Section 20 Qualifying Long Term Agreements

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Section 20 Qualifying Long Term Agreements: What You Need to Know

Section 20 of the Competition Act, which covers qualifying long term agreements (QLTA), is frequently overlooked by many businesses. However, it is an important aspect to consider, as it can potentially affect a company’s legal obligations and financial liabilities.

QLTA refers to any agreement between two or more parties that involves the supply of goods or services on a long-term basis (typically 5 years or more). Such agreements can involve a wide range of industries, including manufacturing, construction, and energy.

In essence, Section 20 QLTA is designed to prevent anti-competitive behavior between parties in a long-term contractual agreement. This means that the agreement must not have any provisions that restrict competition, such as price fixing or limiting production or supply. Doing so could result in a breach of the Competition Act, leading to significant penalties and legal consequences.

To avoid running afoul of Section 20, it is important for businesses to assess the terms of their QLTA with great care. In particular, they should consider whether the agreement contains any clauses that may harm competition, such as exclusive dealings or customer restrictions.

It is also worth noting that the Competition Bureau has the power to investigate any QLTA that could be deemed anti-competitive. This means that even if a business believes that their agreement is fair and lawful, they may still be subject to a regulatory review.

In conclusion, Section 20 QLTA is an important consideration for businesses that enter into long-term agreements with customers or suppliers. By ensuring that their contracts comply with the Competition Act, companies can avoid potential legal problems and reputational harm down the line. It is always advisable to seek legal advice to ensure that your QLTA meets the requirements of Section 20, and that you fully understand your legal obligations.

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