Competition Bureau to enforce new rules on anti-competitive practices
Parliament has amended the Competition Act, aiming to address anti-competitive practices in commercial retail real estate that can stifle business growth and inflate prices.
The updated Competition Act affects how the Competition Bureau tackles anti-competitive controls in the commercial retail real estate market. These controls often manifest as exclusivity clauses and restrictive covenants, which can limit competition by preventing new businesses from entering the market or by restricting what existing businesses can do, it said.
Understanding property controls
Competitor property controls are a primary focus of the new guidelines. These controls are commonly seen in commercial real estate and can severely limit competition.
There are two main types of property controls that the Bureau is targeting: exclusivity clauses and restrictive covenants.
Exclusivity clauses limit how a property can be used by competitors to an existing tenant, while restrictive covenants prevent a property owner from leasing to certain types of competing businesses.
“These property controls insulate firms from competition. Therefore, by their nature these property controls can raise serious competition concerns,” the government wrote in a news release. “However, in limited cases they can be justified if they are necessary for a firm to make investments that increase competition, such as to enter a market. Even in these cases they must be as limited as possible to be justified.”
International enforcement actions have targeted property controls due to their competitive impact. For example, large grocers in New Zealand and the United Kingdom face specific limitations on using property controls.
The Bureau is particularly concerned about the impact of these controls on small businesses and entrepreneurs. By limiting competition, such clauses can lead to higher prices for consumers and reduced choice.
While acknowledging that property controls can sometimes be justified, the Bureau emphasized that they must be tailored around legitimate business objectives.
Public feedback
The Bureau is seeking public input on its enforcement approach to these practices, inviting feedback from businesses, consumers, and industry experts. The goal is to develop guidelines that balance the need for fair competition with the interests of property owners and tenants, it said.
“Canadians are encouraged to provide feedback on the guidance, along with bringing other pertinent issues to our attention,” the Bureau said. “The feedback received as part of the Bureau’s consultation on this guidance will help inform how the Bureau evaluates the competitive impact of property controls.”
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The deadline for submitting feedback is October 7. The Bureau says each submission received through its online form will be published on its website, unless the provider requests confidentiality.
The Competition Bureau’s increased scrutiny of competitor property controls is part of a broader effort to promote competition and protect consumers. The Bureau has been granted new powers under the amended Competition Act to address anti-competitive practices more effectively.
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