Administration And Enforcement Of The Law

As discussed in our previous blog post, on November 17, 2022, the Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry, launched the much anticipated public consultation on the second stage of potential amendments to the Competition Act (the "Act").

As part of this consultation process, the Department of Innovation, Science and Economic Development ("ISED") issued a discussion paper, titled The Future of Competition Policy in Canada (the "Discussion Paper"), which considers numerous issues and potential areas of reform, including in the mergers, unilateral conduct, competitor collaboration, deceptive marketing and administration/enforcement context. The Discussion Paper does not include any particular recommendations or proposed amendments to the Act. Rather, it simply sets the stage and invites feedback from interested stakeholders on the issues and potential areas of reform. Feedback can be provided on or before February 27, 2023.

To help businesses better understand the issues and potential areas of reform included in the Discussion Paper, we are releasing a series of blog posts discussing these issues and potential areas of reform on a topic-by-topic basis. This is the fifth and final blog post in the series, which is focused on administration and enforcement of the law.

In an era of cross-border conduct and investigations, both the means and pace of enforcement take on added importance, as competition authorities coordinate investigative activity. The Discussion Paper spotlights what it characterizes as Bureau limitations in the ability to take action in an authoritative and timely fashion. It contrasts the Bureau's enforcement powers to international counterparts, such as the European Commission (the "EC"), which is an example of an integrated agency model where the Commission acts as "police, prosecutor and judge". The EC is an adjudicator in the first instance for both interim and remedial measures, and has extensive powers to collect information as part of its investigative function. By comparison, the current Bureau's institutional design is that of a bifurcated judicial model where the competition authority goes to court for enforcement decisions and formal investigatory powers.

It would appear that the government is considering strengthening the Bureau's enforcement powers and may have regard to new enforcement powers being proposed for the Office of the Privacy Commissioner of Canada contained in Bill C-27 for future possible amendments to the Act in this regard.¹

The first stage of amendments to the Act passed into law in June 2022 (the "BIA Amendments") sought to improve the Bureau's ability to seek information from foreign affiliates, trying to better align the threshold for, and content of, orders with those of target firms. They also sought to add clarity as to the applicability of information-seeking orders to firms located abroad. The Federal Government is now considering reforms (as outlined below) and is seeking input from stakeholders:

Making the administration of the law, and enforcement before the Competition Tribunal or courts, more efficient and responsive whether public or private, without unreasonably compromising procedural fairness. For example:
- Giving the Bureau more leeway to act a decision-maker (e.g. through simplified information-collection, or a first-instance ability to authorize or prevent forms of conduct). The Discussion Paper notes that the enforcement of competition law "does not generally provide a rapid response to urgent marketplace issues." This is a function of the process in place in Canada, in which the Bureau (1) must seek authorization to compel the production of information (other than through supplementary information requests in the context of mergers) and (2) has no ability to render binding decisions or set down rules. Rather, such measures are the exclusive purview of the Tribunal or court system, or must be the product of a party's consent. In contrast, and as noted in the Discussion Paper, antitrust agencies in Australia, Europe and the United States have much greater latitude to engage in many of these measures. In this regard, the Discussion Paper notes that as per peer jurisdictions experiences suggest, "the Bureau could be afforded greater leeway to intervene as necessary to protect the marketplace."
- Introducing new forms of civil enforcement as alternatives to criminal prosecution for certain actions. The Discussion Paper notes that criminal prosecution takes time and suggests that it may be worth exploring other form of civil enforcement being added "as an alternative or complement to cumbersome, or potentially undesired criminal enforcement."
- Allowing private parties to seek compensation for damage suffered from civilly reviewable (non-merger) conduct under the Act. Pursuant to section 36 of the Act, a private party may commence an action for damages (including a class action) where a party has either engaged in conduct contrary to the criminal provisions of the Act or breached an order issued by the Tribunal or courts under the Act. Such actions are not available in the case of civil reviewable conduct, such as an alleged contravention of the abuse of dominance or civil competitor collaboration provisions. The Discussion Paper has suggested that a stronger private enforcement framework that includes both private action in the provincial and federal courts and private access to the Competition Tribunal for damages would: (i) complement the Bureau's public enforcement, which is already resource-constrained; (ii) cause more expedient case resolutions; and (iii) help clarify legal issues through increasing jurisprudence.
Pursuing a reasonable path with respect to the collection of information outside of the enforcement context, such as for the purpose of market studies, taking both public value and private burden into account. The Discussion Paper notes that "the importance of the Bureau's role as competition advocate should not be understated" and that "markets both in Canada and abroad have often been well served by timely interventions outside of pure enforcement action". It also identifies several benefits that can be realized through the use of market studies, including, for example, "uncovering possible competition problems, proposing pro-competitive solutions, and ... informing public debate through an airing of evidence". Finally, the Discussion Paper notes that there has been debate around the use of market studies; indicates that the collection of information outside the enforcement context "need not be an all-or-nothing affair"; and identifies a number "specific triggers or oversight mechanisms" that could be put in place if a market study provision were to be added to the Act.

