Bill C-59: From investigation to inquiry

This post is the second in a four-part series on investigation and enforcement proceedings for greenwashing claims under the Competition Act. Part One, “Balancing green goals with economic risks,” provides a general overview of the investigation and enforcement process for greenwashing claims under the Competition Act.  

In this post, I’ll explore some of the key considerations for companies that may be under investigation by the Competition Bureau.

The Competition Bureau (the Bureau) is an independent federal law enforcement agency that protects consumers and promotes competition in Canada. The Competition Act (the Act) grants the Bureau broad authority to investigate potential contraventions of the Act. The Commissioner of Competition (the Commissioner) leads the Bureau and has overall responsibility for the administration and enforcement of the Act.

Specifically, the Commissioner can investigate companies under the new measures of the Act for unsubstantiated environmental claims promoting a product, business or business activity, implicating companies that are potentially doing the same. The Commissioner may commence an investigation based either on the Bureau’s own initiative or on information received from a variety of individuals, including a complainant, competitor, supplier, customer, employee or whistleblower.

For instance, private parties can file an online complaint form, asking the Bureau to investigate deceptive marketing practices.¹ The Bureau receives thousands of such complaints annually. Between April 2023 and March 2024, the Bureau received about 3,400 deceptive marketing practices complaints, representing a 60 per cent increase since 2018.

Complaints that have sufficient merit may warrant an initial investigation to gather information and consider whether the company being complained about may have violated the Act. However, according to the Bureau’s annual statistics, only a small percentage of complaints (less than one per cent since 2021) proceed to an investigation, although that percentage is expected to increase because of Bill C-59's anti-greenwashing amendments.

The Commissioner may conduct both criminal and civil investigations into false or misleading environmental claims based on potential offences under sections 52 and 74.01(1) of the Act, respectively. Such investigations proceed upon information voluntarily provided, which does not require the Commissioner to exercise their powers of compulsion.

How and when the Bureau communicates to the target of an investigation depends on several considerations. In the civil context, a company is more likely to hear directly from the Bureau that it is the target of an investigation if the Commissioner does not consider it will harm the investigation. In the criminal context, the Bureau typically administers and enforces the law without notifying targets of investigation—unless the Bureau has decided to proceed with alternative case resolution, the subject has become aware of the investigation through other means, or when the Public Prosecution Service of Canada (PPSC) decides not to pursue charges. The target company may also learn of an investigation based on public statements by a complainant or other person involved.

Some investigations may progress to formal inquiry. In these cases, the Commissioner gathers information to determine whether there are grounds to pursue either civil or criminal proceedings. Once a formal inquiry is launched, the Commissioner may obtain court orders.

This section sets out the steps involved in commencing, conducting and ending a formal inquiry.

Commencing an inquiry
To start, the Commissioner may commence a formal inquiry either:

1. On the sworn application of six Canadian residents
2. If there is reason to believe a contravention of the Act has occurred, and grounds exist for issuing an order or pursuing criminal prosecution
3. If directed by the Minister of Innovation, Science and Industry.

Although section 10(1)(a) of the Act mandates that the Commissioner initiate a formal inquiry following an application from six Canadian residents, the Commissioner is not required to do so in circumstances where they have already thoroughly investigated the matter and found it did not warrant a formal inquiry.²

Section 11 orders
Once a formal inquiry is launched, the Bureau relies heavily on court orders compelling the production of evidence obtained under Section 11 of the Act.

The Commissioner may seek a Section 11 order to compel testimony, production of records and information, and interim orders. Such order may apply not only to the target of the investigation but also to its affiliates (including those outside of Canada) and its competitors, suppliers or customers—if they hold relevant information. However, inquiries about deceptive marketing practices are typically focused on the target of the inquiry.

In criminal investigations, the Bureau relies primarily on the use of search warrants and wire taps.

Confidential process
The Bureau has a statutory duty to conduct its inquiries in private and to maintain confidentiality of information it receives.³ In practice, the Bureau extends this protection to all preliminary examinations, including its informal investigation process.

