To promote a competitive market, Canada has gradually amended the Competition Act in recent years.
To maintain and promote the competitiveness of the Canadian market for entrepreneurs and consumers, the Canadian government has successively modernised the Competition Act since 2022.
Bill C-19 (Budget Implementation Act, 2022, No. 1) was initially passed on 23 June 2022, which increased the penalties and fines for competition law infringements, among other things. Bill C-56 (An Act to amend the Excise Tax Act and the Competition Act) subsequently received royal assent on 15 December 2023. In particular Bill C-56 has led to a reorganisation of the legal examination of the abuse of a dominant market position by a company. Finally, Bill C-59 (An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023) was enacted on 20 June 2024. Bill C-59 focuses, among other things, on the control of mergers between companies.
Changes to competition law in 2022
As part of the modernisation of Canadian competition law, Bill C-19 was passed as a first step in 2022. The legal changes associated with Bill C-19 primarily address business practices that are harmful to consumers and increase the penalties and fines for competition law offences.
In particular, the amendments prohibit ‘drip pricing’. Drip pricing is a pricing strategy in which companies advertise a low price for a product or service, but then incur additional costs throughout the purchasing/ordering process.
Penalties and fines play a key role in ensuring compliance with competition law. The Canadian government has therefore increased the penalties for misleading marketing practices, among other things. The maximum penalty for companies for engaging in deceptive marketing practices is now 10 million Canadian dollars (kan$) and three times the value of the benefit derived from the deceptive behaviour. If this amount cannot be reasonably determined, the maximum penalty is 3 per cent of gross annual worldwide turnover.
Changes to competition law in 2023
The basic prerequisite for a competitive market is fair competition. In line with the creation of fair competition, the Canadian government issued new requirements for a prohibition order against the abuse of a dominant position by a company (or a dominant group) in 2023.
Prior to the enactment of Bill C-56 in December 2023, an abuse of a dominant position occurred when a dominant undertaking (or group of undertakings) intentionally engaged in anti-competitive conduct that had the effect of substantially lessening or preventing competition. To prove an abuse of a dominant position, all three elements of the offence must be present: Market dominance (dominance), anti-competitive intent (anti-competitive intent) and anti-competitive effects (anti-competitive effects). As a result of the legislative changes, a Canadian Competition Tribunal can now issue a prohibition order against a dominant company (or group) if its behaviour fulfils either the anti-competitive intent or anti-competitive effects requirement.
Competition law changes in 2024
Anti-competitive mergers can cause lasting damage to fair competition in the Canadian market (for example, through increased prices or a limited product selection). The legislative amendments enacted in 2024 (Bill C-59) therefore aim to enable the Competition Bureau to take stronger action against anti-competitive mergers.
Among other things, there is now a legal presumption that a merger is anti-competitive if the market share increases significantly. The merging companies can attempt to rebut this presumption if they can provide sufficient evidence that the merger does not significantly impede or weaken competition.
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Source: German Trade and Invest
