In 2020, Canada’s Competition Bureau can be expected to sharpen its focus on the digital economy—a clear priority for Commissioner of Competition Matthew Boswell. Shortly after Mr. Boswell’s March 2019 appointment, the Commissioner declared his “big picture” vision to be “for the Bureau to be among the world’s leading competition agencies in terms how we do all aspects of our work in the digital economy.” As we discuss below, this is one of several trends that could see the scaling up of competition enforcement this year in Canada.
A heightened focus on digital issues
The most visible of the Bureau’s initiatives on the digital front was a September 2019 “call-out” to market participants for information on potential anti-competitive conduct in key digital markets, such as online search, social media, display advertising and online marketplaces. This “tip line”-like approach was an unusual move for the Bureau. With written submissions in the call-out process now in, all eyes are on the Commissioner as to whether 2020 will see an uptick in digital-related enforcement cases or advocacy.
An early sign of a potential digital enforcement trend came this past summer, when private equity firm Thoma Bravo saw the Bureau challenge—post-closing—its acquisition of oil and gas reserves software maker Aucerna. The firm quickly came to a consent agreement resolution with the Commissioner, committing to divest an Aucerna rival that it owned. On the Bureau’s theory of the case, the Aucerna deal represented a “merger to monopoly” in a market for reserves data it described as “critical” to the business and compliance requirements of Canadian oil and gas producers.
A further development was the release of the Competition Tribunal’s decision in the Vancouver Airport Authority (VAA) case. Among other things, VAA clarifies the competition law criteria that apply to actors that exercise control over, or set the rules of, a market without competing in it, including what constitutes a “plausible competitive interest” in a market sufficient to support abuse of dominance allegations. These criteria may be important in any future Bureau action concerning a digital platform. That said, the VAA decision set a low bar for the “plausible competitive interest” required for the Commissioner to pursue a case, but did underscore the importance of having legitimate business justifications for conduct that is challenged as anti-competitive.
The Bureau’s digital focus in 2020 may also draw upon the resources of the “Chief Digital Enforcement Officer” position the organization created in 2019, with its hiring of an ex-IBM data and AI specialist. This officer’s role is to ensure the Bureau has the technology, tools and techniques to capture evidence of deceptive marketing practices online or cartels/bid-rigging, monitor threats and underlying emerging technologies and work with domestic and international partners in digital enforcement.
Finally, 2020 may see the creation of the role of the Data Commissioner, as outlined in the mandate letter to Minister of Innovation, Science and Industry. The mandate letter states that the Data Commissioner will oversee new regulations for large digital companies to better protect people’s personal data and encourage greater competition in the digital marketplace. How this commissioner’s responsibilities will align with those of the Commissioner of Competition is not clear at this time.
Non-notifiable mergers increasingly on the Bureau’s radar
Another recent organizational change for the Bureau was the rebranding of its Merger Notification Unit as the “Merger Intelligence and Notification Unit.” In announcing the change, the Bureau noted its intent to more actively scrutinize mergers falling below the Competition Act’s thresholds for notification.
Consistent with the announcement, many observers noted an increase in Bureau interest in non-notifiable mergers in mid-to-late 2019, such as its document production order relating to the acquisition of Encore Event Technologies by PSAV in the audiovisual services market. The Bureau’s legal authority to investigate or challenge non-notifiable mergers is not new; in fact, one such case was litigated to the Supreme Court of Canada several years ago. However, the Bureau’s new enforcement tack should cause companies looking to acquire Canadian businesses to more proactively assess and address competition risks in 2020.
An expanded scope for competition class actions
The Supreme Court of Canada’s highly anticipated decision in Pioneer Corp. v Godfrey can also be expected to have consequences for competition enforcement going forward. The Court found that so-called “umbrella” purchasers that buy goods or services from non-cartelists in a sector affected by price-fixing could bring private actions under the Competition Act to seek damages. It also found that the discoverability principle was available to extend the two-year limitation period under the statute, and that a private right of action was not intended to displace other common law or equitable remedies available to plaintiffs. Finally, the Court established a lower bar for showing a loss at the class certification stage than in the United States.
Each of these developments can be expected to spur on private class actions in Canadian courts in 2020 and beyond.
To read the comprehensive Dentons’ pick of Canadian Regulatory Trends to Watch in 2020 report, click here.
This post was originally published on dentons.com.