- Merging parties may seek to rebut this presumption if there is sufficient evidence that the merger will not substantially prevent or lessen competition.
When does the new presumption apply for mergers?
Under the changes to the Competition Act , a merger is presumed to be anti-competitive if it significantly increases concentration or market share.
- Concentration is measured with a concentration index, which is defined as the sum of the squares of the market shares in the relevant market. This is also known as the Herfindahl-Hirschman Index.
This presumption applies if, in any relevant market:
- the concentration index after the merger increases or is likely to increase by more than 100; and
- either:
- the concentration index after the merger is or is likely to be more than 1,800, or
- the combined market share of the parties to the merger or proposed merger is or is likely to be more than 30%.
The specific thresholds for this presumption can be updated through regulations.
- Strengthening remedies for anti-competitive mergers by establishing that their goal is to preserve or restore the level of competition that would have existed without the merger.
- Previously, merger remedies only had to lessen the competitive harm caused by the merger so that it was not substantial.
- As an example, a company’s sales into Canada now count towards the transaction-size threshold for notification purposes.
- The changes temporarily pause mergers when there is a pending application for an injunction before the Competition Tribunal.
- Previously, parties could close a merger before the Competition Tribunal was able to issue a decision on an injunction application.
Other recent amendments to the Competition Act have removed the efficiencies defence for anti-competitive mergers, and expanded the list of factors that the Competition Tribunal could consider to decide whether a merger will harm competition.
Stronger powers to address anti-competitive agreements
The Competition Act contains both criminal and civil provisions dealing with anti-competitive agreements between businesses. The amendments significantly strengthen the civil provision which prevents companies from entering into agreements that substantially prevent or lessen competition.
Specifically, the changes:
- Expand the civil provision to cover past anti-competitive agreements going back up to 3 years.
- Previously, the Competition Bureau could only challenge existing or proposed agreements that harmed competition in the present or were likely to in the future.
- Previously, only the Competition Bureau had the authority to challenge anti-competitive agreements under the civil provision.
Enhanced refusal to deal provision
In most cases, businesses have the right to decide who they do business with. However, the Competition Act prohibits a business from refusing to deal with another business if that refusal harms competition and meets other conditions.
- Expand the refusal to deal provision to cover situations where a refusal is substantially affecting part of a business.
- Previously, the provision only applied to extreme cases where a refusal was substantially affecting the entirety of the business that was refused.
- This change will help independent firms that provide repair services get access to the information and parts they need to repair products.
Improvements to the deceptive marketing practices provisions
The changes strengthen the Competition Bureau’s ability to act against bogus discount claims and drip pricing by:
- Requiring that businesses be able to establish that their discount claims are genuine.
- Clarifying that it is misleading to omit mandatory fees from advertised prices, unless those fees are imposed by government on purchasers, such as sales tax.
- Previously, some firms had interpreted the Competition Act as allowing them to pass their own business taxes and regulatory compliance costs onto consumers as mandatory hidden fees.
The changes also tackle unsupported environmental claims, commonly known as greenwashing, by:
- Requiring that claims about the environmental benefits of a product be supported by adequate and proper testing.
- Requiring that claims about the environmental benefits of a business or business activity be based on adequate and proper substantiation in accordance with an internationally recognized methodology.
- The Bureau is assessing the impact of these requirements and expects to provide guidance, in due course, that will offer transparency and predictability for the business and the legal communities in the enforcement of the law.
Expanded private access to the Competition Tribunal
Under the Competition Act , private parties can apply directly to the Competition Tribunal to challenge certain types of anti-competitive conduct.
- Extend private access rights to cases involving deceptive marketing practices and a civil provision dealing with anti-competitive agreements.
- Previously, private access was limited to provisions involving refusal to deal, price maintenance, exclusive dealing, tied selling and market restriction, and abuse of dominance.
- Previously, in most cases, only businesses whose entire operations were directly and significantly impacted by the alleged anti-competitive conduct were permitted to apply directly to the Competition Tribunal.
These changes will come into force on June 20, 2025.
Other changes
- Civil mechanism for enforcing consent agreements: Most civil cases under the Competition Act are resolved through a negotiated consent agreements that set out what companies agree to do to resolve concerns. The amendments provide the Competition Bureau with a new tool to enforce compliance with these agreements, including the option for the Competition Tribunal to impose administrative monetary penalties if parties don’t meet their commitments. This will help ensure that businesses follow through on the terms of their consent agreements.
- Reprisal actions: The amendments prohibit anyone from penalizing, harassing or disadvantaging another person based on that person’s communication or cooperation under the Competition Act . This provides an additional layer of protection for whistleblowers, complainants, industry participants and others that come forward and provide assistance under the Competition Act .
- Cost awards: The amendments limit the circumstances where the Competition Bureau would be required to pay costs following a case at the Competition Tribunal. This change reduces the chilling effect that potential cost awards can have on public interest enforcement.
- Environmental collaboration certificates: Businesses considering collaborating with one another to protect the environment can seek a certificate from the Competition Bureau confirming that the Competition Act ’s conspiracy, bid-rigging and civil agreement provisions will not apply to the collaboration. The Bureau can grant a certificate if it is satisfied that the agreement is for the purpose of protecting the environment and that it will not harm competition.
