Competition Act

Historical Development

Canada's first legislation dealing with competition was the Anti-Combines Act, introduced in May 1889 as the first antitrust statute in the industrial world, preceding the American Sherman Antitrust Act. The legislation prohibited conspiracies and agreements by businesses in restraint of trade. Two years later in 1891, anti-combines provisions were mostly incorporated into the Canadian Criminal Code. In 1912, the Supreme Court of Canada ruled in Weidman v Shragge that the purpose of these provisions was to protect public interest in free competition. The Combines Investigation Act of 1910 replaced the 1889 law, leading to subsequent iterations in 1923 and 1937. The anti-trust provisions remained in the Criminal Code until their repeal in 1960 with an amendment to the Combines Investigation Act.

In 1985, the Progressive Conservative government of Brian Mulroney replaced the Combines Investigation Act, 1923, with the modern Competition Act, which came into force on June 19, 1986. This new statute introduced a civil regime for reviewing both horizontal and vertical mergers, replacing ineffectual Criminal Code provisions. Subsequent amendments have continually refined the Act. A set of amendments introduced in April 1996 died on the Order Paper. A changed bill, Bill C-20, was introduced on November 20, 1997, and received third reading on September 23, 1998. These amendments dealt with deceptive telemarketing, new civil provisions for misleading advertising, improvements to the merger prenotification process, and clarification of provisions for regular price claims. Further changes in 2002 allowed private parties to initiate proceedings before the Competition Tribunal, which could also hear references and award costs.

Scope and Key Provisions

The Competition Act applies to all economic activities involving goods and services within Canada, with specific exemptions for areas like collective bargaining, amateur sports, securities underwriting, and industries where price or output is regulated by other federal or provincial statutes. The law contains a mix of criminal and civil provisions. Significant amendments in March 2009 and March 2010 led to several criminal offences being repealed or converted into reviewable practices. As a result, only two per se criminal offences remain. The first is conspiracy under section 45, which involves agreements between competitors to fix prices, allocate markets, or restrict output. The second is bid-rigging under section 47, which involves collusive agreements in the tendering process. For these crimes, the harmful effect on competition is presumed and irrelevant.

The civil reviewable matters cover a broader range of conduct that may harm competition. These include abuse of dominant position, exclusive dealing, tied selling, and market restriction. The Act also provides a comprehensive framework for the review of mergers, which it defines broadly as the acquisition or establishment of control over or a significant interest in a business. The civil provisions allow the Competition Tribunal to issue orders to remedy or prevent anti-competitive effects, such as requiring divestitures or prohibiting certain conduct. This dual-track system allows for more nuanced intervention in complex market situations where outright criminality is not present.

Enforcement and Administration

The administration and enforcement of the Competition Act is done by the Competition Bureau, an independent law enforcement agency headed by the Commissioner of Competition. The Bureau investigates anti-competitive conduct, reviews proposed mergers, and promotes compliance through education and advocacy. It also administers and enforces several other consumer protection statutes. These include the Consumer Packaging and Labelling Act for non-food products, the Textile Labelling Act, and the Precious Metals Marking Act. The Bureau conducts inquiries, gathers evidence, and can refer criminal matters to the Public Prosecution Service of Canada for prosecution, while it pursues civil matters before the Competition Tribunal.

The Competition Tribunal is a specialized administrative body and quasi-judicial court that has exclusive jurisdiction to hear applications on civil reviewable matters under the Act. It combines expertise in law, economics, and business. The Tribunal's decisions can be appealed to the Federal Court of Appeal. This system separates the investigative function of the Bureau from the adjudicative function of the Tribunal. The Tribunal can also award costs of proceedings before it and hear references filed pursuant to section 124.2 of the Competition Act on questions posed by the Commissioner.

Merger Review and Thresholds

The Competition Act's merger review provisions are a critical tool for preventing undue market concentration. A merger is notifiable to the Competition Bureau if it meets specific financial thresholds, triggering a mandatory pre-closing review and a waiting period before the transaction can close. The transaction size threshold is set at $93 million, meaning the target must have assets in Canada or gross revenues from sales in, from, or into Canada exceeding that amount. The second, or party size, threshold requires that the parties to the transaction, together with their affiliates, have combined Canadian assets or revenues exceeding $400 million. These thresholds are distinct from those under the Investment Canada Act.

