A Q&A guide to competition law in Canada.
The Q&A gives a high level overview of merger control, restrictive agreements and practices, monopolies and abuse of market power, and joint ventures. In particular, it covers relevant triggering events and thresholds, notification requirements, procedures and timetables, third party claims, exclusions and exemptions, penalties for breach, and proposals for reform.
To compare answers across multiple jurisdictions visit the Competition law Country Q&A tool.
This Q&A is part of the PLC multi-jurisdictional guide to competition and cartel leniency. For a full list of jurisdictional Competition Q&As visit www.practicallaw.com/competition-mjg.
For a full list of jurisdictional Cartel Leniency Q&As, which provide a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities in multiple jurisdictions, visit www.practicallaw.com/leniency-mjg.
Primary legislation. Mergers and acquisitions are subject to the Competition Act. The Competition Act potentially applies to all aspects of anti-competitive conduct, from price-fixing, bid-rigging and resale price maintenance to mergers and abuse of a dominant position.
The Commissioner of Competition (Commissioner) is responsible for enforcing the Competition Act. The Commissioner and her staff at the Competition Bureau (Bureau) (an organisational unit of the federal Industry Department), are responsible for investigating anti-competitive acts. The Commissioner can bring matters that are subject to review under the Competition Act before the Competition Tribunal (Tribunal). This is a mixed quasi-judicial adjudicative body with judicial and lay members. Criminal prosecutions are referred to the Attorney General and prosecuted in the criminal courts (see box, The regulatory authority).
A non-Canadian national acquiring control of a Canadian business can also be subject to a pre-merger review under the Investment Canada Act (ICA). If an acquisition is reviewable, the responsible minister must be satisfied that the transaction is likely to be of net benefit to Canada. The initial review period is 45 calendar days, but can be extended. The ICA also provides for a national security review mechanism for any Canadian transaction involving an acquirer ultimately not controlled in Canada.
Secondary legislation and guidance. The Competition Tribunal Act established the Tribunal. The Bureau has issued numerous helpful guidelines, pamphlets and bulletins, including the:
Merger Enforcement Guidelines (MEGs), last revised in October 2011.
Merger Review Process Guidelines 2009.
Fees and Services Standards Handbook for Mergers 2010.
The Commissioner is responsible for enforcing the Competition Act, and the Commissioner and her staff at the Bureau are responsible for investigating anti-competitive acts (see above, Regulatory framework).
The pre-notification provisions of the Competition Act apply to transactions involving an operating business and the acquisition of assets, voting shares or an interest in a combination, or the creation of an unincorporated combination or amalgamation.
Thresholds determine whether a transaction is subject to pre-merger notification. Even if a transaction does not have to be notified, the substantial merger provisions of the Competition Act apply and the Commissioner has up to one year after completion of a merger to challenge it based on a substantial lessening or prevention of competition (see Question 7).
Two thresholds must be met to trigger pre-merger notification:
The size-of-parties threshold.
The size-of-transaction threshold.
The size-of-parties threshold. This requires that the parties to the transaction, with all of their affiliates (including all companies linked by a voting shareholding of more than 50%), together have either assets in Canada, or gross revenues from sales in, from and into Canada, that exceed Can$400 million (as at 1 December 2011, EUR1 was about Can$1.3).
In a share acquisition, the parties to the transaction are the acquiring party and the target.
The size-of-transaction threshold. This threshold is met where the transaction involves an operating business and:
In an acquisition of assets, the value of the assets in Canada, or gross revenues from sales in and from Canada generated from those assets, exceeds Can$70 million (this amount is adjusted annually).
In an acquisition of a company's voting shares:
more than 35% of the voting shares of a private company or more than 20% of the voting shares of a public company are acquired (and, if the acquirer already has more than 35% or 20%, as the case may be, then when more than 50% of the voting shares of a private or public company are acquired); and
the value of the assets in Canada owned by the target and its subsidiaries or gross revenues from sales in and from Canada generated from those assets, exceeds Can$70 million (this amount is adjusted annually).
