Bill C-59’s third wave of changes to the Competition Act passed

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Bill C-59’s third wave of changes to the Competition Act passed

Bill C-59’s third wave of changes to the Competition Act passed

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June 28, 2024

Bill C-59, the Fall Economic Statement Implementation Act (Bill C-59), received royal assent on June 20, 2024. The bill is part of the Government’s project to modernize the Competition Act (the Act) and represents the third wave of amendments to the Act, with the first passed in June 2022 and the second in December 2023.

In short, Bill C-59 will:

Make substantial changes to the pre-merger notification and substantive merger review regimes;
Make it easier for private litigants to bring cases to the Competition Tribunal (the Tribunal) to seek remedies for non-criminal conduct, including abuse of dominance;
Establish new remedies available to such private litigants at the Tribunal, including monetary disgorgement;
Broaden the types of anti-competitive collaborations that can be challenged civilly; and
Expand the Act’s reach over greenwashing.

Bill C-59’s key amendments to the Act are:

Description of Amendment	Currently in Force?	Section(s) of the Act
MERGER REVIEW AND NOTIFICATION
Rebuttable Presumption of Competitive Effect Based on Increase in Concentration: A very significant amendment to the Act is the inclusion of a rebuttable presumption of a substantial prevention or lessening of competition (SPLC) in the relevant market for a merger that results in a “significant increase in concentration or market share.” A concentration index (the Herfindahl-Hirschman Index (HHI) relied upon in the US[1]) will be used to measure industry concentration levels in Canada. This amendment places the burden of proof on the merging parties where the relevant concentration thresholds are met.[2] The parties must then establish that the merger is not likely to result in an SPLC in the relevant market, rather than the Bureau proving the opposite. Previously the Act specified that the Tribunal could not block a merger based only on market share or concentration. These structural presumptions would not apply to any mergers that were notified or “substantially completed” before June 20, 2024.	Yes	92
Orders Wholly Restoring Pre-Merger Level of Competition: The Tribunal is now empowered to issue remedial orders to "restore" or "preserve" competition to levels that would have prevailed but for the merger. Previously, jurisprudence required that only the substantial component of the SPLC effects be eliminated.	Yes	92
Extended Limitation Period for Transactions Not Notified to the Bureau: The Competition Bureau (the Bureau) can now challenge transactions that are not notified for up to three years post-closing. The limitation period for challenging notified transactions (whether voluntary or mandatory) remains one year.	Yes	97
Automatic Interim Prohibition on Closing: There is now an immediate and automatic interim prohibition on closing a merger applicable from the point when the Bureau applies for an interim order to prevent closing until that application is heard and decided by the Tribunal.	Yes	100; 104
Broadening Scope of Revenues Included in Notifiability Calculations: Amendments to the Act’s merger notification provisions now require revenues from sales “into” Canada (i.e., imports to Canada), in addition to sales “in” and “from” Canada, to be considered when determining whether the Act’s size-of-transaction threshold (currently CA$93 million) is exceeded. Mergers that were previously below the notification threshold because the threshold did not include revenues from sales into Canada derived from assets outside of Canada may now trip this threshold.	Yes	110

PRIVATE ACCESS AND REMEDIES BEFORE THE TRIBUNAL
Private Access to Deceptive Marketing Provisions: Private litigants are now able to make applications to the Tribunal to seek leave to initiate proceedings under the Act’s deceptive marketing provisions.	Yes	74.1
Disgorgement Awards: Disgorgement awards for private claimants for up to the value of the benefit derived from the non-criminal conduct (including refusal to deal, price maintenance, exclusive dealing, tied selling, market restriction, abuse of dominance, and collaborations) will be available.	No – will come into force June 20, 2025	75; 76; 77; 79; 90.1
Private Access to Civil Collaboration Provision: Private claimants will be permitted to make applications to the Tribunal to seek leave to initiate proceedings under the Act’s civil collaborations provision (section 90.1).	No – will come into force June 20, 2025	90.1
Lowered Test for Leave: Leave to make an application to the Tribunal for refusal to deal, price maintenance, exclusive dealing, tied selling and market restriction, abuse of dominance, and collaborations can be granted even if only part of the applicant’s business is substantially affected (rather than all of its business), or if the Tribunal determines that it is in the public interest to do so. For deceptive marketing practices, leave will be granted if the Tribunal finds it to be in the public interest.	No – will come into force June 20, 2025	103.1

