The Canadian government has proposed giving the Minister of Innovation, Science and Industry the ability to direct the Competition Bureau to conduct market studies with the ability to compel production of related documents and testimony from market participants, among other amendments.

Bill C-56, An Act to amend the Excise Tax Act and the Competition Act, was introduced following an announcement from the Prime Minister’s Office that the forthcoming amendments would create new information-gathering powers, eliminate the “efficiencies defence” for mergers, and impose a new civil prohibition on anti-competitive agreements between non-competitors (including restrictive covenants in grocery store leases).

In detail, the amendments introduced in Bill C-56 will make the following changes to the Competition Act:

• Compel production of information for market studies. The Competition Bureau will receive new powers to compel companies to provide information in the context of market studies. While the Bureau is principally a law enforcement agency, it also carries out occasional “market studies” to report on industries or markets of interest. There have been six such market studies since 2008, covering generic drugs, financial services, broadband internet, grocery stores and other markets. The Bureau does not currently have the power to compel companies to provide information or data in connection with such market studies, and has complained that this limitation hinders its ability to carry out market studies effectively. The amendments introduce the concept of a “market or industry inquiry” whereby the Minister of Innovation, Science and Industry can direct the Competition Bureau to commence “an inquiry into the state of competition in a market or industry”. The amendments would bring this new inquiry power within the scope of section 11 of the Competition Act, which allows the Commissioner of Competition to apply for a court order to compel oral examinations, production of records or written returns, meaning that companies may now be compelled to provide the Competition Bureau with information in connection with a market study (even if they have not engaged in any conduct contrary to the Competition Act).
• Eliminate the efficiencies defence. The Competition Act currently includes a “defence” for mergers that generate efficiencies that outweigh their anticompetitive effects. The Competition Bureau and the Commissioner of Competition have long called for the repeal of this defence and the amendments will finally eliminate the efficiencies defence. While Bill C-56 removes the mention of efficiencies from the merger review provisions entirely, the NDP have also introduced Private Member’s Bill C-352 which would similarly remove the defence but also add efficiencies to the (non-exhaustive) list of factors for the Competition Tribunal to consider when assessing a merger.
• Allow civil orders with respect to agreements between non-competitors. The Prime Minister’s announcement said that the Competition Act will be amended to “empower the Bureau to take action against collaborations that stifle competition and consumer choice, in particular situations where large grocers prevent smaller competitors from establishing operations nearby.” In order to accomplish this, Bill C-56 will add an “exception” to section 90.1 of the Competition Act (the civil competitor collaboration provision) which would allow the Competition Tribunal to make an order in respect of an agreement between non-competitors if “a significant purpose of the agreement or arrangement, or any part of it, is to prevent or lessen competition in any market”. This amendment has the potential to affect a very large number of agreements, although the remedy available under section 90.1 is limited to a prohibition order, unless the target of the order and the Commissioner consent to an order to take any other action. If passed, this amendment would not take effect until one year after Bill C-56 receives royal assent.

These amendments are described as a “first set”, and they follow a previous “first stage” of amendments that were implemented in 2022. After the 2022 amendments, the government launched a wide-ranging consultation on the “future of competition policy in Canada”, and further amendments had been anticipated. Innovation, Science and Economic Development Canada also released its “What We Heard Report” this week, which summarizes the responses received during the consultation. While market studies and the elimination of the efficiencies defence were considered during the consultation, broadening section 90.1 to apply to agreements between non-competitors was not.

We will monitor these amendments as they make their way through the legislative process and provide updates as they arise.

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