Sir John A. MacDonald, Canada's first prime minister, was universally recognized as a bon vivant. He was a lawyer-politician who oozed charisma and political skill.

Still, for a lawyer well-known to enjoy a frequent glass of Scotch, he championed significant bills through the House of Commons during his long tenure.

One was extremely avant-garde and became, later, what Canadians now enjoy as the Competition Act.

According to some legal historians, it was the first competition or antitrust statute in the world to, at least in theory, control monopolies and price-fixing.

The preamble:

"Whereas it is expedient to declare the law relating to conspiracies and combinations formed in restraint of trade and to provide penalties for the violation thereof."

For the most part, to that time, the common law had been an unrepentant champion of freedom to contract, firmly believing that this freedom was the gasoline behind the phenomenal advances in science and technology then igniting economies around the world.

Sir John A. Macdonald and his Canadian cohorts saw the need to reign in some of the tycoons who seemed to be abusing the freedom to contract, creating and fostering monopolies especially, and fixing prices according to supply which they could then control. Water supply, petroleum and transportation were the early areas of monopolistic conduct. Like leaches, monopolies and price-fixing were rampant and a step ahead of the common law's timid approach to abusive restraint of trade.

1889 combines actMacdonald put into his new law the common law's soft answer to restraint of trade, especially restrictive covenants, and backed by a few cases such as the 1602 case Colgate v Bathchelor. Circa 1889, there were also some ancient common law claims related to fair trade for which damages could be sought by individual plaintiffs: engrossing, badgering, forestalling and regrating.

The fledgling law was tabled and obtained the necessary approval of the House in 1889. It sported an odd title but commensurate with the vocabulary of the times:

An Act for the Prevention and Suppression of Combinations formed in the Restraint of Trade.

A year later, the United States government passed their initial antitrust law, enacted on July 2, 1990.1

The Canadian statute had been first but, for all its good intentions, was grossly deficient, a work-in-progress. Musgrove explains:

"While it established a criminal offence for unduly preventing or lessening competition by conspiracy, combination, agreement or arrangement, the statute was drafted in such a way that for anti-competitive behaviour to be prohibited, the behaviour had to be unlawful under the common law of restraint of trade. The permissiveness of the common law in this area prevented the legislation from meaningfully advancing competition law.

"Furthermore, Parliament did not provide for any federal official to enforce the act."

In Attorney General of Canada v Canadian National Transportation, Limited, Justice Brian Dickson (as he then was - later chief justice) wrote of the 1889 statute:

"The statute was motivated by concern over the emergence in Canada of smaller versions of the huge trusts in the United States, through which a few personalities could control enormous financial empires. The combines problem was seen as one with strong moral overtones and criminal sanctions were selected as the appropriate means for its control.

Epilogue

The 1889 statute was incorporated into the country's first Criminal Code in 1892. In 1910, MacDonald's long-time nemesis, Wilfrid Laurier, as Liberal prime minister, introduced a Combines Investigation Act, repealed in 1919 and replaced with the Combines and Fair Prices Act, with an enforcement bureau, a creature known as the Board of Commerce.

The statute did not survive a constitutional challenge ultimately resolved by an English court (Re Board of Commerce Act, 1919, and the Combines and Fair Prices Act), the Judicial Committee of the Privy Council (at the time, Canada was a dominion of England). The Canadian government, under the Liberal government of William Lyon Mackenzie King tweaked the law and re-introduced a second generation Combines Investigation Act. This was again challenged but this time, in Proprietary Articles Trade Association v. Attorney-General for Canada, the law was upheld by the English House of Lords: valid under the Canadian federal criminal law powers.

The legal vocabulary changed with the times: combinations, combines, cartels, monopolies, antitrust and, finally, competition law.

Significant amendments were brought in 1935, 1952 and 1960, all leading to the passage of the modern statute, the Competition Act, and the companion watchdog, the Competition Tribunal and the Competition Bureau.

► For more on modern Canadian competition law, see Competition Law: Antitrust With Teeth.

REFERENCES:

  • An Act for the Prevention and Suppression of Combinations formed in the Restraint of Trade, SC 1889, Chapter 41.
  • Attorney General of Canada v Canadian National Transportation Ltd., [1983] 2 SCR 206
  • Colgate v Batchelor, Cro. Eliz. 872 (also at 78 ER 1097)
  • Board of Commerce Act, SC 1919, Chapter 37
  • Combines and Fair Prices Act, 1919, SC 1919, Chapter 45
  • Combines Investigation Act, SC 1910, Chapter 9
  • Competition Act, RSC 1985, c C-34
  • Duhaime, Lloyd, Competition Law: Antitrust With Teeth
  • Musgrove, James, Fundamentals of Canadian Competition Law, 2nd Ed. (Toronto: Carswell, 2010)
  • Proprietary Articles Trade Association v. Attorney-General for Canada, [1931] A.C. 310
  • Re Board of Commerce Act, 1919, and the Combines and Fair Prices Act, 1919, [1922] 1 A.C. 191
  • Spelling, Thomas, A Treatise on Trusts and Monopolies (Boston: Little, Brown and Company, 1893) - NOTE 1.