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Overview

• Amendments to the Competition Act came into effect on December 15, 2024.
• These changes affect exclusivity clauses and restrictive covenants in commercial leases across Canada – including hospital retail leases.
• The Competition Bureau released guidance on June 4, 2025.

Key Concepts

• Exclusivity Clause: Prevents a landlord from leasing to competing businesses (e.g., only one pharmacy in the hospital).
• Restrictive Covenant: Restricts competition on the land (Not common in hospital leasing).

What’s New

1. Broader Oversight
   • Bureau can now review landlord-tenant agreements, not just agreements between competitors.
2. Easier to Trigger “Abuse of Dominance”
   • Intent OR effect may be enough for enforcement (previously, both needed).
   • Applies where a party has significant market power.

Implications for Hospitals

• Hospital exclusivity clauses may now attract scrutiny.
• No “grandfathering” — older (currently binding) exclusives can still be challenged.
• Certain exclusives may still be justified, but only in limited circumstances.

Enforcement Trends

• Major retailers (e.g., Empire/Sobeys, Loblaw, Walmart) have agreed to remove or limit exclusives due to Bureau pressure.
• Private parties (landlords, tenants, etc.) can now challenge anti-competitive clauses before the Tribunal.
• Remedies can include: orders to remove clauses, amend leases, financial penalties.

What Hospital Landlords Should Do

• Review existing leases with exclusivity provisions.
• Assess whether exclusives are necessary and proportionate.
• Amend overly broad clauses where appropriate.
• Future leases: avoid exclusives where possible; if used, ensure they are narrow and justifiable.

General Best Practices

• Limit exclusives by time, scope, geography, and product/service.
• Focus only on direct competitors.
• Consider clauses that protect landlords if exclusives violate the Act.

If you require additional information, please feel free to contact Alan Frank and Aida Nabavi for assistance at [email protected] and [email protected].

_{This publication is intended for general information purposes only and should not be relied upon as legal advice.}