VOLUME II, NUMBER 4 / DECEMBER 1997
Bill to amend Competition Act
gets first reading in Commons
Author: The Competition Law Group
Word count: 1,811
On November 20, 1997, “An Act to amend the Competition Act and to make consequential and
related amendments to other Acts” (the “Bill”) received first reading in the Canadian House of
Commons. The Bill is the culmination of an extensive public consultation process which
commenced on June 28, 1995 with the release of a government discussion paper regarding
proposed amendments to the legislation.
The discussion paper raised the prospect of far-reaching amendments, many of which, and
arguably the most controversial of which, do not form part of the Bill. For example, the Bill
does not propose any changes related to (i) private access to the Canadian Competition
Tribunal; (ii) confidentiality and international mutual assistance; or (iii) price discrimination and
promotional allowances. An earlier version of the Bill died on the Order paper in the last
The Bill proposes some significant amendments to the Competition Act (the “Act”), particularly
in the context of marketing practices. It is anticipated that the Bill may be passed into law as
soon as early 1998. This issue of the Competitor provides a brief summary of the Bill with
This issue also considers the recent report on “whistleblowing” prepared at the request of the
The Bill proposes to give the Competition Bureau (the “Bureau”) the power to obtain judicial
approval for wire taps to investigate price fixing, bid rigging and deceptive telemarketing cases.
Technically, this is to be done by amending section 183 of the Criminal Code (the “Code”) to
include conspiracy, bid rigging and deceptive telemarketing as offences for which wire taps may
The general prohibition against wire tapping is contained in subsection 184(1) of the Code,
which provides that “every one who, by means of any electro-magnetic, acoustic, mechanical or
other device, wilfully intercepts a private communication is guilty of an indictable offence and
liable to imprisonment for a term not exceeding five years”.
The Code does allow an agent of the state to seek authorization to intercept communications in
two situations: (i) where either the originator of the communication or the person intended by
the originator to receive it has consented to the interception; or (ii) where no such consent is
given. In either case, however, the authorization of a judge of a provincial criminal court of
superior jurisdiction is required to intercept a private communication. In addition, all
applications for judicial authorization must be supported by an affidavit sworn on the
information and belief of a peace marketing” with the exception of increasing the maximum
fine in respect of summary conviction proceedings from $25,000 to $200,000, per offence.
The Civil Regime - Deceptive Marketing Practices
The Bill proposes a new civil regime (Part VII.1) to address most instances of misleading
advertising and deceptive marketing practices currently prosecuted in the criminal courts by the
Attorney General of Canada.
The types of representations which are currently proscribed by subsection 52(1) of the Act
would become reviewable matters, and not criminal offences. The Bill provides clarification in
the highly controversial area of “ordinary price” representations. It is proposed that “ordinary
price” representations would involve a volume and time based test. That is, in determining
whether a price representation was misleading, the Director would consider whether (i) a
substantial volume of the product had been sold at that price or a higher price within a
reasonable period before or after the making of the representation; and (ii) the product had
been offered at that price or a higher price for a substantial period of time recently before or
immediately after the making of the representation.
Civil misleading advertising would be reviewable, upon application by the Director, by the
Competition Tribunal, the Federal Court - Trial Division, or the superior court of a province.
The orders contemplated by the Bill would include (i) cease and desist orders; (ii) orders
requiring the publication of information notices; and (iii) civil monetary penalties. The latter
two orders are available in the absence of due diligence. Unless otherwise specified by the
court, a cease and desist order would have a duration of ten years. provision, that person would
be guilty of an offence and liable (i) on conviction on indictment, to a fine in the discretion of
the court or to imprisonment for a term not exceeding five years or both; or (ii) on summary
conviction, to a fine not exceeding $200,000 or to imprisonment for a term not exceeding one
year or both.
The Bill also proposes an amendment to Section 33 of the Act to provide for interim
injunctions prohibiting the supply of products which may be used for deceptive telemarketing
to anyone previously convicted of the offence.
Also, as noted above, deceptive telemarketing is one of the offences for which a wire tap may
The Bill proposes a number of changes to the pre-merger notification regime. First, a power
has been granted to the Director or a person authorized by the Director to waive the
requirement to notify.