In an amalgamation of two or more companies, the value of the assets in Canada owned by the continuing company and its subsidiaries, or the gross revenues from sales in and from Canada generated from those assets, exceeds Can$70 million (this amount is adjusted annually).
In a combination where two or more persons propose to carry on business jointly (combination) other than through a corporation (for example, a joint venture or partnership) and:
assets that form part of an operating business are contributed by one of the persons; and
the value of the assets in Canada that are the subject matter of the combination, or the gross revenues from sales in and from Canada generated from those assets, exceeds Can$70 million.
In an acquisition of an interest in an existing combination:
the interest acquired entitles the person to receive more than 35% of the profits of the combination or more than 35% of its assets on dissolution (and if the acquirer already has more than 35%, then when the 50% threshold for either test is exceeded); and
the value of the assets of the business in Canada, or gross revenues from sales in and from Canada generated from those assets, exceeds Can$70 million.
Calculation of assets and revenues. Assets and revenues are generally calculated using book values in the most recent audited financial statements (for a 12-month period) for the relevant entity, although there are certain exceptions.
Exemptions. In certain circumstances, the parties to a transaction may be exempt from the filing obligation, even where both thresholds are met (for example, certain joint ventures, transactions among affiliates and asset securitisations).
Mergers and acquisitions that exceed the relevant thresholds must be pre-notified (Part IX, Competition Act) (see Question 2).
The transaction must be notified before it is completed.
The Commissioner can issue an advance ruling certificate (ARC) at the request of the parties at any time before the conclusion of a transaction. She can issue an ARC at her discretion if she is satisfied that she would not have sufficient grounds to apply to the Tribunal under the substantive merger requirements (Competition Act) (see Question 7). An ARC has both of the following effects:
The parties are exempted from the pre-merger notification requirements.
The Commissioner is precluded from challenging the merger under the Competition Act.
The Commissioner usually issues an ARC where it is clear that the proposed merger raises no competition issues. When an ARC is requested, the Bureau could, in some cases, require substantially more information from the parties than would be required if only a notification is filed, and the review process could take longer.
Parties can also seek informal guidance from the competition authorities before a filing or even if a formal notification is not required (bearing in mind that any anti-competitive merger, whether notifiable or not, can be challenged) (see Question 7).
Each party to a transaction must notify. In an acquisition of a corporation's shares, that corporation is deemed to be one of the parties.
The transaction must be pre-notified to the Commissioner at the Bureau Merger Notification Unit.
Notification is made on a pre-notification form. The information included in the notification form is typically insufficient to assess the proposed transaction in a meaningful way. To assist the Bureau's task, the parties generally provide additional information on a voluntary basis. Additional information usually includes a description of the relevant product and geographic markets, and an estimate of the parties' market shares.
In addition to information it receives through notification, the Bureau has the statutory power to request additional information (either by issuing a supplementary information request or by seeking a court order). This can be exercised in more complex transactions that may raise significant issues.
Where the parties submit a request for an ARC, but do not file notifications, the ARC request usually contains submissions to the effect that the transaction does not raise competition concerns. The ARC request usually sets out information that allows the Commissioner to reach this conclusion, such as:
A description of the parties and the transaction.
Relevant product and geographic markets.
The concentration that would result from the proposed transaction.
A notification fee of Can$50,000 applies.
A notified transaction cannot be completed until the applicable waiting period has expired or been waived (see Question 4).
Parties to relevant transactions must establish whether the transaction satisfies all of the applicable threshold tests (see Question 2). If it does, and no exemptions apply (see Question 2, Thresholds: Exemptions), pre-merger notification is required. The parties can either file a request for an ARC, or file a pre-notification form (see Question 3, Formal/informal guidance and Form of notification).
If a proposed transaction is subject to a pre-merger notification requirement, the parties cannot close the transaction unless the completed notification form has been given to the Commissioner and the applicable waiting period (initially 30 days) has expired or has been waived by the Commissioner. The Commissioner is authorised, without judicial oversight, to issue a request for information "relevant to the Commissioner's assessment of the proposed transaction" within 30 days after the submission of pre-notification filings. If such a supplementary information request (SIR) is issued, the waiting period is automatically extended until 30 days after a complete response to the SIR is filed.
