Bill C-454: An Act to amend the Competition Act and to make consequential amendments to other Acts

C-454 First Session, Thirty-ninth Parliament, 55-56 Elizabeth II, 2006-2007 HOUSE OF COMMONS OF CANADA BILL C-454 An Act to amend the Competition Act and to make consequential amendments to other Acts first reading, June 7, 2007 Mr. Gaudet 391562 SUMMARY This enactment amends the Competition Act to authorize the Commissioner of Competition to inquire into an entire industry sector. It also provides for the imposition of an administrative monetary penalty in respect of cases of abuse of dominant position, and for an increase in the amount of administrative monetary penalties in respect of deceptive marketing cases. It repeals all provisions dealing specifically with the airline industry and criminal provisions dealing with price discrimination, predatory pricing, discriminatory promotional allowances and geographic price discrimination. The enactment also provides that the court may make an order requiring a person who made a false or misleading representation to compensate persons affected by that conduct and may issue an interim injunction to freeze assets where the Commissioner of Competition intends to ask for such an order. It also makes consequential amendments to other Acts. Also available on the Parliament of Canada Web Site at the following address:http://www.parl.gc.ca .vis1 {position: absolute;display:block;} .vis2 {position: static;} 1st Session, 39th Parliament, 55-56 Elizabeth II, 2006-2007 house of commons of canada BILL C-454 An Act to amend the Competition Act and to make consequential amendments to other Acts Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: R.S., c. C-34; R.S., c. 19 (2nd Supp.), s. 19 AMENDMENTS TO THE COMPETITION ACT 1. Section 4.1 of the Competition Act is repealed. 2. Paragraph 10(1)(b) of the Act is amended by striking out the word “or” at the end of subparagraph (ii) and by adding the following after subparagraph (iii): (iv) grounds exist for the making of an inquiry into an entire industry sector, or 3. Subsection 45(1) of the Act is replaced by the following: Conspiracy 45. (1) Every one who conspires, combines, agrees or arranges with another person (a) to limit the facilities for transporting, producing, manufacturing, supplying, storing or dealing in any product, (b) to prevent, limit or lessen the manufacture or production of a product or to enhance unreasonably the price thereof, (c) to prevent or lessen competition in the production, manufacture, purchase, barter, sale, storage, rental, transportation or supply of a product, or in the price of insurance on persons or property, or (d) to otherwise restrain or injure competition, is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years or to a fine not exceeding twenty-five million dollars or to both. Defence (1.1) The court shall not convict the accused if the accused establishes that the combination, agreement or arrangement is reasonably necessary to attain gains in efficiency or encourage innovation. 4. Sections 50 and 51 of the Act are repealed. 5. The portion of section 66 of the Act before paragraph (a) is replaced by the following: Contravention of order under Part VII.1 or VIII 66. Every person who contravenes an order made under Part VII.1, except paragraph 74.1(1)(c) and subsection 74.1(1.1), or under Part VIII, except subsection 79(3.1), is guilty of an offence and liable 6. Subsection 73(1) of the Act is replaced by the following: Jurisdiction of Federal Court 73. (1) Subject to this section, the Attorney General of Canada may institute and conduct any prosecution or other proceedings under section 34, any of sections 45 to 49 and section 61 or, where the proceedings are on indictment, under section 52, 52.1, 53, 55, 55.1 or 66, in the Federal Court, and for the purposes of the prosecution or other proceedings, the Federal Court has all the powers and jurisdiction of a superior court of criminal jurisdiction under the Criminal Code and under this Act. 7. (1) The portion of subsection 74.1(1) of the French version of the Act before paragraph (a) is replaced by the following: Décision et ordonnance 74.1 (1) Le tribunal qui conclut, à la suite d’une demande du commissaire, qu’une personne a ou a eu un comportement susceptible d’examen visé par la présente partie peut ordonner à celle-ci : (2) Subsection 74.1(1) of the Act is amended by striking out the word “and” at the end of paragraph (b) and by replacing paragraph (c) with the following: (c) to pay an administrative monetary penalty, in such manner as the court may specify, in an amount not exceeding (i) in the case of an individual, $750,000 and, for each subsequent order, $1,000,000, or (ii) in the case of a corporation, $10,000,000 and, for each subsequent order, $15,000,000; and (d) to pay an administrative monetary penalty, in such manner as the court may