Welcome to the October 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 and foreign investment, including updates on enforcement activity by the Canadian Competition Bureau (Bureau), recent initiatives and key trends.
Key Highlights
Merger review activity remains slow in 2023, with 135 merger reviews completed to date. In contrast, the Bureau completed 165 reviews in the same period in 2021 and 153 in 2022.
Industry committee presents report on the proposed amendments to the Investment Canada Act (ICA).
Canada’s Competition Summit takes place on October 5, 2023.
Parliament continues debates on significant amendments to the Competition Act (Act).
ICA Annual Report highlights record number of national security reviews.
Merger Monitor
September 2023 Highlights
11 merger reviews completed
Primary industries: transportation and warehousing (18%); health care and social assistance (18%); utilities (18%); manufacturing (18%); mining, quarrying, and oil and gas extraction (18%); real estate and rental and leasing (9%)
Six transactions received an Advance Ruling Certificate (55%), five transactions received a No Action Letter (45%)
January – September 2023 Highlights
135 merger reviews completed
Primary industries: manufacturing (21%); mining, quarrying, and oil and gas extraction (19%); finance and insurance (12%); real estate and rental and leasing (12%); retail trade (7%)
Three consent agreements (remedies) registered
One judicial decision
- 62 transactions received an Advance Ruling Certificate (46%), 68 transactions received a No Action Letter (50%)
Merger Reviews Completed Year to Date in 2023 by Primary Industry
Merger Enforcement Activity
Transport Minister announces review of the proposed acquisition of Viterra Limited by Bunge Limited
On September 26, 2023, Transport Minister Pablo Rodriguez released a statement announcing that the Government of Canada will be reviewing global agricultural company Bunge Limited’s proposed acquisition of grain handler Viterra Limited. The acquisition will be reviewed under the mergers and acquisitions provisions of the Canada Transportation Act, as both companies hold ownership interests in port terminals throughout Canada. According to the Transport Minister, the government will conduct a public interest assessment that includes consulting with Canada’s ports, the marine industry and other interested stakeholders, given the significant national interest involved.
Other Enforcement Activity
Bureau reaches consent agreement with Dufresne Group regarding misleading marketing
On September 27, 2023, the Bureau announced that it had entered into a consent agreement with The Dufresne Group Inc. and its affiliates (Dufresne) to resolve the Bureau’s concerns that Dufresne’s marketing claims gave the false or misleading impression that deals on certain products would no longer be available after a certain time, and that Dufresne had offered discounts on products with inflated prices, suggesting significant savings for consumers. In resolving the Bureau’s concerns regarding its marketing practices, Dufresne agreed to pay an administrative monetary penalty of C$3.25-million, pay C$100,000 towards the Bureau’s costs and establish and maintain a corporate compliance program.
Apotex seeks leave from Competition Tribunal to bring private application for abuse of dominance
On October 3, 2023, Apotex Inc. (Apotex) brought an application to the Competition Tribunal seeking leave to bring an application under section 79 of the Act. In its application, Apotex alleged that Takeda Pharmaceuticals USA Inc. and its affiliates (Takeda) abused their dominant position in Canada with respect to the supply of ponatinib hydrochloride (ponatinib). Apotex further alleged that Takeda, as the only supplier of ponatinib in Canada, controls a class of business in Canada. Apotex claimed that, by refusing to supply Apotex with a sample of ponatinib, Takeda engaged in an anti-competitive practice that was likely to prevent or delay competition substantially by preventing or delaying when generic and lower priced ponatinib products were made available to Canadians. The Competition Tribunal confirmed that it could hear Apotex’s application for leave. Apotex discontinued its application on October 13, 2023.
