On June 23, 2022, Bill C-19 (the Budget Implementation Act, 2022, No.1) received royal assent, introducing sweeping amendments to Canada’s federal Competition Act.
These amendments include new criminal and civil prohibitions on drip pricing under sections 52 and 74.01 of the Competition Act, broad amendments to expand the abuse of dominance provisions under section 79 and new employer related wage fixing and no-poaching agreement offences under section 45 of the Competition Act (criminal conspiracy agreements).
The amendments also include significant increases to the civil and criminal penalties under the Competition Act to bring Canadian competition law in line with other major international jurisdictions, including the European Union and the United States.
These initial Competition Act amendments (a second round of amendments is anticipated including potential changes to Canada’s mergers efficiency defence) follow the Competition Bureau’s submission on Examining the Competition Act in the Digital Era on February 8, 2022 and mark the most significant amendments to the Competition Act since 2009.
For more information about the 2022 Competition Act amendments, see: Sweeping Canadian Competition Act Amendments Passed.
Significantly Increased Competition Act Penalties
The June 2022 amendments to the Competition Act included significant increases to the civil and criminal penalties under a number of the cornerstone provisions of the Act, which will markedly increase the risk of violating Canadian competition law.
According to the Competition Bureau in its February 2022 submission to the Federal Government, the current fines under the Competition Act were “out of step” with that of other major jurisdictions and insufficient to achieve the Competition Act’s intended purpose to deter and punish anti-competitive conduct.
Under the amendments, the maximum fine for criminal conspiracy (cartel) offences (section 45), which are currently capped at CDN $25 million, will be amended to allow courts to set fines in their discretion (i.e., criminal fines with no fixed upper limit). This amendment is consistent with the existing unlimited fine threshold for criminal bid-rigging (section 47 of the Competition Act) and the higher penalty provisions of other major foreign jurisdictions for criminal cartel offences (e.g., price-fixing and market division/allocation agreements), including the United States and European Union. This amendment will come into force on June 23, 2023 after a one-year transition period has ended.
In addition, the administrative monetary penalties for civil abuse of dominance (section 79) and for civil misleading advertising (under Part VII.1 of the Competition Act – deceptive marketing practices) for a corporation has increased from the previous CDN $10 million (CDN $15 million for each subsequent violation) to the greater of: (i) CDN $10 million (CDN $15 million for each subsequent violation); (ii) three times the value of the benefit obtained from the deceptive conduct; or (iii) if the latter amount cannot be reasonably determined, 3% of a company’s annual worldwide gross revenues.
The administrative monetary penalty for an individual under the Part VII.1 deceptive marketing provisions has also increased from the previous CDN $750,000 (CDN $1 million for each subsequent offence) to the greater of: (i) CDN $750,000 (CDN $1 million for each subsequent violation); and (ii) three times the value of the benefit derived from the deceptive conduct if the latter amount can be reasonably determined.
For more information about civil and criminal enforcement under Canada’s Competition Act, see: Canadian Competition Law Enforcement, Canadian Competition Law Complaints and Canadian Competition Law.
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We are a Toronto based Canadian competition law and advertising law firm who helps clients in Toronto, Canada and the United States practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
Our Canadian advertising/marketing law services include advice in relation to: anti-spam legislation (CASL); Competition Bureau complaints; the general misleading advertising provisions of the federal Competition Act; Internet, new media and social media advertising and marketing; promotional contests (sweepstakes); and sales and promotions. We also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
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