Blakes Competitive Edge™: December 2024 Update

Welcome to the December 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 and foreign investment law, including updates on enforcement activity by the Canadian Competition Bureau (Bureau), recent initiatives and key trends.

Key Highlights 

• Merger review activity in 2024 has slightly increased compared to the last two years, with the Bureau completing 193 merger reviews through the end of November 2024. This figure is 5.9% greater than the number completed through the end of November 2023 (182) and 4.8% greater than the number completed through the end of November 2022 (184).
• The Bureau brings an application against Google alleging anti-competitive conduct.
• The Bureau obtains several court orders to advance its ongoing investigations into deceptive marketing practices involving Leon’s and The Brick, along with restrictive trade practices involving Broadridge and Dye and Durham.
• Innovation, Science and Economic Development Canada publishes its Annual Report on the Investment Canada Act.

Merger Monitor 

November 1 – November 30 Highlights

• 22 merger reviews announced, 24 merger reviews completed
• Primary industries of completed reviews: mining, quarrying and oil and gas extraction (25%); manufacturing (21%); real estate and rental and leasing (21%); retail trade (13%)
• 15 transactions received a No Action Letter (63%) and seven transactions received an Advance Ruling Certificate (29%)
• One consent agreement (remedy) filed; one transaction was abandoned by the merging parties

January – November Highlights

• 205 merger reviews announced, 193 merger reviews completed
• Primary industries of completed reviews: manufacturing (19%); real estate and rental and leasing (16%); mining, quarrying and oil and gas extraction (15%); finance and insurance (8%)
• 98 transactions received a No Action Letter (51%), 85 transactions received an Advance Ruling Certificate (44%) and four transactions were resolved through other means
• Three consent agreements (remedies) filed; one judicial decision filed; two transactions were abandoned by the merging parties

Merger Reviews Completed Year to Date Through November 30, 2024, by Primary Industry

Merger Enforcement

Bureau Reaches Consent Agreement for TransAlta’s Acquisition of Heartland Generation

• On November 14, 2024, the Bureau announced that it entered into a consent agreement with TransAlta, an electrical power company, regarding its acquisition of Heartland Generation. The Bureau’s review concluded that the transaction would substantially lessen competition in the supply of wholesale electricity in Alberta. To resolve the Bureau’s concerns, TransAlta has agreed to sell Heartland Generation’s Poplar Hill and Rainbow Lake 4 & 5 electricity generating businesses.

Other Enforcement Activity

Bureau Brings an Application Against Google Alleging Anti-Competitive Conduct

• On November 28, 2024, the Bureau published a news release and a corresponding backgrounder on its application to the Competition Tribunal against Google Canada and Google LLC. The Bureau's application is based on allegations that Google abused its dominant position through, among other things, tying its advertising technology (ad tech) tools together to maintain market dominance and utilizing its position across ad tech tools to distort auction dynamics. The Bureau requested an order to (1) prohibit Google from continuing to engage in the alleged anti-competitive practices; (2) require Google to pay a penalty to promote compliance with the Competition Act; and (3) mandate that Google sell two of its ad tech tools.

Bureau Obtains Multiple Court Orders in Connection With Ongoing Investigations

• Broadridge: On November 26, 2024, the Bureau announced that it obtained court orders in respect of its ongoing investigation into Broadridge Software Limited, a wealth management and capital markets technology services company. The Bureau’s investigation is considering whether Broadridge is engaged in anti-competitive practices related to book of record platforms in Canada, including practices that may prevent competitors from offering complementary software products to broker-dealers. The Bureau is also reviewing the company’s recent acquisition of Kyndryl Canada Limited’s Securities Industry Services business.
• Leon’s and The Brick: On November 20, 2024, the Bureau announced that it obtained a court order requiring Leon’s Furniture Limited and its subsidiary, The Brick Warehouse LP, to provide records and written information that are relevant to the Bureau's investigation into whether these entities have engaged in certain deceptive marketing practices, including urgency cue claims, the usage of inflated regular prices when making saving claims, and misleading sales claims.
• Dye & Durham: On November 7, 2024, the Bureau announced that it obtained a court order requiring Dye & Durham to produce records and written information relevant to the Bureau's ongoing investigation into whether Dye & Durham Limited has engaged in conduct contrary to the restrictive trade practices provisions of the Competition Act, including abuse of a dominant position.

Non-Enforcement Activity 

Bureau Publishes Report on Canada’s Competition Summit 2024

• On November 13, 2024, the Bureau announced that it had published a report summarizing the Bureau's five key takeaways from Canada’s Competition Summit 2024: Market Dynamics in the AI Era in September, which touched on AI’s impact on competition; proposed regulatory frameworks to address challenges posed by AI; the desire for international regulatory cooperation; the need for transparency in AI systems; and the role of big tech in AI development.

