Formal market studies power and other procedural and remedial matters

In addition to the significant changes to the Competition Act (Act) discussed throughout this guide, recent amendments also include the enactment of a formalized market studies power, a new prohibition of “reprisal actions”, limitations on cost awards against the Commissioner of Competition (Commissioner) and a new certification regime to immunize agreements intended to protect the environment from the application of certain provisions of the Act. In this section, we discuss these additional amendments to the Act.

Formal market studies power established

Since December 15, 2023, a formal market studies power has been available to the Commissioner. Prior to the December amendments, only once a market inquiry had commenced because the Competition Bureau (Bureau) had reason to believe the Act had been violated was the Commissioner empowered to apply to the Competition Tribunal (Tribunal) for an order under its compulsory information gathering powers set out in the Act. Commissioners had called for a formal market studies power for several years now to enable the use of compulsory information gathering powers (which include oral examinations and production of documents or records under oath) outside of formal inquiries into specific conduct or arrangements under the Act.

There is a multi-step procedure required for the Commissioner to commence a market study, in addition to the court application process required to access compulsory powers. The procedure includes the following checks and balances:

• The Commissioner must consult with the Minister prior to commencing a market study. Similarly, prior to directing the Commissioner to commence a market study, the Minister must consult the Commissioner to assess whether the study would be feasible, including its cost.
• If the consultation determines that the market study will proceed, the Commissioner must prepare draft terms of reference to be published online for a public consultation period of at least 15 days. After considering any comments, the Commissioner then submits the terms of reference for the Minister’s approval and, if approved, publishes the final terms of reference online.
• Once the final terms of reference are published, the Commissioner has 18 months, subject to an extension of up to three months at the Minister’s discretion, to conduct the market inquiry and prepare a report.
• Prior to publishing the report, the Commissioner must circulate a full or partial draft report to every person who was compelled by court order to participate in the inquiry, who then has three working days to identify concerns regarding inaccurate or confidential information. Following this, the Commissioner must make the report available online.

First market study under new powers commenced

Since the Bureau’s market study power expanded, the Commissioner commenced a market study into domestic air passenger services in Canada. On May 27, 2024, the Bureau launched a study of the state of competition of Canada’s airline industry, its barriers to entry and expansion, and impediments to informed customer choice. The stated purpose of the study is to examine and improve competition for the benefit of domestic air passengers as well as the workers and entrepreneurs who enable such services. The market study is anticipated to run for approximately 12 months.

Update to statutory process for determination of privilege claims

The Act sets out a legislative scheme for dealing with claims of privilege in the context of a court-ordered production of records. Where an individual or business is compelled to produce records under the Act, they may claim that certain records are subject to solicitor-client privilege. These records are held in custody by a designated authority. Previously, the court had 30 days after a record was placed in custody to determine whether the record was in fact privileged based upon an application by the Commissioner or the owner of the record. If no such application was made within the 30 days, the Commissioner could apply on an ex parte basis for the record to be delivered to the Commissioner. There is now no timeframe within which the application for a determination of privilege must be filed. Notwithstanding this statutory process, it is common for privilege claims to be addressed on a more informal basis without judicial involvement.

Introduction of jury trials for corporations

Previously, if a corporation was accused of any offence against the Act, the corporation could only be tried without a jury. Corporations may now, subject to the court’s discretion, be subject to jury trials where one or more individuals are also charged. Specifically, in a single indictment:

• If an individual plus one or more corporations are charged, the individual’s election to be tried with or without a jury dictates whether the corporation is tried with or without a jury.
• If one or more corporations plus two or more individuals are charged, and all the individuals elect to be charged with or without a jury, the corporations must be tried in the same manner. If some but not all the individuals elect to be tried without a jury, the Attorney General makes the determination of whether each corporation is tried with or without a jury.

If only corporations are charged (i.e., no individuals), the corporations will be tried without a jury.

