For small and medium-sized businesses, compliance with Canadian competition law may not be at the forefront in business planning and operational considerations. However, there are a variety of potential risks and associated liabilities (including criminal liability) for a business that has not considered the application of Canadian competition law to its day-to-day business activities. As discussed below, understanding the Canadian competition laws which apply to your business and implementing internal compliance policies and controls will help mitigate these risks to your business.
Canadian Competition Law
Canadian competition law is designed to maintain a competitive marketplace and prohibits and regulates certain business activities (including those conducted by non-Canadian companies operating in Canada) that might prevent or reduce competition or harm consumers. Enforcement of these laws, primarily the Competition Act (Canada) (the “Act”), is conducted by the Competition Bureau of Canada. While the Act also contains provisions which apply to mergers and acquisitions, the focus of this article is the provisions of the Act relating to day-to-day business activities.
All it may take is for an aggrieved consumer, competitor or whistleblower to file a complaint with the Competition Bureau and trigger an investigation that could ultimately result in an order against a business, its management personnel and/or employees. Such an order may include a requirement to compensate consumers for losses and/or to stop or modify conduct. There is also the possibility of civil damages and criminal prosecution. In addition, even before a final determination is made, a business suspected of breaching the Act may also be subject to a time and resource-consuming investigation process as well as potential reputational damage.
Examples of Regulated or Prohibited Business Activities
The following are examples of business activities that are regulated or prohibited by the Act:
Proactively Protecting Your Business
Navigating the requirements of the Act can be challenging, but compliance is important for all businesses and legal advice is recommended to ensure a proper understanding of the Act’s prohibitions and restrictions. A first step towards reducing the risk to your business is to understand which of a business’ activities are regulated under the Act. Next is to ensure that there is a general understanding among management and relevant employees of the applicable legal requirements and to put internal policies and controls in place to ensure compliance and avoid drawing regulatory scrutiny.
Developing and implementing an internal compliance program is a prudent and proactive way to mitigate legal liability and ensure a business is operated legally and in accordance with best practices. Having a properly designed, implemented and effective compliance program will: (i) clearly communicate to management and employees the need to comply with applicable provisions of the Act and related laws to ensure internal business operations do not contravene the Act; (ii) identify the nature of the compliance risks associated with discussions or arrangements with third parties, such as partners, competitors, or trade associations; (iii) reduce the risk of costly investigations and lawsuits that adversely impact on core business activities; (iv) reduce the risk of penalties or third party damage claims for the business and criminal liability for its management and employees; (v) protect the business’ reputation; and (vi) support eligibility for participation in public sector procurement opportunities.
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