Highlights: Amendments to the Canadian Competition Act

National HR

Some amendments were recently made to the Canadian Competition Act. They are likely to have a major impact on labour law. Here are some highlights to keep in mind.

September 14, 2022

ME ALEXANDRE BOISJOLY-RIVEST, CPHR, and ME AMÉLIE GUILLEMETTE

Introduction

By proposing Bill C-19, also known as the Budget Implementation Act, 2022,[1] earlier this year, the federal government served notice of its intention, in step with trends that can be observed in other jurisdictions in the area of competition law reform, to make a number of amendments to the Competition Act[2] in the interest of expanding its scope and strengthening it.

On June 23, Bill C-19 was passed. It received royal assent on the same day.

Some of the amendments made to the Competition Act came into force upon royal assent, whereas others will take effect exactly one year after the date of royal assent, which will be June 23, 2023.

For reference purposes, the Competition Bureau published a Guide to the 2022 amendments to the Competition Act, which provides a high-level explanation of the various amendments made to the Competition Act. The Bureau also announced that it would hold a public information session in September, where Competition Bureau representatives would discuss the recent amendments made to the Competition Act.

Some of the amendments made to the Competition Act will have major repercussions for employers, regardless of whether they fall under provincial or federal jurisdiction. This article provides an overview of these amendments.

Amendments that are likely to have a significant impact on the working world

One of the amendments made to the Competition Act expands the concept of criminal conspiracy, thereby making wage-fixing, no-poach and no-hire agreements between unaffiliated employers illegal.[3] With this amendment, Canada is keeping pace with other jurisdictions, such as the United States, which already prohibit these types of agreements.

When these amendments take effect, employers that enter into agreements with other unaffiliated employers regarding the salaries, wages or terms and conditions of employment that they grant to their employees and make agreements in which they agree not to solicit or hire their respective employees will be committing a crime. Employers that become parties to such agreements will be liable to penalties ranging from a fine, whose amount is not set by the law, to imprisonment for up to 14 years, or both.[4]

Employers that become parties to such agreements may also be sued for damages through different types of legal actions, including class action suits filed by the parties that had been harmed by the effects of these agreements.[5]

However, as is already the case for other offences involving conspiracies, agreements or arrangements between competitors, employers will be able to raise an ancillary restraints defence.[6] An ancillary restraints defence, as specified in paragraph 45(4) of the Competition Act, provides that no person may be convicted of having taken part in a conspiracy, an agreement or an arrangement prohibited by the Competition Act, if it is demonstrated that the conspiracy, agreement or arrangement, depending on the case, is ancillary to a broader or separate agreement or arrangement that includes the same parties, is directly related to, and reasonably necessary for giving effect to, the objective of that broader or separate agreement or arrangement, and the broader or separate agreement or arrangement, considered alone, does not constitute itself a conspiracy, an agreement or an arrangement prohibited by the Competition Act.

Effective date of changes with significant impacts

These amendments to the Competition Act are some of the amendments that will take effect exactly one year after royal assent, i.e. on June 23, 2023.[7] This grace period is meant to give employers some time to make the necessary adjustments so that they comply with the law.

What employers need to keep in mind

Employers should use this grace period before the provisions take effect that make wage-fixing, no-poach or no-hire agreements between employers illegal to review their agreements with other unaffiliated employers, verify whether any of them contain wage-fixing, no-poach or no-hire clauses for their respective employees and make any necessary changes. Employers should also review their methods and procedures to make sure that they do not engage in practices with unaffiliated employers in the future that could be considered wage-fixing, no-poach or no-hire agreements or any other practice that could be construed as facilitating such agreements.

This is a translation of an article published on the site of the Ordre des conseillers en ressources humaines agréés du Québec. Click here to read the original version.