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Canadian Guidance On Wage-Fixing And No-Poaching Agreements – Antitrust, EU Competition


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The Competition Act has been amended to include a new criminal
offence for employers that enter into agreements to fix wages, or
that agree not to solicit or hire each other’s employees. The
amendment will come into force in June 2023. The Competition Bureau
has released draft guidelines on how it will interpret and enforce
the amendment. The key things all employers should know about the
amendment and the guidelines are as follows:

  • Audit Your Employment Practices.
    Given the possibility of criminal prosecution (and significant
    fines and jail terms), employers should review their existing
    employment practices, focusing specifically on whether the law
    impacts any agreements or communications with third parties that
    concern how their employees are compensated or treated, or any
    non-solicitation agreements.

  • Understand Industry-Specific
    The amendment and the guidelines have
    different implications for employers in different industries. For
    example, “gig economy” employers should assess how this
    legislation applies (or not) to contractors who are not traditional
    employees. Professional firms should assess how they can
    appropriately protect valuable employees who work directly with

  • M&A Considerations.
    Non-solicitation provisions are common in M&A. The Bureau’s
    guidance that it will not “generally” use the new
    criminal provision to examine non-solicitation agreements in the
    M&A context is helpful. However, the Bureau’s guidance is
    not absolute or binding, and care will be required to ensure that
    the multitude of agreements that are used in M&A (including
    early stage agreements, like NDAs and Exclusivity Agreements) do
    not create legal risk.

This update provides background to the amendment to the
Competition Act, and summarizes key insights about different
aspects of the Bureau’s guidelines.

Brief History

The Act was amended through the 2022 Budget Implementation
, and the new provision will enter into force June 23,
2023. The impetus for this change includes a number of events:

Insights About the Amendment and Guidelines
Regarding Wage-Fixing and No-Poach Agreements

On June 23, 2023, the new criminal provision (section 45(1.1))
will come into force, making it a per se offence for
employers to enter into wage-fixing or no-poach agreements –
in other words, these agreements will be illegal regardless of
their effect on competition.4 The penalty for violating
this new provision includes imprisonment for up to fourteen years
or a fine to be set at the discretion of the court, or both.

The Bureau’s guidelines set out how it will interpret and
enforce this new provision. Here are ten insights about the
amendment and the Bureau’s guidance:

  1. Affiliated Parties. The amendment does not
    apply to employers that are affiliated (i.e., ultimately controlled
    by the same entity). Thus, corporate groups can continue to
    coordinate their HR matters across all entities within their
    organization without risk.

  2. Employers, Not Competitors. The civil
    price-fixing provision of the Act applies only to companies that
    are “competitors”. By contrast, the amendment applies to
    all employers that enter into agreements regarding wages, etc.,
    whether or not they compete. The actions of persons acting for
    them, including directors, officers, agents, and employees, may be
    attributed to the employer, or those individuals may be
    “employers” themselves (and therefore subject to the
    available sanctions).

  3. Employment Relationship Required. The
    amendment applies to agreements in respect of persons in an
    employment relationship (which is defined by laws related to
    employment and “other circumstances under which the
    relationship was entered into”). It is unclear what
    “other circumstances” will be relevant, but it is
    questionable whether a court would enter a criminal conviction for
    any conduct in respect of persons whom employment law would not
    recognize as being in an employee-employer relationship.

  4. Conscious Parallelism. While it is not a
    violation for a business to act independently with awareness of the
    likely response of other employers or in response to the conduct of
    other employers (“conscious parallelism”), the guidelines
    warn the Bureau may attempt to treat parallel conduct paired with
    other facilitating practices (e.g., exchanging information about
    each other’s employment practices) as a violation. The
    guidelines suggest that merely “taking steps to monitor”
    other employers’ practices could be a facilitating practice,
    but there is no modern history of Canadian courts accepting that
    mere monitoring of a rival constitutes an agreement.

  5. Terms and Conditions of Employment. The
    guidelines warn that the prohibition on wage-fixing will extend to
    any “terms of employment” so long as it “could
    affect a person’s decision to enter into or remain in an
    employment contract.” This broad language could apply to a
    range of HR matters, including a company’s vacation policies or
    pandemic-return-to-work policies. While the Bureau will likely
    exercise discretion about which types of cases to investigate or
    enforce, private litigants could use this broad language to bring
    private actions in provincial Superior Courts or the Federal

  6. Reciprocity Not Required, Except When it Is.
    The guidelines counsel that, because of the specific language of
    the amendment, it is a crime for Company A to enter into an
    agreement with Company B about Company A’s wages (but not
    Company B’s). However, it is not a crime for Company A to agree
    not to poach Company B’s employees unless Company B also agrees
    not to poach Company A’s employees.

  7. Dealing with Unions. The amendment applies to
    all employees, including unionized labour. However, the guidelines
    do not explain how the amendment interacts with other laws that
    govern unionized labour, including section 4(1)(c) of the
    Competition Act. That section expressly permits agreements between
    two or more employers in “a trade, industry or
    profession” that pertains “to collective bargaining with
    their employees in respect of salary or wages and terms or
    conditions of employment.”

  8. Risk of Private Actions. The amendment creates
    a criminal offence. Under the Competition Act, private parties can
    bring private damages suits or seek other orders for such offences
    before provincial Superior Courts or the Federal Court, including
    class actions. Employers should understand how plaintiffs’
    lawyers, unions or other stakeholders might attempt to use the
    amendment in private actions.

  9. Some Protection for M&A and Joint Ventures, But
    Questions Remain.
    The amendment is subject to the
    “ancillary restraints defence”, which shields restrictive
    agreements from criminal prosecution provided they are (i)
    ancillary to a broader and separate agreement that is not illegal,
    and (ii) directly related and reasonably necessary for that other
    agreement. The guidelines confirm the Bureau will not
    “generally” assess wage-fixing or no-poaching clauses
    that are ancillary to mergers or joint ventures under the criminal
    provision, or “second guess” the restrictions created by
    employers in these contexts. However, the guidelines do not provide
    counsel about when restrictions can be utilized in common types of
    M&A agreements where provisions related to employees are
    frequently found (e.g., NDAs, Exclusivity Agreements, Purchase
    Agreements, Transition Services Agreements). Careful planning with
    competition counsel will be required.

  10. Non-Compete Agreements Not Impacted. The US
    Federal Trade Commission has recently proposed a rule that would
    ban non-compete provisions from employment contracts in the US. The
    amendment and the guidelines do not apply to non-compete provisions
    in employment contracts, and those agreements remain legal under
    Canadian competition law.

For further information on these guidelines or the amendment to
the Act, please contact any member of our
Competition and Foreign Investment Group.


1 US Department of Justice Antitrust
Division and Federal Trade Commission, “Antitrust Guidance for
Human Resource Professionals”, October

2 For instance, see United States v.
, No. 4:20-CR-00358, ECF No. 56 (E.D. Tex. Nov. 29,
2021) and United States v. DaVita Inc., No. 21-cr-00229,
ECF No. 264 (D. Colo. Apr. 15, 2022).

3 See Mohr v. National Hockey League,
2021 FC 488 and Latifi v The TDL Group Corp, 2021 BCSC

4 Like other criminal provisions under s. 45
of the Act, a per se offence is behaviour that is deemed
to be illegal without requiring proof of anti-competitive

The content of this article does not constitute legal advice
and should not be relied on in that way. Specific advice should be
sought about your specific circumstances.

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