The future of competition law
Some thoughts on modernizing the Competition Act.
The Competition Law and Foreign Investment Review Section of the CBA shared comprehensive comments on Innovation, Science and Economic Development Canada’s Consultation Paper on proposals to modernize the Competition Act and related legislation. They are summarized below.
The first, more general comment is that vigorous competition is beneficial to the economy and to consumers, and that the legislative regime should be “fully equipped to maintain and encourage competition in Canada.” The Act and Regulations, the Section believes, should apply to all sectors of the economy and be of general application, rather than contain sector-specific provisions.
On more specific provisions, the CBA Section “supports revision of the pre-merger notification rules to ensure they capture transactions of economic significance to Canada,” including by ensuring thresholds are better targeted. In addition, the one-year limitation period for all mergers, whether they’re notifiable or not, should be retained. The Section is of the view that it “strikes the appropriate balance between the certainty the business community reasonably expects, and the risk that small but harmful mergers could go undetected.” As well, the efficiencies defence – which permits a merger where cost savings outweigh negative impacts on competition – should continue in its present form. Should the government decide otherwise, the Section offers “constructive recommendations on how efficiencies could be considered as a relevant factor in assessing a merger transaction under the Act.”
When it comes to competitor collaborations, the requirement for agreement should remain unmodified. Changing it “would be a radical departure from Canadian competition law and policy,” the letter says.
The Section advises against a broad expansion of buy-side collusion offences. “Unlike the cartel conduct covered by the conspiracy offence (price-fixing, market allocation and supply restriction agreements), buy-side agreements are not clearly harmful and in many scenarios are competitively neutral or even procompetitive,” the submission reads.
On the matter of enforcement, the views of CBA Section members “vary considerably on the question of introducing a more robust framework for private enforcement of the non-cartel reviewable practices, including private rights of action for damage suffered.” Should the government proceed with expanded privatization of competition law enforcement, there should be effective judicial and procedural safeguards to mitigate against the potential for unmeritorious and abusive private litigation.