Investment Canada Act 

Government of Canada Orders Wind-Up of TikTok Following National Security Review

• On November 6, 2024, the Minister of Innovation, Science and Industry announced that the Government of Canada, through the Governor-in-Council, ordered the wind-up of the Canadian business carried on by TikTok Technology Canada, Inc. in order to address alleged national security risks related to its parent company’s, ByteDance Ltd., operations in Canada. This decision resulted from a national security review process under the Investment Canada Act. The TikTok social media application will remain accessible in Canada and Canadians will remain able to create content on the platform.

Innovation, Science and Economic Development Canada Releases its Annual Report on the Investment Canada Act

• On November 29, 2024, Innovation, Science and Economic Development Canada published its 2023–2024 Annual Report on the administration of the Investment Canada Act. The report provides fiscal-year statistics, including information regarding net benefit and national security reviews.
  • The 2023 to 2024 fiscal year (from April 1, 2023, to March 31, 2024) saw 1,201 investment filings, a 18.9% increase in the total number of investment filings that occurred in the 2022 to 2023 fiscal year. This marks the second-highest total number of investment filings and the highest in terms of value of investments, which totalled over C$141.9 billion. Of the 1,201 filings, six were applications for review approved as being of likely net benefit to Canada, and 1,195 were notifications certified as complete.

Investments by Sector 

• The business and services industries (520 investments) category represented the greatest number of investments, representing a 20.1% increase from the 2022 to 2023 fiscal year. Similarly, total investments into the resources (44 investments), manufacturing (214 investments), wholesale and trade (165 investments), and other services (258 investments) categories increased from the year before.  

Investments by Country of Origin 

• The U.S. was by far the most significant foreign investor in Canadian businesses, with 618 investments originating from the U.S. (51.5%), accounting for 32.4% of the total asset value and 43.4% of the total enterprise value of investments. The U.S. was followed by the E.U. (20.4%) and the U.K. (6.7%), with the three regions collectively accounting for 944 filings or 75.2% of the total number of filings.
• The proportion of investments from China (including Hong Kong) decreased to 3.2% of total investments (compared to 4.3% in the prior fiscal year).
• The primary target for investments was Ontario (612 investments, 51.0%), followed by British Columbia (204 investments, 17.0%) and Quebec (196 investments, 16.3%).

Results of National Security Reviews 

• 26 investments were subject to an extended national security review, reflecting a 23.1% decrease from the previous year’s record high of 32, but nevertheless the second highest in history. Out of these 26 investments, two resulted in the Governor-in-Council issuing a final order including a divestiture, nine were withdrawn and 15 were allowed to proceed without any further action.
• Companies in the technology industry were a significant focus of national security scrutiny. Of the 22 orders for full national security review issued under Section 25.3 of the Investment Canada Act, eight reviews were in the computer systems design sector, while those in the mining sector decreased from six in the previous fiscal year to two. The average length of the extended national security review process was 163 days.
  • Notably, the government issued a national security review order under Section 25.3 with respect to an investment by investors originating in the U.S. This continues the trend from the last year when national security reviews orders were issued for the first time to U.S. companies.

Non-Cultural Investments 

October 2024 Highlights

• One reviewable investment approval and 100 notifications filed (82 filed for acquisitions, 18 for the establishment of a new Canadian business)
• Country of ultimate control: United States (60%); France (11%); United Kingdom (5%); Sweden (3%); Germany (2%); Italy (2%); Switzerland (2%)

January – October 2024 Highlights

• Four reviewable investment approvals and 956 notifications filed (742 for acquisitions and 214 for the establishment of a new Canadian business)
• Country of ultimate control: United States (60%); France (6%); United Kingdom (5%); China (3%); Germany (3%); Sweden (2%); India (2%)

Cultural Investments

Q2 2024 Highlights 

• Zero reviewable investment approvals and five notifications filed (one for an acquisition, four for the establishment of a new Canadian business)
• Country of ultimate control: United States (20%); Sweden (20%); Japan (20%); South Korea (20%); India (20%)

Q1 – Q2 2024 Highlights

• Two reviewable investment approvals and nine notifications filed (five for an acquisition, four for the establishment of a new Canadian business)
• Country of ultimate control: United States (27%); Denmark (18%); United Kingdom (9%); Sweden (9%); Japan (9%); South Korea (9%); India (9%); Argentina (9%)

Blakes Notes

• On November 7, 2024, the second episode of the Counterfactual Podcast’s “Better Know the Bureau” series was released, featuring Blakes Partner Julia Potter, who hosted a discussion with Matt Chiasson, a Senior Policy Advisor at the Bureau.
• Browse our thought-leadership insights from the Competition, Antitrust & Foreign Investment group to learn more.
• Browse our Competition Act Amendments page for insights on navigating the recent amendments.

Contact Us 

If you have any questions, please do not hesitate to contact your usual Blakes contact or any member of the Blakes Competition, Antitrust & Foreign Investment group.