COMPETITION BUREAU'S BROAD POWERS
FEDERAL COURT OF APPEAL DECISION IS A USEFUL REMINDER OF BASIC PRINCIPLES
On February 12, 2025 the Federal Court of Appeal (“FCA”) issued a decision upholding the Federal Court (“FC”) decision in Empire Company Limited and Sobeys Inc. v. the Attorney General of Canada (2025 FCA 34). The case dealt with an application for judicial review of a decision of the Commissioner of Competition to commence an inquiry under the Competition Act (the “Act”, the same legislation which defines permissible multi-level marketing plans and illegal pyramid selling schemes in Canada).
Accordingly, the case serves as a reminder of several principles regarding the Competition Bureau that are relevant to direct selling companies.
The Judicial Review Application
While the judicial review application was about the commencement of an “inquiry”, subparagraph 10(1)(b)(ii) of the Act actually mandates such an inquiry where the Commissioner has “reason to believe” that grounds exist for the making of an order under the “abuse of dominant position” provisions of the Act.
The FC had granted a motion from the Attorney General of Canada (“AGC”) to strike the underlying judicial review application as “doomed to fail” given the decision to undertake an Inquiry did not affect the rights of the applicants, impose any legal obligations on them, or cause any prejudicial effects.
The FCA Decision
The FCA found no reviewable error in the FC’s decision, which is significant given the “very high standard required to grant a motion to strike”. The FCA reiterated that “[n]ot all administrative conduct is subject to judicial review” and cited prior caselaw to the effect that “No right of review arises where the conduct attacked ‘fails to affect legal rights, impose legal obligations, or cause prejudicial effects’.”
The FCA noted in passing that the Inquiry process is required to be conducted in private per subsection 10(3) of the Act, and that it is really a “preliminary administrative step” that give the Competition Bureau access to additional formal investigative powers under the Act (which are subject to judicial oversight when used).
Significance for Direct Sellers
Given the FCA’s finding of limited opportunity for judicial intervention, it is important for direct selling companies to take any and all communications from the Competition Bureau seriously, to try and avoid the potential for additional administrative scrutiny and formal investigative powers that come from an inquiry.
Similarly, while we do not believe the Competition Bureau is actively investigating direct selling companies, no one can say for sure how busy the Competition Bureau may be “behind the scenes” given the privacy/confidentiality provisions in the Act.
Finally, direct selling companies should note that even in cases of non-compliance the Competition Bureau is generally open to compliance agreements or negotiated settlements, and that those may remain confidential.
Direct Sellers should take communications from the Competition Bureau seriously and obtain professional legal advice in responding to questions!
Takeaways
When the Competition Bureau comes knocking, direct selling companies should make sure they understand how the provisions of the Act impact what the Bureau can and can’t do at certain stages. Professional legal advice is also generally recommended when responding to questions, as a good legal advisor can often understand what the Competition Bureau is really trying to get at with their questions.
For help in dealing with the Competition Bureau, click here.
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