Canada Overhauls Competition Act to Tackle Corporate Concentration and Boost Consumer Choice

A New Era for Canadian Competition Law

In a landmark move aimed at reshaping Canada's economic landscape, the federal government has passed a series of comprehensive amendments to the Competition Act. Heralded as the most significant update to the country's competition law in decades, the reforms are designed to empower regulators, challenge corporate dominance, and provide tangible relief to consumers grappling with high prices in concentrated sectors such as groceries, telecommunications, and air travel.

For years, critics have argued that Canada's competition framework was outdated and overly permissive, often failing to prevent mergers that reduced consumer choice and allowed anti-competitive practices to flourish. Public frustration reached a boiling point amid post-pandemic inflation, with the spotlight shining brightly on the grocery industry, where a few dominant players control the majority of the market. These legislative changes are a direct response to that public pressure and a growing consensus that the old rules were no longer fit for purpose.

Strengthening the Watchdog: Enhanced Powers for the Competition Bureau

At the heart of the reforms is a significant expansion of the powers vested in the Competition Bureau, the independent law enforcement agency responsible for protecting and promoting competition. Previously, the Bureau's ability to act was often constrained by a high burden of proof and limited investigative tools. The new legislation changes this in several key ways:

• Market Study Authority: The Bureau can now compel the production of information for market studies, giving it the power to conduct deep-dive investigations into industries where it suspects competition is lacking. This allows the agency to proactively identify problems rather than just reacting to complaints or merger proposals.
• Challenging Anti-Competitive Collaborations: The amendments make it easier for the Bureau to challenge collaborations between companies that are not direct competitors but whose arrangements could stifle competition. This closes a loophole that previously made it difficult to address certain types of strategic alliances.
• Private Right of Action: For the first time, private parties will be able to seek leave from the Competition Tribunal to challenge anti-competitive conduct, empowering individuals and businesses to take direct action rather than relying solely on the Bureau.

Targeting Problematic Practices: From Grocery Aisles to Online Checkouts

The reforms take direct aim at specific business practices that have drawn public ire. The grocery sector, in particular, has been a major catalyst for change. The government's actions follow extensive public debate and formal investigations into the industry's structure. As part of a broader effort, Ottawa launched a formal inquiry into grocery sector competition to understand the root causes of soaring food prices. A key focus has been on so-called "property controls," where large grocery chains use restrictive covenants in leases to prevent rival supermarkets from opening nearby. The new law explicitly identifies this practice as anti-competitive, giving the Bureau a clear mandate to challenge it. This move was bolstered after the Competition Bureau secured a court order to advance its probe into these very property controls, signaling a more aggressive enforcement stance even before the legislative changes were finalized.

Beyond groceries, the amendments address several other key areas:

• Drip Pricing: The law now explicitly bans drip pricing, the practice of advertising a low headline price and then adding mandatory fees and charges later in the purchasing process. All mandatory costs must now be included in the upfront price.
• Environmental Claims: Companies making environmental or "green" claims must be able to substantiate them with adequate and proper testing, cracking down on deceptive greenwashing.
• Merger Review: The framework for reviewing mergers has been updated to better account for the impact on labour markets and to consider how a merger could entrench the market power of dominant firms.

Industry Reaction and the Road Ahead

The response from the business community has been mixed. While some acknowledge the need for modernization, major industry associations have expressed concern that the changes could create uncertainty, increase the regulatory burden, and potentially deter investment and innovation. They argue that the previous framework provided stability and that a more aggressive regulatory environment could chill legitimate business activities. Proponents, however, counter that robust competition is a driver of innovation and that a level playing field ultimately benefits the entire economy by allowing smaller, more agile companies to challenge incumbents.

For consumers, the potential benefits are clear: lower prices, more choice, and greater transparency. Advocacy groups have largely applauded the government's actions, calling them a long-overdue victory for Canadians. However, they also caution that the ultimate success of these reforms will depend on vigorous enforcement by the Competition Bureau and a willingness by the courts to interpret the new laws in a manner that prioritizes competitive outcomes.

The implementation of these changes will be a critical test for the federal government and the Competition Bureau. The agency will require adequate funding and resources to utilize its new powers effectively. The first major cases brought under the amended Act will set important precedents, shaping the future of competition law and business conduct in Canada for years to come.