A warning shot across monopolists’ bow

Reidar Mogerman thinks monopolists in Canada should consider themselves warned.

Change is afoot in the wake of sweeping updates to Canada’s competition regime over the past three years, including expanded opportunities for private parties to take a range of actions under the Competition Act.

“It will be much easier to pursue monopolists who abuse their monopoly power under the new provisions,” says Mogerman, a competition law expert with CFM Lawyers LLP, a boutique Vancouver firm specializing in class actions and private liability work.

“That will be a big help because our regulators don’t have the resources to chase every big monopolist, so they need private enforcement as an adjunct to these powers.”

He adds: “The changes also make civil damages available for a much broader range of conduct.”

Mogerman foresees more cases against big tech companies like Meta, Amazon, and Google. Under the previous system, launching suits under the Act had primarily been the purview of the Competition Bureau, with private action limited to only a few areas under the legislation’s criminal law sections.

Now, private litigants can pursue cases for civil reviewable practices like refusal to deal, price maintenance, tied selling, and abuse of dominance. Private actions will also be possible under the new prohibitions against deceptive environmental claims, known as greenwashing, with claims expected from environmental groups, consumers, and competitors.

Others in the profession are less enthusiastic about private parties' increased ability to launch actions and seek monetary relief for themselves and others. They worry the changes were adopted too quickly and could increase the cost of doing business.

“I think they’re very consequential changes,” said Adam Hirsh, a partner at Osler, Hoskin & Harcourt LLP in Toronto.

“They significantly expand the right of private access to the Competition Tribunal and reflect the most dramatic expansion of private enforcement of Canada’s competition laws in a generation.”

Hirsh and Mogerman are part of a panel on private action for competition collaborations this week at the CBA’s Fall Competition Law Conference in Ottawa.  

Hirsh understands the rationale for expanding the ability of consumers, businesses and other interested parties to access the Act, as is the case in the U.S. and other jurisdictions, but he’s concerned about the impact.

“The changes were passed very quickly and with fairly limited public consultation,” he says.

“They adopt remedies that are fairly open-ended and don’t include a robust set of procedural rules . . . so there’s a lack of clarity.”

Hirsh is worried that businesses will be exposed to increased risk of tactical litigation by private litigants, including in cases where the Competition Bureau has declined to act in the past.

Keldon Bester, who heads the Canadian Anti-Monopoly Project, thinks opening up private access will enrich the discussion on competition policy in the country.

“If only a single federal enforcer is bringing cases, you end up with a relatively narrow view of what constitutes a case even before you get to the judge. With a bunch of people looking at the problem and a diversity of views, we’re likely to have a richer case law.”

Mogerman said the negative reaction from corporate Canada is understandable because the changes are against their interests.

“Having monopoly power and using that monopoly power is a very lucrative thing. That’s the reason that historically people have been worried about it, because it allows you to eliminate competition and overcharge your customers.”

But it won’t be just consumers or public interest groups taking advantage of the legislative changes. One of the first significant cases under the new rules involves JAMP Pharma Corp., a Quebec-based generic drug company that has applied for leave to the Competition Tribunal to bring a case under the Act’s abuse of dominance provisions against Janssen Inc., a subsidiary of Johnson & Johnson.

In 2024, JAMP introduced a biosimilar drug to a Janssen product to treat psoriasis. JAMP alleges Janssen engaged in anti-competitive actions to prevent it and other competitors from introducing the drug. That delayed the drug’s introduction and resulted in lost sales.

Prior to the overhaul of the competition regime, only the competition commissioner could bring cases of abuse of dominance to the Tribunal.

Despite the broader access, Jennifer Quaid, an associate professor of law at the University of Ottawa and an expert in competition law, says there’s still no guarantee of success when a case is brought.

“It remains to be seen how adept plaintiff-based litigators are going to be at leveraging these rules into real cases and outcomes.”

For one thing, access is not guaranteed, with the Tribunal acting as the gatekeeper that must first authorize leave. If leave is granted to pursue the case, Quaid says you still have to prove your case at the end of the day. She notes that the Competition Bureau still loses cases before the Tribunal.

There’s also uncertainty about how it will all play out, with a lot of pressure on the Tribunal, which has limited resources.

“There will be some turbulence in the short term,” says Quaid.

“What I don’t know is whether the turbulence will ultimately be brought under control.”

 Jonathan Wall, an associate at Goodmans LLP and moderator of this week’s panel, doesn’t expect any flood of cases in the short term.

“With the liberalization of private actions, there comes a risk of frivolous actions, but I think the risk is fairly low,” he says, pointing to the screening process already existing at the Tribunal.

“Suppliers, customers and competitors will all have their role to play and opportunities under the new Competition Act.”