Canada: Competition/Antitrust & Foreign Investment Outlook 2023

For the first time in over a decade, and after years of sustained advocacy by the Commissioner of Competition (the "Commissioner"), substantial reform was enacted to the Competition Act in 2022. Among numerous changes, highlights include the pending criminalization of certain buy-side (specifically wage fixing and no-poach) agreements, very significant increases in the financial penalties available for abuse of dominance and deceptive marketing infringements, and the adjustment of the statutory assessment factors for mergers, abuse of dominance and competitor collaborations to better enable the Competition Bureau ("Bureau") to take enforcement action using unconventional theories of harm in digital markets. Tied to these developments, we have seen the Bureau continue to prosecute alleged wrongdoing in domestic cartel cases, as well as focusing its deceptive marketing efforts on so-called "greenwashing" practices.

In parallel, the Bureau has – as we predicted last year – taken a tougher line on merger enforcement under the existing provisions, challenging more cases in a single year before the Competition Tribunal ("Tribunal") than ever before. We expect merger review in complex cases to continue to intensify in 2023.

As well, significant developments with respect to the Investment Canada Act have signalled a stricter approach to national security review, particularly in relation to sensitive industries (especially critical minerals) and to foreign investors, whether privately or publicly-owned, with connections to non-allied foreign governments. As geo-political conditions evolve, we expect national security interventions to proliferate further.

Finally, following closely behind the first phase of Competition Act reform, the federal government has announced a public consultation as a precursor to further – more significant – legislative amendments. Among many areas of potential reform, the government will consider whether Canada's almostunique merger efficiencies defence should be repealed or at least watered down, whether the merger thresholds should be adjusted to facilitate more effective merger enforcement, as well as reviewing the legal test for abuse of dominance and considering if more effective sanctions could be made available for civilly-reviewable competitor collaborations. If enacted, these changes would represent a dramatic shift in Canada's competition law framework, with significant consequences for all companies that do business in Canada.

Competition Act Merger Review: More Contentious and Intensive Reviews

2022 was a very active year for the Bureau's mergers branch. Alongside several negotiated merger remedies, the Bureau continued its recent trend of challenging mergers before the Tribunal, a practice that until recently had been rare in Canadian enforcement. This increased merger activity took place against a backdrop of ongoing legislative reform in Canada. While the initial set of amendments, enacted in June 2022, took a restrained approach, the fuller review of the Competition Act launched in November 2022 will consider a number of significant changes to Canada's merger control laws.

A HARDENING ENFORCEMENT STRATEGY

2022 was a very active year for the Bureau's mergers branch.

Over the past year, the Bureau has stressed that it is ready, willing and able to challenge mergers through litigation before the Tribunal. While, overall, merger litigation remains uncommon in Canada, the number of cases brought by the Bureau to the Tribunal has demonstrably increased. In the 13 years since Canada's merger review regime was last meaningfully amended in 2009, the Bureau has challenged nine mergers; however, three of these have been brought since 2021 (Secure / Tervita, GFL / Terrapure and Rogers / Shaw), with the Tribunal hearing two of these cases in 2022 (GFL / Terrapure was ultimately resolved through a consent agreement). However, this litigation-ready posture does not necessarily translate into success before the Tribunal: in November 2022, it was announced that the Bureau had lost its challenge of the Parrish & Heimbecker / Louis Dreyfus grain handling merger on account of having failed to prove the merger would lessen competition substantially.

Notwithstanding this setback, other merger litigation continues:

• Rogers / Shaw. In fall 2022, the Tribunal heard the Bureau's challenge of the $26 billion merger between Rogers Communications Inc. and Shaw Communications Inc., two of Canada's leading telecommunications companies. The Bureau persisted with litigation notwithstanding a substantial structural remedy offer from Rogers, which would have seen it divest Shaw's Freedom Mobile wireless business. On December 29, the Tribunal dismissed the Commissioner's application. The Bureau has filed an appeal of the Tribunal's decision with the Federal Court of Appeal.
• Secure / Tervita. In spring 2022, the Tribunal heard the Bureau's challenge of the proposed merger between two players in the waste sector, Secure Energy Services Inc. and Tervita Corporation. The case is likely to turn on the Competition Act's mergers efficiencies defence, a provision that has been subject to sharp criticism from the Commissioner and which has been called out as an area of potential reform as the government considers further amendments to the Competition Act in 2023.

In parallel, the Bureau has also continued to demonstrate its openness to resolving merger concerns on a consensual basis, entering into seven consent agreements in 2022, each providing a structural remedy. While generally in line with the number of consent agreements registered annually, it does represent a steady increase over recent years, with three and four consent agreements being registered in 2020 and 2021, respectively.