Settlement agreements reached in connection with alleged illegal agreements between competitors
On October 20, 2023, the Public Prosecution Service of Canada (PPSC) reached settlement agreements with two companies relating to separate allegations of criminal conduct involving illegal agreements between competitors. First, the PPSC reached an agreement with Teknika HBA Inc. (Teknika) for bid-rigging on municipal infrastructure contracts in Quebec between 2004 and 2011. Under the settlement agreement, Teknika agreed to pay a C$200,000 fine, and was ordered to follow its corporate compliance program and maintain appropriate control procedure to ensure that this program is effective. Second, the PPSC reached an agreement with Inter-Cité Construction Ltée relating to alleged agreements between the company and a competitor to allocate territories for paving contracts awarded by the ministère des Transports du Québec. As part of the settlement, the company will pay a C$150,000 fine and has implemented a corporate compliance program designed to prevent its employees from engaging in anti-competitive activities.
Non-Enforcement Activity
Bureau hosts Competition Summit
On October 5, 2023, the Bureau hosted Canada’s Competition Summit, where expert speakers and panelists discussed how competition considerations can be factored into policy development across all levels of the Canadian government. The summit addressed Canada’s current economic landscape, the main barriers to competition in Canada and other competition issues from differing perspectives. Minister of Innovation, Science and Industry (Minister), François-Philippe Champagne, opened the summit by delivering a speech, in which he discussed several hot-button issues, including inflation, grocery prices and price-fixing practices. Following the Minister’s speech, the Commissioner of Competition, Matthew Boswell, provided remarks, in which he advocated for a whole-of-government approach to promote greater competition and improved productivity in Canada.
Parliament continues debates on significant changes to the Competition Act
Parliamentary debate on Bill C-56, which proposes significant amendments to the Act, continues. Among other things, Bill C-56 proposes to provide the Bureau with the power to compel third parties to produce information in connection with market studies and to eliminate the efficiencies defence, which allows mergers with economic efficiency gains to proceed if those gains outweigh any anti-competitive effects resulting from the merger. For more information about the amendments, see our September 2023 Blakes Bulletin: Canadian Government Introduces Important Amendments to the Competition Act. For more information on the government’s consultation on the future of the Act, see our November 2022 Blakes Bulletin: Canadian Government Announces Review of the Competition Act and our April 2023 Blakes Business Class Seminar: Sweeping Changes to Canada’s Competition and Foreign Investment Rules.
Minister provides update on action by grocers to stabilize food prices
On October 5, 2023, Minister François-Phillipe Champagne, released an update on efforts to stabilize food prices after meeting with leaders from grocery chains, and domestic and international food processors. The Canadian government will establish a Grocery Task Force to monitor initial commitments made by certain grocery chains and actions taken by other players in the food industry, and investigate practices that may harm customers. The Canadian government will also continue to work towards creating a Grocery Code of Conduct, and launching a food price data hub to increase transparency and accessibility. The Canadian government will also review input it receives from public consultation with Canadians and stakeholders on the amendments to the Act relating to food price stability.
Bureau launches international collaboration related to the 2026 FIFA World Cup
On September 22, 2023, the Bureau announced a joint initiative between the United States Department of Justice Antitrust Division and the Federal Competition Commission of Mexico to detect and prevent anti-competitive conduct in the provision of goods and services related to the 2026 FIFA World Cup. The collaboration will target price or wage fixing, bid rigging and market allocation, among other prohibited practices.
Bureau publishes finding on competitive intensity in Canada over the last 20 years
On October 19, 2023, the Bureau published its Competition in Canada from 2000 to 2020: An Economy at a Crossroads report, aimed at analyzing the state of competition across the Canadian economy, and how competition in Canada has evolved from 2000 to 2020. The Bureau concluded that Canada’s competitive intensity has decreased from 2000 to 2020, with increased concentration in the most concentrated industries, increased rank stability, reduced entry and exit, and rising profits and markups.
Investment Canada Act
Industry Committee presents report on proposed amendments to the ICA
On September 28, 2023, Parliament’s Standing Committee on Industry and Technology (INDU) completed its review of Bill C-34 (Bill) and presented its report on the Bill to the House of Commons. If implemented, the Bill would significantly amend the ICA by introducing a new mandatory pre-closing filing requirement for investments by non-Canadians in certain business sectors and providing the relevant minister authority to accept undertakings during a national security review. The report recommended amendments to expand the ability to conduct a net benefit review for investments by state-owned enterprises. The report also recommended adding factors for consideration in a net benefit review, such as the effect of an investment on intellectual property rights and personal information of Canadians. For more information about the amendments, see our December 2022 Blakes Bulletin: Canadian Government Proposes Important Changes to Expand National Security Review Powers Under the Investment Canada Act and our April 2023 Blakes Seminar: Sweeping Changes to Canada's Competition and Foreign Investment Rules.