specify, in an amount exceeding the amounts set out in paragraph (c) but not exceeding the gross revenues earned by the person as a result of that person's reviewable conduct. (3) Section 74.1 of the Act is amended by adding the following after subsection (1): Order (1.1) Where the court determines that a person is engaging in or has engaged in reviewable conduct under paragraph 74.01(1)(a), the court may also order the person to pay an amount, not exceeding the total of the amounts paid for the products that were the object of the conduct, to be distributed among the persons to whom the products were sold — not including those persons who bought the products for resale or distribution — in any manner and on any terms that the court considers appropriate. The court may specify in the order any terms that it considers necessary to implement its decision, including (a) specifying how the payment is to be administered; (b) appointing an administrator to administer the payment and specifying the terms of administration; (c) requiring the person against whom the order is made to pay the administrative costs related to the payment as well as the fees to be paid to an administrator; (d) requiring that potential claimants be notified in the time and manner specified by the court; (e) specifying the time and manner for making claims; and (f) specifying the conditions for the admissibility of claimants. Not-for-profit organization (1.2) The court may also designate in the order a not-for-profit organization in Canada that benefits persons who have been affected or are likely to be affected by reviewable conduct under this Part — or any other person or organization that the court considers appropriate in the circumstances — to receive any or all of the amount of the payment that remains unclaimed or undistributed in the manner and on the terms set out in the order. Variation of order (1.3) The court may vary the order on application by the Commissioner or the person against whom the order was made. (4) Subsections 74.1(3) and (4) of the Act are replaced by the following: Saving (3) No order may be made against a person under paragraph (1)(b) or (c) or subsection (1.1) where the person establishes that the person exercised due diligence to prevent the reviewable conduct from occurring. Purpose of order (4) The terms of an order made against a person under paragraph (1)(b) or (c) or subsection (1.1) shall be determined with a view to promoting conduct by that person that is in conformity with the purposes of this Part and remedying any injury that has resulted, and not with a view to punishment. (5) Subsection 74.1(5) of the Act is amended by striking out the word “and” at the end of paragraph (g) and by replacing paragraph (h) with the following: (h) the gross revenue from sales affected by the conduct; (i) the financial position of the person against whom the order is made; (j) any decision of the court in relation to an application for an order under subsection (1.1); (k) whether any restitution has been made voluntarily; and (l) any other relevant factor. 8. The Act is amended by adding the following after section 74.11: Interim injunction 74.111 (1) Where, on application by the Commissioner, a court finds a strong prima facie case that a person is engaging in or has engaged in reviewable conduct under paragraph 74.01(1)(a) and the court is satisfied that the person, being the owner or the person having possession or control of articles within the jurisdiction of the court, is disposing of or is likely to dispose of those articles by any means, the court may issue an interim injunction forbidding the owner or any person having possession or control of the articles from disposing of or otherwise dealing with the articles other than in the manner and on the terms specified in the injunction. Statement to be included (2) Any application for an injunction under subsection (1) shall include a statement that the Commissioner has applied, or intends to apply, for an order under subsection 74.1(1.1). Where court shall not issue injunction (3) The court shall not issue an injunction where the person in respect of whom the injunction is sought establishes that the disposal of the articles will not render an order under subsection 74.1(1.1) unenforceable. Duration (4) Subject to subsection (7), the injunction has effect, or may be extended on application by the Commissioner, for any period that the court considers necessary and sufficient to meet the circumstances of the case. Notice of application by Commissioner (5) Subject to subsection (6), at least forty-eight hours’ notice of an application referred to in subsection (1) or (4) shall be given by or on behalf of the Commissioner to the person in respect of whom the injunction or extension is sought. Ex parte application (6) The court may proceed ex parte with an application made under subsection (1) where it is satisfied that subsection (5) cannot reasonably be complied with, where the urgency of the situation is such that service of the notice in accordance with subsection (5) would not be in the public interest or might defeat the purpose of the injunction. Duration of ex parte injunction (7) An injunction issued ex parte has effect for the period that is specified in it, not exceeding seven days unless, on further application made on notice as provided in subsection (5), the court extends the injunction for any additional period that it considers necessary and sufficient. Submissions to set aside (8) On application of the person against whom an ex parte injunction is made, the court may make an order setting aside the injunction or varying it subject to any conditions that it considers appropriate if the person establishes that the disposal of the articles will not render an order under subsection 74.1(1.1) unenforceable. Notice of application (9) A person who makes an application under subsection (8) shall give the Commissioner forty-eight hours' written notice of the application. Duty of Commissioner (10) Where an injunction issued under this section is in effect, the Commissioner shall proceed as expeditiously as possible to complete the inquiry under section 10 arising out of the conduct in respect of which the injunction was issued. Definition of “dispose” (11) For the purposes of this section, “dispose” includes removing from the jurisdiction of the court, depleting the value of or disposing of by lease. 9. Section 75 of the Act is amended by adding the following after subsection (1): Damage awards (1.1) The Tribunal may make an award of damages under this section to a person granted leave under subsection 103.1(7). 10. Subsection 77(3.1) of the Act is replaced by the following: Damage awards (3.1) The Tribunal may make an award of damages under this section to a person granted leave under subsection 103.1(7). 11. (1) The portion of subsection 78(1) of the Act before paragraph (a) is replaced by the following: Definition of “anti-competitive act” 78. For the purposes of section 79, “anti-competitive act” means any abusive exploitation of a dominant position in the market, and includes any of the following acts: (2) Subsection 78(1) of the Act is amended by adding the word “and” at the end of paragraph (h) and by repealing paragraphs (j) and (k). (3) Subsection 78(2) of the Act is repealed. 12. (1) Section 79 of the Act is amended by adding the following after subsection (1): Damage awards (1.1) The Tribunal may make an award of damages under this section to a person granted leave under subsection 103.1(7). (2) Subsections 79(3.1) to (3.3) of the Act are replaced by the following: Administrative monetary penalty (3.1) Where the Tribunal makes an order against a person under subsection (1) or (2), it may also order them to pay, in any manner that the Tribunal may specify, (a) an administrative monetary penalty in an amount not greater than $10,000,000 and, for each subsequent order under either of those subsections, an amount not greater than $15,000,000; and (b) an administrative monetary penalty in an amount greater than the amounts set out in paragraph (a) but not greater than the gross revenues earned by the person as a result of that person's engaging in a practice of anti-competitive acts. Aggravating or mitigating factors (3.2) In determining the amount of an administrative monetary penalty, the Tribunal shall take into account the following: (a) the frequency and duration of the practice; (b) injury to competition in the relevant market; (c) the history of compliance with this Act by the person against whom the order is made; (d) the gross revenue from sales affected by the practice; (e) any actual or anticipated profits generated by the practice; (f) the financial position of the person against whom the order is made; and (g) any other relevant factor. Purpose of order (3.3) The purpose of an order made against a person under subsection (3.1) is to promote practices by that person that are in conformity with the purposes of this section and not to punish that person. 13. Section 79.1 of the English version of the Act is replaced by the following: Unpaid monetary penalty 79.1 The amount of an administrative monetary penalty imposed on a person under subsection 79(3.1) is a debt due to Her Majesty in right of Canada and may be recovered as such from that person in a court of competent jurisdiction. 