On June 23, 2023, major amendments to section 45 of the Competition Act1 (the “Act”) are set to come into force. Adopted in 2022 by the Parliament of Canada, these amendments are primarily designed to harmonize Canadian non-competition law with legislation in various other countries, particularly the U.S., which restricts certain business practices regarded as harmful to workers. The amendments to the Act will have an impact on employers across Canada, whether or not they operate in an area of federal or provincial jurisdiction. Beginning on June 23, 2023, the Act will prohibit “unaffiliated” employers from entering into agreements aimed at: i) fixing wages or employment conditions; or ii) restricting the job mobility of employees by means of reciprocal non-solicitation and no-poaching agreements. In this regard, it should be noted that agreements between affiliated companies (e.g., controlled by the same parent company) do not violate the Act. This bulletin seeks to provide a summary of various amendments of interest to employers in light of the official version of the related enforcement guidelines (the “Guidelines”), which were published by the Competition Bureau (the “Bureau”) on May 30, 2023.2 Although the Guidelines do not have the force of law, they set out the Bureau’s approach when interpreting applicable prohibitions and defences. AGREEMENTS FIXING WAGES AND EMPLOYMENT CONDITIONS Paragraph 45 (1.1) (a) of the Act prohibits agreements between unaffiliated employers aimed at fixing, maintaining, decreasing or controlling wages and other employment conditions. In this regard, the Bureau’s Guidelines state that “terms and conditions of employment” typically refer to any condition that could affect a person’s decision to enter into, or remain in, an employment contract. This may include “job descriptions, allowances such as per diem and mileage reimbursements, non-monetary compensation, working hours, location and non-compete clauses, or other directives that may restrict an individual’s job opportunities”. Citing an example of a problematic case in light of the Act’s new provisions, the Bureau describes a situation in which two unaffiliated employers hold a lunch meeting during which they agree to limit the annual bonuses of their employees to 5% of their gross salary. This type of agreement would, in all likelihood, be prohibited under the Act. NON-POACHING AND NON-SOLICITATION AGREEMENTS Paragraph (1.1) (b) of the Act also prohibits agreements between unaffiliated employers that could limit the prospects of their employees being hired by the other employer. This new provision concerns reciprocal non-solicitation and non-poaching agreements between employers. These agreements are found fairly frequently in commercial contracts covering mergers/acquisitions, joint ventures, partnerships, sales, procurement/supplies of goods and services, franchises, recruitment and personnel placement, etc. However, as discussed below, it should be noted that these types of agreement would only violate the Act if the parties had reciprocal non-poaching obligations in place. In other words, if the obligation is only “one-way”, i.e., only one of the parties is subject to the obligation not to solicit or poach the employees of the other employer, there is no infraction. POTENTIAL EXEMPTIONS AND DEFENCES The main defence against proceedings initiated under subsection 45 (1.1) is based on the ancillary restraints defence (“ARD”). To use it, employers must demonstrate that: The restraint is ancillary to a broader or separate agreement between the parties; The restraint is directly related to and reasonably necessary for achieving the objective of the broader or separate agreement; and The broader or separate agreement does not otherwise violate subsection 45 (1.1) of the Act (when considered without the restraint). For example, it is reasonable to expect that an agency specializing in temporarily placing personnel with its clients would want to prevent its clients from hiring said personnel for the duration of their agreement. In that case, the ARD defence could be used. The agreement, however, must be carefully drafted so the employer can demonstrate that it was reasonably necessary for achieving the desired objective. In this regard, the Bureau notes that the duration, objective and geographical scope of the restraint, among other factors, will be examined when determining whether the agreement is in fact “reasonably necessary”. The Guidelines states that the Bureau “will generally not assess wage-fixing or no-poaching clauses that