Following the landmark 2014 Supreme Court of Canada decision Tervita Corp. v. Commissioner of Competition, where the Competition Bureau (Bureau) has concerns about a merger and the parties are relying on the efficiencies defence, merging parties should expect to be asked to provide considerable information about transaction efficiencies to enable the Bureau to determine whether the efficiencies will be greater than, and will offset, the anti-competitive effects of the merger. The Bureau can use its supplementary information request process or even section 11 production orders to obtain relevant information from the parties as well as from customers and other market participants. We also anticipate that the Bureau will continue to challenge transactions that raise issues in either important sectors of the Canadian economy or consumer-facing industries, even where the competition issues are limited to a small number of products or markets.
The coming year has the potential to be quite important to the development of foreign investment policy in Canada.
While Prime Minister Justin Trudeau has not spoken extensively on foreign investment, he has in the past voiced support for several high-profile transactions that required approval under the Investment Act Canada. Recently, he stated that his party is "always open to global investment in a way that respects and defends Canadian interests, and that is the approach we will take on foreign trade and foreign investments."
The new government can be expected to:
- Apply rigorous scrutiny to investments that potentially raise national security issues
- Continue to encourage foreign investment into Canada but apply scrutiny to large-scale transactions and particularly transactions involving higher-profile Canadian businesses
- Closely monitor investments by state-owned enterprises and sovereign wealth funds, but our expectation is greater openness to investors on a case-by-case basis, especially if jobs and innovation are highlighted.
We anticipate that the Bureau will increase and intensify its scrutiny of Canada's construction industry in the coming year. The Commissioner of Competition has publicly stated that he will continue to focus on the construction industry as it is "particularly susceptible to cartel activity." We also anticipate that the Bureau will continue to expand its partnerships with other investigative agencies, highlighted by the memoranda of understanding signed with the Ontario Provincial Police and international antitrust agencies. Approximately one-third of the Bureau's cartel cases have an international dimension, highlighting the Bureau's desire for increased cooperation with antitrust and investigative agencies. It will also be interesting to see how the Bureau and the courts will implement the Bureau's new compliance policy "credit" in an actual case.
Certification issues will continue to be a hot-button topic as trial courts in provinces across Canada grapple with the Supreme Court of Canada's new standards. Moreover, two contradictory decisions have followed the British Columbia Court of Appeal's decision in Wakelam v. Wyeth Consumer Healthcare in which the courts took opposite views as to whether plaintiffs may claim for restitution (disgorgement of profits) as a result of a criminal conspiracy. Since the issue remains unresolved in Canada, we expect it could be the subject of a Supreme Court of Canada decision in the near future.
CONDUCT AND INTELLECTUAL PROPERTY
Updated guidelines on the intersection between competition law and intellectual property law were released this past year. These guidelines include additional guidance related to the Bureau's enforcement policy concerning pharmaceutical patent litigation settlements and concerning the use of standard essential patents by standard-setting organizations. As a result, we anticipate increased enforcement efforts with respect to the competition/ intellectual property interface in the coming year. We also expect the Bureau to carry out further investigations of parties that are not actually competing in a market if they otherwise are found to, in some way, exercise control over that market under the abuse of dominance provision.
ADVERTISING AND MARKETING
In 2016, we expect the Bureau will continue to pursue consumer protection through the enforcement of the misleading advertising provisions of the Competition Act. In particular, companies should be mindful of the Bureau's willingness to scrutinize the proper disclosure of fees and charges, ordinary selling price claims, and deceptive telemarketing. Using new enforcement powers and under new guidance issued in 2015, companies should anticipate increased enforcement by the Bureau related to online promotions, "astroturfing" and anti-spam, particularly under the new provisions of Canada's Anti-Spam Legislation.
COMPETITION PROMOTION AND ADVOCACY
We anticipate that the Bureau will continue to dedicate more resources to competition promotion and advocacy in the coming years. The current Commissioner has made competition promotion, compliance and advocacy a central focus on the Bureau's mandate, including creating a new branch within the Bureau dedicated to this task. Despite questions raised about the Bureau's statutory authority to conduct market studies, we anticipate the Bureau will continue to conduct such studies and may again seek amendments to the Competition Act to enable it to compel information from market participants for this purpose.
To continue reading this article, please click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.