, e.g. through simplified information-collection, or a first-instance ability to authorize or prevent forms of conduct.

What we heard: A majority of submissions commented that the Bureau already has sufficient tools to fulfill its role as an enforcement agency, despite the need for third-party oversight of most binding decisions. The burden involved in seeking authorizations, for example in the context of information production orders, was not seen to be unduly onerous or out of step with reasonable expectations for a law enforcement agency. There were concerns expressed about jeopardizing the separation between investigative and adjudicative decisions, raising issues with respect to procedural fairness, institutional bias and vulnerability to politicization.

While other models abroad do make use of an administrative system with a decision-maker of first instance, it was noted that these agencies largely contain other mitigating aspects, including functional separation between roles, internal checks, and decisions made by a multi-member council. Those who advocated for change often suggested adopting a model similar to the U.S. Federal Trade Commission to contain any added authority. Some stakeholders also expressed interest in positioning the Bureau as an agency to oversee industry codes of conduct and making more practical use of the Act's s. 124.1, through which the Bureau can issue legally binding opinions upon request.

Market Studies

What we consulted on: Unlike its G7 counterparts, the Bureau does not have formal market study powers to support its role as a competition advocate. The Government is considering pursuing a reasonable path with respect to the collection of information outside of the enforcement context, such as for the purpose of market studies, taking both public value and private burden into account.

What we heard: There was a great deal of interest around this proposal. While the Bureau already conducts studies periodically, it must rely on voluntarily provided information from industry players. The Bureau's market study into the retail grocery sector coincided with the consultation period, and was known to be enduring mixed results in terms of industry cooperation, and these facts undoubtedly provoked many reactions in the submissions received.

More than two-thirds of stakeholders who commented on the possibility of information-seeking powers to conduct market studies were in favour of such a change. This included some voices who were otherwise unenthusiastic about reforming enforcement provisions. There was a great deal of value placed behind the analysis and recommendations that the Bureau would be in a position to make with more complete information, and the positive experiences in international jurisdictions were noted. Some suggested that healthier competitive behaviour throughout markets could be expected with increased monitoring, and that studies would also reveal additional matters to target in investigations, while others wished for the Bureau to be able to impose remedies following the conclusion of a study. Few opinions opposed every aspect of a market study framework – many acknowledged the utility that can come of such an exercise. However, several submissions were concerned with potential overreach, the risk of politically-motivated fishing expeditions, and the resource drain that studies could impose on companies not alleged to have breached the Act. Several expressed a willingness to contemplate the question, provided that sufficient guardrails are established, such as judicial oversight, clearly defined terms of reference, confidentiality, and due process.

Private Enforcement

What we consulted on: While private parties are now able to bring abuse of dominance cases directly to the Competition Tribunal, at present there does not appear to be a strong incentive for them to do so. The Government is considering allowing private parties to seek compensation for damage suffered from civilly reviewable (non-merger) conduct under the Act.

What we heard: Albeit in various degrees, a significant number of stakeholders who commented on the issue of private enforcement agreed that reform is needed to recalibrate the balance of incentives associated with the current framework. The Bureau is limited in resources and must prioritize cases of national importance, which inevitably leads to many smaller or less certain matters going unchecked. Privately initiated cases before the Tribunal are largely intended to help bridge this gap in some forms of civil enforcement, with a focus on securing corrective orders – i.e. assuming the Commissioner's usual role – rather than seeking compensation for damage. The latter is available only under private lawsuits allowed by s. 36 of the Act for losses suffered due to criminal conduct.

To date, no successful private case has been litigated at the Tribunal, and many stakeholders pointed to the absence of strong financial incentives as one of the reasons why they so rarely occur. The other most often cited reason was what the stakeholders perceived as a particularly rigid leave threshold that the Tribunal has interpreted to mean a substantial effect must be apparent across an applicant's entire business, and not merely one part of it. For the most part, this requires businesses to be injured to such a degree that they may no longer be in a position to undertake a case, while other parties – affected consumers or public interest groups, for example – have no standing at all.

