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Peter Flynn
Blakes, Toronto
peter.flynn@blakes.com

Victoria Turner
Blakes, Toronto
victoria.turner@blakes.com

 

There have been a few significant developments in Canadian competition law, including:

• the Competition Tribunal’s decision in the Vancouver Airport Authority (VAA) case;

• a public call-out for information by the Bureau regarding anti-competitive conduct in the digital economy; and

• significant policy developments and international cooperation at the Bureau.

We report on these developments and others below.

Conduct developments

Competition Tribunal dismisses Commissioner’s application against Vancouver Airport Authority

On 17 October 2019, the Competition Tribunal issued the VAA decision.^[1] This decision dismissed the Commissioner of Competition’s (‘Commissioner’) application to prohibit the airport authority from imposing restrictions on the number of in-flight catering services at the airport, which allegedly decreased competition. The Commissioner’s application was brought under the abuse of dominance provision of the Competition Act (the ‘Act’), but the Tribunal ultimately concluded that the required elements of the provision were not satisfied. While the Vancouver Airport Authority (‘the Authority’) was found to be dominant in the relevant market, the Commissioner failed to establish that the overall character of the conduct was anti-competitive and that the conduct substantially prevented or lessened competition.  

With respect to an anti-competitive character of the conduct, the Tribunal found that the Authority had a plausible competitive interest (PCI) in the market, which is a requirement where a company accused of abuse of dominance does not itself compete in the relevant market. The Tribunal found a PCI because the Authority had an interest in the level of concession fee revenues it obtains from in-flight caterers. However, the Tribunal also found that the Authority had legitimate business justifications for the exclusionary conduct. The Commissioner also failed to prove that the conduct substantially prevented or lessened competition, with the Tribunal concluding that the conduct did not materially reduce the degree of price or non-price competition in the market.

In late November 2019, the Commissioner announced that the Bureau would not be pursuing an appeal of the matter, while also confirming that the Bureau would continue vigorously enforcing the abuse of dominance provisions of the Competition Act.

Bureau enters into temporary consent agreement with online flight operator

In a first for the Competition Bureau, a company under investigation for misleading advertising agreed to refrain from making false or misleading representations (with regard to seat selection and cancellation fees), while the Competition Bureau completed its investigation. Notably, the consent agreement will remain in place until a permanent consent agreement is executed or the matter is decided before the courts. The Competition Bureau took this action after proceedings were commenced in California alleging similar conduct. This case highlights the Competition Bureau’s continued focus on digital businesses and its pattern of bringing cases in Canada that were also brought in the United States.

Final sentence imposed in Quebec bid-rigging case

The last of several charges against companies and individuals involved in a bid-rigging scheme for municipal infrastructure contracts in Quebec and Gatineau were settled in late November 2019. The scheme involved executives from several engineering firms who engaged in a conspiracy to fix bid prices and divide up the relevant contracts among their firms, resulting in increased contract prices. All four individuals that faced charges pleaded guilty in 2019 and received varying sentences and fines. The last individual to be sentenced was Claude Marquis, a former executive of Genivar (now WSP Canada). Marquis received a 19-month sentence (six months house arrest and 13 months under curfew) and was ordered to complete 120 hours of community service, bringing the total punishments imposed on the individuals to sentences of five years and 11 months and 260 court-ordered community service hours.

Policy guidelines and development

 

Call-out for information regarding potentially anti-competitive conduct in the digital economy

The Bureau published a call-out for information from digital market participants about conduct in the digital economy that could be harmful to competition in early September 2019.^[2] The call-out requests information on conduct related to various topics, including: the impact of network effects on competition; advantages related to economies of scale and scope; and practices based on access to large volumes of data. The Bureau may use the information collected for the purposes of commencing or continuing investigations; informing analysis with respect to anti-competitive conduct in the digital economy; and developing competition law guidance relevant to digital markets.

Bureau increases monitoring of non-notifiable mergers

On 17 September 2019, the Bureau announced that it had recently expanded the role of its Merger Notification Unit, renamed the Merger Intelligence and Notification Unit (MINU). The MINU would focus more on intelligence gathering for non-notifiable mergers raising potential competition concerns. This signals an increasing scrutiny and risk of enforcement for smaller deals. The Bureau’s announcement also encouraged parties engaged in non-notifiable transactions to voluntarily engage with MINU prior to closing, where the transaction may raise competition issues.

Commissioner continues to push international cooperation

The Commissioner met with his counterparts at the US Department of Justice, the US Federal Trade Commission and Mexico’s Federal Economic Competition Commission in late October. The meeting involved discussion of recent cases and ongoing priorities, with a focus on competition law in the digital economy. This meeting is one example of the Bureau’s ongoing efforts to increase international collaboration. This year, the Bureau has also been designated President-Elect of the International Consumer Protection and Enforcement Network and participated in the release of a common understanding on the digital economy with the competition authorities of G7 countries and the European Commission.

Bureau publishes highlights from recent Data Forum

In late August, the Bureau issued a report on its May 2019 Data Forum, where evolving competition issues in the economy were discussed.^[3] The report highlights a number of developments and trends, including: Canada’s new Digital Charter and its key principle of ensuring a level playing field in the digital marketplace; an update on current thinking from international jurisdictions on digital platforms and the digital economy; potential enforcement tools to address concerns specific to the digital economy, such as a right of private access for abuse of dominance and the establishment of a digital platform code of conduct; and the relationship between privacy and competition law.

Commissioner remarks on ‘Building a Culture of Competition’

The Commissioner gave a speech on 19 November 2019 at a CD Howe Round Table regarding competition policy in the digital age. Throughout the speech, the Commissioner focused on the importance of fostering a culture of competition. The Commissioner shared his views on the benefits of a culture of competition in the digital age, including protecting incentives for Canadians to innovate with respect to the digital economy. The Commissioner noted that his goal is to use vigorous enforcement, advocacy and improvement of tools and processes to modernise the approach to competition, while recognising that government and business cooperation will be required to achieve a culture of competition.

New Senior Deputy Commissioner, Cartels and Deceptive Marketing Practices appointed

On 2 December 2019, the Bureau appointed Stéphane Lamoureux as Senior Deputy Commissioner, Cartels and Deceptive Marketing Practices. Lamoureux has held senior positions in Legal Services for a variety of Government of Canada departments and also has previous experience at the Bureau, including as the Deputy Commissioner, Deceptive Marketing Practices.