Exclusive Use Clauses Under the Amended Competition Act
This article is a companion piece to our article on the practical and drafting implications of the 2024 amendments to the Competition Act, RSC 1985, c C-34 (the “Act”) for exclusive use clauses in commercial leases. An exclusive use clause restricts a landlord’s ability to lease its property to another tenant for a specified use, and is commonly seen in favour of pharmacies, dentists and grocery stores. The 2024 amendments to the Act, together with the Competition Bureau’s June 2025 guidance, mean that these clauses may now be seen as anti-competitive and subject to the Act’s remedies, even though landlords and tenants are typically not competitors of one another. This article examines the specific statutory changes, the question of standing before the Competition Tribunal, the remedies available, and the retroactivity of the amendments in greater technical detail than our companion article.
Broadened Scope of Section 90.1: From Competitor Agreements to All Agreements
The key change introduced by the 2024 amendments to s. 90.1 of the Act fundamentally broadened the scope of the provision. Prior to the amendments, s. 90.1 applied only to agreements between competitors, that is, parties operating in the same relevant market. The amended provision now applies to any agreement, regardless of the relationship between the parties, where the agreement has the purpose (intent) or effect of preventing or lessening competition substantially in a relevant market. This expansion is significant for commercial leases because landlords and tenants, who are not competitors in the conventional sense, may now find their exclusive use arrangements subject to scrutiny under the Act.
Sections 78 and 79: The Purpose-or-Effect TestSections 78 and 79: The Purpose-or-Effect Test
The 2024 amendments to sections 78 and 79 of the Act are equally significant. The amended provisions employ the disjunctive “or” in establishing the test for reviewable conduct, meaning that the Tribunal may find a contravention where an agreement was intended to lessen competition or had the effect of lessening competition. The practical consequence is that even if an exclusive use clause did not actually succeed in limiting competition in the relevant market, the clause may nonetheless be caught by the Act if the intent to limit competition was present at the time the agreement was entered into. This lowers the evidentiary threshold for the Commissioner of Competition and broadens the range of agreements that may be subject to challenge.
The combined effect of these amendments is that landlords and tenants could be subject to the Act where they are not competitors in the conventional sense, meaning they do not operate competing businesses in the same market . An exclusive use clause in a commercial lease, by its nature, restricts the landlord’s ability to lease to competing businesses, and this restriction on the landlord’s use of its property may be characterized as an agreement with the purpose or effect of lessening competition in the market served by the tenant. Accordingly, both landlords and tenants should be aware that exclusive use arrangements may attract scrutiny under the amended provisions, regardless of the nature of their commercial relationship.
Who Can Challenge an Exclusive Use Clause Before the Competition Tribunal?
As discussed in our companion article, a prospective tenant deterred from entering the market by an exclusive use clause may have standing to challenge that clause even without a lease in place. Under the Act, any person may apply to the Tribunal for leave to bring proceedings in respect of a reviewable practice, provided the person is directly and substantially affected. A prospective tenant who can demonstrate that an exclusive use clause prevented it from obtaining a lease and entering the relevant market may therefore have standing before the Tribunal, notwithstanding the absence of privity of contract that would defeat a civil action against the landlord.
Remedies Available Before the Competition Tribunal
The Tribunal has exclusive jurisdiction due to its specialized mandate and expertise in competition law. The Federal Court of Appeal (as opposed to the provincial superior and appellate courts) has jurisdiction over appeals from the Tribunal. The practical effect is that parties seeking to challenge an exclusivity clause on competition grounds must navigate a different forum, specialized law and procedural framework than in other civil litigation. Available remedies include: financial penalties, prohibitory orders known as injunctions (for example, the landlord and/or the tenant could be ordered not to enforce the exclusivity provision), mandatory steps to restore competition, and orders for the sale of assets or shares.
Despite being able to order significant monetary penalties (potentially in the millions of dollars), the stated purpose for any order is to promote competition in the market rather than to punish.
Are The Amendments Retroactive and Do They Apply to Existing Commercial Leases?
As a general principle of statutory interpretation, legislation is presumed to apply prospectively unless the legislature has expressed a clear intention to the contrary. The 2024 amendments to the Act do not contain an express retroactivity provision. However, the amended provisions capture agreements that have the “effect” of lessening competition substantially, and this effects-based limb of the test is assessed on a continuing basis. Accordingly, an exclusivity provision in a lease that was entered into prior to the amendments coming into force may nonetheless be subject to challenge if the clause continues to produce anti-competitive effects after the effective date of the amendments. This creates significant uncertainty for existing lease portfolios, as landlords and tenants cannot assume that pre-amendment exclusivity provisions are immune from scrutiny. Prudent parties should undertake a review of existing leases to assess whether any exclusivity provisions may be vulnerable to challenge under the amended Act.
Conclusion: Navigating the Amended Framework
The 2024 amendments to sections 90.1, 78 and 79 of the Act, read together with the Competition Bureau’s 2025 guidance, mean that exclusive use clauses in commercial leases can no longer be assessed solely as a matter of contract or common law restraint of trade. The disjunctive purpose-or-effect test lowers the evidentiary threshold for challenge, prospective tenants may have standing before the Tribunal even without a lease, and the effects-based limb of the test means existing leases are not necessarily insulated from scrutiny. As of early 2026, no Tribunal or court decisions have applied the amended Act to exclusive use clauses in commercial leases, so parties must currently rely on the Bureau’s guidance rather than adjudicated outcomes. As set out in our companion article, careful, proportionate drafting of exclusivity provisions remains the most effective way to manage this uncertainty.