Blakes Competitive Edge™: July 2022 Update

July 14, 2022

Welcome to the July 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

Merger activity in 2022 remains strong, with 110 merger reviews completed through the end of June. This is a slight increase over the number of reviews completed in the same period in 2021 (107). 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 June from 2013 to 2021 was 106.
Early mediation in the Bureau’s challenge of the Rogers / Shaw merger has ended without resolution.
New private right of access for abuse of dominance and substantial increases in maximum monetary penalties under the Competition Act now in effect; criminal wage-fixing and no-poach provisions to come into effect in June 2023.
The Bureau released the first of a trilogy of reports based on its digital health-care market study.

Merger Monitor

June 2022 Highlights

24 merger reviews completed
Primary industries: real estate and rental & leasing (17 per cent); wholesale trade (17 per cent); mining, quarrying and oil & gas (17 per cent); finance and insurance (13 per cent); and professional, scientific and technical services (eight per cent)
One consent agreement (remedy) filed
13 transactions received an Advance Ruling Certificate (54 per cent), 10 transactions received a No Action Letter (10 per cent)

January – June 2022 Highlights

110 merger reviews completed
Primary industries: real estate and rental & leasing (21 per cent); manufacturing (15 per cent); wholesale trade (14 per cent); mining, quarrying and oil & gas (12 per cent); and finance and insurance (nine per cent)
Two consent agreements (remedies) filed
64 transactions received an Advance Ruling Certificate (58 per cent), 44 transactions received a No Action Letter (40 per cent)

Merger Enforcement

Early mediation in the Bureau’s challenge of the Rogers / Shaw merger ends without resolution

On July 6, 2022, Rogers and Shaw announced that early mediation between the two companies and the Commissioner, which took place on July 4 and 5, did not result in resolution of the Commissioner’s objection to their proposed merger. The announcement follows Rogers’ June 17 announcement that it had entered into an agreement to sell Freedom Mobile Inc. to Quebecor for C$2.85-billion, a sale that was intended to resolve concerns expressed by the Commissioner as well as the Minister of Innovation, Science and Industry, regarding viable and sustainable wireless competition in Canada following the proposed merger.

Other Enforcement Activity

The Bureau concludes preliminary investigation of relabelled pharmaceuticals

On June 27, 2022, the Bureau announced it had closed its “preliminary investigation” into relabelled biologic pharmaceuticals, as the pharmaceuticals in question have not been marketed in Canada. However, the Bureau noted that information gathered through its investigation suggested that relabelling drugs could harm competition in some cases by making it less likely that patients would switch from originator drugs to biosimilar drugs, which could in turn reduce incentives for pharmaceutical companies to develop and market biosimilars. As such, the Bureau left open the possibility of future investigation where a relabelled biologic is marketed in Canada and there is compelling evidence of harm to competition. More detail on the Bureau’s preliminary investigation is available in the Bureau’s position statement.

Non-Enforcement Activity

**Important amendments to the Competition Act come into effect**

Amendments to the Competition Act came into force on June 23, 2022. The amendments include higher maximum fines and penalties, and private access to the Competition Tribunal for those impacted by abuse of dominance. Modifications to the criminal conspiracy provisions under section 45, which include an increase in potential fines and a prohibition on wage-fixing and no-poach agreements, will come into effect on June 23, 2023, in order to give corporations adequate time to ensure compliance with the changes. The Bureau has published a guide to the amendments and is planning to host virtual info-sessions for the public and to update its guidance to reflect the amendments. For more details on the amendments, see our June 24 bulletin.

The Bureau makes recommendations for improving digital health-care service

On June 23, 2022, the Bureau published the first of a trilogy of reports based on its digital health-care market study. In its report, the Bureau finds that disparate privacy and data governance rules across Canadian provinces and territories, coupled with the lack of interoperability between established electronic medical records (EMR) systems, create barriers for new digital health-care solutions providers seeking to enter the Canadian market. This has resulted in a marketplace characterized by three main providers of primary health-care EMR systems, reduced data sharing, impeded innovation and lowered adoption of digital health-care solutions. The Bureau concludes by suggesting steps policymakers can take to reduce the barriers of entry into the EMR systems market.

New Collusion Risk Assessment Tool released by the Bureau

On June 16, 2022, the Bureau launched its Collusion Risk Assessment Tool. As detailed in the Bureau’s press release, the tool is intended to help procurement agents avoid bid-rigging and produces a collusion-risk score based on a 10-minute questionnaire about a planned bid process. The tool will also suggest best practices to help users mitigate identified risks, with the stated goal of creating a fair, competitive bidding environment.

Section 36 Remedies under the Competition Act

In Petty v Niantic Inc., 2022 BCSC 1077, a case concerning so called “loot boxes” in video games, the Supreme Court of British Columbia (Court) granted an order staying the majority of the plaintiffs’ claims, including those brought under the Competition Act, based on a binding arbitration clause found in the defendant video game publisher’s terms of service. The plaintiffs argued against the stay of their Competition Act claims on the grounds that these claims were not capable of arbitration in this case as, among other things, the relevant terms of service excluded the possibility of applying Canadian law. The Court did not decide the question of whether the Competition Act claims are arbitrable, and instead found that the question of the arbitrator’s jurisdiction to decide the Competition Act claims should be left to the arbitrator in the first instance. The Court ordered a stay of the proceeding except for the plaintiffs’ claims under section 172 of the British Columbia Business Practices and Consumer Protection Act.

Investment Canada Act

Non-Cultural Investments

April 2022 Highlights

For non-cultural investments: zero reviewable investment approvals and 87 notifications filed (61 for acquisitions and 26 for the establishment of a new Canadian business)
Country of origin of investor: U.S. (48 per cent); UK (11 per cent); China (six per cent); France (five per cent); India (three per cent); Sweden (two per cent)

May 2022 Highlights

For non-cultural investments: zero reviewable investment approvals and 86 notifications filed (71 for acquisitions and 15 for the establishment of a new Canadian business)
Country of origin of investor: U.S. (52 per cent); UK (12 per cent); Denmark (six per cent); France (five per cent); Netherlands (three per cent); Austria (three per cent)

January – May 2022 Highlights

For non-cultural investments: zero reviewable investment approvals and 485 notifications filed (363 for acquisitions and 122 for the establishment of a new Canadian business)
Country of origin of investor (non-cultural): U.S. (54 per cent); UK (seven per cent); France (five per cent); China (three per cent); India (three per cent); Austria (three per cent); Sweden (two per cent); Germany (two per cent)