In our February 6, 2009 Osler Update, we drew attention to the important changes to the Competition Act and the Investment Canada Act (ICA) proposed in Bill C-10, the Budget Implementation Act, 2009 of the federal government, which was introduced that day. Since then, Bill C-10 has been expeditiously ushered through the Finance Committee and Second and Third Readings in the House and the Senate. It received Royal Assent on March 12, 2009. Most of the amendments to the Competition Act and the ICA in Bill C-10 are now in force although a few will not come into force until a date fixed by the Governor-in-Council or following the expiry of a set transitional period. The changes brought about by these amendments, which are the most significant in over two decades, have important and far-reaching implications for the business and legal communities.
Bill C-10 implements all but one of the amendments to the Competition Act proposed by the government-appointed blue ribbon Competition Policy Review Panel (Panel), which reported in June 2008, and implements a few of the amendments to the ICA proposed by the Panel. These amendments fundamentally restructure Canadian conspiracy laws and the merger review process, and significantly increase corporate and individual penalties to the highest levels anywhere in the world in some cases. They also introduce a national security regime into our foreign investment law.
Not only will the amendments themselves require the business community to reflect on and change some of its existing and future business strategies and activities, they will require the Competition Bureau (Bureau) and the Investment Review Division to adjust their practices and guidelines to reflect the new law that they will now be responsible for enforcing.
Many of these amendments will need to be accompanied by new regulations and guidelines that explain how they will be administered and enforced. Until such guidance is available, the legal and business communities may find it difficult to navigate through the new provisions and will face unpredictable challenges in satisfying new obligations. Existing corporate compliance programs, in particular, will have to be reviewed and, in many cases, revised. In view of the potential for significantly increased criminal exposure for agreements with competitors, combined with the increased enforcement of cartel laws by antitrust regulators around the world, companies without competition compliance programs should consider implementing them as soon as possible. This is particularly true for companies currently in joint ventures, strategic alliances, co-production, co-marketing or facility sharing arrangements with competitors.
The repeal of the pricing discrimination, promotional allowance, price maintenance and predatory pricing provisions will provide businesses with considerably more flexibility in structuring their pricing and distribution strategies and practices. However, businesses with leading positions in their industries now potentially face significant financial penalties for engaging in abusive behaviour. This is a dramatic change. In light of this potential exposure, industry leaders will need to be more aware of how their aggressive business practices are affecting or may affect the market.
While the amendments do not change our substantive merger law, companies contemplating transactions will have to adapt closing conditions, filing requirements and timing expectations to reflect the new merger process which, to a significant extent, aligns the Canadian merger review process with its U.S. counterpart. In addition, both buyers and sellers and their financial and legal advisors will have to assess the timing and execution risk associated with a potentially uncertain national security review where the buyer in non-Canadian.
Click on the following link for a discussion of the principal amendments to the Competition Act and the ICA as set forth in Bill C-10. Appendix A summarizes in chart form the amendments to the Competition Act and the ICA that are now in force and indicates when others will come into force.
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