Many submissions therefore recommended allowing the Tribunal to award damages alongside remedial orders, or else opening up civil conduct to lawsuits for damage recovery through s. 36 (or a similar provision), or some combination of both. A less strict leave threshold was also sought, so as to enable new and larger classes of applicant. A majority of those in favour of reform also suggested expanding the scope of civil provisions available for private enforcement to include competitor collaborations under s. 90.1, drawing no distinction between harm caused by a single dominant firm or two or more firms together.

Many voices, particularly among the larger business community and among legal practitioners whose practice was not focused on litigation, preferred the status quo. They expressed concerns that the threat of private challenges under s. 90.1 would result in chilling legitimate and pro-competitive collaborations, and that allowing financial awards either by the Tribunal or in court proceedings for damages could open up the floodgates for unmeritorious, frivolous, and strategic litigation that is not currently incentivized to the same extent. There was an objection expressed about the legal inconsistency of allowing financial compensation based on conduct that is not actually unlawful in the manner of a tort, but only subject to correction under the Act based on economic effects. However, there are stakeholders who would resolve this conflict by simply declaring anti-competitive conduct to be unlawful as such.

Some concerns were also expressed about the level of expertise of the general courts in relation to that of the Tribunal, the potential burden on the judicial system, and the unease with which private and Commissioner-led actions could co-exist, particularly if heard in two different fora. These stakeholders argued that should changes be considered, a high bar to obtain leave must be maintained and the Tribunal, as gatekeeper, be allowed to award costs against leave applicants as a potential deterrent to unfounded settlement-hunting. A few suggested the lack of jurisprudence may be attributed to the fact that access was unavailable for abuse of dominance before 2022, and the effects of this development should be monitored before proceeding further.

Tribunal Procedure

Ensuring an efficient and rapid litigation procedure without compromising procedural fairness has long been a preoccupation of all sides of the competition policy community. The longstanding challenge has always been in devising a means to achieve this result. Stakeholders put forward an array of ideas for improvement, most often the imposition of statutory timelines for Tribunal proceedings. A number of stakeholders referred to the Canadian International Trade Tribunal for inspiration, with its strict timeframe for the release of decisions and reasons. These stakeholders called for a limited duration for litigation (unless extended by mutual consent), and a deadline by which the Tribunal must issue its decisions and reasons.

The role of lay members was a common theme as well, with some comments calling to remove this aspect of the Tribunal in favour of external experts or consulting economists, more akin to court proceedings. Some called for the elimination of the Tribunal itself, with recourse in competition matters placed in the hands of general courts. Some saw the Tribunal instead transformed into a commission with expanded access for private enforcement and public participation. Those who favoured keeping lay members had varying views. Some held views that membership should reflect a broader cross-section of society – e.g. representing SME, Indigenous, labour, non-profit, civil society or other interests. An opposite view was also heard, that lay members are meant to assist judges in understanding economic evidence, and should if anything dutifully avoid imposing external values.

Certain stakeholders called for an ability for private parties to refer questions to the Tribunal, particularly on time-sensitive merger matters where obtaining certainty is at a premium.

Decriminalization

Since the Act's origins as the penal Combines Investigation Act, a gradual move toward civil enforcement has been underway. A hybrid approach was first instituted with the new Act in 1986, a civil deceptive marketing regime was added in 1999, and then 2009 amendments saw a move away from criminal enforcement of non-cartel collaborations and certain pricing practices. Only a handful of stakeholders commented on the possibility of further decriminalization, with those expressing favourable opinions showing a general openness to further movement. It is widely understood that civil enforcement allows for more responsiveness than criminal prosecution, with its bifurcated structure (Bureau and Public Prosecution Service of Canada) and exacting evidentiary requirements. Some however cautioned against additional compliance burden for businesses from differing or duplicative requirements, and cited the possibility of a resource drain for the Bureau.

Although specific proposals were scant, some commentators suggested that it could be useful to have civil provisions that address the same cartel behaviours in s. 45, retaining its per se approach without requiring proof of anticompetitive effects, or else subject to a rebuttable presumption of harm for this conduct.

