Court Clarifies Requirements For Production Orders Under Canada’s Competition Act

Court affirms limits on Competition Bureau’s power to compel production

The Commissioner of Competition (Commissioner), as head of Canada’s Competition Bureau (Bureau), may conduct inquiries where there is reason to believe that someone has engaged in conduct that is either illegal or reviewable under the Competition Act (Act). The Commissioner may also conduct inquiries into the state of competition in a market or industry whether or not the Commissioner believes that any sanctionable conduct may have occurred (see our earlier bulletin). Pursuant to such inquiries, the Commissioner may obtain court orders to compel production of records and information. Indeed, the Commissioner is obtaining such orders more frequently – obtaining over 30 orders in 2024-25 compared with only six in the prior two-year period. 

Canadian businesses should recognize the potential risk of broad and onerous production orders under the Act. However, a recent decision of the Federal Court of Appeal confirms that courts will require the Commissioner to provide fulsome disclosure, justify the relevance of document and data requests, and demonstrate that the order does not unreasonably intrude on privacy interests before the court will issue such an order. 

We discuss the Court’s ruling in more detail below, as well as the resulting implications for Canadian businesses.

Section 11 Orders

When conducting an inquiry, the Commissioner may, under section 11 of the Act, apply to a court for an order compelling anyone who is likely to have information relevant to the inquiry to (i) attend for examination under oath; (ii) produce records, including documents, emails, text messages and other forms of electronic media on which information is stored; and (iii) provide written responses to requests for information. Such orders may be obtained against not only persons whose conduct is being investigated but also other industry participants, such as competitors, customers and suppliers.

Because these orders may be sought on an ex parte basis, the Commissioner generally need not give notice to the person subject to the order (the respondent), and the respondent does not have a right to appear before the judge considering the Commissioner’s application. In practice, section 11 order applications typically arise in contexts in which the Bureau has ongoing communications with the respondent’s counsel. The Bureau normally shares a draft order with the respondent, providing a relatively short time for the respondent to comment on the draft. Respondents have not been permitted to appear before, or make direct submissions to, the application judge, but the Bureau’s practice is to inform the judge of any concerns that the respondent has raised with the Bureau and provide copies of related correspondence. In this way, respondents can usually indirectly raise concerns with the application judge about a proposed section 11 order.

Section 11 orders often cover voluminous records and information, requiring the respondent to expend significant time and resources to comply within the time mandated by the order. In commenting on draft orders, respondents often ask the Bureau to narrow the scope of some of its requests and provide more time to respond. For example, respondents may question the relevance of what they perceive to be overbroad requests or suggest narrower requests that they believe would provide the Bureau with sufficient information. The Bureau may revise its draft order before filing it with the court.

The Bureau’s use of section 11 orders has long been a source of controversy, particularly in light of the considerable burden and costs imposed on respondents. Such orders often require the respondent to search for and submit “all records” relating to specified categories of information and respond in accordance with complex instructions. A Canadian Bar Association submission described the implications as follows:

“At any given time, a firm that may be targeted with a broad order for producing data and records relevant to competition could have millions of potentially responsive records in the normal course of business across multiple systems and databases managed in different formats by different groups of personnel. Indeed, even a carefully drafted information request could generate millions of potentially responsive records. At a minimum, dedicated information technology specialists, legal and compliance professionals, relevant business lines, and senior executives with leadership oversight would need to be engaged to review potentially relevant data and records. It is also increasingly common that external competition law counsel and data management service providers (for example, legal technology providers and forensics, e-discovery, and document review specialists) are retained to handle the necessary search, review, production, and certification processes.”

Data storage and processing fees in particular can be substantial – often hundreds of thousands of dollars. Short deadlines to supply documents and data can increase compliance costs. While data on section 11 order compliance costs are limited, a Federal Court decision noted that Labatt Brewing spent over C$750,000 in external costs alone to respond to a section 11 order relating to its 2007 acquisition of Lakeport Brewing. It has also been reported that the aggregate cost of compliance with section 11 orders issued in relation to a 2000-2002 Bureau inquiry into the Canadian film distribution industry likely exceeded C$20 million. In more recent proceedings, respondents have estimated that section 11 order compliance costs about C$2.5 million to C$3 million.