However, in four limited circumstances, the Bureau has the discretion to communicate confidential information:

1. When it is to a law enforcement agency
2. When it is for the purposes of administration or enforcement of the Act
3. When it has been made public
4. When it has been authorized by the person who provided it.

Examples of instances where the Bureau might decide to disclose certain confidential information about an inquiry/investigation include:

• Applying to the Court for the use of formal investigative powers under Section 11 or 15 of the Act
• Communicating to the public for the purpose of administrating or enforcing the Act
• Initiating a proceeding before the Competition Tribunal (the Tribunal) or Courts, including entering into a consent agreement
• If a complainant or other person involved in the investigation leaks to the public, the Bureau has the discretion to acknowledge that it did in fact proceed with such an investigation or inquiry.

While an inquiry must be conducted in private, this requirement ceases once the matter is before the Tribunal or a Court.

Meanwhile, the public is entitled to access documents filed or received in evidence on the public record in the form in which they are received by the registry. However, this right is not a general right of access to records in the Bureau’s possession or control. The Bureau will not voluntarily provide information to individuals contemplating or initiating an action, and may in fact seek protective court orders to maintain confidentiality of the information in question. The Bureau relies on public interest privilege to protect against disclosure of information in the government’s possession where such disclosure is contrary to the public interest.

Ending an inquiry
After the Commissioner has assessed the evidence gathered, an inquiry may end in several ways:

1. The Commissioner may discontinue it
2. The Commissioner and the company under investigation may settle the matter by entering into a consent agreement or agreeing to written undertakings
3. For civil matters, the Commissioner may file an application to the Tribunal
4. For criminal matters, the Commissioner may refer to matter to the PPSC for criminal prosecution.

The Bureau’s most commonly used tool to secure enforcement for civil matters is entering into a consent agreement with the company under investigation. The consent agreement may be filed with a court or the Tribunal for immediate registration. Upon registration, the proceedings, if any, are terminated and the consent agreement has the same force and effect, as if it were an order of the court.⁴ Once filed, the consent agreement is available to the public.

In some cases, the Commissioner may decide not to end the inquiry while an enforcement proceeding before the Tribunal is ongoing.

The avenues available to regulators and the public to scrutinize and act against greenwashing are widening. What’s more, the Act’s new greenwashing measures and private right to action underscore the need for companies to back-up their environmental claims. Companies must remain vigilant in their internal processes and public disclosures. A failure to adapt could result in costly investigations and enforcement actions, jeopardizing both financial standing and reputation. Given the potential risks, it’s crucial that companies update their internal processes and ensure that their public reporting undergoes legal review on an annual basis.

Companies concerned about facing a Bureau investigation/formal inquiry for false, misleading or unsubstantiated environmental claims should:

• Implement robust internal controls and compliance programs, or review existing ones, and regularly conduct audits of the same
• Assess its greenwashing risk exposure and address gaps where appropriate.
• Ensure that all claims are well-documented and backed up by credible data and analysis
• Establish a crisis management plan specifically for regulatory investigations, including defining roles for key personnel, communications protocols and response strategies
• Engage legal counsel early in the process to guide responses and preserve legal privilege
• Establish protocols for responding to regulatory inquiries or investigations and cooperate transparently.

Please note this publication presents an overview of the investigation and enforcement proceedings for deceptive marketing practices under the Competition Act. It is for informational purposes only and is not a replacement for legal advice. If you need guidance, please contact our ESG Legal Risk and Disclosure team to explore how we can help you navigate your legal needs.

1. Key inputs to the complaint form include the complainant’s contact information, company’s contact information, detailed description of the events, business conduct observed, whether the complainant is a victim and any other additional information (including documents) the complainant feels is pertinent to the complaint. The form can be found at: https://competition-bureau.canada.ca/contact-competition-bureau-canada/complaint-form
   
2. Charette v. Canada (Commissioner of Competition), 2003 FCA 426 (F.C.A.), at para 50
   
3. Competition Act, s. 10(3), s. 29
   
4. Ibid, s. 74.12(3), (4).