Bureau's Place within Government

Although not a common area of comment, a few commentators argued that the Bureau should be completely separated from the ISED portfolio, such that the Commissioner would report directly to Parliament and be fully responsible for the Bureau's budget. Notwithstanding the Bureau's independence in enforcement, these stakeholders found it problematic for the Bureau to be under any influence from the Department in charge of industrial policy. Others called for legislative authorization for the Bureau to collaborate further with other government agencies such as the Office of the Privacy Commissioner on investigations or other matters of compliance with the law.

Transparency of Bureau Activity

A number of submissions called for greater transparency, oversight, or public participation in Bureau activity. Some requested more detailed annual reporting, similar to that of the U.S. Federal Trade Commission, through which annual performance plans with strategic goals, targets, metrics and results could be communicated to the public. In addition, there were a number of calls to disclose or publish more information about investigations, reasoning informing decisions (including with respect to matters not pursued), as well as outcomes and retrospective analysis. Some other notable comments included providing better and clearer resources to help SMEs, more input from provinces and territories, regular working groups to canvass stakeholder opinion, and additional disclosure on how Bureau activities support Canada's environmental and climate goals.

Other

Other comments received falling generally under the category of administration and enforcement included further funding to the Bureau to increase its research capacity; granting the Minister of Innovation, Science and Industry additional oversight powers in certain aspects of the Act; and incorporating additional lenses, such as for sustainability or labour, into all aspects of the Bureau's enforcement efforts.

Considerations

Unquestionably, the greatest volume of feedback received pertained to two main areas: market study powers and private enforcement.

While no item of discussion approached complete consensus among stakeholders, the introduction of market studies backed by information-collection powers appeared to be the one with the greatest alignment, particularly as this is a common feature of competition regimes worldwide. In any framework, it would be possible to accommodate concerns of burden or overreach through appropriate safeguards that could cover a triggering procedure, transparent terms of reference setting out scope and duration, opportunities to contest various decisions, and limits on the use of information collected. All of these considerations will undoubtedly be relevant as the government considers how to proceed.

The question of privately-led cases and financial compensation also elicited a great deal of enthusiasm among a diverse set of stakeholders. In considering next steps, the Department once more recognizes that it would be possible to consider reforms designed, on the one hand, to better serve the goals of private enforcement than the narrow provisions featured in today's Act might, while placing appropriate boundaries on any new framework to reduce the potential for exploitation by cynical actors.

With regard to some of the other suggestions put forward, notably having the Bureau oversee industry codes of conduct, it is worth reiterating that direct management of business conduct is in many cases reserved for provincial and territorial jurisdiction in Canada's federal system.

10. Other Areas of Comment

Purpose

The Act's purpose clause in s. 1.1 contains a single primary purpose – "to maintain and encourage competition in Canada" – with the list of objectives that follow being desired results of that competition, not alternative purposes. This being a largely aspirational statement rather than a legal direction, the discussion paper did not devote a great deal of discussion to the topic. The Act's enforcement provisions are largely self-contained and directly govern marketplace behaviour, and therefore occupied a much larger share of the discussion.

Many commentators nevertheless offered opinions on the clause, with views generally divided on whether amendments were desirable. The general consensus among those who were comfortable with the status quo was that the purpose of the Act has stood the test of time for the past several decades, and efforts to alter it appeared to be an attempt to introduce non-competition concerns that could lead to business uncertainty or unpredictable enforcement. Other policy tools remained available to layer on top of a statute focused on promoting competition. Others who favoured updating the purpose clause were divided between those who would narrow it, such as an explicit focus on economic efficiency, and those who advocated for broadening the scope to include other considerations. These factors ranged from general calls to consider "fairness", "inclusive growth", and "political and social problems", to more specific requests to include mention of items such as the environment, climate change and labour.