Legally, a transaction can be completed after the expiry of the applicable waiting period, unless the Tribunal has issued an order prohibiting the transaction (see Question 8). If the proposed transaction is subject to pre-merger notification under the Competition Act and involves a transportation undertaking, the Canada Transportation Act must also be complied with (see Question 12).
In practice, the Bureau's review sometimes takes longer than the prescribed waiting period. Although the parties are legally entitled to close when the waiting period expires, they often prefer to wait for the Bureau's response. The Bureau generally undertakes to advise the parties within a given time frame whether there are sufficient grounds to start proceedings before the Tribunal.
After a notification is filed, the Bureau informs the parties as to how it will classify the proposed transaction. The classification depends on the complexity of the transaction and the seriousness of the issues involved. According to service standards established by the Bureau, depending on which category the transaction falls into, the Bureau undertakes to complete its review within the corresponding period:
Non-complex: 14 calendar days.
Complex: 45 calendar days (where a SIR is issued, the end of the waiting period).
At the end of the Bureau's review, the Commissioner does one of the following:
Approves the transaction and issues a no-action letter or an ARC (see Question 3, Formal/informal guidance).
Agrees to remedial steps with the parties to deal with the anti-competitive aspects of a transaction.
Applies to the Tribunal for an order prohibiting the merger or for other remedial orders (see Question 8).
Applications to challenge a merger can be brought by the Commissioner before closing or within one year of its completion.
For an overview of the notification process, see flowchart, Canada: merger notifications.
While the existence of a transaction may become known (through company press releases or if the competition authorities make third-party contacts with persons such as customers, suppliers or competitors) the content of a filing is kept confidential (see below, Automatic confidentiality).
Once the Bureau has completed its review, and after the transaction has otherwise become public, the Bureau may issue a press release containing its conclusions. In more complex cases, it may also issue a background explanation of the rationale for its conclusions.
In the rare cases where the Bureau objects to a transaction and challenges the merger before the Tribunal, proceedings before the Tribunal are public, although the Tribunal can order that some evidence be given in private in certain circumstances.
Information provided to the competition authorities (in either the pre-notification form, an ARC application or voluntarily) must be kept strictly confidential, except for the purposes of communicating with other Canadian law enforcement agencies, or for the administration or enforcement of the Competition Act.
The Commissioner generally respects requests to keep a proposed transaction confidential if formal notification has not been made (and the statutory waiting period has not started to run). If a judicial proceeding is initiated, relevant, non-privileged information can be used as evidence.
When they become aware of the transaction, third parties can, and do, make representations by contacting the Mergers Branch of the Bureau.
Third parties generally do not have the right to access documents filed by the merging parties.
If the matter is brought before the Tribunal, third parties can, in limited circumstances, intervene in the process.
The substantive merger provisions of the Competition Act apply to all mergers and acquisitions, irrespective of whether pre-merger notification is required. The term merger includes a much larger group of transactions than those subject to pre-merger notification. It includes the acquisition or establishment (whether by purchase or lease of shares or assets, by amalgamation or by creation of a joint business or otherwise) of control of a significant interest in the whole or a part of a business of a competitor, supplier, customer or other person.
When evaluating a proposed merger (whether under a pre-merger notification or otherwise), the Commissioner must consider whether the merger does or is likely to substantially prevent or lessen competition. The MEGs describe the merger enforcement policy of the Bureau and provide guidance on the methodology used in assessing mergers. The Commissioner will conclude that a merger substantially prevents or lessens competition if it is likely to create, maintain or enhance the ability of the merged entity, unilaterally or in co-ordination with other firms, to exercise market power. Market power is defined as the ability of a single firm or group of firms to maintain prices above the competitive level for a significant period of time.
The Tribunal will not make a remedial order in relation to a merger or proposed merger (see Question 8) if it finds that both (Competition Act):
The merger is likely to bring about gains in efficiency that will be greater than, and will offset, the effects of any lessening of competition that will or is likely to result from the merger.