ANTI-COMPETITIVE CONDUCT
Expanded Remedies under Civil Collaboration Provision: Under the civil collaboration provision, the Tribunal can now make orders regarding past agreements or arrangements within three years of termination. The Tribunal may also impose conduct orders, including requiring divestitures, and significant monetary penalties. Previously, the Tribunal was limited to issuing prohibition orders under this provision. This section had already been amended to apply to certain vertical agreements or arrangements, including, potentially, distribution, franchising, or licensing agreements, where the Tribunal finds the agreement (or any part of it) has a “significant purpose” of preventing or lessening competition in any market. (The government’s particular focus in bringing forward this amendment was on capturing restrictive covenants in lease agreements for retail stores in the grocery sector.) Those amendments were passed within Bill C-56 in December 2023 and will come into force on December 15, 2024.	Yes	90.1
Environmental Certificates: Parties can request a certificate from the Bureau to exempt certain environmental agreements from the Act’s collaboration provisions. The Bureau may issue the certificate when: A party proposes to enter into an agreement or arrangement with the purpose of protecting the environment; and The agreement is not likely to prevent or lessen competition substantially in a market. Once issued, parties to the certified agreement will be exempt from the collaborations provisions under the Act, including conspiracy, bid rigging and the civil collaboration provision, for a period of up to 10 years (subject to extension at the parties’ request).	Yes	124
Right to Repair: The Act now includes a qualified “right to repair” under its refusal to deal provision. This amendment allows the Tribunal to prevent manufacturers from refusing to provide a “means of diagnosis and repair” to a person under certain conditions, including that doing so does not require disclosure of trade secrets and that the refusal would have or likely have an adverse impact on competition in a market.	Yes	75(1)

DECEPTIVE MARKETING PRACTICES
Drip Pricing Changes: To ensure that sellers take an “all-in” approach to pricing, the drip pricing provisions of the Act now specify that the only fixed, unavoidable amounts that can be excluded from the upfront price of a product or service are those imposed by law directly on the purchaser, such as sales tax. Previously, the Act did not specify on whom an unavoidable amount must be imposed for it to be excluded from the upfront price of a product or service, so sellers could exclude their own regulatory charges or fees from the upfront price of a product or service.	Yes	52
Greenwashing: Anti-greenwashing provisions have been added to the Act, which render it a deceptive marketing practice to: Make a representation in the form of a statement, warranty, or guarantee regarding a product’s benefits for protecting or restoring the environment or mitigating the environmental, social and ecological effects of climate change that is not based on an adequate and proper test; or Make a representation to the public with respect to the benefits of a business or business activity for protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change that is not based on adequate and proper substantiation in accordance with internationally recognized methodology. Environmental claims regarding the benefits of a business or business activity must be supported by adequate and proper substantiation “in accordance with internationally recognized methodology.” Reverse onus provisions require the business making the representation to prove that it was properly substantiated. Businesses should carefully assess their public claims and representations about the sustainability and impact of their practices, products and plans.	Yes	74.01
Ordinary Selling Price: Sellers advertising reduced prices are required to prove that the regular price they are discounting from is genuine. This is a reverse onus, and the Bureau does not have to prove that the seller’s discounted price is false or misleading.	Yes	74.01

These amendments will require those doing business in Canada to review their practices, compliance programs, and the way they assess competition risks in M&A transactions. Dentons is here to help our clients understand and prepare for these changes.

For more information, please contact a member of our team: Adam S. Goodman, Sandy Walker, Barry Zalmanowitz, KC, Margot Patterson, Simon Kupi, or Camila Maldi.

[1] The HHI is defined as the sum of the squares of the market shares of all competitors in a market. The sum is small when there are many small firms and grows larger as the market becomes more concentrated, reaching 10,000 in a monopoly scenario.

[2] A significant increase in concentration arises where markets are likely to have an HHI greater than 1,800 or where merging parties have a combined market share of more than 30%, and the transaction is likely to lead to an increase of more than 100 points in the HHI.