14. (1) Subsections 103.1(1) and (2) of the Act are replaced by the following: Leave to make application under section 75, 77 or 79 103.1 (1) Any person may apply to the Tribunal for leave to make an application under section 75, 77 or 79. The application for leave must be accompanied by an affidavit setting out the facts in support of the person's application under section 75, 77 or 79. Notice (2) The applicant must serve a copy of the application for leave on the Commissioner and any person against whom the order under section 75, 77 or 79 is sought. (2) Paragraph 103.1(3)(b) of the Act is replaced by the following: (b) was the subject of an inquiry that has been discontinued because of a settlement between the Commissioner and the person against whom the order under section 75, 77 or 79 is sought. (3) Subsection 103.1(4) of the Act is replaced by the following: Application discontinued (4) The Tribunal shall not consider an application for leave respecting a matter described in paragraph (3)(a) or (b) or a matter that is the subject of an application already submitted to the Tribunal by the Commissioner under section 75, 77 or 79. (4) Subsection 103.1(7) of the Act is replaced by the following: Granting leave to make application under section 75, 77 or 79 (7) The Tribunal may grant leave to make an application under section 75, 77 or 79 if it has reason to believe that the applicant is directly and substantially affected in the applicants' business by any practice referred to in one of those sections that could be subject to an order under that section. (5) Subsection 103.1(8) of the English version of the Act is replaced by the following: Time and conditions for making application (8) The Tribunal may set the time within which and the conditions subject to which an application under section 75, 77 or 79 must be made. The application must be made no more than one year after the practice that is the subject of the application has ceased. (6) Subsection 103.1(10) of the Act is replaced by the following: Limitation (10) The Commissioner may not make an application for an order under section 75, 77 or 79 on the basis of the same or substantially the same facts as are alleged in a matter for which the Tribunal has granted leave under subsection (7), if the person granted leave has already applied to the Tribunal under section 75, 77 or 79. 15. Section 103.2 of the Act is replaced by the following: Intervention by Commissioner 103.2 If a person granted leave under subsection 103.1(7) makes an application under section 75, 77 or 79, the Commissioner may intervene in the proceedings. 16. Section 104.1 of the Act is repealed. 17. Subsection 105(1) of the Act is replaced by the following: Consent agreement 105. (1) The Commissioner and a person in respect of whom the Commissioner has applied or may apply for an order under this Part, other than an interim order under section 103.3, may sign a consent agreement. 18. The portion of subsection 106(1) of the Act before paragraph (a) is replaced by the following: Rescission or variation of consent agreement or order 106. (1) The Tribunal may rescind or vary a consent agreement or an order made under this Part other than an order under section 103.3 or a consent agreement under section 106.1, on application by the Commissioner or the person who consented to the agreement, or the person against whom the order was made, if the Tribunal finds that 19. Paragraphs 110(4)(a) and (b) of the Act are replaced by the following: (a) the aggregate value of the assets in Canada, determined as of such time and in such manner as may be prescribed, that would be owned by the continuing corporation that would result from the amalgamation or by corporations controlled by the continuing corporation, other than assets that are shares of any of those corporations, would exceed fifty million dollars, or such greater amount as may be prescribed; or (b) the gross revenues from sales in or from Canada, determined for such annual period and in such manner as may be prescribed, generated from the assets referred to in paragraph (a) would exceed fifty million dollars, or such greater amount as may be prescribed. CONSEQUENTIAL AMENDMENTS R.S., c. 19 (2nd Supp.) Competition Tribunal Act 20. Subsection 11(1) of the Competition Tribunal Act is replaced by the following: Hearing of applications 11. (1) The Chairman of the Tribunal, sitting alone, or a judicial member designated by the Chairman, sitting alone, may hear and dispose of applications under section 74.111, subsection 100(1), section 103.1 or 103.3 or subsection 104(1) of the Competition Act and any related matters. 2003, c. 22 Public Service Modernization Act 21. Paragraph 224(z.18) of the Public Service Modernization Act is repealed. COORDINATING AMENDMENTS Bill C-41 22. (1) Subsections (2) and (3) apply if Bill C-41, introduced in the 1st session of the 39th Parliament and entitled An Act to amend the Competition Act (the “other Act”), receives royal assent. (2) If the other Act comes into force after this Act, then, on the coming into force of the other Act, that other Act is repealed. (3) If the other Act comes into force on the same day as this Act, then this Act is deemed to have come into force after the other Act. 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