The gains in efficiency are not likely to be attained if the order was made.
The Commissioner will also not usually challenge a transaction if the acquired party is a failing firm and certain other conditions are met.
A number of factors may be considered in determining whether a merger is likely to substantially lessen or prevent competition, including:
The extent to which acceptable substitutes are available.
Barriers to entry.
The extent of change and innovation.
The strength of remaining competitors.
If the Tribunal finds that a merger meets the substantive test, it can prohibit the merger. If a merger is completed, the Tribunal can unravel the merger and order divestiture of shares or assets. The Tribunal can also make other remedial orders, including some behavioural remedies, for example, to ensure supply or prevent discrimination, but only with the consent of the party against which the order is directed.
When the Commissioner institutes proceedings against a proposed merger, she usually seeks an interlocutory order pending the outcome of the proceedings. In addition, if the Commissioner believes that the parties may implement a transaction before she has completed her review, she can apply to the Tribunal for an interim order forbidding any person from completing or implementing the transaction. The Tribunal can issue an interim order when it finds that, in the absence of such an order, a party to the proposed merger is likely to take an action that would substantially impair the ability of the Tribunal to remedy the effect of the proposed merger on competition, because that action would be difficult to reverse.
In addition, the Commissioner and the merging parties can, at any stage of the merger review, sign a consent agreement based on terms that address competition concerns and that has the same force and effect as a Tribunal order once it is registered with the Tribunal.
There is no deadline by which remedies must be offered.
The Commissioner is not a regulator; she is responsible for the administration and enforcement of the Competition Act but does not make decisions that must be complied with. The Tribunal and the courts have decision-making powers (such as prohibiting a merger, determining the culpability of a defendant or ordering a search and seizure).
Every person who, without good and sufficient cause (which that person must prove), fails to pre-notify a proposed notifiable transaction, is guilty of a criminal offence and is subject to a fine not exceeding Can$50,000. The parties may also be liable for administrative penalties not exceeding Can$10,000 for each day on which they have failed to comply.
Every person who, without good and sufficient cause (which that person must prove), completes a merger before the applicable waiting periods have expired, is guilty of a criminal offence and is subject to a fine not exceeding Can$50,000. The parties may also be liable for administrative penalties not exceeding Can$10,000 for each day on which they have failed to comply (see above, Failure to notify correctly).
Failure to notify, or implementation of a transaction before expiry of the legal waiting period (see Question 2), may also affect the validity of the transaction, as the court may order the parties to dissolve the transaction or dispose of assets or shares.
Failing to observe a decision of the Tribunal or the courts can result in either or both of:
A fine at the discretion of the court.
Imprisonment for not more than five years.
Parties can appeal a decision of the Tribunal to the Federal Court of Appeal (they must have leave for an appeal on a question of fact). The appeal must be made within 30 days (and within ten days for interim decisions).
Generally, third parties do not have a right of appeal.
If restrictive covenants are made in good faith and are an integral aspect of the merger (such as commercially reasonable non-compete covenants), they are unlikely to give rise to any issues. Restrictive covenants that are unnecessarily broad and negatively impact on competition may still be subject to the provisions of the Competition Act that restrict anti-competitive agreements (see Question 13), even if the merger is cleared.
Many industries (for example, broadcasting and transportation) are subject to specific regulation, which can, in certain circumstances, suspend the application of the Competition Act. The Tribunal cannot prevent a merger of financial institutions that the Minister of Finance or the Minister of Transport certifies to be in the public interest.
Pre-merger notification requirements under the Competition Act may also trigger notice obligations under the Canada Transportation Act if the transaction involves an air transportation undertaking. In these circumstances, the merging parties must file a notification with the Minister of Transport and seek any required approval.
The Competition Act prohibits or allows the review of specified anti-competitive conduct. There is no system of regulation of such agreements, practices or conduct (that is, they are not prescribed and do not require prior approval or consent).
Many horizontal and vertical agreements and practices could trigger the application of the Competition Act. The Competition Act provides for a criminal and civil regime.
