Canada: Blakes Competitive Edge™: June 2022 Update

Welcome to the June issue of Blakes Competitive Edge, a monthly publication of the Blakes Competition, Antitrust & Foreign Investment group. Blakes Competitive Edge provides an overview of recent developments in Canadian competition law, including updates on enforcement activity by the Canadian Competition Bureau (Bureau), recent initiatives and key trends.

Key Highlights

• 86 merger reviews have been completed through the end of May. This is a 7% decrease from the number of reviews completed through the same period in 2021, and a 15% increase over the number of reviews through the same period in 2019. Setting aside 2020, which saw a significant decline in merger activity as a result of the Covid-19 pandemic, the average number of reviews completed through the end of May from 2013 to 2021 was 84.
• Rogers and Shaw have agreed not to close their proposed merger until the Commissioner's challenge is resolved.
• Amendments to the National Security Review of Investments Regulations to come into effect August 2, 2022.

May 2022 Highlights

• 15 merger reviews completed
• Primary industries: real estate and rental and leasing (30%); manufacturing (20%); finance and insurance (13%); wholesale trade (13%)
• Zero consent agreements (remedies) filed
• 11 transactions received an Advance Ruling Certificate (73%), four transactions received a No Action Letter (27%)

January – May 2022 Highlights

• 86 merger reviews completed
• Primary industries: real estate and rental and leasing (22%); manufacturing (19%); wholesale trade (13%); mining, quarrying, and oil and gas extraction (10%)
• 1 consent agreement (remedy) filed
• 51 transactions received an Advance Ruling Certificate (59%), 34 transactions received a No Action Letter (40%)

Consent agreement reached in respect of GFL Environmental Inc.'s acquisition of Terrapure Environmental Ltd.

• On May 24, 2022, the Competition Bureau announced that, following a mediation process, the Commissioner and GFL Environmental Ltd. entered into a consent agreement in respect of GFL's acquisition of Terrapure Environmental Ltd., bringing an end to the Commissioner's legal action against GFL. The consent agreement requires GFL to divest seven facilities that provide industrial waste services (IWS) and oil recycling services (ORS). The mediation stemmed from the Commissioner's application to the Competition Tribunal in November 2021 alleging that the acquisition would substantially prevent or lessen competition in several western Canadian markets for IWS and ORS.

Competition Bureau reaches interim agreement with Rogers and Shaw regarding merger challenge

• On May 30, 2022, Rogers and Shaw entered into a consent agreement with the Commissioner that prohibits the companies from closing their proposed merger either until the Tribunal has disposed of the Commissioner's application challenging the merger under section 92 of the Competition Act or with the agreement of the Commissioner. Rogers also agreed not to enforce any covenants under any transaction agreements that would limit Shaw's ability to operate or enhance its business until the Tribunal has disposed with the application or with the agreement of the Commissioner.

Paper Excellence completes divestiture of Kamloops pulp mill as required by consent agreement

• On June 1, 2022, the Competition Bureau announced that it had approved Kruger Papers Holding L.P., an affiliate of Kruger Inc., as the purchaser of Paper Excellence's pulp mill in Kamloops, British Columbia (B.C.). The sale of the Kamloops mill was required under a consent agreement between Paper Excellence and the Commissioner regarding Paper Excellence's acquisition of Domtar Corp in order to alleviate the Commissioner's concerns regarding possible concentration for the purchase of wood fibre from the Thompson/Okanagan region of B.C.

Competition Bureau reaches agreement with Neighbourly Pharmacy Inc. regarding acquisition of Rubicon Pharmacies

• On June 7, 2022, the Competition Bureau announced that it had entered into a consent agreement with Neighbourly Pharmacy Inc. to resolve competition concerns related to its proposed acquisition of Rubicon Pharmacies in Saskatchewan. The Bureau concluded that the proposed transaction would substantially lessen competition of pharmacy products and services in two Saskatchewan towns, as Neighbourly and Rubicon operate the only two pharmacies in each town. Neighbourly Pharmacy Inc. agreed to sell one of the two pharmacies in each town to resolve the Bureau's concerns.

Competition Bureau closes two investigations into pharmaceutical patent litigation settlements

• On May 20, 2022, the Competition Bureau announced that it had closed two recent investigations into potentially anti-competitive patent litigation settlement agreements involving pharmaceutical drugs. The Bureau did not name the parties to the settlement agreements under investigation. Evidence gathered from the investigations suggested that the agreements did not violate the Competition Act. However, in a position statement released concurrently with the announcement, the Bureau stated that it was of the view that the type of conduct displayed by the parties had the potential to bring about significant anti-competitive effects, and that the Bureau would take action should new and compelling evidence come to light.

Commissioner Boswell delivers speech at Centre for International Governance Innovation

• On May 26, 2022, the Commissioner of Competition, Matthew Boswell, delivered a speech to the Centre for International Governance Innovation as part of its Competition Policy Series. In his remarks, the Commissioner argued that in order to meet present challenges to the Canadian economy – including high inflation and Canada's falling economic productivity – Canada had to develop "a culture that embraces competition." The Commissioner then discussed steps the Bureau is taking to support this goal (as outlined in the Bureau's Annual Plan), including remaining vigilant about lingering challenges created by the pandemic such as anti-competitive conduct related to supply-chain issues and advocating for new, pro-competitive policies, including through the forthcoming release of the results of the Bureau's Digital Health Care Market study. The Commissioner concluded by briefly commenting on the importance of public engagement in further enabling competition in Canada. You can watch the Commissioner's speech and read the speech here.

• In Williams v. Audible Inc., 2022 BCSC 834, the Supreme Court of British Columbia (Court) was asked to decide three applications relating to an action centred around exclusivity provisions in an agreement between defendants Audible Inc. and Apple Inc. Ultimately, the Court dismissed Apple's application for summary judgement and the plaintiff's certification application, and granted Audible's application to extend a stay of proceedings to two groups of putative class members. In the course of its decision, the Court held that section 45 of the Competition Act does not apply to vertical agreements, as the section was intended to "criminalize a narrow range of conduct—agreements between competitors to fix prices, allocate markets, or restrict output, that constitute naked restraints that can only have negative effects."

Non-Cultural Investments

• Information regarding Investment Canada Act decisions for April 2022 have not yet been published and will instead be included in next month's Competitive Edge newsletter.

Amendments to National Security Review of Investments Regulations made by Order in Council

• On June 2, 2022, the Regulations Amending the National Security Review of Investments Regulations were announced through Order-in-Council. As previously discussed, these amendments will provide for a voluntary filing mechanism for investments by non-Canadians that do not require a filing, while also significantly extending the time period the government has to review such an investment where a voluntary filing is not made. The amendments will come into force on August 2, 2022.

Government of Canada intends to prohibit Huawei and ZTE products in 4G and 5G networks

• On May 19, 2022, the Government of Canada (Government) announced its intention to prohibit Canadian telecommunications service providers from deploying Huawei and ZTE products and services in their 4G and 5G networks. The Government further intends to require the removal or termination of (i) any existing 5G equipment and managed services by June 28, 2024, and (ii) any existing 4G equipment and managed services by December 31, 2027. The Government expects that telecommunications service providers will cease procurement of new 4G or 5G equipment and associated services by September 1, 2022.

• For more information regarding the proposed changes to the Competition Act, please click here.
• To read more thought leadership insights from the Competition, Antitrust & Foreign Investment group, please click here.

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