Clarify enforcement of competitor property controls
Contractual clauses commonly used in commercial real estate should not be subject of review under the Competition Act
In a nutshell
The CBA’s Competition Law and Foreign Investment Review Section wants the Competition Bureau to clarify its enforcement approach to competitor property controls. It is calling for practical guidance and focused compliance standards to prevent regulatory overreach.
Restrictions on property use
Competitor property controls are restrictions on the use of commercial real estate to protect firms from competition. The controls targeted by the guidance are:
- Exclusivity clauses that put limits on tenants on how they can use land, and
- Restrictive covenants, which prevent land from being used for certain types of businesses that may compete with a previous owner.
A call for clarity
The CBA Section is pleased with the Competition Bureau’s swift issuance of guidelines on enforcement but emphasizes the need for the Bureau to clarify the scope of conduct it is likely to review or challenge given how frequently businesses use property controls. For the vast majority of businesses, this is the first time their standard practices may be scrutinized under the Competition Act.
In its letter, the CBA Section highlights the lack of detail in the Bureau's legal analysis under the new non-competitor agreements provision (Section 90.1(1.1)) and the abuse of dominance provisions (Sections 78–79), especially regarding the assessment of a “substantial prevention or lessening of competition” (SPLC). The Section recommends addressing this gap with detailed explanations.
Other concerns
The Bureau’s guidance recognizes that property controls are common in Canada, but asserts they are justifiable “in limited cases” and that restrictions are only justifiable in exceptional circumstances. The CBA Section is concerned about the lack of clarity on when it the Bureau will consider property controls justified.
“[M]arket participants would benefit greatly from the Burau’s initial views on acceptable, or inacceptable, boundaries,” the letter reads.
Finally, the Section calls for plain language guidance for tenants, lessors, landowners and former landowners. The guidance should “clearly and prominently state that, in many cases, there will be no basis for any competition concern under the Act.”
Read the submission.