To further this conversation, as the Canadian Chamber of Commerce Future of Business Centre Fellow, John Pecman recently released an independent report entitled "Toughening Canada's Competitiveness". His report addresses likely areas of reform to the Act in the upcoming review.

Consequences for Businesses

The outlook may be changing for Canadian competition law. Should the Bureau gain stronger enforcement powers and evidence gathering tools, companies can likely expect increased enforcement activity. Canadian businesses should consider participating in the government consultation process relating to the amendments to the Act particularly where they may have concerns with proposals contained in the Discussion Paper. Further, it would also be prudent for companies to stay abreast of these reforms and to plan compliance updates early to avoid delays in aligning their internal guidance with any new legal requirements.

Timing of Submissions

As noted above, interested stakeholders have been invited to provide submissions or before February 27, 2023. This can be done using the online consultation form on ISED's website.

Footnote

1 The Enhanced Privacy Commissioner Powers under Bill C-27:

Following an investigation, the Privacy Commissioner may make a formal inquiry. This is a procedural power already possessed by the Competition Commissioner.
The Privacy Commissioner will be able to resolve an investigation by way of a dispute resolution mechanism such as mediation and conciliation. The Competition Commissioner has no expressed power under the Competition Act to attempt to resolve a complaint through an alternate case dispute mechanism.
During an investigation, where the Privacy Commissioner believes on reasonable grounds that an organization has committed an offence, the Commissioner will be able to enter into a compliance agreement with that organization. Under the Competition Act, the Commissioner can only enter into a consent agreement with a party that is based on terms that could be the subject of an order of a court against that person, and such consent agreement may be filed with the appropriate court for registration.
Inquiries under Bill C-27 would require the Privacy Commissioner to develop rules of procedure and evidence, make them public, and follow them. The new privacy legislation would appear to have greater procedural protections for fairness and due process than under the Competition Act.
Following the completion of an inquiry, the Privacy Commissioner can issue compulsory orders of measures a party must take to comply with the Consumer Privacy Protection Act or orders it stop conduct that contravenes the legislation. It is interesting to note that the Privacy Commissioner will not be able to impose any financial penalties, rather they can recommend them to the newly proposed Privacy and Data Protection Tribunal. Under the Competition Act's adversarial system, the Competition Commissioner currently has no power to issue orders and must remit prosecutions of criminal cases to the Federal Director of Public Prosecutions or make application for orders to the Competition Tribunal for reviewable matters such as mergers or abuse of dominance.
Companies will have a right of appeal of any order rendered by the Privacy Commissioner to the new Tribunal. It would appear that the Privacy Commissioner will have a role similar to the EC Commissioner as a decision-maker in the first instance. The Competition Commissioner is currently responsible for investigations and has no formal adjudication powers under the Competition Act.

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