Amending the Competition Act can wait
More time for consultations and careful consideration are needed before adopting proposed changes under the Budget Implementation Act.
The CBA's Competition Law and Foreign Investment Review in letters to the House of Commons and the Senate, warns against using Bill C-19, Budget Implementation Act, or BIA, to make non-urgent changes to the Competition Act.
“There is no urgency and the proposed changes are not related to the Government’s budget nor its implementation,” the letters say. “Given the central role of the Competition Act in the Canadian economy, meaningful and thorough consultations with all relevant stakeholders are necessary to ensure the underlying policy objectives are achieved,” they add, noting that the budget implementation process in Parliament does not allow enough time for said consultations.
Furthermore, the amendments to the Competition Act proposed in the BIA are significant and potentially controversial.
The Competition Law and Foreign Investment Review Section urges the government to defer those proposed amendments and have them be part of broader consultations. Alternatively, these amendments should only come into force after a one-year delay and still be part of upcoming consultations to enable revisions and improvements.
Concerns about some of the proposed amendments
The Competition Law and Foreign Investment Review and Labour and Employment Sections have concerns with the introduction of a criminal offence for wage-fixing and no-poach agreements between employers. Among them, that the proposed offence is not limited to employers that are competitors in a labour market. “Without limiting the proposed offence to competing employers, it is at odds with the purpose of the Competition Act, which is to protect against conduct that could lessen or prevent competition.”
The BIA proposes increases to fines for deceptive marketing and abuse of dominance. The letters explain that those fines that are connected to the benefit derived, or revenues received should be limited to benefits and revenues in Canada. “There is no rationale or policy basis for considering benefits arising or sales made outside Canada when determining an appropriate penalty for conduct occurring in Canada.”
Other concerns relate to the proposals for addressing anti-avoidance and hostile acquisitions. It is difficult to see how the Commissioner could establish that a transaction was “designed” to avoid the application of the Act. “As a practical matter,” the letters explain, “transactions are ordinarily designed to achieve multiple objectives. For example, if a transaction structure is designed to achieve tax savings and avoid notification obligations, would the new law require the selection of a sub-optimal tax structure instead?”
The Competition Law and Foreign Investment Review Section also expresses concerns that the proposals related to hostile transactions “could make the review and completion of mergers more difficult or impossible in certain circumstances.”