On May 6, 2021, the Canadian Competition Bureau (Bureau) released an update to its Competitor Collaboration Guidelines (Guidelines). The updated Guidelines signal several key changes to the Bureau’s enforcement practices for competitor collaborations. Businesses need to be aware of the changes to the Guidelines and competition law compliance generally when considering joint ventures, collaborative agreements or other business arrangements that involve a competitor or potential competitor.
KEY TAKEAWAYS FOR CANADIAN BUSINESSES:
The key implications for Canadian businesses are:
The Bureau continues to carefully scrutinize whether collaborations between competitors are in compliance with the criminal and civil provisions of the Canadian Competition Act (Act).
Although buy-side agreements between competitors (such as no-poach and wage-fixing agreements) are still reviewable under the Act’s civil provisions, the Bureau has reaffirmed that it will not review buy-side agreements under the criminal provisions.
Businesses should update their internal competition compliance guidelines to reflect the key changes in the updated Guidelines.
SUMMARY OF KEY CHANGES TO COMPETITOR COLLABORATION GUIDELINES:
The key changes in the updated Guidelines are the following:
Buy-Side Agreements Between Competitors. Joint purchasing agreements among competitors do not violate the criminal competitor collaboration provisions of the Act. This change is in line with the Bureau’s November 2020 statement on its treatment of buy-side agreements and is a pivot relative to the Bureau’s consultation draft of the updated Guidelines (published in July 2020).
Non-Compete Clauses Potentially Subject to Criminal Enforcement. Where a non-compete agreement between competitors amounts to a standalone restraint, the Bureau may examine the non-compete under the criminal provisions of the Act. As with the previous version of the Guidelines, the updated Guidelines also state that non-competes can be examined under the civil provisions of the Act as well.
Consortium Bids May Be Subject to Civil Review. Bids made by consortiums may be subject to review under the civil competitor collaboration provisions of the Act if they substantially lessen or prevent competition, even where the party that requested the bids is made aware that the bid is from a consortium.
Expanded Scope of Civil Competitor Collaboration Provisions. An agreement between parties may be subject to civil review if the parties are competitors in respect to any product, even if that particular product is not the subject of the agreement.
Expanded Analysis of Joint Production Agreements Relating to Intermediate Products. When determining whether a joint production agreement concerning an intermediate product lessens competition, the Bureau will now consider the markets for both the intermediate product and the final product. Previously, the Bureau would only consider the market for the final product.
Call-Out of Algorithms and Price-Fixing. Pricing algorithms could form the basis of a cartel offence under the Act’s criminal provisions.
For further information on the Bureau’s November 2020 statement and on the consultation draft of the Guidelines, please see, respectively, Blakes Bulletin: Competition Bureau Guidance on Buy-Side Agreements and Focus on Economic Recovery and Blakes Bulletin: Competition Bureau Releases Draft Competitor Collaboration Guidelines.
If you have any questions regarding the updated Guidelines, please do not hesitate to contact your usual Blakes contact or any member of the Blakes Competition, Antitrust & Foreign Investment group.
Blakes and Blakes Business Class communications are intended for informational purposes only and do not constitute legal advice or an opinion on any issue. We would be pleased to provide additional details or advice about specific situations if desired.
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