The Commissioner and Bureau are responsible for investigating anti-competitive acts (see Question 1).
Provisions have been made for the following principal offences:
Cartel. Section 45 of the Competition Act prohibits as a per se offence (that is, the competitive effect of the cartel is not relevant to the issue of the offence being committed) any agreements among competing suppliers to fix prices, allocate markets or restrict output. Parties to such an agreement may defend a charge if they can prove that the competitive restraint (that is, the agreement on prices, markets or output) is ancillary and necessary to a broader or separate agreement that is not itself a prohibited hard-core cartel. However, the defence cannot eliminate all risk that arrangements such as co-marketing agreements or other joint ventures between competitors will constitute a criminal offence.
Prior to amendments to the Competition Act which came into force on 12 March 2010, section 45 prohibited anyone from conspiring, agreeing or arranging with another person to prevent or lessen competition unduly in the production, sale, purchase or supply of a product. The amendments will likely make it easier for the prosecution (and civil plaintiffs) to prove price-fixing conspiracies and will more than double the potential penalties on conviction. They also create a dual track regime under which agreements among competitors are considered.
Bid-rigging. Illegal bid-rigging occurs when one or more persons:
agree not to submit a bid in response to a call or request for a bid, or to withdraw a bid submitted in response to a call or request for a bid; or
agree on the contents of the bid (unless the agreement or arrangement was made known to the person calling for the bid).
Bid-rigging is a per se offence.
Civil provisions have been made for the following:
Civil competitor agreement provision. Agreements or arrangements between competitors (other than price-fixing, market allocation and output restrictions) that substantially prevent or lessen competition are civilly reviewable before the Tribunal, but not subject to criminal sanctions. The Commissioner can bring an application to the Tribunal for an order prohibiting any person from doing anything under the agreement, but the conduct is not subject to monetary penalties. Parties can argue that the pro-competitive efficiencies of the arrangement outweigh an agreement's anti-competitive effects.
Price maintenance. Price maintenance under section 76 of the Competition Act can constitute a reviewable practice and give rise to an order of the Tribunal (on application by the Commissioner and, in certain circumstances, affected private parties) if the conduct has or is likely to have an adverse effect on competition in a market. Price maintenance occurs if a supplier:
by agreement, threat or promise, influences upward, or discourages the reduction of the price at which another person resells a product. (Restricted conduct can therefore be either unilateral or an agreement.) Retail prices suggested by a supplier are presumed to constitute price maintenance, unless the supplier makes it clear that the buyer is under no obligation to resell at the suggested prices and that there would be no sanctions against the buyer if it does resell at lower prices;
refuses to supply a product to, or otherwise discriminates against, a person because of that person's low pricing policy.
The Commissioner or, in certain circumstances, private parties can seek an order from the Tribunal prohibiting the practice or requiring supply.
Refusal to deal. A refusal to deal or supply under section 75 of the Competition Act can constitute a reviewable practice and give rise to an order of the Tribunal if all the following conditions are met:
the business of the would-be buyer is substantially affected by the refusal to supply;
there is insufficient competition between suppliers (for example, the refusing supplier is in a monopoly or quasi-monopoly position);
the refused product is in ample supply;
the would-be buyer is willing to meet usual trade terms;
the refusal to deal has an adverse effect on competition.
The Commissioner or, in certain circumstances, private parties can seek an order from the Tribunal requiring supply.
The Competition Act does not prohibit a refusal to supply based on valid business reasons, such as the fact that the buyer is a poor credit risk or the supplier's business policy is not to sell directly to end users.
Exclusivity, market restriction and tied selling. Practices that restrain customers' freedom to act as they wish under section 77 of the Competition Act can lead to Tribunal review. These are:
exclusivity agreements, where a supplier requires a buyer to deal only or primarily in the supplier's products;
market restriction agreements, where the supplier requires a buyer to serve only a defined market;
tied selling, where the supplier agrees to supply a product only if the buyer agrees to purchase another product.