The Amazon Section 11 Order

In June 2024, in the context of an inquiry into whether Amazon may be engaging in reviewable deceptive marketing practices by permitting “fake reviews” on its website, the Commissioner applied to the Federal Court for a section 11 order requiring Amazon to produce extensive transaction data relating to products offered for sale on its online store. The Commissioner applied for the order more than two years after commencing the inquiry.

The Bureau provided Amazon’s counsel with a draft order that would require Amazon to produce, among other things, extensive transaction data across more than 30 data fields for products in four broad product categories – namely, “Health and Personal Care, Home and Kitchen, Tools and Home Improvement, and Electronics.” Amazon objected on the basis that this data production requirement was “exceedingly broad, excessive, and unnecessarily burdensome,” claiming that there were “billions of products offered in the four specified categories.” The Commissioner nevertheless applied for an order that included this data requirement. The judge hearing the application issued an order requiring Amazon to produce other documents and information sought by the Bureau, but asked the Commissioner to consult with Amazon to clarify the number of records that Amazon would have to produce under the requested data production order, and to address Amazon’s concerns. At a subsequent hearing, the application judge continued to express uncertainty about the reasonableness of seeking data fields potentially capturing billions of products. The judge dismissed the application for a further data production order because the Commissioner had failed to adequately consult with Amazon or otherwise sufficiently explain the scope of the data request. The Commissioner appealed that decision to the Federal Court of Appeal.

Prior case law, relying partly on the protection against unreasonable search and seizure in section 8 of the Canadian Charter of Rights and Freedoms, had established that, before issuing a section 11 order, an application judge must be satisfied of the following:

(1) An inquiry is in fact being made; this is normally an uncontentious question of fact.

(2) The Commissioner has provided full and frank disclosure to the court; in 2008, a judge quashed a section 11 order when the judge subsequently found that the Commissioner’s disclosure had been so misleading, inaccurate and incomplete that the judge would not have issued the order had adequate disclosure been made of (i) the degree of overlap between the requested order and information previously produced by the respondent or otherwise already in the possession of the Bureau, (ii) a prior Bureau representation that it believed earlier section 11 orders against the same respondent would likely be sufficient for its inquiry, and (iii) certain concerns articulated by the respondent. 

(3) The information or records described in the order being sought are relevant to the inquiry in question. 

(4) The scope of such information or records is not excessive, disproportionate or unnecessarily burdensome. 

The last two criteria were the focus of the Court of Appeal’s decision in Amazon. 

Initially, the Court recognized that, under the Charter, Amazon had an information privacy interest in its records, and an application judge has authority to ensure that the Commissioner’s investigative powers are exercised in compliance with the Charter. Notably, the Court observed  the following

“[E]ven where the records are relevant to the Commissioner’s inquiry, the application judge retains a residual discretion to refuse the requested production order. The contours of this discretion are defined by section 8 [of the Charter]. Authorizing judges must evaluate the impact on the subject of the search or the seizure and determine whether 'in a particular situation the public’s interest in being left alone by government must give way to the government’s interest in intruding on the [subject’s] privacy in order to advance its goals.’” [emphasis added]

The Court viewed the assessment to determine whether a requested order is “excessive, disproportionate or unduly burdensome” as involving an evaluation of “whether the information requested by the Commissioner exceeds what is reasonably required for purposes of the inquiry and is overbroad given the nature of the inquiry or unjustifiably intrudes on the privacy interests of the target.” The Court also said that (i) the reasonableness of a section 11 order is to be evaluated by reference to the respondent’s expectation of privacy and (ii) the potential intrusiveness of the order is a relevant factor for that assessment. Indeed, the Court recognized that the Charter meaningfully constrains the Commissioner’s ability to require the production of business records, even though the privacy interest in business records is “minimal” relative to the privacy interest in more intimate personal records. 

