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Canadian Competition Law and Class Actions: Assessing Regulatory Shifts and Their Implications 

Sweeping changes to Canada’s Competition Act1 (the “Competition Act” or the “Act”) are on the horizon and will likely have significant impacts on corporate governance. In part as a response to growing concerns of alleged monopolistic conduct of certain corporations, and frustrations with the ineffectiveness of the current competition law regime, the amendments to the Act will seek to broaden and enhance the scope of private participation in Canada’s Competition Tribunal, will provide the Competition Bureau with more information gathering powers, and will impose increased risk of liability and penalties for misconduct.  

The following is a primer on the current state of competition law in Canada, followed by highlights of the upcoming amendments to the Competition Act. 

Competition and Antitrust Class Proceedings in Canada 

In Canada, competition and antitrust class actions are brought, in part, pursuant to alleged violations of the Competition Act.  

The Competition Act is a Federal statute, but class actions may be brought either via the Federal Court or in a provincial court of appropriate jurisdiction. Since 1976, section 36 of the Act has allowed private litigants to bring forth actions in the federal and provincial courts for the recovery of damages with respect to criminal and anticompetitive conduct listed under Part VI.2 

Competition and antitrust class actions remain popular in Canada, with over 200 cases having been filed since the inception of class proceedings legislation in the 1990’s.3

Typically, an antitrust class action will alleged one or more of the following violations listed under Part VI of the Competition Act:  

  • Conspiracy (section 45), prohibiting criminal conspiracies concerning agreements and/or arrangements between competitors, such as price-fixing; 
  • Foreign Directives (section 46), similar to section 45, prohibits Canadian subsidiaries from participating in a conspiracy at the direction of their foreign parent company; 
  • Bid Rigging (section 47), prohibiting bid rigging and other manipulations of tendering processes; and  
  • False or Misleading Representations (section 52), prohibiting false or misleading marketing and advertising with respect to products or services.4

Competition class proceedings in Canada are informed by a trilogy of cases released by the Supreme Court of Canada in 2013.5 These cases, have, among other things, served to clarify the scope of antitrust actions with respect to class proceedings and certification.   This trilogy, later revisited and refined in Pioneer Corp. v. Godfrey,6 confirmed that the application of the Act was broad enough to include both indirect and umbrella purchasers who may have been impacted by the impugned misconduct, thus expanding the breadth of who may be included as a class member in an antitrust class proceeding. The Supreme Court also confirmed that the Competition Act is not a complete code, and thus common law claims, some of which provide broader remedies than those available under section 36, may serve to complement alleged statutory violations under Part VI. As such, many class proceedings will claim relief with both statutory and common law remedies. 

While price fixing actions have remained consistently popular forms of class proceedings in Canada, deceptive marketing claims have also become increasingly common.7   

The Role of Canada’s Competition Bureau and Tribunal 

Canada’s Competition Tribunal (the “Tribunal”) operates under a jurisdiction separate from class proceedings. While actions via private lawsuits (including class proceedings) have been relegated to the recovery of damages for criminal and anticompetitive conduct listed under Part VI of the Competition Act, the Tribunal has jurisdiction to adjudicate over all other civil offences listed in the Act. The adjudication of criminal conduct (such as those listed under Part VI) is relegated to the Public Prosecution Service of Canada via Canada’s criminal prosecution regime.   

Canada’s investigative and enforcement agency, the Competition Bureau (the “Bureau”), is the most common party to bring forth actions via the Tribunal. Investigations by the Bureau may concern, for example, allegations relating to mergers, abuse of dominance, exclusive dealing, tied selling or misleading advertising, and/or the criminal provisions under Part VI of the Act. The Bureau’s investigative powers are usually in the form of information collection and may involve production orders or search warrants.8  

Beyond the Bureau, private individuals, with leave, may also bring forth actions via the Tribunal for civil misconduct. However, no private action has ever been successfully adjudicated via the Tribunal and the commencement of private actions are rare.9 While the Tribunal may order several remedies, including administrative penalties, fines, restitution and prohibition orders, it did not previously have the authority to award compensatory damages. Many have reasoned that the Tribunal’s high threshold to providing leave to private litigants, coupled by a lack of financial incentive to encourage private parties to commence actions via the Tribunal (as opposed to class proceedings via the courts), have rendered the Tribunal inaccessible to the average person.10   

Upcoming Amendments to the Competition Act – Increased Powers and Access to the Tribunal  

The upcoming amendments will result in a significant overhaul to the Competition Act and may entail several changes to the realm of competition law in Canada. Many of these changes are the result of growing concerns with respect to the perceived ineffectiveness of the Act in preventing monopolistic corporate conduct and its impact of this conduct on the increased costs of living in Canada and increased political power for large corporations.11 Amendment highlights include: 

The scope of actions private litigants may bring has expanded. Beyond recovery for offences under Part VI of the Competition Act, private parties will now be able to bring forth actions via the Tribunal for misconduct that has historically fallen within the jurisdiction of the Bureau, including abuse of dominance, refusal to deal, tied selling, non-criminal conspiracy, and non-criminal deceptive marketing.  