These practices are not prohibited as such. They only give rise to a Tribunal order, at the request of the Commissioner or, in certain circumstances, private parties, if both:
a major supplier engages in them; and
they result in a substantial lessening of competition.
Abuse of dominance. See Question 27.
The Competition Act also prohibits, through a combination of criminal and civil provisions:
Deceptive marketing practices.
Some forms of telemarketing.
The Competition Act applies to both formal and informal practices.
There are general exemptions for:
Collective bargaining activities.
Certain agreements among travel agents.
Securities underwriting agreements.
Agreements relating to amateur sport.
There are other exemptions to specific provisions throughout the Competition Act (including certain agreements among affiliates).
There are no specific exclusions for de minimis restrictive agreements but the Commissioner and the prosecution may choose to exercise prosecutorial discretion and not pursue certain practices that do not have a material impact.
Where conduct is required or authorised by another statute or regulatory regime, the regulated conduct may be excluded from the application of the Competition Act.
There are no applicable statutes of limitation (see Question 25).
It is possible to apply to the Bureau for a written binding opinion in respect of a proposed arrangement.
There is no general requirement for notifying agreements (see above, Notification).
There is no general requirement for notifying agreements (see above, Notification).
There is no general requirement for notifying agreements (see above, Notification). Fees associated with obtaining an opinion range from Can$1,000 to Can$15,000, depending on the subject matter (see above, Informal guidance/opinion).
Under the Competition Act, the Commissioner can make a formal inquiry on her own initiative or if directed to do so by the Minister of Industry.
In limited circumstances, third parties can also cause the Commissioner to make a formal inquiry. Specifically, any six persons resident in Canada, who believe that an anti-competitive practice is being engaged in or an offence has been committed under the Competition Act, can lodge a complaint with the Commissioner detailing the:
Nature of the alleged practice or offence.
Identity of the perpetrators.
Evidence relied on.
The informants' identities are confidential.
An informal complaint can also be lodged with the Bureau by providing information about alleged anti-competitive conduct. Informal complaints are reviewed and may also give rise to a formal inquiry.
A complainant or other third party can make representations and be heard in the course of an investigation.
Those parties generally do not have the right to access documents in the possession of the Bureau.
See above, Representations.
There are no stages of investigation or timetables. The speed at which the Bureau investigates and engages in enforcement action varies significantly.
Similarly, where a request is made for a written opinion, the waiting period depends on the complexity of the issue and the officials' time constraints.
If proceedings are instituted, relevant, non-privileged information can be used as evidence. Court proceedings are public.
The investigation itself and information obtained during an investigation are kept confidential.
There is no need to ask the Bureau to keep information confidential, as information supplied to the Bureau during its investigation is, unless otherwise public, confidential (see above, Automatic confidentiality).
The Commissioner has full powers in relation to the investigation of a suspected breach of the Competition Act. She can, on a without notice basis, apply for orders for:
Search and seizure.
Production of documents to compel individuals to attend oral examinations.
Wire-tapping (in certain criminal cases).
The Commissioner and the party under investigation can, at any stage of the investigation, sign a consent agreement based on terms that address competition concerns and that has the same force and effect as a Tribunal order once it is registered with the Tribunal. Other than the registration of the consent agreement, there is no particular procedure associated with this process.
An individual or company that breaches section 45 of the Competition Act (see Question 13, Criminal provisions: Cartel) is guilty of a criminal offence and is liable, for each count, to:
Imprisonment for up to 14 years.
A fine of up to Can$25 million.
Breach of bid-rigging provisions (a criminal offence) can also result in:
Imprisonment for up to 14 years.
A fine in the discretion of the court.
The maximum sentence for obstruction (a criminal offence) is a fine at the discretion of the court and/or imprisonment of up to ten years.
Other criminal provisions of the Competition Act can result in fines, imprisonment or both.
The remedies available to the Tribunal in relation to the civil provisions of the Competition Act (see Question 13) are:
The penalty for failing to observe such an order can result in a criminal conviction, and imprisonment for up to five years and a fine in the discretion of the court.
