Expansion of private rights of action in proposed Competition Act amendments create new legal risk

The federal government’s proposed Competition Act amendments will create new legal risks for businesses in Canada.

Bill C-59, currently in second reading in the House of Commons, expands the availability of private rights of action for certain civil claims under the act. If enacted, businesses and individuals will be entitled to seek leave to bring these actions to the Competition Tribunal.

“Bill C 59, if implemented, would create significant private enforcement risk for businesses for a wide array of business conduct,” says Antonio Di Domenico, co-leader of Fasken’s competition, marketing, and foreign investment group.

“With respect to the landscape of competition policy, we haven't seen amendments like this in Canada in 30 years. We haven't had amendments like this since the act was first introduced to Canada.”

The act currently only allows private rights of action for certain criminal violations. Private rights of action are available under ss. 75, 76, 77, and 79 for violations such as exclusive dealing, tied selling, market restriction, and abuse of dominance, according to a Fasken news bulletin. Ottawa’s proposed amendments extend the use of private rights of action to ss. 74.1 and 90.1, which deal with deceptive marketing and civil competitor collaborations.

Under the proposed amendments, parties may not seek monetary relief in the form of damages. They must seek disgorgement – where the other party relinquishes the profits rendered from the unlawful conduct.

Another feature of the amendments means the private action process could be akin to a class action, says Di Domenico. The disgorgement amount can be provided not only to the applicant, but to any other person affected by the conduct.

“It can technically be distributed to a voluminous amount of people who are affected by the alleged conduct,” he says.

While Di Domenico says it is uncertain at this point who is likely to take advantage of the proposed amendments, there are at least two likely categories of plaintiffs. There will be business-to-business disputes as well as disputes brought by an individual serving as a representative plaintiff.

“What is unclear, however, is how that process will be managed under the Competition Tribunal,” he says. “Because the amendments themselves do not fully echo the class action procedure that are traditionally available to the civil courts.”

“You see features of the amendments that resemble that of a class action regime, but it's certainly not duplicative of the class action regimes that are available across the various provinces and the Federal Court, generally. Caselaw, in the end, will inform whether or not this private right of action before the Competition Tribunal can effectively function like a class action.”

What is clear is that this creates significant risk for potential civil liabilities under the Competition Act, says Di Domenico. Traditionally, in Canada, risk has arisen from public enforcement by the Competition Bureau without meaningful private risk.

“The risk now to companies has enhanced considerably… assuming it's implemented.”