Canadian HR Reporter

N E W S 8 www.hrreporter.com Rules for no-poaching, wage-fixing agreements clarified by government Greater enforcement in the U.S. around anti-competition laws had many wondering if Canada would follow suit. But a recent statement by the Competition Bureau provides 'welcome clarification' for employers, writes Sarah Dobson BACK in 2016, the Department of Justice and the Federal Trade Commission in the U.S. issued a joint Antitrust Guidance for Human Resource Professionals to alert those involved in hiring and compensation decisions to potential violations of the antitrust laws. "An agreement among competing employers to limit or fix the terms of employment for potential hires may violate the antitrust laws if the not apply, says Shuli Rodal, partner and chair of the competition and foreign investment group at Osler, Hoskin & Harcourt in Toronto. "It provides some comfort to the Canadian business community about how the law will be enforced," she says. "At the same time, it serves as a bit of a warning that this is not intended to be a signal that the Competition Bureau is not concerned about this — they are constrained by the law, not by the extent to which they regard the activity as concerning." 2009 amendments change act Before 2009, there was a single provision in Canada's Competition Act that dealt with agreements among competitors, says Rodal. It basically said that any agreement among competitors could be subject to a criminal enforcement if it resulted in "undue lessening" of competition. But that created a very high bar for the government to ever prosecute a price- fixing agreement, she says. "It wasn't enough to just say two competitors or two people had agreed to fix prices amongst themselves ― you also had to show to a criminal standard of proof that the result would be an undue agreement cons trains individual firm decision-making with regard to wages, salaries or benefits; terms of employment; or even job opportunities. HR professionals often are in the best position to ensure that their companies' hiring practices comply with the antitrust laws. In particular, HR professionals can implement safeguards to prevent inappropriate discussions or agreements with other firms seeking to hire the same employees," said the department. More recently, the U.S. federal grand jury indicted a business owner in December for "participating in a conspiracy to fix prices" by lowering the wages paid to workers. And in January, the jury charged an employer with violating the Sherman Act for engaging "in a conspiracy to suppress competition between them for the services of senior- level employees by agreeing not to solicit each other's senior-level employees." These moves south of the border had many wondering if Canada would take a similar approach in pursuing criminal charges when it comes to wage- fixing and no-poach agreements. But recently, the government delivered a "welcome clarification" for employers in confirming the criminal angle would lessening of competition in the market." So, in 2009, Canada amended section 45 of the Competition Act and basically broke it into two separate provisions by taking a dual-track approach, says Rodal. One is a "per se" criminal offence, meaning agreements that have no redeeming features are subject to enforcement as a criminal matter, regardless of whether there's any market impact. "The agreement itself creates the offence," she says. The tradeoff was that the per se treatment would be limited to those agreements "that are really hardcore, p r i c e - f i x i n g , m a r k e t - a l l o c a t i o n , customer-allocation-type agreements… because you no longer had to show any impact on competition," says Anita Banicevic, a partner at Davies in Toronto. The Competition Bureau was looking to apply criminal enforcement to the most egregious agreements or "hard- core cartels" with "naked restraints" on competition, says Erin Brown, an associate at Norton Rose Fulbright in Ottawa. "There's nothing legitimate about them ― they're not in furtherance of a legitimate collaboration, a strategic alliance or joint venture and the Competition Bureau doesn't need to look into whether they substantially lessen or prevent competition because they de facto do," she says. CHANGING RULES AROUND AGREEMENTS Sources: Competition Bureau Canada, U.S. Department of Justice 2009 Year of amendments to Canada's Competition Act, limiting its scope to supply- side agreements Section 45 Criminal provision in the act regarding conspiracies, agreements or arrangements between competitors Section 90.1 Civil provision in the act that prohibits agreements likely to substantially lessen or prevent competition 2016 Year the U.S. issued guidance on the application of antitrust laws to no poaching and wage-fixing agreements

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