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Any discussion of local preference in Ontario quickly stumbles across the Discriminatory Business Practices Act (R.S.O. 1990, c. D. 12). The Act was passed in the 1970s by Premier Davis in response to the prohibition imposed by the Arab League against conducting business with Israel. Arab League countries were boycotting Israel at the time, and they tried to force Canadian companies to do the same. The background to the legislation shows that the Act was intended as a tool to prevent racial discrimination and appears to have been unrelated to purely domestic business practices.
It has been a commonly-held view among many Ontario municipalities that the Act provides a legal prohibition against the practice of preferring, when procuring, local companies because of their local status (however "local" might be defined). Indeed, the Ontario Public Buyers Association went so far as to publish a small booklet a few years ago making the case against the practice of granting a "local preference" on the basis of ethical, economic, and legal grounds. The booklet declared that legal advice had been received that made preferring local companies a breach of the Act.
It is noteworthy that public procurement did not surface as a distinctive business practice until the 1990s when the trade agreements were ushered in. And, since the public records leading to the passage of the Act make no reference to procurement it is improbable that the purpose of the Act was to bar the practice of granting a preference to local companies.
Aside from the public policy background, what does the language of the Act tell us?
Key provisions
The relevant provisions of the legislation are the following:
2. Purpose and intent of Act
The purpose and...