Competition Bureau Unveils Guidelines to Combat Wage-Fixing and No-Poaching

Recently, the Competition Bureau published its wage-fixing and no-poaching enforcement guidelines.

The Competition Bureau’s latest enforcement guidelines tackle wage-fixing and no-poaching agreements, reinforcing its commitment to fostering competitive markets and safeguarding consumer choice. These guidelines shed light on the Bureau’s approach to enforcing the Competition Act’s subsection 45(1.1), which bans employers from colluding to fix wages and hinder job mobility.

Violating subsection 45(1.1) can result in severe penalties, including imprisonment for up to 14 years or court-determined fines.

Key takeaways from the guidelines include:

• • Wage-fixing agreements: Prohibited actions include fixing, maintaining, decreasing, or controlling salaries, wages, or employment terms.
  • No-poaching agreements: Employers agreeing not to recruit or hire each other’s employees fall within the prohibited scope.

Additional aspects covered in the guidelines include: principles, considerations, and application specifics. Subsection 45(1.1) applies to agreements made on or after June 23, 2023, including conduct that reinforces or implements pre-existing agreements. It extends to agreements between unaffiliated employers, regardless of their competition in the product supply. The guidelines address the Act’s applicability to employers, define the employer-employee relationship, and touch upon information sharing.

The guidelines further discuss the ancillary restraints defense, which allows for certain restraints on competition that are considered necessary for efficient business transactions or collaborations. The defense applies when the restraint is ancillary to a broader or separate agreement, directly related to its objective, and compliant with subsection 45(1.1). Nonetheless, the Bureau retains the authority to review the agreement under Part VIII of the Act.

The guidelines conclude with information about the Bureau’s Immunity and Leniency Programs, which are available for offenses under subsection 45(1.1). The programs provide incentives for individuals or companies to come forward and provide information about the offense in exchange for immunity or leniency.

It is important to note that the guidelines do not restate the law nor possess binding authority. Courts have the ultimate interpretation, while the Commissioner of Competition and the Director of Public Prosecutions exercise discretion in enforcement, considering specific circumstances. The Bureau may revise the guidelines in the future to adapt to evolving circumstances, legal developments, and practical insights.

During the consultation process, the Canadian Lenders Association aimed to ensure that the addition of any statutory provisions to the Competition Act function to support rather than encumber Canadian individuals and businesses. Emphasizing the significance of safeguarding scale, competitiveness, and innovation, the CLA advocated for a regulatory approach that fosters the growth of innovative companies within the nation.

To stay ahead of all provincial and federal consultations, connect with Dean Velentzas (dean@canadianlenders.org) to become a part of the CLA’s Policy Committee.