CANADA Trends and Developments Contributed by: Isabella Tamilia and Alexander Rigante, De Grandpré Chait
vide for an increase in discretionary administra - tive monetary penalties for non-compliance to CAD25 million (as opposed to CAD10 million) for initial violations or three times the value of the benefit derived from the abusive conduct or, if that amount cannot be determined, 3% of the offender’s worldwide turnover; and up to a maxi - mum of CAD35 million (as opposed to CAD25 million) per subsequent violation or three times the value of the benefit derived from the abu - sive conduct or, if that amount cannot be deter - mined, 3% of the offender’s worldwide turnover. With the amendments coming into force in December 2024, there is considerable uncer - tainty as to how the Competition Bureau will address the exclusivity, use restriction and radius clauses contained in commercial leases, which are essential to grocery and other anchor retailer decisions to locate a store within a giv - en development. While the amendments are intended to target household-name players in the grocery industry, they are applicable across the board. As such, it is expected that landlords and tenants affected by the amendments will pay close attention to the evolution of this matter and revisit such clauses in their leases to mini - mise their exposure to the significant penalties proposed. Legislative Updates – Miscellaneous Property taxes on data centre equipment In Quebec, municipalities are now entitled to levy property taxes on certain data centre equipment. Recent jurisprudence has shown the courts granting a large interpretation to the concept of “movable property that is permanently attached to an immovable” in Section 1 of the Act respect - ing municipal taxation (the “ARMT”). In Ville de Montréal v Société en commandite Locoshop Angus (for which the application for leave to appeal to the Supreme Court was dismissed,
making the Court of Appeal’s decision final), the Court of Appeal clarified that, movables such as equipment for hosting computer servers do not need to be physically attached to the ground to be considered “permanently attached”. The Court found that a movable is “permanently attached” if: (i) it cannot be removed without being dismantled or without breaking down the building component in which it is placed; or (ii) an intellectual connection binds it to the immovable in which it is located. This ruling has effects beyond the data centre industry, and also affects industries such as the telecoms sector. For instance, in Ville de Québec v Vidéotron ltée, the Court of Appeal of Quebec considered Vidéotron’s wireless telephone equipment to be physically attached to the concerned immovable and thus to be calculated in the immovable’s municipal evaluation. The court’s ruling is par - ticularly important for Quebec as the province is one of Canada’s largest hubs for data centres (eg, Amazon, Microsoft, Google and IBM), vid - eo game developers, visual effects studios and artificial intelligence research, namely because of the province’s colder climate as well as its affordable and easily accessible energy from Hydro-Québec’s electrical grid. The ruling is expected to increase costs for both landlords and tenants in the technology sector, since the sophisticated equipment used has sig - nificant monetary value which will increase the property value and thus, property taxes. The rul - ing has been criticised as being a deterrent for business technology companies to remain and/ or set up shop in Quebec. Note that the ARMT excludes the equipment used for the industrial, manufacturing and agricultural sectors from a property’s municipal evaluation, an exclusion which the technology sector argues should also benefit them. Various sector groups have called
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