The Competition Act[1] was introduced to Canadian markets in 1986. For the last 35 years, the technological revolution has led to massive innovation that has transformed the economy. The resulting economic growth and profit has made it difficult to measure business and economic efficiencies. In this, the standards that were initially established under the Act monitoring traditional industries were not suitable for assessing digital acquisitions, or responding to exploitative consumers practices.[2]
On June 23, 2022, the federal government amended the legislation to more effectively respond to these changes in the current digital economy. The Act seeks to strengthen the Competition Bureau’s ability to shield consumers, workers, and businesses from anti-competitive conduct. These amendments focus on increasing maximum fines and penalties for violators, imposing criminal prohibitions on wage-fixing and no-poaching agreements, and clarifying legislative intent.
For criminal agreements involving price fixing, the $25 million limitation on fines has been removed, allowing fine amounts to be at the discretion of the courts. Deceptive marketing practices, which included a civil monetary penalty capped at $750,000 for individuals, has been modified to the greater of $750,000 or three times the value of the benefit derived from the deceptive conduct. For corporations, it has been modified to the greater of $10 million or three times the value of the benefit derived from the deceptive conduct.
Criminal prohibitions on wage-fixing and no-poach agreements amongst employers have also been enforced. This amendment protects workers from agreements between employers that may restrict job mobility and allow for fixed wages to the detriment of the employee.
Drip pricing has further been explicitly recognized as a harmful business practice. This is the act of offering a product or service at a price that is unattainable, because consumers must pay additional fees or charges to buy the service or product.[3] Civil and criminal prohibitions will now be enforced against on any drip pricing of this kind.
Amendments increasing fines and penalties, and prohibitions regarding wage fixing and no-poach agreements between employers will not come into force until June 23, 2023. Businesses will be expected to ensure that their processes and procedures comply with the changes in the law in this area by this date. Practitioners in civil and criminal law should be aware of these changes to legislation and the impact these changes will have on competitive practices in the marketplace. For more information on the amendments, please read the official guide here.
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[1] Competition Act, RSC, 1985, c. C-34.
[2] “Examining the Canadian Competition Act in the Digital Era” online: Government of Canada (8 February 2022) [Examining the Canadian Competition Act in the Digital Era —Submission by the Competition Bureau – Competition Bureau Canada].
[3] “Drip Pricing”, online: Government of Canada (24 June 2022) [Drip pricing – Competition Bureau Canada].
