On November 27, 2023, the Federal Government passed a Notice of Ways and Means Motion to introduce a bill entitled 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, which was tabled on November 30, 2023 as Bill C-59 (the “Bill”). The Bill proposes amendments that implement some of the goals discussed in the 2023 Fall Economic Statement , including significant and far-reaching amendments to Canada’s Competition Act (the “Act”).
Among the amendments included in the Bill is a significant expansion of private rights of action and remedies for reviewable practices, including what may become a form of a class action regime before Canada’s Competition Tribunal (the “Tribunal”). The following describes the expanded scope of conduct that will be captured by the private right of action, discusses various factors relating to private litigation at the Tribunal (capturing the proposed leave test, scope of monetary relief and form of class action regime) and includes compliance takeaways for business.
- Expanded Scope of Conduct Captured
The Bill expands the availability of private rights of action under the Act. Currently, private rights of action are only available for sections 75 (refusal to deal), 76 (price maintenance), 77 (exclusive dealing, tied selling and market restriction) and 79 (abuse of dominance) of the Act. The Bill expands the availability of private rights of action to section 90.1 (civil competitor collaborations) and section 74.1 (deceptive marketing) of the Act.
The Bill also expands the scope of conduct that may fall within these provisions – and in doing so further increases the scope of conduct that may be subject to private rights of action before the Tribunal. The most significant changes are the inclusion of a “right to repair” within the existing refusal to deal provision, an expansion of the abuse of dominance and civil competitor collaboration provisions and the introduction of a specific deceptive marketing provision focused on greenwashing.
- Refusal to deal (and Right to Repair): The Bill makes several changes to the refusal to deal provision of the Act. First, it amends this provision to include the supply of the means of diagnosis or repair, creating the ability for a person to compel a company to provide the means of diagnosis or repair in certain cases. Second, the Bill changes the requirement for a person to be substantially affected in its entire business to a requirement that a person be substantially affected in the whole or part of its business. So-called “right to repair” laws already exist in other jurisdictions that seek to ensure that consumers can have devices serviced or repaired by independent firms (that is, firms other than the original manufacturer).
- Abuse of Dominance: Through a related bill, Bill C-56, it is expected that the legal test for abuse of a dominance will be amended such that it will be met if the Tribunal finds that the “dominant” entity has engaged in either a practice of anticompetitive acts or conduct other than superior competitive performance that had, is having or is likely to have the effect of preventing or lessening competition substantially in a relevant market. On a plain reading, it appears that this proposed amendment would mean that abuse of dominance would only require that the Bureau show either a practice of anticompetitive acts (which includes anticompetitive intent) or an anticompetitive effect (in the form of a substantial lessening or prevention of competition). This is in contrast with the current version of the abuse of dominance provision, which requires both anticompetitive intent and effects. However, the most recent version of Bill C-56 provides that both anticompetitive intent and effects need to be demonstrated in order for monetary relief to be awarded.
- Competitor Collaborations: Through Bill C-56, the competitor collaboration provision in the Act would be expanded. In particular, while this provision currently only applies to collaborations between competitors or potential competitors, it is expected to be amended to also capture collaborations among parties that are not competitors, to the extent a “significant purpose” of the collaboration is anticompetitive (notably, the proposed amendments do not elaborate on when an anticompetitive purposes would be considered a “significant purposes”). As such, the competitor collaboration provision would potentially apply to essentially any commercial agreement – including agreements with customers and suppliers. Additionally, Bill C-56 removes the efficiencies defence from the competitor collaboration provision and also extends the competitor collaboration provision to conduct which occurred in the past three years, as opposed to the current provision which only applies to existing or proposed conduct.
- Greenwashing: The Bill introduces an explicit prohibition against making a representation to the public in the form of a statement, warranty or guarantee of a product’s benefits for protecting the environment or mitigating the environmental and ecological effects of climate change that is not based on an adequate and proper test, the proof of which lies on the person making the representation.
II. Proposed Private Litigation at the Competition Tribunal
Through a number of new proposed features, the proposed amendments would create robust private litigation at the Tribunal, including what is potentially a form of a class action regime.