Innovation, Science and Economic Development Canada Releases its Annual Report on the ICA
On September 28, 2023, Innovation, Science and Economic Development Canada released its Annual Report on the administration of the ICA. The report provides fiscal-year statistics including net benefit and national security reviews. Some highlights of the report include:
The fiscal year 2022 to 2023 (from April 1, 2022 to March 31, 2023) saw 1,010 investment filings, a 19.5% decrease in the total number of investment filings after a record-breaking 2021 to 2022. Of the 1,010 filings, five were applications for review approved as being of likely net benefit to Canada and 1,005 were certified notifications (243 of which were notifications in respect of the establishment of a new Canadian business by a non-Canadian).
Although the business and services industries (433 investments) category represented the greatest number of investments, investments in this category decreased by 25.4% from the 2021 to 2022 fiscal year. Similarly, investments into the other services (224 investments), manufacturing (184 investments), and wholesale and trade (135 investments) categories decreased from the year before. However, investments into the resources industries (34 investments) increased by 3%.
Investments by Sector
- The U.S. was by far the most significant foreign investor in Canadian businesses, with 559 investments originating from the U.S. (55.3%), accounting for 36.0% of the total asset value and 61.2% of the total enterprise value of investments. The proportion of investments from China (including Hong Kong) increased to 4.3% of total investments (compared to 4.0% in the prior fiscal year).
Investments by Country of Origin
- The primary target for investments was Ontario (523 investments, 51.8%), followed by British Columbia (171 investments, 16.9%) and Quebec (161 investments, 15.9%).
- 32 investments were subject to an extended national security review, higher than in any previous year. As expected, companies in the technology and mining industries were the main focus of national security scrutiny; of the 22 orders for full national security review issued under section 25.3 of the ICA, seven reviews were in the computer systems design and related services sector and six reviews were in the mining industry sector. The average length of the extended national security review process was 174 days.
- Notably, the government issued national security review orders under section 25.3 with respect to two investments by investors originating in the U.S. While both investments were ultimately allowed to proceed, the Canadian government has never previously issued a section 25.3 order against a U.S.-based investor.
Results of National Security Reviews
Non-Cultural Investments
July 2023 Highlights
Zero reviewable investment approvals and 117 notifications filed (85 filed for acquisitions and 32 for the establishment of a new Canadian business)
Country of ultimate control: U.S. (38%); Austria (16%); France (6%); Germany (5%)
August 2023 Highlights
Zero reviewable investment approvals and 119 notifications filed (88 filed for acquisitions and 31 for the establishment of a new Canadian business)
Country of ultimate control: U.S. (51%); U.K. (8%); India (7%); France (6%)
January – August 2023 Highlights
Four reviewable investment approvals and 808 notifications filed (600 for acquisitions and 204 for the establishment of a new Canadian business)
Country of ultimate control: U.S. (51%); U.K. (7%); France (6%); Austria (5%); Germany (3%); China (3%)
Cultural Investments
Q3 2022 Highlights
Four reviewable investment approvals and nine notifications filed (five for acquisitions and four for the establishment of a new Canadian business)
Country of origin of investor: U.S. (38%); Sweden (23%); China (15%)
Q1 – Q3 2022 Highlights
- 10 reviewable investment approvals and 27 notifications filed (18 for acquisitions and nine for the establishment of a new Canadian business)
- Country of origin of investor: U.S. (54%); China (16%); Sweden (8%)
Cultural Investments
Non-Cultural Investments
Blakes Notes
Browse our thought-leadership insights from the Competition, Antitrust & Foreign Investment group to learn more.
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