Frequently asked questions—Amendments to the Competition Act
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What was Bill C-10 and when did it become law?
Bill C-10, entitled the Budget Implementation Act, was the legislation tabled to implement the 2009 Budget. It contained a number of different elements, including a broad economic stimulus package, as well as amendments to several existing laws, including the Competition Act. It received Royal Assent on March 12, 2009.
Have all these changes now gone into effect?
All amendments to the Competition Act took effect immediately upon Royal Assent, except for the changes that relate to conspiracies and collaborations between or among competitors. Those two new provisions — one criminal and one civil — will come into force in March 2010.
What, generally, were the changes to the Competition Act that arose from the passage of the bill?
The main elements are as follows:
- Increasing the penalties for deceptive marketing practices, and expressly empowering the courts to award restitution to victims of false or misleading representations.
- Removing criminal offences for certain pricing practices.
- Creating a more effective mechanism for the criminal prosecution of the most egregious forms of cartel agreements between or among competitors, and introducing a civil review process for other forms of competitor collaborations.
- Introducing a two-stage merger review process to allow for a more efficient and effective review of mergers.
- Allowing the Competition Tribunal to award administrative monetary penalties against companies who have abused a dominant position in the marketplace.
As a consumer, how will these changes benefit me?
The amendments introduce stronger penalties for those that engage in deceptive marketing practices. As well, other new provisions will allow the courts to award restitution to those who purchased a product owing to false or misleading representations.
The amendments strengthen the anti-cartel and the bid-rigging provisions and increase the penalties to better deter these harmful practices. The amendments also introduce financial penalties for those that abuse their dominant position in a market.
The changes will modernize the Competition Act and better protect Canadians from the harm caused by anti‑competitive acts. Keeping businesses honest cuts costs for everyone in the economy.
Competitive markets provide the greatest opportunities for lower prices, better product quality and business innovation, all of which benefit not only individual Canadians but the economy as a whole.
As the owner of a business, how will these changes benefit me?
First and foremost, these amendments will help ensure legitimate businesses are not victimized by the unlawful behavior of competitors through tougher penalties, particularly for abuse of dominance, bid-rigging and cartel-like activities.
The narrowing of the criminal cartel provision will promote and not deter legitimate beneficial alliances, joint ventures and other collaborations. Potentially legitimate forms of competitor collaborations will not be subject to the threat of criminal sanction.
The amendments will instill greater consumer confidence in the marketplace by deterring deceptive marketing practices and mass marketing fraud through the introduction of restitution, and more meaningful penalties.
We need to file a merger notification, but the current Notifiable Transactions Regulations relate to the Competition Act before it was amended. What do we do?
The Notifiable Transactions Regulations are in the process of being amended, and were pre-published in the Canada Gazette on April 4, 2009 for a 60-day comment period. Until regulations are in force, parties filing merger notifications should continue to use the existing short form reflecting information required under section 16 of the current Regulations. The Bureau will also continue to accept long form notifications that parties wish to file. Either form of notification will trigger the 30-day waiting period found in the amended subsection 123(1).
We already filed a notification before the amendments went into effect, and the merger is still under review. Is there a chance I might receive a supplementary information request?
No. If the merger was notified under section 114 of the Competition Act prior to the passage of the amendments on March 12, 2009, it will be dealt with under the former review process. In the event that the merging parties notified the Bureau using a short form filing prior to the amendments, the Bureau will not require the merging parties to file a long form filing.
Our merger is not notifiable under section 114. Is there a chance the Bureau might issue a supplementary information request?
No. Supplementary information requests apply only to mergers that are notifiable under section 114 of the Competition Act.
Can we still request an advance ruling certificate instead of filing a merger notification?
Yes. The procedure for requesting advanced ruling certificates, as set out under section 102 of the Competition Act, is unaffected by these amendments.
Collaboration among competitors
Will these amendments make it easier to convict companies that charge the same price as their competitors?
The amendments to the conspiracy provision of the Competition Act create a more effective criminal prohibition that is reserved for agreements commonly recognized as the most egregious forms of anti‑competitive conduct; namely, agreements between competitors to fix prices, allocate markets or restrict output that in substance have no purpose or consideration other than restraining competition, and which are deserving of condemnation without an inquiry into their competitive effects. Other forms of competitor collaborations, joint ventures and strategic alliances may be subject to review under a civil provision that prohibits agreements only where they are likely to substantially lessen or prevent competition. The criminal prohibition applies to agreements between actual or potential competitors that agree to fix prices, allocate markets or reduce output in respect of the supply of products and where the restaint on competition is not in furtherance of a legitimate joint venture or collaboration. These amendments were designed to create a more effective criminal enforcement regime for the most egregious forms of cartel agreements, while at the same time removing the threat of criminal sanctions for legitimate collaborations between competitors to avoid discouraging firms from engaging in potentially beneficial alliances.
