In his annual address to
In support of his call for reform, the Commissioner cited the shift in
Key Takeaways
-
The Commissioner has expressed his support for stiffer penalties for anticompetitive conduct, repeal or reform of the "efficiencies defence" available to merging parties under Canadian law, extension of
- The digital economy remains a key focus for the
Competition Bureau , with new funding allocated to increase the Bureau's digital expertise and enforcement, and calls for law reform to better address anticompetitive conduct by large digital firms. - The Commissioner's comments suggest that merger reviews may become more litigation-focused, less transparent, and lengthier.
- increasing the Bureau's "capacity to take on new and more complex anticompetitive conduct, especially in digital markets";
- strengthening the Bureau's enforcement team through new hiring, with an emphasis on building litigation capacity and the use of external experts; and
- enhancing the Bureau's ability "to advocate for pro-competitive regulatory and policy changes."
- First, the Commissioner expressed concern about the Tribunal's requirement that the Bureau must at least provide a "ballpark" estimate of economic harm to support an application for interim injunctive relief where efficiencies claims are involved. What is perhaps surprising is that the Bureau did not present such ballpark evidence despite having reviewed the
Secure Energy Services transaction for over three months by the time the parties moved to close the transaction, and despite clear direction from theSupreme Court of Canada in a prior case that the Bureau bears the burden of quantifying anticompetitive harm. Nonetheless, in the Commissioner's view, if parties choose to hold the Bureau to its statutory review time frames in complex cases (which time frames were significantly extended in 2009 through the addition of a unilateral Bureau power to issue subpoena-like production requests), the Bureau may be required to pursue "a litigation-focused approach" to merger review that would be costly, less predictable, less transparent and less engaged with the merging parties. - Second, the Commissioner repeated the Bureau's long-standing dissatisfaction with the efficiencies defence under Canadian law, saying that it permits anticompetitive mergers (including those that result in monopolies and raise prices for consumers), is inconsistent with the approach of other G-7 countries and raises significant practical challenges for the Bureau in measuring and estimating anticompetitive harm.
- increased penalties and fines;
- expanded private enforcement tools, particularly with respect to the abuse of dominance provisions in the Competition Act; and
- inclusion of buy-side agreements, including wage-fixing and no-poach agreements, in the Act's cartel provisions.
We discuss the Commissioner's main points in more detail below.
1. New Funding Earmarked for Digital Expertise and Litigation Capacity
The Commissioner, like his predecessors, has repeatedly bemoaned the
The newly announced Digital Enforcement and Intelligence Branch is one element of the Bureau's investment in increased digital capacity, and reflects the Commissioner's sustained focus on the digital economy and "Big Tech" (see our previous comments). The Commissioner's stated goal is for the new branch to "become a centre of expertise on technology and data and act as an early-warning system for potential competition issues in the digital and traditional economies." Among other enforcement activities relating to the digital economy, the Bureau has continued an investigation into alleged abuse of dominance by Amazon in
Additionally, the Commissioner was careful to note that the Bureau's merger review program will not directly benefit from the increased funding, and he foreshadowed a merger filing fee review in the next two years to "properly fund operations in line with current realities and demands." Although Canadian merger filing fees experienced a step-change (44%) increase in 2018, the Commissioner's remarks suggest that further increases may be coming.
2. Merger Review Remains a Source of Tension
In the decisions in
In his recent address, the Commissioner asserted that the
Although the Commissioner criticized the
Nevertheless, the Commissioner's comments on the
3. A Vigorous Call for Competition Law Reform
In addition to the call for reform implied by his comments on the
The Commissioner asserted that "modernizing" Canadian competition law in these ways will benefit
Conclusion
The Commissioner's explicit calls for reform in his remarks last week are the most forceful and comprehensive presentation of his views calling for legislative amendment and indicate a willingness to embrace a public role in the policy debate. In doing so, the Commissioner has aligned the Bureau with calls for competition law reform in the global public discourse and with reform efforts underway in other jurisdictions.
Much of what the Commissioner argues is open to debate, in terms of both his analysis of specific issues and his prescriptions for resolving them. Most fundamentally, it is by no means clear that the Bureau requires expanded powers and higher penalties to properly or efficiently enforce the law. The Bureau already has very extensive enforcement tools at its disposal. To many observers, the Bureau's enforcement difficulties are not the product of legislative deficiencies but the result of its lack of litigation capabilities when it does decide to bring cases. From that perspective, the Commissioner's statement in his speech that the Bureau will be allocating increased resources to build its litigation capacity may be the most significant pronouncement he made, and could obviate the need for further dramatic enhancements to the Bureau's already potent enforcement arsenal.
All of this is proper fodder for future discussion. In the interim, while it remains to be seen what reform will look like in the Canadian context, if it occurs at all, it is important for businesses to closely monitor the public debate and consider what proposed changes to the law or enforcement practices could mean for them.
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