Competition Act Canada: What Business Owners Need to Know

The Competition Act is Canada's federal law on fair competition. It makes some conduct a crime, such as price-fixing, wage-fixing and bid-rigging. It regulates other matters through civil review, such as abuse of dominance and deceptive marketing. It also requires advance notice of certain large mergers. The Competition Bureau enforces it, and the Competition Tribunal hears most civil cases.

Many owners assume Competition Act Canada rules are aimed at banks, airlines and grocery chains. In practice, it reaches much smaller businesses. Examples include a pricing chat with a competitor at a trade show, a "we won't hire your staff" understanding between two local firms, a "was $199, now $99" banner, a "carbon neutral" label, or the purchase of a competitor. This Competition Act Canada guide explains what the Act prohibits, what it costs to get wrong, and where it shows up in everyday contracts and transactions.

Current as of October 2026. References are to the consolidated Competition Act, R.S.C. 1985, c. C-34, current to September 21, 2026.

Competition Act Canada: What It Covers and Whether It Applies to You

The Act's purpose clause (section 1.1) says it exists "to maintain and encourage competition in Canada." That includes making sure small and medium-sized enterprises "have an equitable opportunity to participate in the Canadian economy." It also aims to give consumers competitive prices and product choices.

Three bodies do the work. The Commissioner of Competition and the Competition Bureau investigate and enforce the Act. The Competition Tribunal decides most civil matters, such as abuse of dominance and contested mergers. The criminal courts hear prosecutions for offences such as price-fixing and bid-rigging.

There is no general small-business exemption. A five-person company can commit a conspiracy offence or make a misleading price claim, just like a national retailer. Some parts of the Act do depend on size. Pre-merger notification only applies above high financial thresholds. Abuse of dominance requires a business to control a market.

It helps to think of the Act in three groups:

1. Criminal offences: cartels, bid-rigging, wage-fixing and no-poach agreements, and knowing or reckless false advertising.
2. Civilly reviewable conduct: abuse of dominance, anti-competitive agreements, price maintenance, and most deceptive marketing.
3. Merger review: advance notice for large transactions, and the power to challenge any merger that substantially lessens or prevents competition.

Criminal Conduct: Price-Fixing, Bid-Rigging, Wage-Fixing and No-Poach Agreements

The conspiracy offence (section 45)

Under subsection 45(1), it is an offence for a person to conspire, agree or arrange with a competitor to do any of three things:

• fix, maintain, increase or control prices;
• allocate sales, territories, customers or markets; or
• fix, maintain, control, prevent, lessen or eliminate the production or supply of a product.

"Competitor" includes a business that would likely compete if the agreement did not exist. "Price" includes discounts and rebates. A court may infer an agreement from circumstantial evidence, without direct proof of communication (subsection 45(3)).

For a small business, the risk often looks ordinary. Two contractors might agree on a "floor" for quotes. Distributors might agree on who will serve which towns. Competitors might agree at an industry event to pass on a cost increase together.

Wage-fixing and no-poach agreements (subsection 45(1.1))

Since June 23, 2023, a second offence has applied to employers. An employer commits it by agreeing with another employer that is not its affiliate to fix, maintain, decrease or control salaries, wages or terms and conditions of employment. The same applies to an agreement not to solicit or hire each other's employees. Unlike the price-fixing offence, this applies whether or not the employers compete for customers. The Competition Bureau's enforcement guidelines on wage-fixing and no-poaching agreements state that the provision applies to agreements made on or after that date. It also applies to conduct that reaffirms or implements older agreements.

Bid-rigging (section 47)

Bid-rigging covers an agreement where one or more bidders agree not to bid, to withdraw a bid, or to submit bids arrived at by agreement. It applies when the arrangement is not disclosed to the party calling for tenders.

Penalties and the ancillary restraints defence

Conspiracy, wage-fixing, no-poach and bid-rigging offences each carry imprisonment for up to 14 years, a fine in the discretion of the court, or both (subsections 45(2) and 47(2)).

Not every restriction between businesses is a crime. Subsection 45(4) provides a defence for a restraint that is ancillary to a broader or separate agreement between the same parties. The restraint must be directly related to, and reasonably necessary for, giving effect to that agreement's objective. The broader agreement must not itself contravene section 45. The defence must be proved on a balance of probabilities. It is often relevant to non-compete clauses in business contracts, joint ventures and supply arrangements.

Civil Conduct: Abuse of Dominance and Competitor Collaborations

Abuse of dominance (sections 78 and 79)

Section 79 allows the Tribunal to make orders in certain cases. The first is that one or more persons "substantially or completely control" a class of business throughout Canada or any area of Canada. The second is that they have engaged in a practice of anti-competitive acts, or in conduct that substantially prevents or lessens competition and is not the result of superior competitive performance. The Tribunal may consider barriers to entry (including network effects). It may also consider effects on price and non-price competition, such as quality, choice and consumer privacy (subsection 79(4)).

