Competition-law worry in a business sale usually means when a sale becomes a notifiable transaction — a filing, a waiting period, a form. Section 45 of the Competition Act sits in a different Part and does something else. It creates an offence, punishable by up to fourteen years, and since June 2023 it reaches agreements between employers about pay and about hiring each other’s people. A buyer and a seller who compete spend months discussing exactly that.
Key takeaways
SECTION 01 OF 10
Section 45 sits in Part VI, Offences in Relation to Competition. Subsection (1): “Every person commits an offence who, with a competitor of that person with respect to a product, conspires, agrees or arranges” to “fix, maintain, increase or control the price”, to “allocate sales, territories, customers or markets”, or to “prevent, lessen or eliminate the production or supply of the product.”
Then subsection 45(1.1): “Every person who is an employer commits an offence who, with another employer who is not affiliated with that person, conspires, agrees or arranges … to fix, maintain, decrease or control salaries, wages or terms and conditions of employment; or … to not solicit or hire each other’s employees.”
Subsection (1) concerns a product and binds only competitors — a term 45(8) stretches to anyone “likely to compete… in the absence of” the agreement. Subsection (1.1) concerns employment and never uses the word: the Bureau’s wage-fixing and no-poaching guidelines say it applies “regardless of whether they compete in the supply of a product.”
SECTION 02 OF 10
The penalty covers both limbs: “guilty of an indictable offence and liable on conviction to imprisonment for a term not exceeding 14 years or to a fine in the discretion of the court, or to both.” No ceiling. The version in force before the 2022 amendments, still on the Justice Laws site, capped it at “a fine not exceeding $25 million”.
The Crown must prove it beyond a reasonable doubt, and the Bureau does not prosecute — it refers evidence to the Director of Public Prosecutions. Its Competitor Collaboration Guidelines add that on a finding of guilt it “will typically recommend” a prohibition order, which “can last for up to 10 years”.
A conviction then starts the civil clock. Section 36 lets anyone who suffered loss “as a result of… conduct that is contrary to any provision of Part VI” recover it, and 36(2) makes the criminal record “in the absence of any evidence to the contrary, proof” of that conduct.
SECTION 03 OF 10
Subsection 45(1.1) came from the 2022 budget bill — the amendment note reads “2022, c. 10, s. 257” — and the Bureau confirms it “applies to agreements made between employers on or after June 23, 2023”, and also “to conduct that reaffirms or implements agreements that were made before that date”.
Paragraph (a) reaches “terms and conditions of employment”, read by the Bureau to include “job descriptions, allowances such as per diem and mileage reimbursements, non-monetary compensation, working hours, location and non-compete clauses”. Even an agreement “to limit a salary increase could be characterized as a ‘decrease’”.
Paragraph (b) turns on two words: “each other’s”. A restraint that “only applies to one employer… is ‘one-way’” and falls outside it — but separate agreements that “result in reciprocating promises to not poach each other’s employees” can attract enforcement. And “employers” “includes directors, officers, as well as agents or employees, such as human resource professionals.”
SECTION 04 OF 10
A strategic sale puts two management teams in a room for months, discussing margin by account, which salespeople hold which relationships and what the key people are paid. Then subsection 45(3): a court “may infer the existence of a conspiracy, agreement or arrangement from circumstantial evidence, with or without direct evidence of communication” between the parties.
On employment data the Bureau is explicit — sharing “may give rise to an inference that an agreement exists… under subsection 45(1.1)”. A schedule naming every employee with salary, handed to a competitor, is that sharing. Treadstone Law’s note on the confidential information memorandum already says to withhold “individual employee names and compensation details”.
SECTION 05 OF 10
Both limbs are built around affiliation. Paragraph 45(6)(a) disapplies subsection (1) where the parties are “each of which is, in respect of every one of the others, an affiliate”; subsection (1.1) carries the idea internally, biting only where the other employer “is not affiliated with that person”.
Affiliation means control: under subsection 2(2) entities are affiliated where “one of them is the subsidiary of the other or both are subsidiaries of the same entity or each of them is controlled by the same entity or individual”. That does not describe a buyer and a target before completion. The exception arrives on the day the risk ends.
SECTION 06 OF 10
Purchase agreements are full of restraints that look like section 45 conduct in isolation: a seller non-compete, a mutual non-solicit, a covenant not to change pricing before closing. Subsection 45(4) is why they are not charged — no conviction follows where the party proves the restraint “is ancillary to a broader or separate agreement… that includes the same parties” and is “reasonably necessary for giving effect to” its objective.
