| Historical Information |
|---|
| This post is about a previous Session of Parliament. Any legislation here that did not receive Royal Assent has been terminated. |
C-352 – the Lowering Prices for Canadians Act – makes changes to the Competition Act to increase fines for anti-competitive practices and loosen requirements to block mergers that would result in less competition.
Competition Act
Commissioner Review
The first change C-352 makes to the Competition Act is a fairly quick one involving the Commissioner of Competition’s ability to order an inquiry into a company. At the moment the Commissioner can only really do so when they have reason to believe any regulations under the Competition Act are being broken. C-352 will allow them to order an inquiry if a market study or report on market conditions would provide insight into competition in that market.
Punishments
Next are the punishments for anti-competitive behaviour. Currently the punishment is up to 14 years in prison or a fine determined by the court. C-352 sets the fine as being the greater of two options, which are:
- $25 million
- Three times the value of the benefit of the anti-competitive practice, or 10% of the offender’s gross worldwide annual revenue if the benefit can’t be reasonably determined
Note that C-352 makes it so the prison time can be given in addition to this fine.
The punishments for bank employees involved in anti-competitive behaviour is also increased to $25 million (up from $10 million) and/or 14 years in prison (up from 5).
If the Competition Tribunal issues an order against someone to stop engaging in anti-competitive actions they can also issue a fine to that person up to $25 million (up from $10 million) and up to $35 million (up from $15 million) for each additional order. The Tribunal also has the option to instead issue a fine based on benefit or revenue following the same formula listed above.
Anti-Competitive Practices
C-352 adds a new type of anti-competitive practice. This new one is “directly or indirectly imposing excessive or unfair prices”. So price gouging will now be punishable under the Competition Act.
A change is made to the conditions that allow the Competition Tribunal to issue restrictions on people engaging in anti-competitive actions as well. Currently the Tribunal can only act if the anti-competitive practices would lead to a substantial reduction in competition in the market. C-352 removes this requirement, so the Tribunal can take action even if the anti-competitive practices don’t result in a change in the market. (This would mostly apply to the price gouging listed above, as raising prices excessively doesn’t really have an impact on competition when you already have a monopoly). Note that for this bit the Tribunal can mostly just order the offender to stop engaging in those practices. They’re still able to take stronger action if they find that there’s a reduction in competition and an order wouldn’t fix the issue.
Mergers
C-352 makes some pretty big changes regarding mergers. First, if a merger would likely result or has resulted in a combined market share of 30% or more the Competition Tribunal will have the option to block the merger or dissolve it if it’s already happened. They won’t need to do this if there’s a strong chance the merger will result in good things for the public, such as price reductions, increases in supply, increases in quality of goods or services, or increased wages for employees of the companies.
The next big change affects how the Tribunal decides if a merger is bad for competition. Currently the Tribunal is explicitly not allowed to declare a merger bad solely on expected changes to market share. A merger resulting in a company having 90% market share doesn’t automatically count as a bad thing, the Tribunal would need to find evidence elsewhere that it’s a problem. C-352 changes this so that by default the merger is bad if it results in a significant increase in market share, and the companies involved will need to prove otherwise.
C-352 also has a clause similar to C-339. Like C-339 it removes the efficiencies defence, but instead of just completely eliminating it it moves it to a consideration for the Tribunal when looking at a merger. They can still block a merger that would result in increased efficiencies, but they’re expected to consider if those gains offset the loss of competition first. Note that simply increasing profits doesn’t count as increased efficiencies, though increasing the value of exports or swapping domestic products for imported ones are factors to be considered.
And finally C-352 increases the amount of time complaints can be filed against a merger from 1 year after its completion to 3 years.
Competition Tribunal Act
C-352 makes a small change to the Competition Tribunal Act, making it so the Competition Tribunal is no longer allowed to instruct the federal government to pay for the legal costs of any companies fighting its decisions in court.
Progress
C-352 went up for its Second Reading vote and passed with 178 voting in favour and 149 voting against.
| Party | For | Against | Paired |
|---|---|---|---|
| Liberal | 3 | 148 | 0 |
| Conservative | 115 | 0 | 0 |
| Bloc Quebecois | 31 | 0 | 0 |
| NDP | 25 | 0 | 0 |
| Green | 2 | 0 | 0 |
| Independent | 2 | 1 | 0 |
The Liberals argue that they’ve already made progress towards fixing competition in Canada with C-56. I haven’t covered C-56 yet, but one of the main things they point to is that it removes the efficiency defense for mergers. If the increased efficiency of having the companies merged offsets the loss of competition things are fine. The example they give is when Loblaws and Shoppers Drug Mart merged, and how after C-56 that type of merger wouldn’t have been allowed.
The Conservatives supported C-352, arguing that the Competition Act is protecting monopolies and allowing large companies to merge, and that needs to be changed. They also went on a tangent about the carbon tax.
The Bloc Québécois support C-352, agreeing with the Conservatives that the Competition Act is outdated and needs to be fixed.
Worth noting here is that Nathaniel Erskine-Smith (Liberal, Ontario, Beaches—East York), Ken Hardie (Liberal, British Columbia, Fleetwood—Port Kells), and Wayne Long (Liberal, New Brunswick, Saint John—Rothesay) voted against their party in support of C-352.
C-352 will now be sent to the Committee on Industry and Technology.
Discover more from Commons Sense
Subscribe to get the latest posts sent to your email.