See above, Orders. If an individual or a company fails to pay a fine, the order imposing the fine can be filed by the Attorney General in a civil court and entered as a judgment, so that it is enforceable in the same manner as any judgment in civil proceedings. An individual's failure to pay a fine can also result in imprisonment.
Individual directors, officers and employees can be held liable.
In certain circumstances, a party can obtain a grant of immunity from prosecution for criminal offences if it comes forward and is the first to disclose an offence of which the Bureau is unaware. Immunity may also be granted in cases where the Bureau knows about the conduct but has insufficient evidence to refer the matter to the Attorney General. The grant of immunity is, however, subject to other requirements, such as:
Ceasing the illegal activity.
Not having coerced others to be party to the illegal activity.
Agreeing to co-operate.
Any provision in an agreement that results in an illegal activity is null and void. Whether or not the entire agreement is null and void is a matter of construction of the contract in question.
Third parties who suffer loss or damage as a result of a criminal breach of the Competition Act can sue for, and recover, an amount equal to the loss or damage, and costs (including as part of class actions in most Canadian provinces) (section 36, Competition Act). Third parties cannot claim damages for civil breaches of the Competition Act (see below, Special procedures/rules).
A two-year limitation period applies to third parties bringing section 36 actions. The limitation period starts at the later of:
The criminal breach ending.
When criminal proceedings in relation to the conduct are finally disposed of.
The courts do not have jurisdiction to award punitive damages under section 36.
Private parties cannot bring court actions for damages concerning breach of the civil reviewable practice provisions of the Competition Act. They can seek leave from the Tribunal to start an application under section 75 (refusal to deal), section 76 (price maintenance) or section 77 (exclusive dealing, tied selling and market restrictions) (see Question 13, Civil provisions). Cases concerning breach of the abuse of dominance, civil competitor and merger provisions can only be brought by the Commissioner.
Private actions brought under section 36 are increasingly brought as class actions. Many such class actions have resulted in significant settlements. Contested applications to certify competition claims as class actions have had mixed results.
Parties can appeal a Tribunal decision to the Federal Court of Appeal (but only if they have leave in relation to an appeal on a question of fact). The appeal must be made within 30 days (and within ten days for interim decisions).
Generally speaking, third parties do not have a right of appeal.
A monopoly is not in itself illegal. Abuse of a dominant position by resorting to anti-competitive acts in a market can, however, under the civil provisions of the Competition Act, give rise to an order by the Tribunal if such abuse results in a substantial restriction of competition.
The Tribunal issues an order in relation to abuse of dominance if:
There is dominance by an entity or joint dominance by more than one entity co-ordinating their behaviour.
There is an abuse of this dominance (that is, there is an anti-competitive act) (see Question 30).
The abuse has the effect or is likely to have the effect of substantially preventing or lessening competition in a market.
The existence of a monopoly is not a prerequisite, but there must be a relatively high market share allowing the dominant firm (or firms) to substantially dictate market conditions and exclude competitors. The Commissioner has indicated that the Bureau's general approach in evaluating allegations of abuse of dominance is as follows (Enforcement Guidelines on the Abuse of Dominance Provisions 2001):
A market share of less than 35% generally does not give rise to concerns of market power or dominance. A higher market share generally prompts further examination.
In the case of a group of companies alleged to be jointly dominant, a combined market share of 60% or more generally prompts further examination.
The Competition Act gives a non-exhaustive list of acts that may constitute anti-competitive behaviour resulting in an abuse of a dominant position, including:
Squeezing, by a vertically integrated supplier, of the margin available to an unintegrated customer who competes with the supplier.
Introducing "fighting brands" selectively on a temporary basis.
Inducing a supplier to refrain from selling to competitors.
Pre-emption of scarce resources.
Price discrimination and predatory pricing may also amount to abuse of a dominant position. All such practices become anti-competitive when they are adopted with a predatory or exclusionary intent. Without limiting what may constitute an anti-competitive act, the Commissioner has indicated in the Predatory Pricing Enforcement Guidelines that predatory pricing complaints will be, at first instance, analysed under the abuse of dominance provisions of the Competition Act (see Question 13).
