Competition Act Amendments and Guidance on Exclusive Use Clauses in Commercial Leases

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Amendments to the Competition Act (the “Act”) came into force in December 2024 and have significantly changed how exclusive use clauses in commercial leases are treated in Canada. The changes broaden the Act’s reach so that even typical landlord‑tenant agreements may now be reviewed if any part of the agreement is aimed at limiting competition.

In June 2025, the Competition Bureau (the “Bureau”) released guidance explaining how it plans to interpret and enforce the amended Act in relation to exclusive use clauses. The Bureau describes this as compliance guidance and encourages all businesses using or considering exclusivity in their leases to review their documents to ensure consistency with the updated law. This guidance provides the clearest picture to date of how the Bureau will assess exclusivity going forward.

Assessing the Justification for Exclusivity

The Bureau’s main message is that exclusive use clauses must have a real, business‑focused reason that supports competition rather than harms it. In other words, exclusivity must be necessary to help a business enter a market or to support investment that would not happen otherwise.

The Bureau encourages landlords and tenants to consider whether the same objective could be met with a less restrictive clause and whether the exclusivity can be shorter, cover a smaller area or apply only to specific products or services.

Where Exclusivity May Still Be Justified

The guidance recognizes that exclusive use clauses can sometimes benefit the market as a whole. For example, if a retailer is investing heavily in a new development, it may reasonably need short‑term exclusivity to help recover its upfront costs and attract customers during its early months. A limited and carefully drafted exclusivity clause can encourage that kind of investment and ultimately increase consumer choice.

Similarly, a tenant may need exclusivity to justify investing in upgrades to its existing leased space. Without some temporary protection from direct competition, those improvements may never take place. Even in these situations, the Bureau stresses that exclusivity must be proportionate to the purpose. Clauses that last too long, cover too wide an area or restrict too many products or services are unlikely to be acceptable and carry higher enforcement risk.

How the Bureau Will Enforce Exclusive Use Clauses

The Bureau can challenge exclusive use clauses using two parts of the Act: the abuse of dominance rules (sections 78 and 79) and the anti‑competitive collaboration rules (section 90.1).

Under sections 78 and 79, the law is intended to prevent dominant businesses from using their market power in ways that harm competition. The 2024 amendments made it easier for the Bureau to prove an abuse of dominance. Previously, the Bureau had to show both anti‑competitive intent and effect. The law now requires only one or the other. As a result, the Competition Tribunal (the “Tribunal”) can step in where it finds that a business has engaged in conduct meant to limit competition or conduct that actually limits competition, even where there was no intent to do so. The Tribunal has broad powers to fix the problem, including requiring a company to sell assets or shares and imposing significant financial penalties. These penalties can reach $25 million for a first order and $35 million for later orders, or an amount based on the benefit gained or a percentage of worldwide revenues.

Section 90.1 deals with anti‑competitive agreements. Before the recent changes, this section only applied to agreements between competitors, so leases were not usually affected. That has now changed. Section 90.1 may apply to any agreement, including leases, if a key purpose of the agreement is to limit competition and the agreement has the effect of doing so. If the Tribunal finds this to be the case, it can prohibit certain actions under the lease or require steps to restore competition. It may also order the sale of assets or shares if needed to fix the competitive harm. Penalties under section 90.1 can reach $10 million for a first order and $15 million for subsequent orders, or an amount tied to the benefit gained or a percentage of worldwide revenues.

These changes mean that both landlords and tenants may be subject to an investigation if an exclusivity clause appears overly broad or anti‑competitive.

No Cases Yet

While the amendments and guidance are now in place, there has not yet been any Tribunal or court decisions applying the amended Act to exclusive use clauses. As of early 2026, enforcement is in its early stages, and the Bureau’s guidance (rather than case law) sets the expectations for compliance.

Takeaways

Together, the 2024 amendments to the Act and the 2025 guidance from the Bureau represent a noticeable shift in how exclusivity in leases will be viewed. Exclusive use clauses are still allowed but only when they are narrow, necessary and supported by a clear business reason tied to investment or market entry.

Landlords and tenants should review existing exclusivity provisions and be careful when drafting new ones. Any exclusive use clause should be limited in time, restricted to a specific area and focused only on the goods or services that truly need protection. Having a strong, well‑documented justification for the clause will be increasingly important if it is ever reviewed by regulators.

The Commercial Leasing Group at Aird & Berlis LLP provides full-service legal support on all aspects of leasing, including exclusive use clauses. Please contact the authors or a member of the group if you have any questions or require assistance.