The administrative monetary penalty may not exceed the greater of $25,000,000 ($35,000,000 for each subsequent order) and three times the value of the benefit derived. If that cannot reasonably be determined, the cap is 3% of the person's annual worldwide gross revenues (subsection 79(3.1)).

Most small businesses are not dominant. They may still deal with a dominant supplier or customer. And a business that is the only real option in a local or specialised market can be dominant in that narrower market.

Agreements between competitors (section 90.1)

Section 90.1 is the civil counterpart to the cartel offence. It allows the Tribunal to prohibit an existing or proposed agreement between competitors that prevents or lessens competition substantially in a market. Following recent amendments, subsection 90.1(1.01) also lets the Tribunal act where the parties are not competitors, if a significant purpose of the agreement is to prevent or lessen competition.

Deceptive Marketing Practices in Canada: Drip Pricing, Sale Claims and Environmental Claims

Two routes: criminal and civil

Section 52 makes it a criminal offence to knowingly or recklessly make a representation to the public that is false or misleading in a material respect. Section 74.01 makes the same type of representation civilly reviewable, without proof of intent. In both, the "general impression" of the representation counts, not just its literal meaning. It is not necessary to prove anyone was actually misled.

Drip pricing

The Act states that advertising a price that is not attainable because of fixed obligatory charges or fees is a false or misleading representation (subsections 52(1.3) and 74.01(1.1)). The only exception is for amounts imposed under federal or provincial legislation, such as sales taxes. In practice, mandatory "service," "booking" or "admin" fees generally need to be included in the advertised price. They should not be added at checkout.

"Regular price" and sale claims

Subsections 74.01(2) and (3) govern ordinary selling price claims such as "was $199, now $99" or "save 50%." A business citing its own regular price must generally be able to show one of two things. It sold a substantial volume at that price or higher within a reasonable period. Or it offered the product at that price or higher in good faith for a substantial period recently before or immediately after the representation.

Environmental claims (greenwashing)

The 2024 amendments added two environmental provisions. Under paragraph 74.01(1)(b.1), a claim about a product's environmental or climate benefits must be based on an adequate and proper test. Under paragraph 74.01(1)(b.2), a claim about the environmental benefits of a business or business activity must be based on adequate and proper substantiation. In both cases, the proof lies on the person making the claim.

In 2026, the Budget 2025 Implementation Act, No. 1 (S.C. 2026, c. 3), which received Royal Assent on March 26, 2026, narrowed these rules. According to the Bureau's publication on environmental claims and the Competition Act, the amendments removed the requirement that claims be supported by an internationally recognized methodology. The consolidated Act also now provides that paragraph (b.2) cannot be the basis of a private application (subsections 74.01(1.01) and 103.1(6.2)). Product claims and the general prohibition on misleading representations remain available. The Bureau has said it will update its guidance.

Civil penalties for deceptive marketing

Under section 74.1, the Tribunal or a court may order a business to stop the conduct and publish a corrective notice. In some cases it may order restitution to purchasers. It may also order an administrative monetary penalty. For a corporation, the maximum is the greater of $10,000,000 ($15,000,000 for each subsequent order) and three times the benefit derived. If that cannot reasonably be determined, the cap is 3% of annual worldwide gross revenues. Lower maximums apply to individuals.

Under subsection 74.1(3), no corrective notice, penalty or restitution order may be made if the person shows it exercised due diligence to prevent the conduct.

Pre-Merger Notification: Does Buying or Selling a Business Need Competition Bureau Notification?

Every acquisition raises two questions. Is advance notice to the Bureau required? And could the Bureau challenge the deal either way?

Pre-merger notification Canada: the two thresholds

Under Part IX of the Act, notice is generally required only when both thresholds are exceeded:

1. Party-size (section 109): the parties, together with their affiliates, have assets in Canada, or gross revenues from sales in, from or into Canada, exceeding $400 million.
2. Transaction-size (section 110): the target's assets in Canada, or the revenues from sales in, from or into Canada generated from those assets, exceed the threshold set for the year.

On March 2, 2026, the Bureau announced that the pre-merger notification threshold will remain at $93 million in 2026. The figure is reviewed annually.

How the merger notification threshold applies by deal structure

For an asset purchase, the test looks at the assets being acquired. For a share purchase, the target's Canadian assets or revenues must exceed the threshold. The buyer (with affiliates) must also cross a voting level. That level is more than 20% for a public company, more than 35% for a private company, or more than 50% if the buyer already holds more than those levels. Amalgamations and combinations (such as some partnerships and joint ventures) have their own tests. Mixed asset-and-share deals are aggregated (subsection 110(3.1)).

