Conspiracy provision (Competition Act section 45)

A buyer and seller may need to consider this rule when a deal includes non-competes, non-solicits or pay terms. Section 45(1) covers a person who, with a competitor with respect to a product, conspires, agrees or arranges to fix, maintain, increase or control price; to allocate sales, territories, customers or markets; or to fix, maintain, control, prevent, lessen or eliminate production or supply. Section 45(1.1) covers an employer who conspires, agrees or arranges with another employer that is not affiliated with it to fix, maintain, decrease or control salaries, wages or terms and conditions of employment, or to not solicit or hire each other’s employees.

The ancillary restraints defence

Subsection 45(4) sets out a defence for an arrangement that is ancillary to a broader or separate agreement including the same parties, subject to the further conditions in that subsection. The Competition Bureau’s Competitor Collaboration Guidelines call this the ancillary restraints defence and refer to “the conspiracy provision in section 45”. They say non-compete clauses entered into in connection with a merger are generally examined as part of the merger assessment under section 92, and that in rare instances they may be considered under section 45.

What to ask

• Are the buyer and seller competitors with respect to a product?
• Does any clause fix pay or limit hiring or soliciting between employers that are not affiliated?
• Is each restriction tied to the sale itself, and what does it protect?

Have a lawyer assess clauses against s. 45(4). See partnership interests and Competition Act notification and the non-compete entry.