On June 4, 2025, the Competition Bureau (the "Bureau") released its Final Guidelines on Competitor Property Controls (the "Guidelines"). The Guidelines clarify how the Bureau will assess contractual restrictions in commercial leases and restrictive covenants under Canada's Competition Act, following recent legislative amendments.
The Bureau uses the term "competitor property controls" to describe restrictions on how commercial real estate can be used by competitors. These controls can take different forms, but two of the most common restrictions are:
- Exclusivity Clauses: Lease provisions that prevent a landlord from renting to a competing business or restrict what goods and services other tenants can sell.
- Restrictive Covenants: Restrictive covenants registered on title that bind future owners of the property and prevent the use of the property by certain competitors.
By issuing this guidance, the Bureau confirmed that competitor property controls are an enforcement priority and that such restrictions may raise serious competition concerns. For landlords, leasing agents, and commercial tenants, the Guidelines are a timely reminder to review existing agreements and exercise caution when negotiating new ones.
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The Bureau's Enforcement Approach
The Guidelines explain how competitor property controls will be reviewed under the abuse of dominance provisions (sections 78 and 79) and the anti-competitive collaboration provision (section 90.1) of the Competition Act.
Key principles include:
- Necessity and Proportionality: Restrictions must be no broader than necessary in duration, geography, and scope of products/services.
- Narrow Justifications: Property controls may be defensible if they encourage investment that would not otherwise occur at a given location (e.g., a short-term exclusivity clause to attract a key tenant to a new retail plaza).
- Skepticism of Restrictive Covenants: The Bureau views long-lasting, land-based restrictions with particular concern.
While the Guidelines provide important insight into the Bureau's enforcement priorities, they are not binding on the Competition Tribunal or the courts. How these provisions are ultimately applied will depend on the specific facts and the decisions of adjudicative bodies interpreting the Competition Act.
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How Investigations Arise
Investigations may be triggered either by complaints from affected tenants or competitors, or by the Bureau's own initiative. In either case, only the Bureau has authority to pursue enforcement of competitor property controls under the Competition Act. Private parties do not have a direct right of action under these provisions.
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Implications for Landlords and Leasing Professionals
The Bureau's Guidelines outline the factors it will consider when assessing property controls. Based on these, commercial landlords and leasing professionals should keep in mind the following:
- Review Existing Agreements: Identify exclusivity clauses or covenants registered on title that could raise issues.
- Tailor New Restrictions: Limit duration, geography, and scope as narrowly as possible.
- Consider Market Position: Businesses with substantial local or regional market share may be considered "dominant" under the Competition Act. Even without national dominance, using property controls in a concentrated market is more likely to raise concerns under the abuse of dominance provisions.
- Expect Remedies and Penalties: Restrictive covenants, in particular, may expose parties to administrative monetary penalties as well as the risk of being unenforceable.
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Practical Takeaway
The Bureau's Guidelines make clear that competitor property controls will attract closer scrutiny going forward. Although exclusivity may still be justified in limited, narrowly tailored circumstances, landlords and tenants should evaluate whether restrictions are necessary and proportionate. Landlords with larger portfolios or a strong local or regional presence should consider conducting a proactive compliance review
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.
