Leveling the Playing Field: How Canada’s Competition Act Changes May Benefit Consumers - Sotos Class Actions
June 21, 2024

Leveling the Playing Field: How Canada’s Competition Act Changes May Benefit Consumers

By Maria Arabella Robles

In an era where corporate giants dominate markets, having strong regulatory frameworks to ensure fair competition is crucial. Recognizing this need, the latest proposed amendments to Canada’s Competition Act will allow consumers and smaller businesses to effectively challenge anti-competitive practices.

Yesterday, on June 20, 2024, Bill C-59—also known as the Fall Economic Statement Implementation Act, 2023—received royal assent. The Bill proposes several changes to Canada’s Competition Act (the “Act”), which are to come into force next year. This article will focus on the amendments specific to the expansion of private access to the Competition Tribunal (the “Tribunal”), and particularly the potential introduction of a quasi-class action regime.

We advocated for such a regime in our submissions to the Government and are pleased to see that it has responded.

The Current Landscape

Canada’s Competition Act has been the cornerstone of the nation’s competition policy and has been key to maintaining market fairness. However, it heavily relies on the Competition Bureau (the “Bureau”) as the primary investigator and enforcer of the Act, especially for non-criminal practices such as abuse of dominance. While the Bureau plays a crucial role, its resources are limited, and its ability to tackle every instance of market abuse is constrained.

Currently, private parties are only allowed to sue for damages (i.e. monetary compensation) under the Act for breaches of the criminal provisions of the Act, which include price-fixing and other conspiracies between competitors, bid-rigging and criminal misleading advertising. Non-criminal violations, or so-called “reviewable practices” like abuse of dominance, price maintenance and refusal to deal, can only be prosecuted by the Bureau. Private parties need leave or permission from the Tribunal in order to prosecute these cases, which is rarely sought or granted. There is also currently no possibility for monetary compensation and the legal threshold for obtaining leave is high. Bill C-59 proposes to lower this threshold and introduce monetary compensation, making the Tribunal more accessible to private parties.

Proposed Amendments: A New Era of Accountability

Bill C-59 introduces several key amendments in relation to private access:

  • Private Access to Civil Agreements and Deceptive Marketing: Of the non-criminal reviewable practices, private actors can only currently seek leave to bring a private action for abuse of dominance, price maintenance and refusal to deal. Bill C-59 seeks to add civil deceptive marketing (s. 74.01) and civil agreements (s. 90.1) to that list, allowing private actions for anticompetitive agreements between non-competitors and further misleading advertising practices.
  • Lower Threshold for Private Parties to Obtain Leave: In addition to the expanded list above, Bill C-59 lowers the threshold for leave. Currently, a private applicant’s entire business must be directly and substantially affected for leave, but the amendments ease this requirement and allow leave to be granted in two instances: (1) where an applicant’s business is directly and substantially affected either in whole or in part by the conduct, or (2) where the Tribunal is satisfied that it is in the public interest to grant leave.
  • Collective Redress: Importantly, Bill C-59 also introduces the ability to seek “disgorgement” orders in private actions. This opens the door to an applicant being able to seek damages for certain conduct that previously could not give rise to a claim for damages. These damages are not limited to the private applicant. Rather, the Tribunal can also make orders requiring the payment of an amount “not exceeding the value of the benefit derived from the conduct” to be distributed to both the applicant and “any other person affected by the conduct” that violates the available civil provisions for the Act. This appears to create a collective remedy – akin to a class action — for reviewable matters, as opposed to the current regime which only allows class actions access for conduct that is contrary to the criminal provisions of the Act. Although more clarity is required with respect to the protections and procedures under this new regime, these changes are promising for consumers who may be able to benefit from private enforcement related to violations of the reviewable provisions of the Act.
  • Increased Tribunal and Commissioner Powers: With these new changes, the Tribunal will also have more powers regarding the implementation of the new remedy. The Tribunal will have the ability to impose terms about the administration of the remedy, including appointing an administrator. Similarly, if the parties to a private claim reach a settlement, Bill C-59 would require that a copy of the settlement agreement be provided to the Bureau within 10 days, at which point the settlement may be challenged by application to the Tribunal which can vary or rescind the agreement if it finds that it has or is likely to have anti-competitive effects.

These changes represent a paradigm shift in how Canada addresses market abuses. For consumers, this means greater protection against unfair practices that drive up prices or limit choices. For smaller businesses, these amendments may offer a viable path to challenge larger competitors who may engage in predatory behaviours to maintain their market dominance. With individuals and smaller businesses being provided more power to bring legal challenges, corporations that engage in abusive or monopolistic practices will need to reassess their market strategies or face potential sweeping financial consequences.

Learning from the US Model

The United States offers a compelling point of reference with its robust framework for private enforcement under the Sherman Act. In the U.S., individuals and businesses can bring lawsuits against corporations for monopolistic practices at the same time as claims for certain cartel behaviour. This private right of action supplements governmental efforts, ensuring comprehensive oversight and enforcement. The concept of monopolization in the U.S. includes practices similar to abuse of dominance in Canada, providing a lens through which to consider the types of cases that increased private access may lead to.

The following are some examples of the kinds of monopoly cases that have been brought in the U.S. for the benefit of consumers:

  • Visa and Mastercard Tied Selling:[1] A class action lawsuit in the U.S. against Visa and Mastercard alleged that the companies illegally engaged in tied selling by tying merchant acceptance of their debit card services to merchant acceptance of their credit card services. The class action secured a $25.8 billion settlement for merchants.
  • Microsoft Monopoly Cases:[2] Several cases were brought against Microsoft for improperly maintaining a monopoly in the market for personal computer operating systems and word processing and spreadsheet software by unlawfully wielding its Windows monopoly to overcharge consumers for the operating system and certain applications. The cases settled in the middle of trial for a collective amount of nearly $1.7 billion, a portion of which went to provide computers to lower-income schools, in addition to class compensation.
  • EpiPen Monopolization[3]: This class action was brought against Mylan, the owner of EpiPen, and Pfizer, Inc., a manufacturer and seller of EpiPen, alleging a number of practices that are an abuse of the companies’ monopoly power, including bait and switch selling, entering into anticompetitive vertical agreements with schools, and other unlawful exercises of their dominant position. These practices were alleged to have sharply and artificially increased the price for EpiPens in the U.S. The case settled with both defendants for a total recovery of $609 million for class members.

These cases demonstrate the significant impact consumer class actions can have in holding large companies accountable and enforcing competition laws through a well-designed private access regime. The amendments introduced in Bill C-59 similarly present a promising opportunity for the benefit of consumers in Canada.

The proposed changes to the Act are an important step forward in Canadian competition policy. By increasing private access, Canada will not only better align with international best practices, but also empower consumers and businesses to take a more active role in maintaining market fairness. These changes promise a more dynamic and equal market, where abuses of dominant position can be challenged and fair competition upheld.

[1] In re Visa Check/Mastermoney Antitrust Litigation, 297 F. Supp. 2d 503 (E.D.N.Y. 2003)
[2] In re Microsoft I-V Cases, 135 Cal.App.4th 706, 37 Cal. Rptr. 3d 660 (Cal. Ct. App. 2006)
[3] In re EpiPen (Epinephrine Injection, USP) Mktg., Sales Practices & Antitrust Litig., MDL No: 2785 (J.P.M.L)