Canada: Canadian Competition Policy Focuses In On "Big Data"

The application of competition law and policy to "big data" has become a major focus for government agencies in Canada and around the world. In recent weeks, both the Competition Bureau and the Bank of Canada have weighed in. Competition regulators around the world, from the U.S. to Japan to Germany and the European Union have also issued their own policy statements on the application of competition laws to big data.

KEY TAKEAWAYS:

  • Oversight of companies that collect and use consumer data is an area of keen interest for competition law agencies in Canada and around the world.
  • The Competition Bureau's (Bureau) preferred approach is to continue to rely on market forces and the existing competition law framework when making enforcement and policy decisions. The Bureau recognizes that large networks supported by big data provide significant consumer benefits by, for example, encouraging companies to lower prices faster, encouraging innovative services to develop more quickly and allowing consumers to make more informed purchasing decisions.
  • The Bank of Canada has called for a modernization of competition policy to address concerns that the collection and use of consumer data by social media companies and online marketplaces can create market power.
  • Big data will continue to be an important policy issue as Canada takes steps to promote the growth of data-oriented businesses through the supercluster initiative.

COMPETITION BUREAU

In September 2017, the Bureau released a discussion paper to engage stakeholders on the topic of big data and competition law. The Bureau drew from the responses and its own experience to highlight its enforcement approach to big data matters in three areas: mergers and monopolistic practices, illegal agreements between competitors, and deceptive marketing practices. On February 19, 2018, the Bureau released its final report on Big Data and Innovation: Key Themes for Competition Policy in Canada, which summarizes the Bureau's enforcement approach.

For mergers and monopolistic practices, the Bureau will continue to apply its traditional framework to market definition, market power and competitive effects. Where issues concerning big data are involved, the Bureau will consider both the efficiencies and consumer benefits from a network, but also whether big data could impose barriers to new competition or soften competition between firms.

While some commentators have suggested that the advent of artificial intelligence and algorithmic pricing should lead to a new approach to enforcement, the Bureau disagreed. The Bureau reiterated that an agreement between competitors continues to be a requirement to establish a violation of the Competition Act.

As for deceptive marketing practices, the Bureau reiterated that the rules regarding deceptive marketing practices apply both to the collection and use of data. The collection of personal information not only engages Canada's privacy laws, but can engage the deceptive marketing provisions of the Competition Act as well. Similarly, these provisions will continue to apply to advertising supported by big data, including sale or ordinary price claims, performance claims, targeted advertising and online reviews.

While the Bureau's approach to these issues generally aligns with the approaches of regulators in the U.S. and Europe, the development of specific policies in Canada is not as far along given that the Bureau's discussion paper on big data was only released last fall.

BANK OF CANADA

In a February 8, 2018 speech, the senior deputy governor of the Bank of Canada called for a modernization of competition policy with respect to big data. In particular, she stressed the potential for large "superstar" social media companies to take advantage of the "winner-takes-all" nature of the collection of user data. The Bank of Canada has called for more active regulation of ownership and use of big data to prevent companies from imposing barriers to competition or hindering innovation.

The Bank of Canada also connected algorithmic pricing to possible competition law concerns and called for additional clarity on how competition and other laws will address these important issues. The Bureau, like U.S. antitrust regulators, continues to view algorithms under a traditional approach that requires an agreement between parties to establish wrongdoing.

IMPLICATIONS

The collection and use of personal data raises novel competition law issues. As the Canadian economy becomes increasingly digitized (as reflected by the February 15, 2018 announcement to support a Digital Technology Supercluster), resolving these issues in a coherent and consistent manner will become even more important.

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.

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