Second, the scope of exempt transactions to prenotification has been expanded to a small
Third, the issue of who has the obligation to prenotify has been clarified to apply to “the parties
to the proposed transaction”. Also, it is proposed that the Director be granted the power to
require the target of a hostile takeover to provide a pre-merger notification filing within a
stipulated time to ensure that such a target could not use the prenotification process to hold up
Fourth, while the Bill proposes to preserve the discretion for parties to choose between a short
and long form filing, the statutory waiting periods related to each would be extended
significantly. Specifically, it is proposed that the short and long form filing waiting periods be
extended from seven and twenty-one days, respectively, to fourteen and forty-two days,
Fifth, the specific information required in the context of a short or long-form filing will be
stipulated in amended regulations related to pre-notifiable transactions. A draft of those
regulations, issued for public consultation, confirms that considerably more information related
to customers and suppliers will be required.
The current section 34 provides only for prohibition orders. The Bill introduces prescriptive
orders under the amended section 34, i.e. orders which mandate the taking of “...such steps as
the court considers necessary to prevent the commission, continuation or repetition of the
offence...” or to take any steps agreed to by the government and the person in question. The
duration of a prohibition or prescriptive order would be ten years unless a shorter period was
specified. The Bill also sets out the circumstances where orders under this section may be
varied or rescinded.
The Bill will change the official title of the “Director of Investigation and Research” throughout
the Act to the “Commissioner of Competition”. The Bill explicitly states that it is the
Commissioner who is responsible for the administration and enforcement of the Act.
In addition, the Bill proposes that temporary cease and desist orders would be available where,
on application by the Director, a court or the Tribunal finds (i) a “strong prima facie” case that a
person is engaging in deceptive marketing practices (ii) serious harm is likely to ensue unless the
order is issued; and (iii) the balance of convenience favours issuing the order. Unless agreed to
by the person against whom the temporary order is sought, such an order would have a
duration no greater than 14 days.
The Bill also proposes a mechanism for consent orders related to deceptive marketing practices.
Specifically, where application for an order is filed on consent, the order agreed to may be filed
with the court for immediate registration. The Bill does not contemplate a review function for
the Tribunal or the court.
The Bill also introduces a new criminal provision related to deceptive telemarketing.
“Telemarketing” would be defined to mean the use of “interactive telephone communications”
for the purpose of promoting a product or business interest. Generally speaking, this provision
would make it an offence not to provide reasonable and fair disclosure. However, no person
would be convicted under the criminal deceptive telemarketing provisions where it could be
established that due diligence had been exercised to prevent the commission of the offence. It
is particularly noteworthy that the Bill contemplates circumstances where officers and directors
of a corporation engaged in deceptive telemarketing would be subject to personal liability.
In terms of penalties, if a person is found to have contravened the criminal deceptive
telemarketing Control of Partnership
Currently, the Act is silent in respect of determining control of a partnership. It is proposed
that for purposes of the Act, a person would “control” a partnership where such person was
entitled to receive more than fifty percent of the profits of the partnership or more than fifty
percent of its assets upon dissolution.
Private Party Access to the Competition Tribunal
One of the more controversial aspects of the package of amendments initially proposed by the
Director in June, 1995 was a proposal to allow private party access to the Competition Tribunal
in reviewable matters, with the exception of mergers. In May, 1996, the Director announced
that private access would not be included in the current package of amendments, but would
instead be the subject of further study.
The Director released a study prepared for the Bureau by Professors Michael Trebilcock and
Kent Roach, of the Faculty of Law of the University of Toronto. The study expresses the view
that there should be private access to the Tribunal in order to supplement public enforcement
of the Act, and as a means of holding the Director accountable for decisions not to prosecute.
The study recommends that in order to deter frivolous or improperly motivated actions, there
should be a mandatory summary judgment procedure, together with possible cost sanctions.
Private access to the Tribunal is not part of the current package of amendments, but it is clearly
not a dead issue. We expect that the issue will be raised by the Director as part of the next
round of proposed amendments to the Act, whenever that takes place.
Confidentiality and International Mutual Assistance
As noted above, for the time being, there will no amendments relating to confidentiality and
international mutual assistance. This is largely a result of the decision of the Federal Court
(Trial Division) in Schreiber v. Attorney General of Canada, to the extent that requests for assistance
from foreign law enforcement agencies require prior judicial authorization. The amendments
contemplated by the Director would not have required prior judicial authorization of requests
for foreign legal assistance. In light of the Schreiber decision, and the pending appeal which may
clarify what is constitutionally required, it was decided that amendments to the Act in this
context were premature.