Sustainability and Competition Global Practice Guide |
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Canada (Federal Law) |
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(Canada)
Firm
Blake, Cassels & Graydon LLP
Contributors Updated 06 Sep 2022 |
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| Are ESG measures/sustainability agreements included in your jurisdictional competition regime? | No. ESG/sustainability agreements are not specifically included in the Canadian competition regime. Existing provisions relating to competitor collaboration or agreements would encompass collaborations/agreements that are related to ESG under the existing regime (explained below). |
| If ESG measures/sustainability agreements are not included in your jurisdictional competition regime, do you foresee any new regulations coming into place in 2022? | No. |
| Has your Authority issued any guidance on the role, if any, of ESG in the competition law analysis applied to mergers or other conduct? | No. |
| Has your jurisdiction issued guidance regarding competitor collaborations or participating in industry working groups, and if so, do they specifically address ESG? | Yes. The Competition Bureau has published its Competitor Collaboration Guidelines: Competitor Collaboration Guidelines - Competition Bureau Canada. These Guidelines do not specifically address ESG or other environmental initiatives. The Canadian regime contains a “dual-track” system for evaluating agreements or collaborations between competitors:
Competitor collaborations/agreements regarding ESG standards or initiatives would, in the absence of any hardcore cartel agreement, likely be assessed under the civil competitor collaboration provisions. Note that private parties in Canada may seek damages for alleged breaches of the criminal conspiracy provisions of the Act, including in respect of ESG initiatives. Canadian courts have not provided guidance to distinguish between criminal conspiracies and civil competitor collaborations, and the Competition Bureau’s guidelines will not be particularly relevant in any such proceeding. |
| Can parties seek specific guidance from authorities on proposed ESG initiatives? | Potentially. In theory, Parties can reach out to the Competition Bureau (either on a no-name or on a named basis) to discuss potential collaborations/initiatives before they are implemented. The Competition Bureau does not offer formal approval of such initiatives but may provide guidance on how an initiative will be assessed by the Bureau under the Competitor Collaboration Guidelines. Parties could consider this approach where the request for guidance is limited to whether the Bureau considers a fairly simple ESG initiative a potential breach of the Act’s criminal conspiracy provisions. However, as a practical matter, the guidance provided by the Competition Bureau when seeking an advisory opinion on the application of the civil competitor collaboration provisions (or the criminal provisions to a complex ESG initiative) would most likely be of limited value, as the Competition Bureau would be reluctant to provide strong views on an initiative that it cannot evaluate in practice and which may have a variable impact over time. In the vast majority of cases, Parties would be better served by conducting a self-assessment along with experienced competition law counsel. |
| How, if at all, does your jurisdiction quantify or calculate the ESG effects? | There has been no quantification or calculation of environmental effects in Canadian competition law to date. |
| What does your legal authority currently permit even if your agency is not yet active on this topic? | As outlined above, any competitor collaborations that do not constitute hard-core cartel conduct, or that are not likely to result in an SPLC are permitted. |
| Are there precedents that involved ESG/sustainability matters in your country? If so please provide a short description. | No. |
| Is there specific antitrust regulation in your jurisdiction to be aware of which might give rise to private or class action ESG litigation? | The Competition Act provides for a civil cause of action for any person who is harmed through a breach of the criminal provisions of the Competition Act. If an ESG initiative is found to constitute an illegal cartel agreement between competitors (i.e., an agreement which fixes prices, allocates markets/customers, or restricts supply), then persons harmed by such an initiative would have a private cause of action, which is most often exercised through class action litigation. Similarly, misleading advertising can constitute a criminal offense if done knowingly or recklessly. The Competition Bureau has issued guidance on “greenwashing”, i.e., the making of false, misleading, or exaggerated claims regarding the environmental qualities of a product. Environmental claims and greenwashing - Competition Bureau Canada. If a party makes misleading environmental statements regarding a product or service, there is a risk of (1) enforcement action by the Competition Bureau; and (2) civil litigation relating to the alleged misleading representations. |
Sustainability and Competition Global Practice Guide
No. ESG/sustainability agreements are not specifically included in the Canadian competition regime. Existing provisions relating to competitor collaboration or agreements would encompass collaborations/agreements that are related to ESG under the existing regime (explained below).
No.
No.
Yes. The Competition Bureau has published its Competitor Collaboration Guidelines: Competitor Collaboration Guidelines - Competition Bureau Canada. These Guidelines do not specifically address ESG or other environmental initiatives.
The Canadian regime contains a “dual-track” system for evaluating agreements or collaborations between competitors:
- Hardcore cartel activity (price fixing, market allocation, supply restrictions) is subject to the criminal provisions of the Competition Act and does not require an analysis of the competitive effects of such agreements to make out the offense.
- Under the criminal provisions, agreements or arrangements between competitors that include price fixing, market allocation and supply restrictions would be assessed to determine whether these restrictions are justified under an ”ancillary restraints defense”, which considers whether the otherwise illegal restrictions (i) are part of a broader or separate agreement between the parties and (ii) are directly related to, and reasonably necessary to give effect to the object of that broader agreement.
- All other agreements or collaborations between competitors are evaluated under the civil provisions of the Act and are only prohibited where they are shown, on a balance of probabilities, to result in or to be likely to prevent or lessen competition substantially.
Competitor collaborations/agreements regarding ESG standards or initiatives would, in the absence of any hardcore cartel agreement, likely be assessed under the civil competitor collaboration provisions.
Note that private parties in Canada may seek damages for alleged breaches of the criminal conspiracy provisions of the Act, including in respect of ESG initiatives. Canadian courts have not provided guidance to distinguish between criminal conspiracies and civil competitor collaborations, and the Competition Bureau’s guidelines will not be particularly relevant in any such proceeding.
Potentially.
In theory, Parties can reach out to the Competition Bureau (either on a no-name or on a named basis) to discuss potential collaborations/initiatives before they are implemented. The Competition Bureau does not offer formal approval of such initiatives but may provide guidance on how an initiative will be assessed by the Bureau under the Competitor Collaboration Guidelines. Parties could consider this approach where the request for guidance is limited to whether the Bureau considers a fairly simple ESG initiative a potential breach of the Act’s criminal conspiracy provisions.
However, as a practical matter, the guidance provided by the Competition Bureau when seeking an advisory opinion on the application of the civil competitor collaboration provisions (or the criminal provisions to a complex ESG initiative) would most likely be of limited value, as the Competition Bureau would be reluctant to provide strong views on an initiative that it cannot evaluate in practice and which may have a variable impact over time. In the vast majority of cases, Parties would be better served by conducting a self-assessment along with experienced competition law counsel.
There has been no quantification or calculation of environmental effects in Canadian competition law to date.
As outlined above, any competitor collaborations that do not constitute hard-core cartel conduct, or that are not likely to result in an SPLC are permitted.
No.
The Competition Act provides for a civil cause of action for any person who is harmed through a breach of the criminal provisions of the Competition Act. If an ESG initiative is found to constitute an illegal cartel agreement between competitors (i.e., an agreement which fixes prices, allocates markets/customers, or restricts supply), then persons harmed by such an initiative would have a private cause of action, which is most often exercised through class action litigation.
Similarly, misleading advertising can constitute a criminal offense if done knowingly or recklessly. The Competition Bureau has issued guidance on “greenwashing”, i.e., the making of false, misleading, or exaggerated claims regarding the environmental qualities of a product. Environmental claims and greenwashing - Competition Bureau Canada.
If a party makes misleading environmental statements regarding a product or service, there is a risk of (1) enforcement action by the Competition Bureau; and (2) civil litigation relating to the alleged misleading representations.