Private litigants will have increased access and more incentives to pursue claims via the Tribunal. While private litigants may bring civil actions via the Tribunal, they must seek leave beforehand and previously, must have established that they were directly and substantially affected by the alleged misconduct. The new amendments will lower this threshold to allow leave in situations where the applicant is either (i) wholly or in part impacted by the conduct, or (ii) if they can establish that it would be in the public interest to grant leave. In addition, the Tribunal will now be able to award damages to private litigants in the form of disgorgement payments, which may assist in incentivizing private actors in pursuing claims via the Tribunal.  

The test for Abuse of Dominance will be easier to meet. Omitted from the previous test for Abuse of Dominance will be the requirement of proof that the dominant conduct substantially negatively impacted the market or substantially prevented competition in the market. Now, liability may be imposed if the dominant player simply engaged in anticompetitive behaviour, no matter whether their conduct has impacted competition in the market.  

Mergers will be more heavily scrutinized. More mergers will now be subject to mandatory notification procedures via the Bureau. Amendments include the addition of “sales into Canada” to calculate the monetary threshold that would trigger a review from the Bureau, along with the addition of “aggregation of assets” when a single transaction involves both share and asset acquisitions. In addition, mergers that are not subject to mandatory reporting may still be challenged by the Bureau up to three years after closing (as opposed to the initial one (1) year limitation period).   

Greenwashing has been codified as a form of misleading advertising. Representations that certain products or services impart an ecological benefit or mitigate environmental damage that are not based on adequate and/or proper testing will be considered false and misleading for the purposes of the Competition Act.  

What does the Future Hold? 

It appears that growing public discourse surrounding concerns of increased power imbalances at the hands of large and monopolistic corporations have influenced Canada’s response in providing its Tribunal and Bureau with more firepower to adjudicate these matters. On its face, these changes appear to more closely reflect the European model, whereby European regulators have historically taken on a more interventionist approach to anticompetitive conduct, particularly with respect to big tech companies.12 In addition, increased access and incentives via the Tribunal for private litigants may assist in opening the doors for more collective justice and increase possibilities for future litigation.  

However, these implications will only come to light if the Bureau meaningfully undertakes to investigate these matters. Further, the future is unclear as to whether private litigants will be adequately incentivized to pursue these claims, and whether they will be able to surpass the lower thresholds to access leave to the Tribunal. At the end of the day, only time will tell whether the Bureau’s bite will match its bark.  

Conclusion

This article was written by Class Action Lawyers, Sabrina Lombardi and Chanele Rioux-McCormick . For additional information, please do not hesitate to contact them at sabrina.lombardi@mckenzielake.com or chanele.rioux-mccormick@mckenzielake.com a

If you require assistance with any Class Actions matter, speak to a Class Actions Lawyer at McKenzie Lake Lawyers LLP by calling (519) 672-5666. 

  1. RSC , 1985, c. C-34.  ↩︎
  2. Christopher Naudie, Adam Hirsh, Olivia Dixon “Competition class actions in Canada: The Supreme Court resets the ground rules” Osler, Hoskin & Harcourt LLP (September 20 2019) online: https://www.osler.com/en/resources/regulations/2019/competition-class-actions-in-canada-the-supreme-court-resets-the-ground-rules  ↩︎
  3. Ibid.  ↩︎
  4. Competition Act, RSC , 1985, c. C-34 ss.45-47, 52; “Canada: Class actions – litigation, policy and latest developments” Global Competition Review (December 2 2022) online: https://globalcompetitionreview.com/hub/class-actions-hub/2022/article/canada-class-actions-litigation-policy-and-latest-developments#footnote-13  ↩︎
  5. See Pro‑Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57 [Pro-Sys]; Sun‑Rype Products Ltd. v. Archer Daniels Midland Company, 2013 SCC 58; and Infineon Technologies AG v. Option consommateurs, 2013 SCC 59. ↩︎
  6. 2019 SCC 42 [Godfrey]. ↩︎
  7. See Godfrey and David v. Loblaw, 2021 ONSC 7331 as examples of price-fixing class actions, and  Live Nation Entertainment, Inc. v. Gomel, 2023 BCCA 274 and Valeant Canada LP/Valeant Canada S.E.C. v. British Columbia, 2022 BCCA 366 as examples of recent misrepresentation and deceptive marketing cases. ↩︎
  8. Competition Act, RSC , 1985, c. C-34, ss.11, 15.  ↩︎
  9. “Future of Canada’s Competition Policy Consultation – What We Heard Report” Government of Canada (September 20 2023) online: https://ised-isde.canada.ca/site/strategic-policy-sector/en/marketplace-framework-policy/competition-policy/consultation-future-competition-policy-canada/future-canadas-competition-policy-consultation-what-we-heard-report  ↩︎
  10. Ibid.  ↩︎
  11. Ibid. ↩︎
  12. Tom Romanoff “Comparison of Competition Law and Policy in the US, EU, UK, China, and Canada” Bipartisan Policy Center (December 16 2021) online: https://bipartisanpolicy.org/blog/comparison-of-competition-law-and-policy-in-the-us-eu-uk-china-and-canada/  ↩︎

Mar 27, 2024
McKenzie Lake Lawyers