These differences are one reason the choice between a share purchase vs. an asset purchase can matter beyond tax and liability.

The waiting period

When a deal is notifiable, the parties file and cannot close until the waiting period ends (section 123). The period is 30 days after the Bureau receives the required information. Suppose the Bureau requests more information within that window. Then the parties cannot close until 30 days after they comply. The Bureau can end the period early by advising that it does not intend to challenge the deal.

Closing early or without notice has consequences. Under section 123.1, a court may issue interim orders and order a completed transaction dissolved. For a completed transaction, it may also order a penalty of up to $10,000 for each day of non-compliance with the waiting period.

Small deals can still be reviewed

Most small and mid-market deals fall well below the thresholds. That does not put them outside the Act. Under section 92, the Commissioner can ask the Tribunal to block or unwind any merger, notifiable or not, that is likely to prevent or lessen competition substantially, including in labour markets.

Under section 97, the Commissioner generally has one year after substantial completion to challenge a merger that was notified (or received an advance ruling certificate). For any other merger, the window is three years. For a non-notifiable acquisition of a direct local competitor, that longer window belongs in the deal risk analysis.

The structural presumption and the end of the efficiencies defence

Subsections 92(2) and (3) set out a presumption. Say the Tribunal finds a merger is likely to result in a significant increase in concentration or market share. It must then find a substantial lessening or prevention of competition unless the parties prove otherwise. A significant increase means the concentration index rises by more than 100 and either the index exceeds 1,800 or the parties' combined market share exceeds 30%. Transitional rules apply to deals notified or completed before the change.

Separately, the 2023 amendments repealed the former efficiencies defence in section 96.

Practical points for buyers and sellers

A notifiable deal needs filing time and the waiting period built into the timeline at the letter of intent stage. During due diligence, sellers can expect questions about pricing practices, distribution terms and arrangements with competitors. See our due diligence checklist for preparing a business for sale. A foreign buyer may also face a separate review under the Investment Canada Act. That is a different regime with a different test. See when an investment triggers review under the Investment Canada Act and our note on cross-border M&A considerations for U.S. buyers.

Competition Act Canada Penalties and Enforcement

Investigations

The Commissioner of Competition, who heads the Competition Bureau Canada, can open inquiries. Under section 11, the Commissioner can seek court orders requiring a person to be examined under oath, produce records or deliver written returns. The Bureau can also seek warrants to search premises (section 15).

Private applications to the Competition Tribunal

Amendments made in June 2024 came into force on June 20, 2025. According to the Bureau's information bulletin on private access, they expanded private access to the Tribunal. Under section 103.1, any person may apply for leave to bring an application on any of these topics:

• deceptive marketing;
• refusal to deal;
• price maintenance;
• exclusive dealing and tied selling;
• abuse of dominance; or
• competitor agreements.

For refusal to deal, exclusive dealing and tied selling, abuse of dominance and competitor agreements, the Tribunal may grant leave if the applicant is directly and substantially affected in its business or if leave is in the public interest (subsection 103.1(7)). For price maintenance, the applicant must be directly affected (subsection 103.1(7.1)). For deceptive marketing, the test is the public interest (subsection 103.1(6.1)). An application must be made no more than one year after the conduct has ceased (subsection 103.1(8)).

Penalties at a glance

What the Competition Act Means for Your Contracts and Deals

Non-competes in share and asset purchase agreements

A buyer typically wants the seller not to compete after closing. This protects the goodwill the buyer is paying for. Where the parties are or could be competitors, the covenant is in principle an agreement between competitors. The ancillary restraints defence in subsection 45(4) is often relevant. A restriction directly related to and reasonably necessary for the sale is generally treated differently from a stand-alone market-sharing agreement. But scope, duration and geography that go well beyond protecting the goodwill can undermine that position.

A separate provincial rule may also apply. According to the Ontario government's guide to the Employment Standards Act, 2000, employers have been prohibited since October 25, 2021 from entering into non-compete agreements with employees (section 67.2). The exceptions cover certain executives and cases where a seller becomes an employee of the buyer after the sale of a business. That is an employment law rule, distinct from the Competition Act.

No-poach clauses between businesses

Subsection 45(1.1) means mutual "no hire" or "no solicit" clauses between unaffiliated employers deserve a careful look. They appear in staffing, outsourcing, supply and consulting agreements and in franchise systems. A restriction tied to a legitimate broader agreement may fall within the ancillary restraints defence. A stand-alone promise between two businesses not to hire each other's people is the type of arrangement the provision targets. It is one of several red flags in Ontario business contracts worth reviewing before signing.

