Question Period Note: COMPETITION POLICY REFORM

What is the government doing to promote a competitive marketplace for Canadian consumers and businesses?

• Encouraging more competition and contestability in all markets will lead to more choices and better prices for Canadians.
• That is why the Government of Canada has undertaken the most comprehensive modernization of the Competition Act in a generation.
• Three phases of reform –through three separate Bills– have either been completed or are underway.

• The government has also provided significant new resources to the Competition Bureau to better execute on its mandate.

The Competition Act is a federal law governing most business conduct in Canada. Its purpose is to maintain and encourage competition, in order to provide consumers with competitive prices and product choices, among other things. The Commissioner of Competition heads the Competition Bureau, and is responsible for the administration and enforcement of the Competition Act.
The Competition Act contains civil and criminal provisions that allow the Commissioner to review business conduct and mergers that may harm competition and consumers. The Commissioner conducts investigations and, where necessary, takes cases before the Competition Tribunal or the courts to be adjudicated. The commissioner also carries out non-enforcement functions, such as advocacy for greater competition both within and outside of government, as well as international collaboration, both bilaterally and within multilateral fora.
In light of the significant changes that the Canadian economy has undergone with the global digital transformation and the rise of data-amassing “Big Tech” giants, questions have arisen as to the adequacy of the current legal framework. Supply chain challenges and high levels of inflation have also led to acute concerns over corporate concentration and uneven market power.
On February 7, 2022, the Minister of Innovation, Science and Industry announced a commitment to pursuing potential changes to the Competition Act to make targeted improvements, broadening the Bureau’s scope of activity, fixing loopholes and adjusting maximum penalties to better account for the power of today’s major actors. This came to fruition with the Budget Implementation Act, 2022, No. 1, which included several key reforms to modernize the law and align it more closely with international norms. These included, among others: reformulating maximum penalties; prohibiting wage-fixing and no-poach agreements between employers; clarifying that incomplete price disclosure is a deceptive marketing practice; and allowing private access to the Competition Tribunal for those impacted by abuse of dominance. The amendments also expanded the list of factors to be considered when assessing the competitive impact of a merger, competitor collaboration, or alleged abuse of dominance to better account for features of the digital economy such as network effects and non-price competition.
Alongside these changes, the government signalled that a broader review of the law was still to come, in accordance with the Minister’s mandate letter and Budget 2022. On November 17, 2022, the government launched the review by seeking Canadians’ views on a wide array of competition policy topics, including changes that would help the Competition Bureau better protect consumers and the integrity of the marketplace. Canadians were invited to make submissions online until March 31, 2023, and those submissions have since been published on the Innovation, Science and Economic Development (ISED) website. A series of roundtables have also been held with a variety of stakeholders to ensure the government heard diverse views.
The Consultation garnered significant interest, receiving over 130 submissions from identified stakeholders, as well as more than 400 responses from members of the general public. These submissions raised over 100 potential reform proposals.
In December 2023, the Parliament of Canada adopted a first set of legislative amendments to the Competition Act through Bill C-56, the Affordable Housing and Groceries Act. The amendments made a number of landmark changes, including: (i) a framework for the Competition Bureau to conduct market studies with the potential for compulsory information-gathering powers; (ii) expanding the scope of anti-competitive business collaborations to include those between businesses that are not competitors or potential competitors in certain circumstances; (iii) repealing the “efficiencies defence”, which permitted otherwise anti-competitive mergers and collaborations to withstand challenge where they generated sufficient economic efficiencies to offset harm to competition; and (iv) permitting remedial orders against abuses of dominance on the basis of anti-competitive intent or effects alone (instead of both), as well as raising maximum monetary penalties that may be in effect when both are proven.

As of April 2024, the government’s most comprehensive response to the consultation, a set of further, wide-ranging amendments proposed to all areas of the Competition Act, are currently navigating the legislative process via Bill C-59, the Fall Economic Statement Implementation Act, 2023. Broadly, these would modernize the merger notification and enforcement process, significantly increase the scope of review and consequences for anti-competitive collaborations, broaden and incentivize private enforcement, and address government priorities within the framework such as labour and the environment.

If pressed on the three phases of reform:

• The Competition Act was amended by the passage of Bill C-19 in June 2022 to fix certain loopholes in the law, tackle business practices harmful to workers and consumers, increase penalties and access to justice, and adapt the law to today's digital reality.

• The Act was further amended with Bill C-56 in December 2023 to give more power to the Competition Bureau to investigate harmful behaviour within industries; to remove the efficiencies defence to end anti-competitive mergers that raise prices and limit choices for Canadian consumers; and to empower the Bureau to seek to block collaborations that stifle competition and consumer choice.

• Bill C-59, the Fall Economic Statement Implementation Act, 2023, is currently before Parliament, and also contains substantial amendment proposals to the Act.

• These proposed amendments will help better identify structural market issues as they arise, prevent mergers that unduly reduce competition, and provide the Competition Bureau with the ability to address a broader range of business collaborations, such as property controls.