The Government of Canada has recently made some drastic amendments to the Competition Act (“the Act”) in efforts to further protect Canadians from the effects of anticompetitive market behaviour. Some of the key areas of the Act that have been overhauled include sections that relate to deceptive marketing practices, conspiracies, and the merger review process. The focus of this article will be centered on understanding why the current competition regime in Canada ought to be considered by trade associations and their members in their dealings to avoid potentially serious legal consequences.

Trade associations have been described as “individuals and corporations with common commercial interests who, under the auspices of the organization, join together to take joint actions that further their commercial or professional goals”. At first glance, this description may seem to lay the groundwork for completely legitimate activity such as discussing matters of industry importance, safety and quality standards and industry trends. In addition, because the Act lacks  provisions dealing exclusively with trade associations directly, one may think that activities involving trade associations are not on the Government’s radar. However, it must also be recognized that the risks associated with bringing market competitors together into such a tight forum creates a launching pad for trade association members to engage in anticompetitive conduct, which could very well be captured by the Act. However, this is not to downplay the legitimate roles trade associations have. As a result, the following will outline ways to maintain these legitimate purposes while being mindful of where to exercise caution.


Conspiracy is conduct that is dealt with under section 45 of the Act. It is currently defined as conduct involving two or more persons, which prevents or lessens competition unduly. This could include conduct such as price fixing, bid rigging, or agreeing to control the production or supply of goods or services as a group.

Currently, there are three elements needed for conspiracy to be made out. The first element, requires that there be an agreement (although it need not be in writing). However, the agreement itself need not be implemented, just formed.

The second element requires that the agreement must result in an “undue” lessening of competition. “Undue” has been interpreted by the courts to be a function of how much market power the parties have along with consideration of how likely the conduct in question will create adverse market effects. For example, the more restrictive an agreement is, the less amount of market power needed in order to find the conduct “Undue”. However, it is crucial to note that this “undueness” requirement has been repealed with the amendments and come March 12, 2010, it will not be necessary for adverse market effects to be established to prove criminal conspiracy. The effect of this amendment will likely increase criminal conviction rates against companies and individuals across the board including smaller industry players with less market power who in the past had less exposure than market leaders. This change will likely lead to more civil actions as more companies and individuals will likely be found guilty of conspiracy related charges as a result of removal of the “undueness” requirement. Moreover, the recent Canadian case law on opening the door to certification proceedings for competition class actions is also more reason to expect a wave of competition lawsuits.

The final element requires that there be an intention amongst the parties to enter into the agreement. This would include having knowledge of the terms of the agreement and a mutual understanding that the consequences of the agreement if implemented would lessen competition.

It is important to note that in the context of trade associations, conspiracy may also take the form of conduct provided for in rules or codes of ethics set up by the trade association and its members. For example, this may include rules or fee guidelines dealing with the fixing of commission rates in the real estate industry or the setting of insurance premiums in the insurance industry to name but a few hypothetical examples.

The penalty for criminal conspiracy has been amended from a previous fine of up to 10 million dollars CDN or up to 10 years imprisonment to a new fine limit of up to 25 million dollars CDN or up to 14 years imprisonment.

One recent example of conspiracy in the air cargo transportation sector involved British Airways, which pleaded guilty for conspiring with other airlines to fixing surcharges on the sale and supply of international air cargo from Canada between 2002 and 2006. As a result, British Airways was fined $4.5 million CDN dollars.


Certain topics of conversation and information sharing may be evidence of anticompetitive conduct especially if it involves the disclosure of commercially sensitive topics. This may include discussions on the standardization of pricing in the future, ideal profit levels, and planning of the allocation of customer or geographic markets.

In some industries, the sharing of certain types of information between competitors is an integral part of doing business in order to maintain a more efficient and competitive marketplace. This is common practice in the insurance industry with the exchange of statistical and credit information.  With this in mind, section 45(3) of the Act explicitly permits the sharing of certain information. These permissible carve outs allow for the exchange of statistical information, credit information, and the defining of terminology used in a trade industry or profession. This section also permits for agreements about the size and shape of containers in which articles are packaged in an industry. Moreover, agreements or arrangements relating to measures to protect the environment or for cooperative research and development are also permissible. However, all of these arrangements are only permitted insofar as they do not lessen competition in respect of prices; quantity or quality of production; markets or customers; or channels and methods of distribution.


Some tips on avoiding trade association scrutiny are set out below. The following is meant to be a non-exhaustive list of strategies for minimizing such legal scrutiny.

a. Trade Association Meetings:

All trade association meetings should have a clear agenda in place. All documents referred to in meetings should be kept on file in order to record a history of previous meetings so as to protect members from problems down the road.  In addition, it may be useful to have legal counsel review the agenda ahead of time or attend the meeting itself where there is the potential for commercially sensitive information to be brought up.

b. Membership and Discipline:

Trade associations should avoid creating sanctions against other members or potential members aimed at achieving anticompetitive purposes. For example, refusing a potential member into a trade association on the basis that a pricing adherence policy will not be complied with can trigger the Act. However, sanctions against members on the grounds of safety issues will not breach the Act. Additionally, if any fee guidelines are in place, they should be issued in a manner making it clear that there is no intention or expectation for members to adhere to the guideline.

c. Advertising:

Marketing conducted by trade associations on behalf of all its members tend to represent the views of an industry through public statements and advertising practices. As such, it should avoid materially false or misleading representations to avoid scrutiny of Part VII.1 of the Act. Under this part of the Act, individuals will be liable for “administrative monetary penalties” up to $750,000 CDN and corporations will be liable for up to $10 million dollars CDN for breaching the provisions. These will come into force March 12, 2010.

In respect of advertising conduct of the association members themselves, it is important that the internal association rules or guidelines relating to the manner in which members may conduct advertising do not restrict their ability to compete in the marketplace.

d. Information Sharing

Generally speaking, from an anticompetitive standpoint, it is safer for trade association members to share data based on historical aggregated information rather than current data. Moreover, the more general in nature the information is, the less likely anticompetitive challenges will be raised. Also, information sharing should be voluntary amongst members, and the information shared should maintain the anonymity of the members. This can be accomplished through the use of a third party to gather and assemble the information.

e. Compliance Plans:

Trade associations should put into place a corporate compliance program so as to as to avoid becoming a platform for illegal conduct. This would involve educating members about the Competition Act provisions. In addition, it would be wise for trade associations to select a compliance officer to ensure all meetings, guidelines and actions taken are in compliance with the Act. Additional compliance officer responsibilities would include ensuring that the trade association board of directors are comprised of individuals who are not all competitors. This would maintain a healthy balance. A compliance plan is not a requirement under the Act, but it may be looked at as a mitigating factor in the event of a breach.


The legal landscape is changing in the area of competition law. The amendments to the Competition Act will open the door to greater and stricter criminal and civil culpability for companies and individuals who engage in anticompetitive market behaviour. Trade associations in particular must be aware of the implications of both oral and written agreements that are entered into as the effect could trigger scrutiny under the Act.  Through proactive measures such as instituting compliance programs, obtaining legal counsel to review documents in advance of meetings, and educating members of the trade association about consequences of non-compliance, trade associations will be better equipped to continue exercising their legitimate purposes without the fear of legal scrutiny.

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