- New Leave Test: In order for private parties to bring a private right of action before the Tribunal, they must first apply for and obtain leave. The Bill significantly amends the test that private parties must meet in order to bring a private action before the Tribunal, other than the test applicable to section 76 (price maintenance) of the Act that remains unchanged. Currently, the Tribunal may grant leave to bring an application under section 75, 77 and 79 if it has reason to believe that the applicant is directly and substantially affected with respect to the entirety of its business.
With respect to leave for sections 75 (refusal to deal), 77 (exclusive dealing, tied selling and market restriction), 79 (abuse of dominance) and 90.1 (civil competitor collaborations), the new leave test provides that that applicant need only be directly and substantially affected with respect to part of its business. Notably, in many unsuccessful leave applications to date, the applicant has failed to prove it was substantially affected with respect to its entire business. Additionally, the Bill introduces a second potential leave mechanism for these provisions, where the Tribunal is satisfied that it is in the public interest to do so.
Similarly, with respect to section 74.1 (the deceptive marketing portion of the Act), the Bill proposes that the Tribunal may grant leave if it is satisfied that it is in the public interest to do so.
While the scope of public interest is currently unknown, a public interest test could open the door to representative-style proceedings and public interest litigants.
- Private Monetary Relief: The Bill creates the ability for applicants to receive monetary relief in connection with successful applications brought under section 75, 76, 77, 79 or 90.1 and the deceptive marketing provisions of the Act.
In the case of successful applications under these sections of the Act, the Tribunal can order that the person against whom the order is made pay “an amount, not exceeding the value of the benefit derived from the conduct that is the subject of the order, to be distributed among the applicant and any other person affected by the conduct, the manner that the Tribunal considers appropriate”.
With this choice of language, the monetary amount that an applicant may seek is not damages. However, it resembles a form of disgorgement, the quantification of which can be significant in many circumstances.
Further, for Part VII.1 (deceptive marketing practices) and where representations to the public are found to be materially false or misleading, an applicant can seek “an amount, not exceeding the total of the amounts paid to the [advertiser] for the products in respect of which the conduct was engaged in, to be distributed among the persons to whom the products were sold… in any manner that the court considers appropriate”. This choice of language (which is already contained in the Act but now available to private parties) is akin to restitution.
- A Form of a Class Action Regime: There are two amendments that suggest the creation of a form of a class action regime before the Tribunal.
First, the inclusion of the phrase “be distributed among the applicant and any other persons affected by the practice, in any manner that the Tribunal considers appropriate” suggests a broad discretion for the Tribunal to order monetary relief to a large group of persons (businesses and individuals) affected by the alleged conduct.
Second, the amendments would expressly give the Tribunal the power to establish a payment, claims and notice process akin to the powers of Courts in a class action context. These powers include: “specifying how the payment is to be administered”, “the appointment of an administrator to administer the payment and specifying the terms of administration”, “requiring that potential claimants be notified in the time and manner specified by the Tribunal”, “specifying the time and manner for making claims” and “specifying the conditions for the eligibility of claimants”.
Collectively, these features give the Tribunal the power to order the payment of monetary relief to a significant group of affected persons and to manage the related notice, payment and claims process. This effectively creates a form of a class action regime but with differences to the existing class action regime in the civil courts. Significantly, the proposed amendments do not create a certification process that has historically served as a procedural screening mechanism, where a court decides, at an early stage, whether a class action is the appropriate procedural mechanism to advance an action. However, the leave requirement may provide an opportunity to screen claims that should be disposed of at an early stage.
III. Compliance Takeaways for Business
There is fluidity and room for interpretation with the proposed amendments that will need to be fully digested and thought through. However, it is clear that the proposed amendments will fundamentally change the ability and incentives of private litigants to commence litigation and to seek significant financial relief.
This creates significant private enforcement risk for business for a wide array of business conduct, ranging from vertical arrangements, horizonal collaborations, physical and non-physical repair restrictions and advertising and marketing. When these amendments are finalized, it will be important for businesses to develop new compliance measures to mitigate public and private enforcement risk.
The Fasken Team will continue to keep you posted on developments regarding amendments to the Act.
If you have questions about the ongoing Competition Act amendment process, you can reach out to any member of Fasken’s Competition, Marketing & Foreign Investment group. Our group has significant experience advising clients on all aspects of Canadian competition law.