The Court expressed some reservations that prior case law may have gone too far in holding that section 11 production orders should be limited by the efforts or costs imposed on the respondent, the difficulty of responding, or the respondent’s economic interests. However, in this case, the Commissioner had failed to demonstrate that the data request was reasonable, having regard to the nature of the inquiry because of the uncertain scope of the request – the application judge did not know the extent of what the Commissioner sought to have produced under the order. With the broad group of products and no estimate of the volume of data within the scope of the data request, the application judge could not meaningfully assess whether the data request was excessive relative to what the Commission reasonably needed for the inquiry. Implicitly, the Court recognized that, at some threshold, a large data request would constitute an unreasonable invasion of Amazon’s privacy – even if the requested information were relevant to the inquiry.

In reaching its decision, the Court was not swayed by the Commissioner’s assertions that “Section 8 of the Charter does not protect against intrusions into business interests” and the Commissioner is “entitled to receive “all materials which might shed light on the circumstances of an event” which the Commissioner has reason to believe is contrary to the Act.”

Implications for Future Section 11 Orders

While the Court’s decision reflects a degree of deference to the Commissioner and a desire to avoid unduly constraining the Bureau’s law enforcement investigative process, it confirms that the application judge retains discretion to evaluate the appropriateness of the proposed order. The Commissioner must provide an application judge with a reasonable level of precision to enable the judge to (i) relate the nature of the inquiry to the scope of the information requested by the order and (ii) determine the magnitude of the order’s intrusion on the respondent’s privacy interests. 

As the Court recognized, if an application judge does not know the extent of what the Commissioner seeks to have produced, the judge cannot weigh the intrusiveness of a requested order on the respondent’s privacy against the relevance of the information for the inquiry. Conversely, it would seem that the judge must also know the nature of the inquiry with sufficient precision to assess the degree of relevance or importance of the requested information or data to the inquiry. For example, it may be unreasonable to issue an order requiring a broad incursion on the respondent’s privacy rights where the relevance of the records or data is tangential, speculative or unclear, or where less intrusive orders would suffice.

In the Amazon case, the scope of the inquiry was relatively well defined. Bureau affidavits supporting the section 11 order said the Commissioner was investigating alleged “fake reviews” where “people are recruited to give predetermined positive Product Reviews on the Amazon Platform in exchange for compensation from third parties.” Accordingly, the inquiry related to a specific marketing practice, but the scope and number of the products alleged to be the subject of the conduct were unclear. 

However, section 11 order applications for broader or less well-defined inquiries may prove relatively more challenging for the Bureau to justify. Consistent with the Court’s decision in Amazon and the need to evaluate whether the order is both relevant to the inquiry and reasonable, the more expansive a particular document or data request is, the more explanation the Commissioner may need to provide of its relevance to the inquiry. This may be of particular concern where the Bureau has described the inquiry broadly or for market inquiries (where section 11 orders may be used even though there is no allegation of conduct contrary to the Act). For example, in seeking section 11 orders for its first formal market inquiry, the Bureau described the inquiry as “relating to competition in … domestic air passenger services” and added that the purpose of the study was “to examine the state of competition in the airline industry and how governments across Canada can improve competition for the benefit of domestic air passengers as well as the workers and entrepreneurs who enable these services.” Lack of precision in the scope of the inquiry combined with broad or imprecise document or data requests could raise issues about the degree of relevance and whether the requests represent reasonable incursions. 

It also remains to be seen whether courts will confer the same level of weight or deference to a section 11 order for a market study as the Court of Appeal applied for an inquiry to advance law enforcement in the Amazon case. 

Implications for Canadian Businesses

Production orders under section 11 of the Act are being used more frequently by the Commissioner. These orders clearly enable the Commissioner to compel production of voluminous data and documents not only to investigate potential violations of the Act but also to conduct market studies. As a result, employees in competitively sensitive roles should take care to ensure that their communications in all forms of media are accurate and complete, particularly when discussing pricing or distribution policies or other matters likely to have significant impacts on competition or competitors. Regular compliance training can assist in this regard. 

That said, if a business finds itself subject to a potential section 11 order, the Court of Appeal’s decision in Amazon provides a framework within which to most effectively raise with the Bureau (and, indirectly, the application judge) concerns about overbreadth or to propose alternative ways to more efficiently provide the Bureau with documents, information or data that the Bureau reasonably needs for the purposes of its inquiry. Consulting with experienced counsel at the early stages of any investigation or inquiry remains important. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.