Before the Canadian Competition Bureau: Comment of the Global Antitrust Institute on Draft Enforcement Guidance on Wage-Fixing and No-Poaching Agreements

Abstract

The GAI filed this Comment with the Canadian Competition Bureau in response to the Bureau's request for public feedback on draft Guidance on Wage-Fixing and No-Poaching Agreements. Such agreements will be subject to a new statute (subsection 45(1.1), Canadian Competition Act) taking effect June 23, 2023, prohibiting such agreements as per se offenses and making violations subject to criminal remedies. The GAI's Comment commends the Bureau for seeking public comment prior to implementation and generally concurs with the basic approach taken by the Bureau. To further refine and improve the Bureau's approach, the Comment identifies potential ambiguities in the Guidance. Ambiguity complicates compliance, since businesses are likely to avoid even procompetitive or competitively neutral conduct potentially exposed to challenge. Avoidance of lawful conduct by business firms due to uncertainty regarding applicable legal standards may inhibit competition and ultimately reduce economic performance and innovation. Per se condemnation and criminal remedies should be reserved for conduct always or almost always anticompetitive and lacking plausible procompetitive rationale. The GAI therefore asks the Bureau to take particular care in defining the types of agreements that may be subject to the new law. Principal areas of focus involve (1) transition provisions; (2) the scope of an exemption for agreements between "affiliates"; (3) the definition of what constitutes an "employment relationship,” a key term defining the scope of the new law; (4) the line between permissible information sharing and impermissible coordinated conduct, and (5) the proper interpretation of the "Ancillary Restraints Defense" that will be applicable.

Keywords: wage-fixing, no-poaching, Competition Act of Canada, per se liability, criminal sanctions, information exchange, ancillary restraints, franchisor-franchisee coordination, intra-enterprise coordination, employment-independent contractor distinction

JEL Classification: K2, K21, L4, L40, L44, L51, L53