are ancillary to merger transactions, joint ventures or strategic alliances under the criminal provisions”. However, the Bureau “may start an investigation under subsection 45(1.1), where those clauses are clearly broader than necessary in terms of duration or affected employees, or where the business agreement or arrangement is a sham.” Other exemptions and defences may also apply, such as the defence based on regulated conduct3 or the exemption with respect to collective bargaining.4 APPLICABLE SANCTIONS Violations of the new subsection 45 (1.1) could lead to criminal charges. A person found guilty of an offence could be subjected to a fine at the discretion of the court or may be imprisoned for up to 14 years, or both. In addition, under section 36 of the Act,individuals (in all likelihood workers) who suffer losses or damages due to violations of provisions of the Act, including section 45 (thus including the new subsection 45 (1.1)), can claim from the person engaging in such misconduct (in this case, the employer) a sum corresponding to the amount of the losses or damages suffered. Therefore, violations of these provisions could lead to civil suits and possibly, in certain cases, to a class action suit. SPECIFICATIONS REGARDING EXISTING AGREEMENTS AND NEXT STEPS The Guidelines specify that the prohibitions set in out subsection 45(1.1) apply not only to agreements entered into on or after June 23, 2023, but also to conduct that reaffirms or implements agreements that were entered into before that date. In this respect, at least two of the parties to these prior agreements must reaffirm or implement the restraint. This may include, for example, the renewal by two or more parties of an agreement containing a prohibited undertaking. The Bureau also notes that it will be focusing on the intent of the parties on or after June 23, 2023. In that context, companies are advised to review their contract templates and to update their pre-existing agreements in the normal course of business. We therefore recommend that all companies, whether operating in an area of provincial or federal jurisdiction, examine the contracts currently in effect to which they are party and identify any clauses that might constitute violations under the new provisions of the Act. Various strategies or corrective measures aimed at limiting business risks could then be evaluated and implemented depending on the necessity and reasonableness of the undertakings in question are (e.g., renegotiating an undertaking or adopting a directive confirming that the employer will not apply an undertaking on or after June 23, 2023, etc.). Please feel free to contact the members of our teams for further details or for ad R.S.C. 1985 c. C-34, as amended by Bill C-19, Budget Implementation Act 2022, No. 1, S.C. 2022, c. 10. Competition Bureau. Enforcement guidelines on wage-fixing and no-poaching agreements on line, May 30, 2023. Subsection 45(7) of the Act. Section 4 of the Act.
Catherine Méthot Senior Associate
- Québec, 2010
Catherine Méthot is a member of the firm’s Business Law group, and her practice focuses primarily on business and commercial law. As part of her practice, Catherine negotiates, drafts and revises various legal documents relating to commercial transactions and is regularly called upon to support and advise clients in their commercial and operational activities.
In this capacity, she represents businesses in a wide range of purchase and sale transactions and in the negotiation of many types of commercial agreements, such as distribution, supply or manufacturing agreements.
Catherine holds a Bachelor of Laws and a Specialized Graduate Diploma (DESS) in Business Law from the Université de Montréal and began her career as an articling student at Lavery and then as a lawyer in the Business Law group.
She also worked as legal counsel in litigation. During this period, Catherine continued to develop her skills in mergers and acquisitions and commercial law and specialized in regulatory matters in the pharmaceutical industry, and more particularly in development, manufacturing, licensing, supply, distribution, marketing, clinical trial, research and development, partnership and joint-venture agreements.
Finally, practising within a business enabled Catherine to develop her skills as a business partner for her clients, which she uses to analyze and understand the issues and risks involved in concluding commercial agreements and her clients’ specific legal situations. She is thus well-equipped to give tailored advice for each individual situation.
