Canadian Competition Law Compliance During the COVID-19 Crisis

01 April 2020

For many businesses, the COVID-19 crisis has necessitated drastic modifications to normal operations and practices, and more changes will likely be required in the future. As businesses continue to adjust and look for innovative ways to address the challenges, it is important to keep in mind that Canadian competition laws continue to apply with full force and effect, and that the Competition Bureau remains vigilant in enforcing them, particularly in relation to conduct that unlawfully exploits the crisis to the detriment of Canadian consumers.

The crisis does not excuse non-compliance with the Competition Act

There is no general exemption from Canadian competition laws or leniency in the Bureau's enforcement of those laws due to an emergency situation. The Commissioner of Competition recently stated that "the Bureau remains vigilant against potentially harmful anti-competitive conduct by those who may seek to take advantage of consumers and businesses during these extraordinary circumstances". The Commissioner highlighted that the Bureau will pay particular attention to any evidence of deceptive marketing practices (such as false or misleading health claims related to COVID-19) or collusion by competing businesses (such as price fixing), but businesses would be wise to ensure compliance with all aspects of the Competition Act. Moreover, businesses should be aware that unlawful exploitation of the COVID-19 crisis may be seen as an aggravating factor in the penalty phase of any enforcement action.

At the same time, the Commissioner sought "to assure businesses that Canada's competition laws accommodate pro-competitive collaborations between companies to support the delivery of affordable goods and services to meet the needs of Canadians" and that the Bureau is "committed to a reasonable and principled enforcement of Canada's competition laws" during these exceptional times. Accordingly, in certain circumstances, the Bureau may be less likely to take the position that conduct violates the Act, but businesses should not take false comfort simply because of the current crisis. Any proposal to veer from usual business practices with respect to competition law compliance during the crisis should be carefully reviewed with legal counsel before being implemented.

Certain types of agreements or arrangements with competitors (price fixing, customer or market allocations, limits or controls on supply) are unlawful regardless of their impact on competition and therefore there can be no justification - emergency or otherwise - that could be offered or accepted to excuse the conduct. While the Commissioner always retains discretion whether to pursue enforcement action given the circumstances, it is likely that collusion by competing businesses will continue to be severely prosecuted.

In contrast, other forms of competitor collaborations, as well as all vertical relationships between suppliers and customers, are generally permissible under the Competition Act but may, in certain circumstances, be reviewed under the civil provisions of the Act. All of the civil provisions are subject to an effects test where the extent of the competitive impact and business justification are relevant to the analysis. These types of arrangements should also be carefully reviewed with legal counsel to ensure competition law compliance.

Bureau response times during the crisis

Finally, businesses should be aware that while the Bureau endeavours to maintain "business as usual" status while working remotely, certain matters before the Bureau may be impacted by the COVID-19 crisis. For example, merger transactions requiring Bureau review and approval prior to closing may experience some delays due to the Bureau's inability to make market contacts in a timely manner, which is an essential element of most merger reviews. Similarly, the Bureau may not be able to provide written opinion within established service standards, and ongoing matters may experience some disruptions as the Bureau "prioritize[s] urgent marketplace issues that require immediate action to protect Canadians".

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