The Bureau’s list of restraints it “will generally not assess… under the criminal provision in section 45” includes two found in nearly every deal: “a non-compete clause found in an agreement for the sale of assets or shares between parties”, and “an agreement to abstain from making material changes to a business pending the consummation of a merger”.
On the employment limb it “will generally not assess wage-fixing or no-poaching clauses that are ancillary to merger transactions, joint ventures or strategic alliances” — but may investigate “where those clauses are clearly broader than necessary in terms of duration or affected employees”.
SECTION 07 OF 10
The first element is the one a sale process fails. The restraint must be ancillary to a broader agreement that includes the same parties. An understanding reached while the parties are still deciding whether to transact is ancillary to nothing — in the Bureau’s own example of a failed defence, “there is no evidence to suggest that the restraint is ancillary to a broader agreement”.
So the most dangerous conversation in a competitor sale is the one about failure: the reassurance that if the deal dies, neither side will chase the other’s staff. That is a reciprocal promise between two unaffiliated employers attached to no transaction.
Treadstone Law’s article on a breach of confidentiality after a failed sale shows where that concern belongs instead — injunction, damages, an accounting of profits, against a buyer who walks away having “quietly hired away key staff using information that only came from the data room”. It does not discuss the Competition Act, and rightly so: only one of the two problems is solved by drafting.
SECTION 08 OF 10
Winning under 45(4) removes the offence, not the file: “when the ARD applies, the Bureau may still examine the agreement under the reviewable matters provisions in Part VIII… including the civil agreements provision in section 90.1”. Section 90.1 works on the civil standard, and 90.1(1.01) reaches even non-competitors where “a significant purpose” is to lessen competition.
The exposure is money — 90.1(1.3) allows the greater of “$10,000,000” and “three times the value of the benefit… or, if that amount cannot be reasonably determined, 3% of the person’s annual worldwide gross revenues”. But the tracks do not run together: section 45.1 bars a prosecution under 45(1) or (1.1) “on the basis of facts that are the same or substantially the same” as those behind a civil application under section 76, 79, 90.1 or 92.
SECTION 09 OF 10
A merger is not a conspiracy: an acquisition of control or of a significant interest “will generally be assessed under the merger provisions in section 92 and following of the Act, and not… the conspiracy provision in section 45”. But where parties agree anything “that goes beyond the acquisition, amalgamation or combination agreement”, the Bureau decides which provision applies. Section 45 risk lives in the side agreements.
Nor does it touch collective bargaining: section 4 exempts agreements among employers “pertaining to collective bargaining with their employees in respect of salary or wages and terms or conditions of employment”. Bid-rigging, by contrast, is a separate offence under section 47 at the same fourteen-year maximum — relevant where a sale runs as an auction and bidders talk.
And the seller non-compete is ordinary, for reasons unconnected to this Act: Ontario courts “treat non-competition clauses in the commercial sale of a business far more favourably than in the employment context”, per Treadstone Law; its note on geographic scope adds that an unreasonable area means “the entire clause may fail rather than simply being narrowed”. Neither page mentions the Competition Act. The two tests are independent, and a clause must survive both. Pricing it is a third question: allocating price to a non-compete.
SECTION 10 OF 10
Stage employment data last and aggregate it first. Compensation by band, headcount by function and total payroll answer most valuation questions; names and individual salaries can wait for signing. The Bureau endorses the mechanism — limit disclosure “to personnel who are not engaged in sales or marketing activities” and prefer data “aggregated by a third party”. The Academy notes on managing confidentiality during a live process and what a vendor should release first, and Treadstone Law on confidentiality, sequence the rest of the data room.
Put every restraint in the signed document and tie its duration and its named employees to the transaction. A no-poach running for exclusivity plus a defined tail is arguable under 45(4); an open-ended mutual promise is not. Treadstone Law on employee non-solicitation in a purchase agreement and business-to-business non-solicitation treats both as pure contract questions — sound drafting, but neither addresses the criminal ceiling above it.
Keep retention one-sided: stay bonuses and updated contracts are a buyer dealing with employees, not two employers dealing with each other. Treadstone Law on key employee flight risk settles retention “as part of the purchase agreement” and “early, not requested at the last minute”. And if something has already been said, the Immunity and Leniency Programs cover 45(1.1) — immunity goes “only to the first party… to self-report”, and in a two-party sale there is one seat.
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