Big Tech Regulation

While many commentators noted the particular and often unique challenges to traditional economic models that arise in the digital context, there was limited support for embarking on a program of comprehensive digital platform or "Big Tech" regulation, as is currently underway in the European Union with the Digital Markets Act. While some stakeholders proposed specific rules or presumptions linked to digital dominance in the context of discussing existing enforcement provisions of the Act, only a select few felt that a new rules regime was warranted. More commonly, stakeholders preferred to observe developments in Europe before following in its footsteps, or felt that standard competition law remained flexible enough to confront novel situations of competitive harm. Several commentators opined that Europe's efforts were not pro-competitive but in fact likely to stifle innovation and the natural competitive process. Most appeared to recognize that any attempt to establish rules governing large platforms fell outside the boundaries of competition law as such, but rather was more likely a form of sectoral regulation.

Enforcement Matters

Several stakeholders raised allegations of anti-competitive conduct in the marketplace, as understood under the Act in its present state. While ISED has no jurisdiction to take enforcement action, the Department encourages anyone with information about a form of behaviour that may be remediable under the Act to bring its concerns to the Bureau. Its complaint form can be found online at this link.

Other Policy Areas

Submissions also detailed recommendations touching upon other statutes and policy areas, including taxation, support to business, privacy and personal data governance, artificial intelligence, beneficial ownership transparency, intellectual property, labour regulation and telecommunications, among others. Where appropriate, ISED will convey viewpoints to the appropriate government agencies.

V. Conclusion

Engagement in ISED's consultation was highly encouraging, demonstrating that Canadians are invested in the important issues at both the heart and margins of competition policy. Diverse in origin and perspective, well-articulated and poignant, the feedback received raised numerous questions. Affordability, consumer protection and concerning levels of concentration in certain sectors of the economy were top of mind, as were issues related to maintaining a framework conducive to investments and environmental sustainability.

Some of the questions raised are not easy to resolve to the satisfaction of all. This was not an unanticipated result: the Government proceeded with a first set of amendments to the Act in 2022 in large part because the debates around those matters had already played out in various public and private fora, and solutions to specific problems were apparent to policymakers. The remaining items, almost by definition, were likely to yield starkly contrasting views among different stakeholders. This is precisely what occurred: ISED was informed both that the Act and its enforcement regime were toothless and outdated, but also that any attempts at modernization threatened to chill investment and innovation. The Act was, to some, glaringly inadequate when held up for international comparison, yet others insisted that it was exemplary and top-of-the-line when measured against Canada's foreign partners. Some groups explained that their members were suffering under the status quo, while others foretold negative economic consequences in the event that the status quo were abandoned.

What became clear to ISED in reviewing feedback is that the participants were, in many respects, speaking about different things. Those most vocal in calling for reform were generally focused on outcomes that the law was expected to deliver – a better quality of life, lower prices, more contested markets, and strengthened agency for their constituents, with less concern as to how the law went about this task or what that meant for the businesses operating under it. Those cautioning against reform were, for the most part, focused on precision and certainty, to ensure that the route to compliance and the advice formulated to arrive there could be clear and unambiguous.

The Department is mindful that a framework law must apply broad, yet understandable principles. It cannot be the vehicle to resolve every shortcoming in the free market, to address every consumer grievance or perceived unfairness that may occur between businesses. Crucially, it cannot dictate specific outcomes, particularly in the unique legal environment of Canada's federal system and its separation of powers between the federal and sub-federal levels.

At the same time, it is clear that a wide variety of stakeholders – individual Canadians, consumer groups, unions, civil society organizations, academics, as well as several sectoral business associations – felt that the current Act and its enforcement framework had not consistently achieved its objectives and led to suboptimal outcomes. Providing the Bureau a modern and relevant set of tools to carry out its mandate and establishing a sound framework for the promotion of dynamic markets is paramount to meet the concerns of Canadians, notably with regard to affordability. It is also key to ensure that businesses of all size can win and grow when they innovate and offer superior goods and services at better prices.

Legal improvements can, do and must happen regularly in order for our laws to evolve with the economy, technology and society. The task at hand is to consider how best to rebalance the regime to better limit concentration and deter anticompetitive practices, while avoiding overcorrection and preserving certainty in compliance. Thanks to the broad and thoughtful participation in this public consultation, the government now feels it is appropriately equipped to develop well-calibrated proposals for Parliamentary consideration.

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