The foundation of Canada’s marketplace rules, the Competition Act, has undergone its most significant transformation in decades. Through a series of sweeping amendments, notably originating from the Fall Economic Statement Implementation Act and the Affordable Housing and Groceries Act, the federal government has fundamentally altered the landscape for businesses operating in Ontario and across the country.
These changes are not minor technical adjustments. They represent a seismic shift in competition policy, armed with new prohibitions, dramatically increased penalties, and enhanced powers for both the Competition Bureau and private parties. For any Ontario business, from a scaling tech company to an established manufacturer, understanding this new regime is not merely advisable – it is critical for survival and compliance.
Understanding the “Why”: The Push for Modernization
This overhaul was driven by a growing consensus that the Competition Act had not kept pace with the realities of the modern economy. The rise of dominant digital platforms, concentrated key sectors (such as groceries and telecommunications), and sophisticated pricing strategies left consumers and smaller businesses vulnerable. The amendments aim to address these gaps, aligning Canada more closely with the stricter enforcement regimes seen in the United States and Europe. The core objective is clear: to foster a more competitive, innovative, and fair marketplace.
Merger Control: A Higher Bar and a Longer Reach
The rules governing mergers and acquisitions (M&A) have been substantially tightened. Businesses contemplating growth through acquisition must now navigate a much more stringent review process.
A Lowered Threshold for Intervention
Previously, the Competition Bureau had to prove that a merger would “substantially lessen” competition. The amendments introduce a new, lower threshold. Now, the Competition Tribunal can also block a merger that is likely to “substantially prevent” competition.
This change is particularly aimed at “killer acquisitions”—where a dominant firm acquires a nascent, innovative competitor before it can pose a real threat. The new test allows the Bureau to intervene based on the future potential competition that the target firm represents, even if it has minimal market share today.
Challenging Non-Notifiable Mergers
In a significant expansion of power, the Bureau is no longer limited by the previous one-year window to challenge mergers that fall below the mandatory notification thresholds. For non-notifiable mergers, the Bureau now has up to three years post-closing to launch a challenge. This creates long-term uncertainty for acquisitions of smaller companies and requires businesses to assess the competitive impact of all acquisitions, not just the large ones.
Abuse of Dominance: Sharpened Teeth and Massive Penalties
Perhaps the most impactful changes lie within the abuse of dominance provisions under Section 79 of the Act. These rules govern the behaviour of companies with significant market power.
A Broader Definition of “Abuse”
The amendments have reformed the test for what constitutes abusive conduct. The Act now explicitly includes conduct that has the effect of preventing or lessening competition, not just conduct with an anti-competitive intent.
Furthermore, the old three-part test has been simplified. Previously, the Bureau had to establish dominance, a practice of anti-competitive acts, and a substantial lessening or prevention of competition. Now, the focus is streamlined. Most importantly, a legitimate business justification for the conduct is no longer a complete defence; it is now just one factor for the Tribunal to consider when determining if the conduct is, on balance, abusive.
Redefining Anti-Competitive Conduct
The list of “anti-competitive acts” has been expanded. Critically, it now includes “directly or indirectly imposing excessive and unfair selling prices.” This signals a direct move by Parliament to empower the Bureau to tackle issues of price gouging or excessive pricing by dominant firms, a topic of intense public debate.
The New Administrative Monetary Penalties (AMPs)
The financial stakes for non-compliance have been raised exponentially. The new penalties for abuse of dominance are staggering. The Tribunal can now impose an AMP of up to the greater of:
- $25 million for a first violation (up from $10 million) and $35 million for subsequent violations.
- Three times the value of the benefit derived from the abusive conduct.
- If the value of the benefit cannot be calculated, 3% of the company’s annual global revenue.
The inclusion of global revenue as a benchmark is a game-changing threat. It means that a subsidiary of a large multinational corporation operating in Ontario could face penalties calculated against its parent company’s entire worldwide turnover, a power designed to ensure that even the largest global entities take Canadian compliance seriously.