Franchise and distribution agreements

These agreements commonly include exclusive territories, pricing guidance and supply restrictions. The price maintenance provision (section 76) lets the Tribunal act in two situations. One is where a supplier, by agreement, threat or promise, influences a reseller's price upward. The other is where a supplier refuses to supply a customer because of its low pricing policy. In both, the conduct must adversely affect competition in a market. Agreements among franchisees themselves, such as on prices or hiring, raise separate concerns under section 45. For background, see franchising vs. licensing.

Information exchanges and joint ventures

Benchmarking surveys and trade association meetings are legitimate in many forms. Risk rises when competitors share current or future prices, margins, bids or wage plans. A joint venture between competitors may be assessed under section 90.1. It may be treated as a potential criminal agreement if it is really a vehicle for price-fixing. Above the thresholds, it may also be a notifiable transaction. The structure chosen matters, as our comparison of a joint venture vs. a partnership explains.

Deal terms

Acquisition agreements with competition exposure typically include Competition Act compliance representations, a covenant to cooperate on filings, and a closing condition tied to the waiting period. Parties in competing businesses also generally avoid "gun-jumping." That means coordinating prices, customers or operations before closing as if the deal were complete. These issues are generally easier to manage when they are identified at the term-sheet stage rather than during final negotiations.

A Practical Competition Act Compliance Checklist

• Pricing conversations: keep discussions with competitors away from prices, margins, bids, customers and territories.
• Hiring arrangements: review any agreement with another employer that limits hiring, solicitation or pay.
• Advertised prices: show the full price including mandatory fees, other than government-imposed charges.
• Sale claims: keep records supporting any "regular price" or "was/now" comparison.
• Environmental claims: keep testing or substantiation on file before publishing green claims.
• Deal screening: check both merger thresholds early, and consider post-closing review risk for smaller deals.
• Training and records: train sales and management teams and keep a written record of marketing review and compliance steps.

Frequently Asked Questions

Is price fixing illegal in Canada?

Yes. An agreement between competitors to fix, maintain, increase or control prices is a criminal offence under subsection 45(1). The offence does not require proof that the agreement actually harmed competition. The Act applies to "every person." So individuals such as owners, directors and managers can be prosecuted personally, not just the company.

Are no-poach agreements illegal in Canada?

Between unaffiliated employers, generally yes, since June 23, 2023. Agreements between affiliated companies are outside subsection 45(1.1). A restriction that is genuinely ancillary to a broader legitimate agreement may be defensible. A one-sided restriction inside an employee's own contract, such as a non-solicit, is usually an employment law question rather than a Competition Act one.

Is drip pricing illegal in Canada?

Advertising a price that cannot actually be paid because mandatory fees are added later is treated as a false or misleading representation. Government-imposed charges such as sales tax are the exception. Optional add-ons that a customer can genuinely decline are different from fees every buyer must pay. So the distinction often turns on whether a charge is truly avoidable.

Do small businesses have to notify the Competition Bureau?

Usually not. Notification only applies when two tests are met. The parties and their affiliates must exceed $400 million in Canadian assets or revenues. The target must also exceed the annual threshold, which is $93 million for 2026. Even so, the Bureau can still challenge a non-notified deal for up to three years after it is substantially completed.

Sources & Official Resources

Federal Statutes and Government Guidance Cited

1. Competition Act, R.S.C. 1985, c. C-34 (consolidated)
2. Pre-merger notification threshold to remain at $93 million in 2026 (Competition Bureau)
3. Enforcement guidelines on wage-fixing and no-poaching agreements (Competition Bureau)
4. Bulletin on private access to the Competition Tribunal (Competition Bureau)
5. Environmental claims and the Competition Act (Competition Bureau)

Ontario Statutes and Guidance Cited 6. Employment Standards Act, 2000, s. 67.2 (non-compete agreements) 7. Your guide to the Employment Standards Act: Non-compete agreements (Ontario)

This article provides general information about Canadian law and is not legal advice. Every situation is different. Speak with a lawyer about your specific circumstances.

Contact Hadri Law

If you are buying or selling a business, reviewing a distribution or franchise agreement, or unsure whether a marketing practice or competitor arrangement raises Competition Act Canada issues, understanding how the rules apply to your situation is an important first step. Hadri Law, founded by Nassira El Hadri, an M&A, corporate and commercial lawyer called to the Law Society of Ontario, advises on mergers and acquisitions, commercial contracts and franchise agreements from our office at First Canadian Place in Toronto.

Call +1 (437) 974-2374 for a free consultation. We serve clients in English, French, Spanish and Catalan.