The Fines Will Be Hefty — If They’re Implemented

The new legislation ostensibly prohibits firms from forming joint agreements to suppress wages. The text of the act restricts bosses from working “to fix, maintain, decrease or control salaries, wages or terms and conditions of employment [wage-fixing agreements]; or to not solicit or hire each other’s employees [no-poach or no-hire agreements].”

It further stipulates that any employer who participates in one of these “illegal wage-fixing” agreements could face significant criminal penalties, including up to fourteen years in jail. Fortunately for these same bosses, the bill includes enough exceptions to make the above language effectively impossible to implement.

The agreement explicitly excludes past agreements from penalty. It also excludes any and all wage-fixing schemes related to collective bargaining and those agreements between franchisees — except the ones deemed “necessary.”

The new law also permits wage fixing if it is “ancillary,” in a “directly related and reasonably necessary” way, to another agreement. As the lawyers at Norton Rose Fulbright explain:

The Guidelines recognize that wage-fixing and no-poach agreements play an important role in many business arrangements, including mergers, joint ventures, strategic alliances, franchise agreements and IT and staffing service arrangements. The Bureau will generally not challenge wage-fixing or no-poach clauses in these types of agreements or arrangements under the new offence unless they are clearly broader than necessary in terms of duration or scope of affected employees, or where the business agreement or arrangement is a sham.

In spite of this latitude, Norton Rose Fulbright’s reaction was nevertheless cautiously measured. It advises: “Going forward, wage-fixing and reciprocal no-poach agreements and clauses in commercial agreements must be carefully drafted.”

In its earlier submission to the Competition Bureau, Norton Rose Fulbright quietly advocated for many of these exceptions because anything else “would increase uncertainty and risks for Canadian companies with no corresponding benefit to competition.” During these consultations, Norton Rose Fulbright ran a “working group” of publicly listed companies, with unspecified names but a combined market cap of close to $90 billion, in the lead-up to the release.

Writing for the Financial Post, corporate Canada’s boutique union-busting lawyer, Howard Levitt, notes that the law could still impact a large number of firms previously caught between jurisdictions:

With Ontario legislation rendering most noncompetition clauses for new employment contracts unenforceable and other provinces considering doing the same, some employers who were already having difficulty retaining employees have looked to agreements with other employers in the industry to not poach each other’s staff. Many also have arranged with competitors to agree between them to wages for employees, with different wages at certain levels. Such agreements will not only increase the chance that they will retain their employees because they cannot be wooed away but will prevent their having to increase employees’ salaries to compete with higher offers. These agreements have now been rendered criminal.

“It’s tough to be an employer in Canada,” Levitt concludes.

Predictably, the Canadian Franchise Association issued the following warning: “The entire franchise business model, and the success it has brought to the Canadian economy and many thousands of Canadians, could be at risk.

The Canadian Bar Association (CBA), struck by similar feelings of solicitude for the country’s bosses, observes that Canada’s competition laws have historically exempted unionized firms from “wage-fixing” controls. The exemption for agreements between employers engaged in collective bargaining was added during the “Phase I” amendments to the Combines Investigation Act in the mid-1970s, tracing back to the earliest days of competition legislation in Canada. As a result, the CBA is quick to note, there is a “dearth” of case law on this issue, indicating that no firms have likely faced challenges for attempting to suppress union wages.

Maximal Returns

Canada’s economy, like all capitalist economies, is dominated by monopolies and oligopolies that average steady profits and work to ensure maximal returns.

According to data from Statistics Canada, multinational companies, which make up roughly 6 percent of all Canadian enterprises, control about $15 trillion in assets worldwide and roughly 67 percent of the total assets in the Canadian economy. Between 2015 and 2019, the most recent year for which data is available, total corporate profits rose from $239 billion to $409 billion — with profit margins rising from 9.2 percent in 2015 to 9.5 percent in 2016, 10.5 percent in 2017, and 11 percent in 2018, before dropping slightly to 9.6 percent in 2019.

Over the same period, Canadian finance and insurance firms had a net operating profit averaging up to 35 percent, while food and beverage stores are thought, despite data limitations, to have had net profits averaging closer to 6 percent. All told, these firms and multinationals command an enormous share of social wealth, divided further up and down the supply chain between the owners of retail stores, mines, car plants, and the country’s financiers and speculators.

These firms engage in what the business press would call strategic planning and coordination. In plain English, they scheme and conspire.

In a 2018 article, Martin Pelletier, a portfolio manager at TriVest Wealth Counsel, candidly described Canada as a “nation of oligopolies” that are “not good for consumers but great for investors.” He showed how every key sector of the Canadian economy — banking, telecommunications, energy, and the like — is dominated by a tiny handful of firms, who have ruled their respective roosts with little competition for decades. These companies consistently enjoy steady and high returns, despite providing increasingly limited services and, in many instances, implementing job cuts, reduced wages, and diminished benefits for their employees.

Globalive CEO Anthony Lacavera and the journalist Kate Fillion make a similar observation when they write:

Six companies dominate the Canadian banking industry. Four companies dominate the internet-service-provider market. Three companies dominate English-language television broadcasting, the supermarket industry, and wireless telecommunications. A duopoly dominates the airline industry. And so on.

The True Producers of Value


In the world of capitalism, it is not an exaggeration to say that all firms work together to keep wages low. As the above shows, their representatives are not shy in acknowledging this fact. The reason behind this is that the firms’ income is directly linked to the labor of the working class. Tools, facilities, and raw materials, when put into action by workers, create value, which is built upon the efforts of past workers. The connection between wages and profits is one of subtraction.

In the productive sectors of the economy, workers produce the revenues and profits that are split between their employer and the financiers backing them. Beyond the workplace, a similar dynamic exists, where international and domestic capital continues to exploit the working class through practices such as offering high-interest loans and engaging in price gouging. Wage fixing helps ensure that workers keep less of the value they produce in the direct production process. It is no coincidence that corporate profits hit record highs while wages dragged below the cost of living — corporate profits surged last year mainly because wages lagged behind the rising cost of living.

The desire for profit incentivizes Canadian bosses to collaborate, share information, and conspire to prevent workers from demanding higher wages. By the lights of the free market, this is rational behavior. It is what enables them, as capital owners, to take a larger portion of the value created by their workers. Regardless of whether their wealth is acquired through legal or illegal means, it is all unjustly obtained. This is the reality of workaday capitalist exploitation.