For share acquisitions, a notification is required if the acquirer will own more than 20 percent of the voting shares of a publicly traded company or more than 35 percent of a privately held company. If the acquirer already owns between 20 and 50 percent of a public company, a notification is triggered upon crossing the 50 percent threshold. The Bureau's review assesses whether a merger is likely to substantially prevent or lessen competition. Recent amendments have made it easier to challenge mergers by introducing a rebuttable structural presumption of harm based on market share and concentration levels. The Bureau can apply to the Tribunal for a remedial order, which may include divestiture of assets or shares.

• Transaction size threshold: $93 million (target's Canadian assets or revenues).
• Party size threshold: $400 million (combined Canadian assets or revenues of parties and affiliates).
• Public company shareholding trigger: Acquisition of >20% of voting shares (or crossing 50% if already between 20-50%).
• Private company shareholding trigger: Acquisition of >35% of voting shares.
• Review standard: Likelihood of a substantial prevention or lessening of competition (SPLC).
• Possible remedies: Divestiture, prohibition of conduct, or other orders.

Recent and Proposed Amendments

The Competition Act has undergone significant modernization in recent years, driven by government reviews and legislative packages. Amendments passed as part of the Budget Implementation Act, 2022 (Bill C-19) on June 23, 2022, began this process. These initial changes aimed to strengthen enforcement. On November 17, 2022, with the intention to modernize the Act, Minister of Innovation, Science and Industry François-Philippe Champagne formally commenced a comprehensive review of the Competition Act. This review explored further updates to the law.

The review led to the introduction of the Affordable Housing and Groceries Act (Bill C-56), tabled on September 21, 2023. This bill proposed several key changes to the Act. The most notable enacted change was the removal of the efficiencies defence in merger reviews. Previously, merging parties could argue that efficiency gains from a merger, such as cost savings, outweighed its anti-competitive effects, which could allow a problematic merger to proceed. The repeal of this defence aligns Canadian law with a more competition-centric approach. Other amendments have introduced a rebuttable presumption that a merger is anti-competitive if it results in high market shares or significantly increases concentration, effectively lowering the burden on the Bureau to challenge mergers.

Interaction with the Investment Canada Act

Major corporate transactions in Canada, especially those involving foreign investors, often involve concurrent review under both the Competition Act and the Investment Canada Act (ICA). While the Competition Act focuses solely on the competitive impact of a transaction within Canada, the ICA regulates foreign investment for its net economic benefit to Canada and reviews it for national security implications. The two regimes have separate financial thresholds and review processes. The Competition Act's pre-merger notification thresholds are set in the Act and have remained at $93 million for the transaction size. The ICA's net benefit review thresholds are adjusted annually for inflation based on nominal Gross Domestic Product.

For the 2026 calendar year, the enterprise value threshold for direct acquisitions of control by private investors from World Trade Organization member countries with which Canada has a free trade agreement is $2.179 billion. For private investors from other WTO member countries, the threshold is $1.452 billion. A lower asset-based threshold of $578 million applies to direct acquisitions of control by state-owned enterprises, regardless of their home country, if that country is a WTO member. For non-WTO investors or for investments in cultural businesses, the threshold is $5 million based on the book value of the Canadian assets. All investments by non-Canadians are subject to potential national security review under the ICA, regardless of the transaction's value.

Notable Enforcement Cases

Enforcement under the Competition Act has led to significant penalties and landmark rulings that shape business conduct. During the 1980s and 1990s, fines for criminal conspiracy offences increased greatly, reflecting a more aggressive enforcement posture. A record fine was obtained on May 27, 1998, when the United States-based agribusiness giant Archer Daniels Midland pleaded guilty to two conspiracies. The company paid a $14 million fine for a lysine price-fixing conspiracy and an additional $2 million for a citric acid conspiracy. These fines amounted to 29.2 percent and 11.8 percent respectively of ADM's sales in Canada during the conspiracy periods, demonstrating the courts' willingness to impose penalties linked to the scale of the offence.