Deceptive Marketing: The End of “Drip Pricing”
The amendments directly address a common e-commerce frustration: drip pricing. This is the practice where customers are shown an attractive low price at the beginning of a transaction, only to have mandatory fees and charges “dripped” in as they proceed, resulting in a much higher final price.
A Per Se Violation
Under the revised Section 74.01 of the Competition Act, drip pricing is now a per se deceptive marketing practice. This means the Bureau does not need to prove that the practice misled consumers. The simple failure to display the total attainable price (including all fixed mandatory charges) as the most prominent figure at the outset of the interaction is, in itself, a violation.
This applies to all Ontario businesses engaged in e-commerce, including online retailers, travel booking sites, and event ticketing platforms. All unavoidable charges must be included upfront, not added at the checkout page.
Competitor Collaborations: New Risks and New Exemptions
The Act‘s provisions on agreements between competitors (Section 90.1) have also been updated, creating new risks related to environmental claims, as well as new defences for sustainability initiatives.
Tackling “Greenwashing”
Businesses can now face challenges for “greenwashing” – making claims about environmental benefits that are not supported by adequate and proper testing. An agreement between competitors, for example, that prevents or lessens competition for an ecological product, could be challenged.
Furthermore, the Act now specifies that false or misleading environmental claims can be grounds for action. Any business advertising its “green” credentials must ensure it has robust, verifiable evidence to support every claim.
A New Environmental Defence
Conversely, the amendments introduce a new, narrow exception for competitor collaborations. If an agreement’s sole purpose is to protect the environment (e.g., standardizing sustainable packaging), it may be permissible, provided it is not likely to substantially prevent or lessen competition. This creates a cautious path forward for businesses seeking to collaborate on genuine sustainability goals.
Opening the Floodgates: The Private Right of Action
One of the most significant procedural changes is the creation of a new “private right of action.”
Bypassing the Bureau
Historically, only the Commissioner of Competition could bring an application to the Competition Tribunal to challenge most anti-competitive conduct, including abuse of dominance. This created a bottleneck, as private parties who were being harmed (like a small supplier being squeezed by a dominant customer) had to rely on the Bureau to take up their case.
The new amendments allow private parties to apply directly to the Tribunal for leave (permission) to bring their own application under the abuse of dominance and certain other civil provisions. If leave is granted, the private company can effectively “sue” its dominant competitor before the Tribunal and seek a remedy.
The Anticipated Impact
This change is expected to dramatically increase the volume of competition litigation in Canada. Ontario businesses that feel they are being subjected to anti-competitive tactics by larger players now have a direct, albeit complex, path to seek redress. Conversely, dominant firms must now prepare to defend their business practices not only against regulators but also against their competitors, customers, and suppliers.
The New Competitive Horizon for Ontario Businesses
The message from Parliament is unequivocal: the era of lax competition enforcement is over. These amendments collectively arm the Competition Bureau and the private bar with formidable new tools.
For businesses in Ontario, the new Competition Act demands a proactive and comprehensive compliance review. Pricing strategies, advertising claims, M&A due diligence, and agreements with competitors must all be re-evaluated through this new, stricter lens. The penalties for failing to adapt are simply too high to ignore. This new competitive landscape requires vigilance, strategic legal guidance, and a corporate culture that embeds fair competition at its core.
Ottawa Business Lawyers Helping You Navigate the New Competitive Landscape
The recent overhaul of the Competition Act represents a seismic shift in how business is conducted across Canada. From the “per se” illegality of drip pricing to the staggering new penalties for abuse of dominance, the risks of non-compliance have never been higher. At Tierney Stauffer LLP, we are committed to providing comprehensive, forward-thinking, and practical advice to our corporate clients, ensuring that your operations are protected in this increasingly stringent regulatory environment. Regardless of the size of your operation, our team possess extensive experience in all aspects of business law, including real estate and licensing, as well as navigating complex regulatory changes and business succession. Don’t leave your compliance to chance; call us at 1-888-799-8057 or contact us online to arrange a consultation with an experienced business lawyer.
