Changes to Canada’s Competition Act coming into effect this summer: a primer on recent amendments impacting Canadian businesses
By Deanne MacLeod, K.C., Burtley G. Francis and David F. Slipp
In June 2022, Canada’s federal government enacted a number of changes to the Competition Act (the “Act”) as the first step in a comprehensive review of the country’s competition regime. The Competition Bureau Canada (the “Bureau”) has released a short guide to all of the amendments which summarizes the most important changes.
Many of the amendments to the Act took effect immediately upon being enacted last year, with the remaining changes, which are arguably the most interesting (and potentially most impactful), coming into effect on June 23, 2023. As described below, the Wage-Fixing Provision and the No-Poach Provision may require businesses with employees to modify certain behaviours and standard form agreements.
Beginning on June 23, 2023, it will be unlawful under the Act for any two unaffiliated employers to agree:
(i) to fix, maintain, decrease or control salaries, wages or terms and conditions of employment (the “Wage-Fixing Provision”); or
(ii) to not solicit or hire each other’s employees (the “No-Poach Provision”).
Contravening either of these new rules will be considered an indictable offence punishable by imprisonment for a term of up to 14 years, a fine in an amount in the discretion of the court, or both.
As enacted, the Wage-Fixing Provision and the No-Poach Provision each have the potential to have huge impacts on the day-to-day operations of Canadian businesses, but thankfully, the Bureau has provided some comfort through its enforcement guidance (the “Guidance”).
The Wage-Fixing Provision
The phrase “terms and conditions of employment” is tremendously broad and not defined by the Act. The Guidance suggests that responsibilities, benefits and policies, including job descriptions, allowances, per diems, mileage reimbursements, non-monetary compensation, working hours, location and non-compete clauses, and any other directives that may restrict job opportunities will all be considered “terms and conditions of employment”. This requires an increased level of care from employers, because all of this information must now be treated as competitively sensitive. Caution will need to be used when benchmarking policies and employment terms in the market so as not to inadvertently trip over the Wage-Fixing Provision.
The No-Poach Provision
No-poach (commonly referred to as “non-solicit”) clauses are common in commercial contracts, including non-disclosure agreements, supply agreements, and agreements of purchase and sale. Thankfully, the Guidance indicates that the Bureau’s primary concern will be on “bare” no-poach agreements (i.e. a mutual agreement not to solicit the other party’s employees with the sole intent of limiting their job mobility). The Guidance confirms that the Bureau will not be concerned by one-sided agreements where only one of the parties agrees not to poach employees, or by no-poach provisions that can be justified by the “ancillary restraints defence”.
The ancillary restraints defence is found in subsection 45(4) of the Act and protects restrictions contained in contracts that are ancillary to the main purpose of the agreement but required to make the arrangement efficient or possible. The ancillary restraint in question must (i) flow from or be related to the broader business objective between the parties; (ii) be directly related to, or reasonably necessary for achieving the broader business objective; and (iii) the broader business objective, when considered without the ancillary restraint, cannot violate the criminal conspiracy provisions of the Act.
Key Takeaways:
- Starting in June 2023, it will be unlawful for unaffiliated employers to agree with each other to fix, maintain, decrease or control salaries, wages or terms and conditions of employment of their employees.
- Employers should begin treating employment terms and operational policies as competitively sensitive information.
- Starting in June 2023, it will be unlawful for unaffiliated employers to agree not to solicit or hire each other’s employees.
- The Bureau will be primarily targeting “bare” agreements not to solicit.
- The ancillary restraints defence will be available to save breaches of the Wage-Fixing Provision and No-Poach Provision in limited circumstances, such as when an agreement is ancillary to a broader, legal arrangement between the parties.
This client update is provided for general information only and does not constitute legal advice. If you have any questions about the above, please contact a member of our Competition Law group.
Click here to subscribe to Stewart McKelvey Thought Leadership.
Archive
DUE DILIGENCE Generally, occupational health and safety legislation in Atlantic Canada, like other jurisdictions, requires employers to take reasonable precautions to ensure the health and safety of workers in their workplace. Read More INCIDENT RESPONSE…
Read MoreThe Cyber-safety Act (“the Act”), excepting Part V (that part amending the Safer Communities and Neighbourhoods Act), was proclaimed August 6, 2013 and is now in effect. As discussed in our May 17, 2013 Client Update and our HRLaw blog The business case…
Read MoreThe Supreme Court of Canada has now released the much anticipated decision in the case of Marine Services International Ltd. v Ryan Estate, 2013 SCC 44. In doing so, the high court has signaled, at least…
Read MoreIn Wood v. Wood et al, 2013 PESC 11, a motion pursuant to Rule 7.08 of the Rules of Civil Procedure for court approval of a settlement involving a minor, Mr. Justice John K. Mitchell approved the settlement among the…
Read MoreClients who sit on boards of corporate employers should take note of recent amendments made to New Brunswick’s Employment Standards Act (the “ESA”) which could increase their exposure to personal liability in connection with claims advanced by…
Read MoreSignificant changes may be coming to the standard automobile policy in PEI, including increases to the accident benefits available under Section B and an increase to the so-called “cap” applicable to claims for minor personal…
Read MoreOn June 17, 2013, pursuant to the recently amended Section 70 of the Labour Relations Act for Newfoundland and Labrador (“NL”), the Government of Newfoundland and Labrador issued three Special Project Orders (“SPOs”) in respect of the…
Read MoreOn June 14, 2013, the Supreme Court of Canada (“the Court”) released the decision that employers across the country were waiting for. In CEP Local 30 v. Irving Pulp & Paper Ltd., 2013 SCC 34, a…
Read MoreThe Government of Newfoundland and Labrador (“NL”) has recently released its “Aboriginal Consultation Policy on Land and Resource Development Decisions” (the “Policy”). A copy of the Policy can be accessed here. This new Policy is the…
Read MoreThe following is a province-by-province update of legislation from a busy 2013 spring session in Atlantic Canada. Watching these developments, we know the new legislation that has passed or could soon pass, will impact our…
Read More