Competition Bureau issues guidance on competitor property controls – Key considerations for the commercial real estate sector

On June 4, 2025, the Competition Bureau released new guidance (the “Guidance”) on competitor property controls under the Competition Act (the “Act”), marking a significant development in the Bureau’s approach to commercial real estate practices. 

Competitor property controls—namely restrictive covenants, exclusivity clauses, and non-compete provisions—have long been a feature of commercial property sale and leasing arrangements in Canada. While these controls often serve legitimate business purposes, the Bureau observes that they may raise concerns under the abuse of dominance and anti-competitive collaboration provisions of the Act. The Guidance comes on the heels of significant amendments to these provisions, certain of which were motivated by the use of competitor property controls in the retail grocery sector.  

While the Guidance outlines the Bureau’s expected enforcement approach, it is not binding on the Competition Tribunal or any court. Rather, property controls are presumptively lawful; the Bureau or a private party must prove that a particular property control is sufficiently anti-competitive to warrant an order of the Tribunal.

What are competitor property controls?

The Guidance focuses on two primary forms of competitor property controls:

• Exclusivity clauses: Found in commercial leases, these clauses typically constrain landlords from renting spaces to a tenant’s competitors within a defined geographic area or otherwise restrict how products or services are offered.


• Restrictive covenants: These are restrictions on commercial property that prevent its owner, including purchasers, from using or leasing the property for certain uses, such as the operation of a business that competes with the property’s previous owner.

In the Bureau’s view, exclusivity clauses and restrictive covenants are anti-competitive “by their nature” because “the value of a competitor property control comes from how it can protect the business from competition”. The Bureau is particularly concerned where property controls:

• are imposed by dominant firms;


• are broad in scope (covering large geographic areas or multiple properties);


• are long in duration; and


• exclude actual or potential competitors from key locations, markets, or access to essential facilities.

Property controls can be pro-competitive or “justified”

The Bureau acknowledges that not all competitor property controls are inherently anti-competitive. In “limited cases”, it says, controls can be “justified” if they are necessary to facilitate pro-competitive outcomes. Context matters—short-term restrictions that are narrowly tailored to protect legitimate business interests (such as safeguarding confidential information or investment in property improvements) are less likely to attract scrutiny.

The Guidance states that the Bureau intends to look at both the intent and effect of competitor property controls, by considering at least the following factors:

• market share of the party imposing the restriction;


• availability and accessibility of alternative sites for competitors;


• specific terms, duration, and geographic reach of the restriction;


• the nature of the affected market (e.g., retail, grocery, or other sectors where location is critical); and


• whether the restriction is standard industry practice or goes beyond what is reasonably necessary for legitimate business purposes.

Based on the above considerations, the Bureau points to three criteria for assessing whether a competitor property control is “justified”:

• Timeframe: The control should last only as long as necessary to protect investment or an incentive to enter a market.


• Geographic area: The control should be limited to the smallest geographic area necessary. Restrictions that extend to unrelated or other properties owned by the landlord are generally not defensible.


• Products and services: Extensive restrictions covering a broad scope of products or services are less likely to be justified. A control should be narrowly tailored such that it does not unnecessarily limit products or services a competitor may offer.

Enforcement against anti-competitive property controls

In the Bureau’s view, competitor property controls can be challenged under the Competition Act’s abuse of dominance provisions (sections 78 and 79) and/or civil anti-competitive collaboration provision (section 90.1). Either the Bureau or private litigants can initiate proceedings under these provisions.

Abuse of dominance occurs where a dominant firm (or firms) engages in one or both of the following:

• Anti-competitive practices: business practices which are intended or expected to have a negative predatory, exclusionary, or disciplinary effect on competitors or adverse effect on competition.


• Anti-competitive effects: conduct that has had, is having, or is likely to have the effect of preventing or lessening competition substantially in a market (“SPLC”).

The Bureau generally considers the party proposing or benefiting competitively from the property control to be the potential target of investigation or enforcement.

The anti-competitive collaboration provision applies to agreements that have the likely effect of an SPLC in the past, present, or future. The provision typically applies to agreements between competitors but—as a result of recent amendments to the Act—it can now also apply to agreements between non-competitors if a significant purpose of any part of the agreement is to prevent or lessen competition in a market. This means the provision could apply to property control arrangements involving landlords and tenants who do not compete with one another.

