CANADA'S COMPETITION ACT

Canada's Competition Act ("the Act") applies to all businesses in Canada. Enforced by the Commissioner of Competition, who leads the Competition Bureau, the Act deals with:

  • Mergers: Parties to mergers that lessen or prevent competition substantially can be forced to divest assets or be prohibited from closing their merger by the Competition Tribunal. Parties to mergers that exceed certain thresholds must file a notification with the Bureau at least 30 days before closing so that the Bureau can determine whether the merger is likely to harm competition. The Canada Investment Act also requires that certain mergers over certain thresholds be approved by the Investment Review Division before the parties can close.
  • Cartels: The Act makes it a criminal offence for competitors to fix prices or rig bids. Offenders can be fined up to $25 million or jailed for up to 14 years.
  • Monopolization: Firms that enjoy market power and use anti-competitive conduct to reduce competition can be forced to stop the conduct and, in some cases, to pay a fine of up to $10 million.
  • Deceptive marketing practices: Advertising that is false or misleading can lead to fines of up to $10 million. There are special rules for performance claims and ordinary price claims.

For a more detailed summary of the Competition Act, see the Competition Law chapter of Doing Business In Canada at casselsbrock.com/DBIC.

2018 HIGHLIGHTS

Record Divestiture

Bayer AG agreed to sell a number of businesses in Canada and around the world to resolve concerns that its US$63 billion acquisition of Monsanto Company would raise prices for seeds and traits and reduce innovation. The global merger was notified in 29 jurisdictions. In settlements reached with competition authorities in Canada, the US, the EU, Australia, Brazil, and elsewhere, Bayer agreed to sell businesses that compete with Monsanto's businesses, including various seeds and traits businesses and its Liberty herbicide business (a competitor of Monsanto's Roundup). These remedies, worth a record US$9 billion, came nearly two years after the merger was first announced.

In Canada, canola seeds and traits raised the biggest concerns, since canola is Canada's highest acreage crop. Bayer and Monsanto's herbicide resistance traits account for 95% of the canola seeds sold in Canada.

Bayer sold the businesses it promised to divest to BASF. This deal also raised competition concerns, because of overlaps with BASF's existing herbicide and seed treatment businesses, as well as a herbicide resistant trait for canola known as Clearfield. BASF agreed to divestures to address these concerns.

Microsoft Agrees to Record Settlement

Microsoft agreed to a settlement worth between $312 and $517 million, depending on the take-up rate by class members. This is by far the largest settlement ever of a private action under the Competition Act.

Microsoft will pay $13 to consumers who purchased Windows and $8 to those who purchased Office.

Beginning in 1988, Microsoft engaged in a campaign that "destroyed competitors" of its Windows operating system and Office software, the plaintiffs alleged. The action was initially pleaded as a tort claim based on alleged abuse of dominance by Microsoft. In 2006 the court held that the plaintiffs could not rely on abuse of dominance allegations because conduct constituting abuse of dominance is not unlawful until after the Competition Tribunal prohibits it. The plaintiffs re-pleaded their case to allege that Microsoft engaged in a criminal conspiracy to limit competition unduly, which allowed them to bring the case under the Competition Act's private damages provision.

The BC court approved both the settlement and record-breaking fees to class counsel of $100 million.

Download >> Canadian Competition Law - Review 2018 & What to Expect 2019

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