The Competition Act in practice
It has recently been brought to the Law Society's attention that the Competition Bureau is concerned that legal service providers, including lawyers, may not be aware of provisions in the Competition Act and how they may relate to their practices. Some lawyers have forwarded to the Law Society a letter that they have received from the Bureau. In it, the Bureau advises as follows:
The [Bureau] has information raising concerns that some lawyers and notaries public in your region may have formed an agreement not to provide signature execution witnessing services for mortgage refinancing documents prepared for financial institutions by title insurance companies. The purpose of this letter is to remind you and your firm of the prohibition in the Competition Act against forming anti-competitive agreements with competitors.
As you may be aware, the Commissioner of Competition is responsible for the administration and enforcement of the Act, a federal statute designed to protect and promote competition in the Canadian marketplace. Headed by the Commissioner of Competition, the Competition Bureau investigates alleged anti-competitive practices and promotes compliance with the laws under its jurisdiction.
Section 45 of the Act prohibits persons from conspiring with one another to lessen competition unduly or to enhance prices unreasonably. A primary purpose of this prohibition against conspiring is to ensure that both businesses and their customers benefit from competitive prices, product choice and quality services. An agreement made with other lawyers or notaries public to not provide signature execution witnessing services in respect of mortgage refinancing documents is an example of activities which could violate this provision. However, it is important to note that this does not impede an individual, acting independently from his or her competitors, from deciding whether or not to offer such services to a potential client.
Where the Commission has reason to believe that an individual or company is conducting its affairs in a manner contrary to section 45 or other provisions in the Act, they will conduct an investigation. Investigations under the Act can lead to criminal proceedings. Upon conviction of an offence under section 45, individuals or companies may face very substantial penalties. These can include fines to a maximum of $10 million per incident and jail terms of up to five years. In addition, under section 36, victims may sue for losses incurred as a result of conduct that violates particular provisions of the Act, including section 45. For the specific working of these provisions, please refer to the Competition Bureau's website.
In its letter, the Bureau referred to one of its pamphlets entitled "Reaching an Agreement with Competitors." This document and additional information on the Act are available on the Bureau's website.
The Law Society has met with the Bureau, which has discussed its concerns with us directly. In light of that meeting, the Law Society has concluded (without passing judgment on the specific matters raised by the Bureau in its letters) that it would be prudent to ensure that all lawyers are reminded of the provisions of the Act, and in particular section 45. While lawyers are always free to choose for whom they act, a collective decision between competitors not to act in particular situations may trigger section 45 of the Act and expose the participants to legal sanctions, including prosecution.