In anti-competitive collaboration cases, the Bureau considers all parties to an impugned agreement to be potential targets of investigation or enforcement—i.e. the Bureau may investigate tenants and landlords with respect to exclusivity clauses, and property buyers and sellers with respect to restrictive covenants.

Investigation under either the abuse of dominance or anti-competitive collaboration provisions can lead to significant penalties, such as prohibitions against the terms of a competitor property control andadministrative monetary penalties (“AMPs”). The Bureau warns that it will seek AMPs in addition to other remedies in respect of restrictive covenants, given its view that such controls are not justified “outside of exceptional circumstances.”

Private parties can now also take steps to challenge property controls by seeking leave (permission) to bring applications before the Competition Tribunal under the abuse of dominance and/or anti-competitive collaboration provisions. To obtain leave, the party must demonstrate that the impugned conduct directly and substantially affects all or part of its business, or that the application serves the public interest. In addition to seeking remedial orders to address ongoing competitive harm, private applicants can seek orders directing the respondent(s) to make monetary payments to persons affected by the challenged conduct, in what effectively amounts to a disgorgement remedy.

Untested legal landscape

While the Guidance sheds helpful light on the Bureau’s enforcement plans and analytical approach to competitor property controls, the legal landscape in this area remains largely untested.

The Tribunal has not had an opportunity to consider commercial property controls in light of the recent amendments. The Bureau has commenced investigations, most notably into property controls in the retail grocery sector. In early 2025, the Bureau announced the resolution of an investigation into a major grocery chain in a small Alberta community that had adopted restrictive covenants that prevented competitors from opening grocery stores in the vicinity. The Bureau alleged that these restrictions lessened competition substantially by limiting consumer choice and potentially increasing prices. The matter was resolved by consent, with the retailer agreeing to remove its restrictive covenants.

Practical tips and considerations for real estate sector participants

Businesses with interests in commercial real estate—whether as owners, landlords or tenants—should take stock of past, present, and future practices and arrangements respecting property controls:

• Review existing arrangements: The amended provisions in the Act apply to existing arrangements. Assess current leases, sales agreements, and other property-related contracts for restrictive covenants, exclusivity clauses, or non-compete provisions that may impact competitors’ access to real estate.


• Evaluate competitive impact: Consider whether the person requesting or imposing the restriction may be dominant in a market and whether existing or proposed restrictions could be viewed as intending to negatively affect competitors or competition, or may have the effect of lessening or preventing competition in such market. The relevant markets may be narrow and highly localized in which case suitable alternative sites for competitors may be limited.


• Record keeping: Bear in mind that the Bureau often looks at contemporaneous internal records and communications between the parties when assessing the intention and effect of business practices. Parties should document the legitimate, pro-competitive reasons for property controls.


• Consider avoiding property controls as a policy: In response to the amended Act and Bureau enforcement, some businesses, including prominent retail grocery chains, have decided to abandon competitor property controls as a general policy. This strategy mitigates risk and the need for a case-by-case evaluation.


• Monitor legal developments: Stay informed of further guidance or enforcement actions from the Bureau and private enforcement. As the legal framework in this area continues to develop, so too will best practices for compliance. For instance, the Bureau recently issued a warning that agreements between landlords/property managers and their competitors about rental prices, terms of their leases and restrictions on the availability of rental units may be illegal.


• Seek legal advice: Consult commercial real estate and competition counsel before negotiating or renewing property control arrangements, especially in concentrated or localized markets. Landlords and tenants may negotiate the allocation of risks associated with property controls.

Conclusion

The Guidance underscores the need for careful consideration of competition law risks in commercial real estate transactions. The Bureau’s view provides a useful reference point, but it is not determinative. It may well overstate the actual risks, particularly where property controls do not involve a dominant firm or anti-competitive effects are unlikely. Nevertheless, gone are the days where exclusivity clauses or restrictive covenants should be imposed routinely. By proactively reviewing and, where appropriate, adjusting property control arrangements, parties can better manage potential competition law exposure in this evolving area.

For further information or tailored advice, please contact both our Competition and Foreign Investment Group and Real Estate Group.