With a new Commissioner of Competition appointed in March, and important competition cases expected to be decided this year, lawyers working in Competition and Anti-trust are anticipating both changes in the sector and a continued focus by the Competition Bureau on the digital economy and innovation.
Matthew Boswell has been heading up Canada’s Competition Bureau since last May, as interim commissioner, and was appointed commissioner on March 5, 2019, for a five-year term. As a former senior deputy commissioner in the Bureau, Boswell led numerous merger reviews and directed major investigations into criminal cartels, abuse of dominance and deceptive marketing practices.
Prior to joining the Competition Bureau, Boswell was a senior litigation counsel for the Ontario Securities Commission, where he largely prosecuted securities fraud and related matters. Earlier, he prosecuted criminal offences as an assistant crown attorney for the Ministry of the Attorney General of Ontario.
“As a lawyer, he will be more sensitive to evidence over economic theory,” says George Addy
, senior counsel at Davies Ward Phillips & Vineberg LLP
in Toronto and head of the firm’s Competition, Antitrust & Foreign Investment practice. “I think he likes the casework, and he’ll be less focused on internal institutional issues like organizational structure” than was his predecessor, who revamped it.
With eight years of experience at the Competition Bureau under his belt, Boswell is well known to the competition bar, and “with his prosecutorial background, there may be some increased focus on criminal matters, but also a strong impetus to bring cases in the digital economy” forward, says Anita Banicevic
, also a partner in the Competition, Antitrust & Foreign Investment practice in Davies
’s Toronto office.
The Competition Bureau has accomplished important enforcement practices in reviews and assessments, in particular work around Big Data and the technology sector, says Neil Campbell
, a partner at McMillan LLP
in Toronto. “They have looked at some cases in these areas, but there’s not an extensive track record of actual enforcement,” he says. Campbell would contrast Canada’s Competition Bureau with those of Germany and other jurisdictions in Europe, where agencies are getting “very vigorous” in enforcement activity in a range of digital economy markets. However, “we’re starting to see the Bureau go from thinking about it to more enforcement, with a Commissioner who has a stronger enforcement background.” The digital economy may be an area of increased scrutiny going forward, he agrees.
The digital economy involves an interplay between Competition and Privacy law, notes Brian Facey,
a partner in Blake, Cassels & Graydon LLP
in Toronto. “A lot of companies are collecting it,” and want data on customers and competitors in order to compete, he says. “They don’t want to share it, but competition law likes sharing of data. That will be a very big issue that the new Commissioner will have to grapple with” owing to the privacy issues in maintaining data, he adds.
The Competition Bureau will soon appoint a Digital Enforcement officer to advise on enforcement activity and cases in the digital sector, similar to what other jurisdictions have done, and the Bureau has already noted areas of interest, such as the intersection of privacy, data and anti-trust, says Banicevic.
“So, are the privacy protections you say you have being put in place? That’s a new area of focus, and they’re using what has traditionally been provisions used for advertising and other types of representations and applying them to the privacy sphere,” she says.
Mergers are expected to continue to be closely scrutinized. Facey predicts that the Competition Bureau will continue to rely on the pre-merger notification obligations on parties as well as other tools at the Commissioner’s disposal to investigate non-notifiable deals. Over the next six months, he anticipates that all eyes will be turned to Commissioner Boswell to see how he balances consumer and business interests in allowing consolidations in the marketplace.
There’s been some pushback of late from the legal and business communities, says Addy, notably over charges that deal merger processes have been taking too long. The Bureau has internal key performance indicators for how long a merger process should take to be approved, and statistically, he says, the Bureau has been slipping and not meeting its internal guidelines.
“I hope to see [the Commissioner] spending time trying to address the timeliness of performance or timeliness of review,” he says.
Important competition case law is also expected to be decided in 2019, including in the area of abuse of dominance (the Vancouver Airport Authority case), and class actions (i.e., Godfrey v. Sony Corporation
), with the potential for competition law liability to become more expansive in 2019.
The Vancouver Airport Authority case will be heard by the Competition Tribunal. Launched in 2016, the Competition Commissioner has argued that the airport authority, which operates Vancouver International Airport, had exploited its market position by denying new suppliers access to the airport, resulting in higher prices and poorer service.
Addy says this is the first case he knows of in which the Competition Bureau will look at how a local airport authority operates; prior to the 1990s, when airports were privatized, the government had monopolies for running airports, he says.
In the Vancouver Airport Authority case, “the theory of harm that the Competition Bureau is employing is based on an aggressive extension of some statements that came out of the Toronto Real Estate Board [TREB] litigation, the previous big case,” says Campbell.
In that case, the Toronto Real Estate Board had aimed to prevent its agent members from publishing home sales data, arguing that it would violate homeowners’ privacy. In 2011, the Competition Bureau challenged TREB’s policy preventing the publication of such information, charging that it impeded competition and digital innovation. The Supreme Court of Canada dismissed TREB’s appeal in August, and sales prices for Toronto homes are now publicly available.
Campbell predicts that the Competition Tribunal’s decision on the Vancouver Airport Authority will be appealed to the Federal Court of Appeal by whichever side loses, “based on novelty, and the importance of the issues. If the Bureau is successful, … it will signal greater risks, liabilities and exposures by companies that have a strong market position.” The decision is expected to be released by August.
Godfrey v. Sony Corporation
is a class action that was certified by the BC Supreme Court on behalf of both direct and indirect purchasers of optical disc drives, where price-fixing was alleged. Included in the class were so-called umbrella purchasers, who made purchases from suppliers who were not part of the alleged cartel but whose sales prices, they argued, had been elevated because of the alleged cartel’s price fixing.
“It’s a pretty important case,” says Campbell, who represented global electronics manufacturer Philips in the case. The reason for that is twofold, he says: i) “the plaintiffs’ bar is bringing cases in almost every situation that could be at issue under the Competition Act
,” including the Canadian component of big international cartel cases such as Godfrey
. So, the Supreme Court of Canada’s decision in Godfrey,
the appeal of which it has already heard, will be important to the Competition Bureau in terms of which cases it pursues for criminal prosecutions.
“From the point of view of Canadians as a whole, one of the best investments you could make is to properly resource the Competition Bureau to do the work that
The second reason Godfrey
is important is that it will get the Supreme Court to reconsider guidance it gave in a trilogy of cases in 2013 in which it held that indirect purchasers could advance Class Actions for recovery of unlawful price-fixing, and, “in particular as to whether the very lenient interpretation of the certification thresholds that have been adopted by a few of the trial judges is or isn’t an appropriate approach for class-action certification in the competition area,” Campbell says.
“It’s going to be an important decision … on what the legal standard is,” and should decide whether the dependent action by those suppliers who are not part of a cartel creates a right of recovery if the umbrella purchasers paid higher prices.
Although the decision in Godfrey
may not expose companies to more damages, “because it’s so hard to prove causation,” it “will be significant because it really has the potential to expand the number of people who could make a claim,” says Blakes’s Facey, who believes the Competition Act
needs to be updated. Price fixing is a criminal offence carrying a penalty of 14 years in jail, he says, “which is the same as treason. It’s a little overboard.”
Globally, this is certainly an interesting time to be in anti-trust law, says Banicevic. “It is getting a lot more attention, particularly in the tech sphere.” Debate over what direction anti-trust enforcement should take, and whether it should be increased in certain industries, makes it “an interesting area to watch in the next little while,” she says.
“There’s an opportunity for [the Competition Bureau] to take the lead and shape policy.”