Written By Adam Kalbfleisch and Imran Ahmad
On February 6, 2009, the Canadian government
introduced Bill C-10, An Act to implement certain
provisions of the budget tabled in Parliament. Bill
C-10 includes several significant amendments to
the Competition Act and Investment Canada Act
which are generally consistent with the recommendations
to the Government of Canada in
the Competition Policy Review Panel's report,
Compete to Win, released in June 2008.
Competition Act
Merger Review
- Instituting a two-stage merger notification
and review process that resembles
the process in the United States. Bill C-10
proposes to establish an initial review period
of 30 days with a discretionary “stage 2”
review triggered by a request for additional
information by the Competition Bureau.
This second stage would end 30 days after
compliance with this “second request” for
information, unless the Bureau approves a
shorter review period.
- Increasing the current financial thresholds
that trigger an obligation for merger pre-notification
from CDN$50 million to CDN$70
million in assets in Canada or gross revenues
from sales in or from Canada with a formula
for potential annual increases based on
growth of GDP.
Broadly speaking, the notification provision
amendments will affect the timing and may
increase the cost of merger review.
Criminal Conduct
- Repealing existing conspiracy provisions and
replacing them with a per se criminal offence
to address “hard core” cartel agreements and
an ancillary agreement defence.
- Institute a civil conspiracy prohibition to
deal with other types of non-hard core cartel
agreements between competitors that
prevent or lessen competition substantially
while also permitting parties recourse to an
efficiencies defence.
- Removing provisions dealing with criminal
price discrimination and predatory pricing.
- Repealing the criminal price maintenance
provisions and replacing them with new
civil price maintenance provisions based
on an adverse effect on competition
test and permitting price maintenance
private actions to be brought before the
Competition Tribunal.
- Expanding the scope of bid-rigging to
include agreements or arrangements which
withdraw bids or tenders and increasing
prison sentences to up to 14 years.
Abuse of Dominance/Monopolization
- Instituting for the first time non-industry
specific administrative monetary penalties
(AMPs) for abuse of dominant position of up
to CDN$10 million for an initial offence and
CDN$15 million for subsequent offences.
- Repealing all provisions dealing specifically
with the domestic airline industry.
Misleading Advertising
- Allowing courts to order restitution for
misleading advertising as well as to freeze
assets in order to preserve restitution orders.
Broadly, the proposed amendments seem to
indicate a significant toughening of penalties
throughout the Competition Act, from cartel
fines and sentences to those related to obstruction,
destruction of documents and prohibition
orders.
Investment Canada Act
- Increasing the review threshold for direct
acquisitions of Canadian businesses by
WTO investors to CDN$600 million immediately
and gradually to CDN$1 billion (with
inflation-indexed increases thereafter) and
replacing gross asset book value with “enterprise
value” of the acquired business as the
standard of threshold measurement.
- Introducing a new “national security”
review for investments, independent of the
transaction review process, allowing the
Federal Cabinet to take any measures that
it considers advisable in order to protect
national security, including prohibiting non-
Canadians from implementing an investment
or requiring divestiture where the
investment has already been implemented.
- Providing that only acquisitions of “cultural
businesses” will be subject to the lower
CDN$5 million review threshold, so that
the three other traditional “sensitive sectors”
(transportation, financial services and
uranium mining) will now be subject to the
higher value threshold described above.
As noted, these amendments to the Competition
Act and Investment Canada Act are included in
Bill C-10, a budget implementation bill, which is
unusual and unexpected. Since the amendments
are included in the budget bill, a confidence
matter, it is quite likely that they will pass notwithstanding
the lack of the type of consultation
process that would typically be expected given
the sweeping nature of the proposed amendments.
In addition, the timetable for review of
these amendments is likely to be significantly
compressed.
For further information about the proposed
Competition Act and Investment Canada Act
amendments and their potential impact on
specific sectors or businesses, please contact a
member of our Antitrust & Competition Group.