The Bureau recognizes the need for transparency and predictability regarding its assessment of competitor collaborations. Accordingly, the Bureau will issue guidelines (in draft initially, for consultation) that are intended to assist firms in assessing the likelihood that a competitor collaboration will raise concerns under the criminal or civil provisions of the Competition Act.
What is the purpose of delaying the coming into force of these provisions by one year?
Companies may use this opportunity to verify that existing or proposed agreements and arrangements do not violate the new civil and criminal provisions. If they are unsure, companies may apply to the Bureau for an advisory opinion as to how a pre-existing or proposed agreement might be viewed under the two new provisions. For existing agreements, the fee payable for an advisory opinion will be waived during this one-year period.
What will the change in the conspiracy provisions do for high gas prices?
High prices are not in and of themselves evidence of illegal cartel activity, in the gasoline or any other industry. The increased criminal penalties and the removal of the need to prove an "undue" effect on competition will serve as a greater deterrent against price-fixing in all industries, including gasoline. The new provision will provide the tools to punish this conduct more effectively when it is uncovered.
The Bureau does not hesitate to act when it finds clear evidence that price-fixing has occurred. In 2008, the Bureau uncovered a price-fixing agreement involving gasoline retailers in four communities in Quebec. As of mid-April 2009, several individuals and companies have pleaded guilty. This investigation is ongoing.
Can consumers receive restitution for any violation of the Competition Act?
The restitution orders created by Bill C-10 were introduced as an additional remedy for the courts or the Tribunal for civilly reviewable false and misleading representations under paragraph 74.01(1)(a). On application of the Commissioner, the Competition Tribunal or a court that hears a matter regarding a false or misleading representation is empowered under the new provision to grant restitution and lay out the specifics of a restitution order, including who is eligible to receive restitution and how prospective claimants are to be notified. Restitution is already available for criminal offences, including criminal false or misleading representations, under the Criminal Code.
Victims of criminal misleading advertising can continue to seek to recover damages by suing the advertiser directly (section 36). Similarly, nothing in the Competition Act prevents a person from pursuing civil recourse outside of the Competition Act framework for, among other things, deceptive marketing practices (sections 62 and 74.08).
I purchased a product because of a false or misleading representation. Under what circumstances will I receive restitution under the new provision?
On application of the Commissioner, the Competition Tribunal or a court that hears a matter regarding a false or misleading representation is empowered under the new provision to grant restitution and lay out the specifics of a restitution order, including who is eligible to receive restitution and how prospective claimants are to be notified.
Abuse of dominance
What are "administrative monetary penalties"? Are they fines?
Administrative monetary penalties, or "AMPs," are civil remedies, and quite distinct from fines (which are criminal). The purpose of an AMP is to promote and encourage compliance with the Competition Act, and failure to pay one may be enforced civilly as a debt due to the Crown. A fine, by contrast, is a punishment imposed by a court upon conviction of a criminal offence, and failure to pay may lead to imprisonment.
Several provisions relating to the airline industry were repealed. Does this mean airlines are no longer subject to the abuse of dominance provisions?
Airlines will remain subject to the general abuse of dominance provision and can still be subject to a remedial order from the Tribunal (including AMPs) in the event that they are found to have engaged in activities in abuse of dominance.
Now that the criminal prohibitions against price discrimination, predatory pricing, geographic price discrimination and promotional allowances have been repealed, does that mean that anyone can engage in those activities?
While the criminal provisions have been repealed, the Competition Bureau will still consider whether such activities are anti‑competitive practices being used by a dominant firm in an abuse of dominance case. A dominant firm can be ordered to stop the practice and/or pay an administrative monetary penalty where there is evidence of likely anti‑competitive effect. Only firms that carry a degree of influence in the marketplace will be subject to a sanction for these formerly criminal activities.
Now that the criminal prohibition against price maintenance has been repealed, does that mean that anyone can engage in it?
In the case of price maintenance, the criminal provision was repealed and replaced with a new provision that makes this a civilly reviewable practice. Under the new civil provision, a person can be ordered to stop engaging in price maintenance if the practice will likely have an adverse effect on competition in a given market. Also, private parties can now bring price maintenance cases before the Competition Tribunal.
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