- Specialized Graduate Diploma (DESS) in Business Law, Université de Montréal, 2009
- Bachelor of Laws, Université de Montréal, 2008
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On March 29, 2022, ImmunoPrecise Antibodies Ltd (IPA) announced that it acquired BioStrand BV, BioKey BV, and BioClue BV (together, “BioStrand”), a group of Belgian entities pioneers in the field of bioinformatics and biotechnology. With this €20 million acquisition, IPA will be able to leverage BioStrand’s revolutionary AI-powered methodology to accelerate the development of therapeutic antibody solutions. In addition to creating synergies with its subsidiaries, IPA expects to develop new markets with this revolutionary technology and strengthen its position as a world leader in biotherapeutics. Lavery was privileged to support IPA in this cross-border transaction by providing specialized expertise in cybersecurity, intellectual property, securities and mergers and acquisitions. The Lavery team was led by Selena Lu (transactional) and included Eric Lavallée (technology and intellectual property), Serge Shahinian (intellectual property), Sébastien Vézina (securities), Catherine Méthot (transactional), Jean-Paul Timothée (securities and transactional), Siddhartha Borissov-Beausoleil (transactional), Mylène Vallières (securities) and Marie-Claude Côté (securities). ImmunoPrecise Antibodies Ltd. is a biotherapeutic, innovation-powered company that supports its business partners in their quest to discover and develop novel antibodies against a broad range of target classes and diseases.
Lavery is pleased to announce the arrival of three new lawyers and two new paralegals who will bring their wide-ranging expertise to the firm. Gabrielle Ahélo – Associate Gabrielle Ahélo is joining the firm’s Business Law group, and her practice focuses mainly on corporate, commercial and tax law. Before becoming a lawyer, She spent the first nine years of her career as a paralegal in the corporate and tax sectors. “I see Lavery as a high-quality multidisciplinary firm, close to the Quebec business community and local entrepreneurs. It’s what I liked about it right away. The firm is brimming with quality professionals who stand out and work with their clients to help them achieve their goals and grow their business. I decided to join Lavery after meeting with two partners, Étienne Brassard and Audrey Gibeault. I felt a great affinity between my values and theirs. I am a firm believer in mentoring and I truly feel that I have found great mentors in them. I am very much looking forward to working with them and, more importantly, learning from them. I have a deep appreciation for business law and entrepreneurs. I strive to support them in their daily business, to help them think strategically from a legal standpoint and all other standpoints, and Lavery will help me achieve this goal.” - Gabrielle Ahélo Joseph Gualdieri – Associate Joseph Gualdieri is joining our Business Law group. He supports our partners and experienced members, working primarily in the areas of mergers and acquisitions and commercial law. “What attracted me to Lavery was the emphasis on know-how, the excellence of the firm’s services and the lawyers who work there, which makes Lavery one of the most prominent firms in Quebec. Joining an experienced team with in-depth knowledge of a wide range of industries is very appealing to me, and I want to continue the tradition of offering our clients the best strategies and legal advice to help them achieve their business goals.” - Joseph Gualdieri Catherine Méthot – Associate Catherine Methot is joining our Business Law group and her practice focuses mainly on mergers and acquisitions and commercial law. “As I had started my career as a student to then do my articling and become a lawyer at Lavery, it was just natural as a next step in my career to return to my roots. I am very happy to be back in the great Lavery family, providing high quality services under positive and human-centric leadership and guidance. I am confident that the expertise I have developed as an in-house legal counsel combined with Lavery’s expertise will be put to good use for our clients.” - Catherine Méthot Lysa Laramée – Paralegal Lysa Laramée is joining our Business Law group. She began her career as a paralegal intern at Lavery and practices mainly in the field of mergers and acquisitions. “As a recent paralegal graduate, it was important for me to join a team focused on mentoring, teamwork, and mutual support to fully develop my skills. Even during my final internship program at Lavery, I felt welcomed and was encouraged to take part in the firm’s professional and social activities. At Lavery, you are welcomed as if you were already part of the family, and everyone is happy to share their knowledge with you. So, it made total sense for me to officially join this caring and driven team when I completed my internship.” - Lysa Laramée Belinda Rigon – Paralegal Belinda Rigon is joining our Litigation group.Belinda supports lawyers practising in insurance litigation, ranging from professional and civil liability to other related sectors. She plays a key role in managing litigation cases and preparing legal documentation. “I see Lavery as a renowned firm that has evolved over time. It is the perfect place for someone ambitious to prove themselves and take their professional career to the next level. What persuaded me to make the leap and join the Lavery team was the energy I felt during my first visit to the firm. I was welcomed warmly and had enriching discussions with those who would soon become my co-workers. I was convinced in no time.” - Belinda Rigon