by: Oliver J. Borgers, Donald B. Houston, Madeleine Renaud, Michele F. Siu, McCarthy Tétrault LLP
On December 9, 2014, new legislation, referred to as the Price Transparency Act, was tabled in Parliament to target “unjustified” cross-border price discrimination.[1] The proposed law is not intended to set or regulate prices in Canada, nor does it provide for penalties or other remedies. Instead, the Commissioner of Competition will be given powers and tools to investigate and “expose” gaps between U.S. and Canadian selling prices and the reasons for that difference.[2] Industry Minister James Moore has indicated that some higher prices are justified by legitimate higher costs of doing business on this side of the border. Within one year of receiving information that the Commissioner considers sufficient for the inquiry, the Commissioner must issue a public report setting out the conclusions of the inquiry. Minister Moore has said that it is then up to Canadians to decide if they want to continue supporting a particular company.
Significantly, the proposed legislation will expand the Commissioner’s investigative powers applicable to all inquiries under the Competition Act, not just inquiries into the difference between selling prices in Canada and the United States. The legislation gives the Commissioner the authority to seek court orders to:
- require a person, located in or outside Canada, to attend an examination, to produce documents or to make a written return in order to provide the Commissioner with information relevant to the inquiry. Currently, the Competition Act does not provide for such orders to be made against a person who is located outside Canada.
- require a person to provide the Commissioner with records or written return of information that an affiliate of the person, located in or outside Canada, is likely to have and that is relevant to the inquiry. In this regard, the definition of affiliate has been expanded.
Empowering a Canadian court to issue orders compelling information from persons outside Canada is an extraordinary measure. The legality and enforceability of such orders will undoubtedly be challenged before the courts.
In addition, the Price Transparency Act includes proposed amendments that expand the concept of affiliation to include a broader range of organizations, such as trusts. This will potentially increase the situations in which pre-merger notification requirements apply. Such amendments will also clarify the application of the affiliate exception to criminal conspiracy and bid-rigging and to civilly reviewable practices (such as price maintenance, exclusive dealing, market restriction, tied selling and agreements among competitors).
[1] Earlier this year, the federal government announced its plans to take steps to address price discrimination between Canada and the United States for identical goods when such price discrimination cannot be “justified by higher operating costs in Canada.” See our article here.
[2] The proposed amendments to the Competition Act may be found here.
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