Doing Business in Canada: Offences Under The Competition Act

by Bennett Jones LLP
Contact

The Competition Act, which is Canada’s antitrust legislation, restricts anti-competitive business practices. The Act is designed to ensure fair competition in the Canadian marketplace. Over the last 26 years, the Act has evolved to become more responsive and flexible with regards to the identification and prevention of anti-competitive business behaviour. Companies considering doing business in Canada need to be aware that certain business practices are prohibited. 

Companies and individuals engaging in prohibited practices may incur significant penalties ranging from costly monetary fines to the imprisonment of culpable individuals. Conversely, the enforcement of these penalties offers protection for (among others) foreign companies entering the Canadian market for the first time.

There are both criminal and civil offences under the Competition Act. Criminal offences are investigated by the Competition Bureau and, if referred by the Commissioner of the Bureau, are further investigated by the Director of Public Prosecution who may also prosecute.  Civil offences are heard by the Competition Tribunal, which is a specialized, independent adjudicative body composed of both judicial and lay members. While the Minister of Industry is responsible for the Act, it has only a minor role in its administration.

Antitrust investigations have the potential to be expensive for companies and may also damage corporate reputations, even absent a conviction. For this reason, it is important to avoid conduct that could be seen as contravening the Act.

Criminal Offences

Part VI of the Act prescribes criminal penalties for conspiracy, bid-rigging, misleading representations and deceptive telemarketing. Along with many other jurisdictions, Canada has recently been more strictly enforcing these penalties and fining offenders. This emphasis on enforcement of the Act’s penalty provisions has also resulted in prison sentences for executives of offending companies.

Conspiracy

The conspiracy provisions of the Act prevent competitors, including persons who would reasonably be likely to compete, from manipulating prices for the supply of a product; allocating territories or markets for the production or supply of a product; or reducing the production or supply of a product. The penalty for conspiracy is imprisonment for a maximum of 14 years or $25 million, or both.

Bid-rigging

Bid-rigging, whereby an agreement is made with another bidder prior to or during a call for tenders, unbeknownst to the person making the call for tenders, is also an offence. The penalty for bid-rigging is imprisonment for a maximum of 14 years or a fine determined by the court, or both.

Misleading Representations

The making of false or misleading representations to the public is also prohibited by the Act.  Both the literal meaning and general impression conveyed by the person are taken into account when determining whether the representations were misleading. As with bid-rigging, the penalty for making misleading representations to the public is imprisonment for a maximum of 14 years or a fine determined by the court, or both.

Deceptive Telemarketing

To avoid the deceptive telemarketing provisions of the Act, proper disclosure must be made when making representations over the telephone. This includes, for example, disclosure of the number of prizes to be won in a contest or disclosing that in order to receive one low-priced product a person must buy another product. The penalty for deceptive telemarketing is imprisonment for a maximum of 14 years or a fine determined by the court, or both.

Civil Liability for Criminal Offences

Commission of any of these criminal offences also brings potential exposure to civil liability.  Any person who has suffered damages as a result of these criminal offences may bring a private action to recuperate such damages. However, generally only damages that are proven to have resulted from the commission of the criminal offences are allowed. Other types of damages, such as punitive damages, are generally not allowed. These private party claims tend to be started in the form of class actions, and rely heavily on the criminal conviction of the company. 

Foreign Assistance

A foreign competition authority that is party to a mutual legal assistance treaty with Canada may request the assistance of the Commissioner in pursuing its own investigation. Anti-competitive business practices do not need to have taken place in Canada for the Commissioner to assist, nor is the consent of the person alleged to have engaged in anti-competitive practices necessary. However, an order of a judge is required for the evidence gathered in the Commissioner’s investigation to be sent abroad, to avoid abuse of these treaties.

Civil Offences

Part VIII of the Act prescribes civil penalties for reviewable trade practices such as refusal to deal, tied selling, price maintenance and abuse of dominance. If the Tribunal finds that a person has engaged in a reviewable trade practice, it may make an order preventing the person from continuing the prohibited activity and require that person to take any action necessary to rectify the competitive harm caused by this activity. Failure to comply with an order of the Tribunal can result in criminal penalties.

Refusal to Deal

The refusal to deal provisions of the Act prevent suppliers from arbitrarily declining to sell goods to buyers who are willing and able to meet the usual trade terms of the supplier, if such action is likely to have an adverse affect on competition in the market. The Tribunal may order that the supplier accept the buyer as a customer.

Tied Selling

Tied selling, which refers to a supplier supplying one product to a customer so long as the customer buys another product, may also be an offence if it results in a substantial lessening of competition. The Tribunal may order that a supplier, or all suppliers in an exclusive industry, refrain from engaging in this practice.

Price Maintenance

The price maintenance provisions of the Act restrict the ability of a person to artificially inflate or discourage the reduction of prices if such conduct will have an adverse affect on competition in the market. The Tribunal may order that a person stop engaging in this activity.

Abuse of Dominance

Abuse of a dominant position is also restricted by the Act. Persons who substantially control a class of business throughout Canada and are engaging in anti-competitive business practices may be prohibited from engaging in such practices. In addition to making an order prohibiting abuse of a dominant position, the Tribunal may also impose an administrative penalty of $10 million ($15 million for repeat offenders).

Parties That May Bring a Complaint

Private parties, as well as the Bureau, may bring a complaint to the Tribunal concerning these civil offences. The only exception is an allegation of abuse of dominance, an investigation into which may only be initiated by the Bureau. 

Conclusion

Canada is one of the fairest and most transparent countries in the world in which to do business.  This insistence on fairness helps to protect companies interested in coming to Canada to do business. Canadian regulatory authorities will not hesitate to enforce the provisions of the Act where companies are engaging in unfair business practices. Complying with Canadian competition legislation can be a difficult task for companies unaccustomed to these rules. In particular, companies should be careful to avoid committing the criminal offences of conspiracy, bid-rigging, misleading representations and deceptive telemarketing, as well as the civil offences of refusal to deal, tied selling, price maintenance, and abuse of dominance.

Bennett Jones’ Antitrust, Competition & Foreign Investment Group

Our antitrust and competition group is committed to providing every client with best-in-class competition advice and representation. Our group includes internationally recognized practitioners including several former Competition Bureau and Department of Justice officials. We draw on our extensive depth and breadth of expertise in advising clients on the most complex domestic and international competition matters.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bennett Jones LLP | Attorney Advertising

Written by:

Bennett Jones LLP
Contact
more
less

Bennett Jones LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!