AMENDMENTS TO THE COMPETITION ACT – A BRIEF LOOK AT THE STRENGTHENED PROVISIONS FOR ENVIRONMENTAL CLAIMS
By Andrée-Anne Perras-Fortin & Samuel Ross[1]
ROBIC, LLP
LAWYERS, PATENT AND TRADEMARK AGENTS
On June 20, 2024, Bill C-59, An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, received Royal Assent, bringing important amendments to modernize the Competition Act (the “Act”). Some of these amendments will have a significant impact on the treatment of environmental claims.
Greenwashing
Greenwashing consists in leading consumers to believe that the products or services offered to them have exaggerated or non-existent ecological or environmental virtues. This commercial practice can border on, or even transgress, the limits of legality, especially when it involves false or misleading public representations[2].
The legislative context and the Competition Bureau
Before the recent legislative amendments came into force, the Act already prohibited deceptive business practices, notably by prohibiting false or misleading representations on a material point in order to promote a product, service or business[3]. However, although the provisions of the Act enabled the Commissioner of Competition, who heads Canada’s Competition Bureau (the “Bureau”), and the courts to enforce against greenwashing, they did not contain specific provisions on this issue, which raised challenges of application and predictability. To guide their business practices, businesses relied on the Bureau’s publications on environmental claims and greenwashing[4].
Last November, in order to clarify the legislative regime surrounding greenwashing, the federal government published its bill entitled An Act to implement certain provisions of the fall 2023 economic statement, which announced, among other things, the insertion of provisions relating to environmentally deceptive business practices. These announcements were already a clear signal that the federal government was committed to the fight against greenwashing[5]. After several revisions and its adoption on May 28, 2024[6], Bill C-59 finally received Royal Assent on June 20, 2024.
Changes in environmental legislation
First, additions to subsection 74.01(1) of the Act give the Bureau the right to investigate potentially false or misleading corporate environmental representations. The legislative amendments now allow the Bureau to review the conduct of a corporation that makes a representation to the public in the form of a statement, warranty or guarantee of a product’s benefits for protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change.
The Act now requires that these representations be based on adequate and proper tests, that the proof of which lies on the person making the representations[7]. We note here that the notion of product within the meaning of the Act includes any article (i.e., movable and immovable property of any kind) as well as any service[8].
As greenwashing is not limited to products and services, the Act also provides that the Bureau may investigate representations with respect to the benefits of a business or its activities for protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change[9]. As in the case of the addition discussed above, it is up to the business making such representations to demonstrate that they are based on adequate and proper substantiation in accordance with internationally recognized methodology.
As a result of these legislative changes, the Bureau’s ability to act against unfounded environmental representations has been strengthened. Businesses will therefore have a particular interest in complying with these new express obligations, as the administrative monetary penalties can amount to several million dollars[10].
In addition, the new legislation will allow private access to the Competition Tribunal for misleading marketing as of June 20, 2025. Under the current version of the Act, only the Bureau can bring an action based on false or misleading representations[11].
Finally, the amendments introduce a new voluntary regime for prior approval of agreements and arrangements relating to environmental protection[12]. Prior to the introduction of these amendments, such agreements could be contrary to the criminal or civil provisions of the Act relating to agreements or arrangements that prevent or lessen competition substantially. Now, if the Bureau determines that the purpose of a collaboration is to protect the environment and that it will not have the effect of preventing or lessening competition substantially, it may issue a certificate attesting to this belief.
Future directions
Following the coming into force of the new amendments to the Act with respect to environmental protection, the Bureau has received several requests from interested parties for guidance on the interpretation of the new provisions aimed specifically at environmental representations and greenwashing[13]. Recognizing the importance of addressing the impact of these new requirements, the Bureau plans to launch a public consultation with the aim of developing guidance on an accelerated basis to help businesses achieve transparency and predictability in the application of the Act.
If you have any questions about these recent amendments to the Competition Act, please do not hesitate to contact the members of our Regulatory Law Group.
[1] CIPS, 2024. Andrée-Anne Perras-Fortin is a principal and lawyer at ROBIC, Samuel Ross is a lawyer at ROBIC.
[2] Andrée-Anne Perras-Fortin, “Green Marketing: Beware of Greenwashing!“, ROBIC, May 12, 2023
[3] Competition Act, R.S.C. 1985, c. C-34, s. 74.01.
[4] Competition Bureau Canada, “Environmental claims and greenwashing”, Government of Canada, December 2, 2021
[5] Andrée-Anne Perras-Fortin and Samuel Ross, “Fall 2023 Federal Economic Statement: A Step Towards a Legal Framework for Greenwashing“, December 14, 2023
[6] Bill C-59, An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, 44th parl. (Can.), 1st sess.
[7] Id. at s. 236.
[8] Competition Act, R.S.C. 1985, c. C-34, s. 2(1).
[9] Bill C-59, supra note 6, s. 236.
[10] Competition Act, R.S.C. 1985, c. C-34, s. 74.1.
[11] Bill C-59, supra note 6, s. 264.
[12] Id. at s. 265.
[13] Competition Bureau Canada, “Competition Bureau statement regarding guidance on Competition Act‘s new greenwashing provisions”, Government of Canada, July 4, 2024