Enforcement continues across all areas of the Act. The Competition Bureau's annual plans commit to effectively applying the strengthened Competition Act to address anti-competitive activity. This indicates a continued focus on challenging anti-competitive mergers, prosecuting hard-core cartels, and addressing abuses of dominance. The Bureau's work is guided by its published priorities and the evolving legal standards set by amendments to the Act and decisions from the Competition Tribunal and higher courts. The Bureau also promotes compliance through outreach and the publication of guidelines and bulletins on various topics, such as competitor collaborations and the abuse of dominance provisions.

Questions about Competition Act

What is the purpose of the Competition Act?

The Competition Act is Canada's primary federal law governing competition. Its purpose is to prevent anti-competitive practices in the marketplace to protect the public interest in free competition. The Act aims to provide consumers with competitive prices and product choices while promoting the efficiency and adaptability of the Canadian economy. It achieves this through a combination of criminal prohibitions and civil reviewable matters enforced by the Competition Bureau and adjudicated by the Competition Tribunal.

Who enforces the Competition Act?

The Competition Act is enforced and administered by the Competition Bureau, an independent law enforcement agency headed by the Commissioner of Competition. The Bureau investigates potential violations, reviews proposed mergers, and promotes compliance. For criminal offences like conspiracy and bid-rigging, the Bureau investigates and refers cases to the Public Prosecution Service of Canada. For civil matters like merger review and abuse of dominance, the Bureau applies to the specialized Competition Tribunal, which has exclusive jurisdiction to hear these cases and issue remedial orders.

What are the criminal offences under the Competition Act?

Since amendments in 2009 and 2010, the Competition Act contains only two per se criminal offences, meaning they are illegal regardless of their actual effect on competition. The first is conspiracy under section 45, which involves agreements between competitors to fix prices, allocate markets, or restrict output. The second is bid-rigging under section 47, which involves collusive agreements in the tendering process. All other anti-competitive practices, such as abuse of dominance, exclusive dealing, or anti-competitive mergers, are treated as civil matters subject to review and remedial orders by the Competition Tribunal.

When is a merger review required under the Competition Act?

A mandatory pre-merger notification and review is required when a proposed transaction meets three tests. First, the target business must have assets in Canada or gross revenues from sales in, from, or into Canada exceeding $93 million. Second, the combined Canadian assets or revenues of the parties and their affiliates must exceed $400 million. Third, the transaction must meet specific acquisition of control tests, such as purchasing more than 20% of a public company's voting shares or more than 35% of a private company's shares, or crossing the 50% threshold if already between 20-50%. If all thresholds are met, parties must notify the Bureau and wait during a statutory review period before closing.

What recent changes have been made to the Competition Act?

Recent years have seen significant amendments to modernize the Act. Changes passed in the Budget Implementation Act on June 23, 2022, began the process. A comprehensive government review commenced on November 17, 2022. The Affordable Housing and Groceries Act (Bill C-56), tabled on September 21, 2023, proposed changes including the removal of the efficiencies defence in merger cases, which has since been enacted. Other amendments introduced a rebuttable presumption that a merger is anti-competitive if it results in high market shares or significantly increases concentration, making it easier for the Bureau to challenge mergers.

How does the Competition Act relate to the Investment Canada Act?

Large transactions, especially those involving foreign investors, may trigger review under both the Competition Act and the Investment Canada Act (ICA). The Competition Act focuses solely on the competitive impact of a deal within Canada. The Investment Canada Act assesses whether a foreign investment is of net benefit to Canada and reviews it for national security risks, regardless of competitive impact. The financial thresholds for review are separate and calculated differently. For 2026, the Competition Act's pre-merger threshold remains $93 million, while the ICA's net benefit thresholds for foreign investors range from $5 million for non-WTO investors to over $2.179 billion for trade agreement investors, based on enterprise value or asset value.

Sources: Wikipedia and current public reporting, checked by the Nosy Mag desk. Last updated 2026-11-03.