Prohibition of ‘reprisal actions’

Completely new to the Act is a prohibition of “reprisal actions”, which are defined as actions taken to “penalize, punish, discipline, harass or disadvantage another person” because of that person’s communications with the Commissioner or their cooperation (or expressed intention to cooperate) in an investigation or proceeding under the Act. Upon application to a court by the Commissioner or an affected party, the court may issue a prohibition order and impose an administrative monetary penalty of up to $750,000 for individuals and $10 million for corporations, on first instance. While the maximum available penalties for reprisal actions are significant, the Act explicitly states that these penalties should not be calculated with a view to punishing individuals or corporations engaging in this conduct, but rather should promote conformity with the Act.

Environmental certification regime for agreements intended to protect the environment

The Act now provides that the Commissioner may grant an environmental certificate indicating that he/she is satisfied that an agreement or arrangement was made for the purpose of protecting the environment and is not likely to result in a substantial lessening or prevention of competition (SLPC). The certificate, which may have a term of up to 10 years (with a possibility of extension if requested by the parties), may also include any terms that the Commissioner considers appropriate. This process immunizes the agreement from the application of the criminal conspiracy, bid-rigging and civil collaboration provisions of the Act. The certificate is filed with the Tribunal and may be rescinded or varied by the Tribunal in certain circumstances.

It is noteworthy that in the Commissioner’s letter, to the House of Commons Standing Committee on Finance dated March 1, 2024, which discussed several aspects of legislative reform to the Act,^[1] he strongly recommended against adopting the environmental certificate regime due to “potentially significant unintended consequences”. The Commissioner pointed to the numerous established ways for businesses to collaborate for environmental or other purposes while conforming with the Act, including the ancillary restraints defence against conspiracy provisions, conformity with extensive guidelines published by the Bureau and the existing written opinion program for businesses to seek clarity from the Commissioner on the application of the Act. The Commissioner also indicated that businesses may take advantage of the new regime by mischaracterizing an agreement to receive immunity unfairly for problematic conduct.

It is not clear that the introduction of this new regime will materially change the written opinion practice, as historically these have been requested only rarely. However, the reward of immunity from portions of the Act (at least from the Bureau perspective) including the possibility of private actions may generate renewed interest in written opinions.

Enhanced penalties for violating consent agreements

Under the Act, the Commissioner can enter into consent agreements with companies or individuals to resolve the Commissioner’s concerns or to settle commenced litigation under the civil provisions of the Act. Once registered with the Tribunal, a consent agreement has the effect of a Tribunal order and, further, the Act provides that it is a criminal offence not to comply with a Tribunal order under the civil provisions of the Act (other than certain orders relating to administrative monetary penalties). The amendments provide for new civil penalties for failure (or likely failure) to comply with a consent agreement, enabling the Commissioner to challenge actual or likely non-compliance short of recommending the filing of criminal charges. The new civil penalties include a Tribunal order prohibiting non-compliance, requiring other action necessary for compliance, imposing an administrative monetary penalty of up to $10,000 per day of non-compliance and a catch-all penalty of any other relief the Tribunal considers appropriate.

Limited cost awards against the commissioner

The Competition Tribunal Act provides that the Tribunal may award the costs of proceedings in respect of reviewable matters under the Act, without specific considerations for granting cost awards against the Commissioner. Now the Competition Tribunal Act prevents the Tribunal from awarding costs against the Commissioner unless the Tribunal is satisfied that the award is necessary to maintain confidence in administration of justice, or the absence of the award would have a substantial adverse effect on the respondent’s ability to carry on business. The amendment was most likely precipitated by the recent Rogers/Shaw litigation, where the Commissioner was ordered by the Tribunal to pay nearly $13 million in costs and disbursements.

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[1] Competition Bureau Canada, “Brief to the House of Commons Standing Committee on Finance and the Senate Standing Committee on National Finance” [PDF] (1 March 2024).

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Authors: Shuli Rodal, Michelle Lally, Kaeleigh Kuzma, Christopher Naudie, Adam Hirsh, Alysha Pannu, Danielle Chu, Chelsea Rubin, Reba Nauth, Zach Rudge, Graeme Rotrand

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