Commissioner of Competition Matthew Boswell has been seeking to improve Canada’s economic efficiency by giving the Competition Tribunal more power.Sean Kilpatrick/The Canadian Press
Breaking Canadian competition laws now carries stiffer financial penalties and an increased risk of class-action lawsuits after long-promised reforms took effect on Friday.
The federal government unveiled updates to the Competition Act last June, with amendments that included significantly increasing the ability of businesses, consumers and public interest groups to seek cash compensation over issues that include misleading advertising. Law firm Osler, Hoskin & Harcourt LLP in a report called the changes “the most dramatic expansion of private enforcement of Canada’s competition law in a generation.”
The federal government gave companies a year to adapt to the new regime, with the new regulations coming into force on June 20.
“These changes will have significant implications for businesses, as they open the door for increased litigation and class-like actions based on competition law claims,” said Julie Soloway, a partner and co-chair of the competition, antitrust and foreign investment group at law firm Blake, Cassels & Graydon LLP, in an email.
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Prior to the reforms enacted on Friday, competition regulations limited the ability of individuals and companies to sue companies for damages for criminal acts such as price-fixing or bid-rigging. Having to prove criminal behaviour as part of a lawsuit meant only a handful of cases were every filed and most were settled or withdrawn.
The new competition laws allow companies or consumers to win compensation equal to the value of the benefit derived from anti-competitive conduct, with the federal Competition Tribunal presiding over the hearings.
“Businesses now have greater ability and more reason to bring private cases about others’ conduct, on top of complaining to the Competition Bureau,” Ms. Soloway said.
In cases involving misleading advertising, consumers can claim damages equal to the amount they paid for the products involved in the marketing campaign. “Any misleading advertising, including greenwashing, and agreements likely to prevent or lessen competition substantially can now be the subject of private applications,” Ms. Soloway said.
The Canadian economy features a number of sectors dominated by a few large companies, including telecom, transportation, banking and grocery stores. Under the new competition regime, private litigants such as rival businesses can sue over competition issues, even if the Competition Bureau of Canada, the federal watchdog, gave its stamp of approval.
The amendments could expose companies “to tactical litigation and financial risks before the tribunal in respect of market conduct that the commissioner has declined to investigate or enforce,” a team of lawyers at Osler said in a recent report.
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The new rules promoting private enforcement of competition laws are part of Commissioner of Competition Matthew Boswell’s six-year campaign to increase economic efficiency by giving regulators, private entities and the quasi-judicial Competition Tribunal more power.
“Commissioner Boswell has been provided with long-sought tools, increased resources and a stronger enforcement hand,” the Osler lawyers said. “With the enhanced role for private parties to contest market conduct, the Competition Bureau’s enforcement burden will be reduced, potentially leaving the Commissioner freer to pursue investigations.”