An act carried out only under the exercise of any right, or enjoyment of any interest derived under certain intellectual property rights (including copyright, designs, trade marks and patents), is not an anti-competitive act.
There is no notification process for an abuse of dominance. However, it is possible to apply to the Bureau for an advisory opinion on proposed conduct.
The process relating to investigations is similar to that described under restrictive agreements (see Questions 18 to 23).
The Commissioner's powers of investigation are essentially the same as those relating to restrictive agreements and practices (see Question 22).
On application by the Commissioner, the Tribunal can:
Make an order prohibiting all or any persons engaged in the abuse from engaging in that practice.
Make any orders, including, in certain cases, the divestiture of assets or shares, that are reasonable and necessary to overcome any anti-competitive effect of the practice in an affected market.
Impose administrative penalties of Can$10 million for a first finding of abuse and up to Can$15 million for each subsequent finding of abuse.
The penalty for failing to observe an order can result in a criminal conviction, imprisonment for up to five years and a fine in the discretion of the court.
It is not possible for parties to claim damages for losses suffered as a result of abuse of market power.
If joint ventures fit within the definition of merger (see Question 7), they may be covered by the Competition Act. A joint venture may also give rise to concerns under the conspiracy provisions of the Competition Act (section 45) (see Question 13, Criminal provisions: Cartel). Joint ventures that do not fit within the definition of merger are likely to be reviewed under the new civil competitor agreement provisions (see Question 13: Civil provisions: Civil competitor agreement).
The greater the market power collectively held by the parties to an alliance or venture, the more likely it is that the Commissioner will conclude that the behaviour potentially restricts competition, and the greater the likelihood of an investigation under the Competition Act.
The regulatory authorities in Canada (the Commissioner and the Bureau) co-operate regularly with authorities in other jurisdictions.
The Commissioner has signed co-operation agreements with the US, Mexico, the European Commission, Australia and New Zealand, among others. These agreements address co-ordination and co-operation among the relevant agencies, and notify each other of enforcement actions and other matters relating to communication and meetings.
Canada is also a signatory to many mutual legal assistance treaties (MLATs), which allow officials of the reciprocal jurisdiction to use their respective local investigative and seizure powers on behalf of the other jurisdiction. The Competition Act also provides for a regime for international co-operation in the administration of civil competition law and criminal competition matters that are not subject to MLATs (which allows the collection of evidence in a manner that is similar to MLAT arrangements).
There are no current proposals for reform.
Head. Melanie Aitken (Commissioner of Competition)
Outline structure. The Bureau, an organisational unit of the federal Industry Department, is organised into separate branches that deal with civil matters, criminal matters, mergers and fair business practices. There are a number of co-ordinating branches, including:
Compliance and Operations.
Economic Policy and Enforcement.
Legislative and International Affairs.
Responsibilities. The Commissioner of Competition (Commissioner) is responsible for the enforcement of the Competition Act. The Commissioner and her staff at the Bureau are charged with investigating anti-competitive acts. Criminal matters are referred to the Attorney General and are prosecuted in the criminal courts. The Commissioner brings matters that are subject to civil review under the Competition Act (including mergers) before the Competition Tribunal (Tribunal).
Procedure for obtaining documents. The best source for obtaining documents published by the Bureau is its website (see above, Contact details). The documents include information pamphlets, news releases, guidelines and annual reports. Decisions of the Tribunal can be obtained from its website (www.ct-tc.gc.ca).
Qualified. Ontario, Canada, 1988; England and Wales, 1995
Areas of practice. Competition law; foreign investment law.
Qualified. Québec, Canada, 1988; Ontario, Canada, 1989
Areas of practice. Competition law; litigation.
Involved in several landmark cases involving competition legislation before the courts and the Competition Tribunal, including Chrysler Canada, Imperial Oil Limited, Association québécoise des pharmaciens propriétaires et al., Nova Scotia Pharmaceutical Society et al., Fédération des producteurs de porcs du Québec, ADM Agri-Industries Ltd., Astral Media Inc., Cascades Fine Papers Group, Infineon Technologies, and others.