Trudeau plans changes to Canada’s competition laws

Ottawa said it will update the Competition Act for the digital age in its 2022 federal budget.

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Prime Minister Justin Trudeau’s government plans to make a series of amendments to tighten Canadian competition rules.

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In a short section on page 72 of the 2022 budget, the government said it will make a series of “legislative amendments” to update the Competition Act for the digital age. As part of those changes, the government has promised to tackle anti-competitive schemes between competitors that harm workers. To some, the line was a sign that a solution to Canada’s lax approach to wage setting might finally be in the offing.

The Trudeau government has faced calls to strengthen the law against wage fixing since 2020, when Canada’s three largest grocers canceled $2-per-hour “hero pay” bonuses for their front-line workers. line the same day.

The office refused to investigate the case, a move many, including a former competition commissioner, saw as an example of the law’s blind spot when it comes to workers.

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“It became abundantly clear that our laws were insufficient to tackle wage fixing,” said Liberal MP Nathaniel Erskine-Smith, who has been a strong advocate for competition reform since the heroes’ pay scandal.

Federal Liberal MP Nathaniel Erskine-Smith during a press conference in Toronto on July 22, 2016.
Federal Liberal MP Nathaniel Erskine-Smith during a press conference in Toronto on July 22, 2016. Photo by THE CANADIAN PRESS/Colin Perkel Files

At a parliamentary hearing into the scandal in 2020, Erskine-Smith argued with executives from Loblaw Companies Ltd., Metro Inc. and Sobeys’ parent company, Empire Co. Ltd. “How can you in good conscience put profit before money?” people in a pandemic? she said, after asking each executive to list their multimillion-dollar salaries.Both Metro and Loblaw said they contacted competitors before canceling bonuses.All three companies denied wrongdoing in the case.

Erskine-Smith has been pushing for a change in the law that would make wage fixing a criminal offence. In its current form, wage fixing can only be prosecuted as a civil offence. This is because it is considered a “supply side” cartel, the kind of conspiracy where competitors band together to price their business inputs, rather than the products they sell.

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Such deals can be seen as positive if, for example, a group of independents pools their resources to buy supplies in bulk as a way of keeping prices lower for consumers. So, in the civil stream, the office has to show that the behavior harmed the competition. In criminal cases, the behavior is assumed to be anticompetitive, so the agency does not have to prove it.

Around the time of the hero pay scandal, Office of Competition Commissioner Matthew Boswell said it’s hard to prove that wage fixing actually harms competition. In the past year, Boswell has been an outspoken advocate for competition reform in Canada, arguing that the law is ineffective, outdated and out of step with the US and other allies.

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Industry Minister François-Philippe Champagne announced a review in February to seek to improve the Competition Law, including “tackling wage-fixing agreements.”

Minister for Innovation, Science and Industry Francois-Philippe Champagne during question period in the House of Commons on Parliament Hill in Ottawa on February 4, 2022.
Minister for Innovation, Science and Industry Francois-Philippe Champagne during question period in the House of Commons on Parliament Hill in Ottawa on February 4, 2022. Photo by THE CANADIAN PRESS/Patrick Doyle Archives

In the budget, the government said it will begin broad consultations on the “role and operation” of the law. But the government also noted some “deficiencies” in the law that can be easily corrected. In an upcoming round of legislative amendments, the Liberals said they will fix loopholes, address “practices harmful to workers and consumers” and modernize penalties and update the law for “current digital reality.”

“I welcome the announcement of amendments to the Competition Act and look forward to the next broad consultation on the Act and the enforcement regime,” Boswell said in a statement on Friday.

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Erskine-Smith said she hopes the language means the government will add a wage-setting amendment to the Budget Implementation Act (BIA), rather than the longer process of stand-alone legislation. “If it goes through the BIA,” she said, “you may see changes approved by June.”

But Jennifer Quaid, who specializes in competition law at the University of Ottawa, said adding wage fixing as a criminal offense under the law might not be the “silver bullet” that some claim.

“It’s definitely not a piece of cake,” Quaid said. “It is extremely short-sighted to believe that this will be the solution to your problem, because criminal cases are difficult to bring and by definition should not be that common.”

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