The Canadian Competition Bureau (Bureau) issued two announcements in September 2019 that impact companies doing business in Canada. First, the Bureau will expand its monitoring of non-notifiable transactions. Second, the Bureau called on participants in the digital economy to submit information about conduct in the industry that could be harmful to competition.
1. STEPPING UP MARKET SURVEILLANCE EFFORTS
On September 17, 2019, the Bureau issued a news release explaining how its Merger Intelligence and Notification Unit (or MINU) will step up its market surveillance efforts to uncover non-notifiable mergers that may raise competition concerns.
Parties are only required to notify the Bureau of transactions that meet certain financial and other thresholds in Canada. However, the Bureau can review mergers of any size to determine whether they are likely to raise significant competition concerns. The Bureau can challenge a merger for up to one year following closing.
The Bureau’s focus on intelligence gathering signals an intention to increase enforcement efforts for mergers that do not meet notification thresholds in Canada, but which may nonetheless create competition concerns. This effort reflects a growing trend globally in which competition agencies are increasingly focused on ensuring that smaller deals are also scrutinized. This is particularly prevalent in the tech sector as the financial thresholds for mandatory notification (which are based on current assets and revenues as opposed to future growth) may not represent the competitive significance of an emerging player.
Parties to any merger involving companies that do business in Canada should carefully consider the risk of Bureau enforcement, even if the deal does not require pre-merger notification to the Bureau.
2. DOUBLING DOWN ON DIGITAL ECONOMY
On September 4, 2019, the Bureau published a “call-out” for information to assist with the Bureau’s enforcement activities in the digital economy. The Bureau is requesting information from market participants regarding conduct related to topics such as: 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 has specifically pointed to certain business strategies that it may examine including:
- Refusals to deal with certain customers or suppliers
- Self-preferencing one’s own products over others on a proprietary platform
- Protecting a “core” market or capturing an “adjacent” one
- Most favoured nation clauses and margin squeezing.
The call-out is a further demonstration of the Bureau’s focus on the digital economy. Other recent digital economy initiatives by the Bureau include: the hiring of the Bureau’s first Chief Digital Enforcement Officer in July 2019; enforcement action taken in June 2019 against the merger of two software companies; and hosting a data forum in May 2019 intended to “foster exchanges” on issues faced by competition enforcers in policing the digital economy.
The call-out reflects increased Bureau scrutiny of companies engaged in the digital economy, including social media companies, online marketplaces, search engines, and businesses that display online advertising – all of which were explicitly identified as areas of concern.
Businesses should expect that information provided in response to the call-out may be used in the investigation of alleged anti-competitive conduct in the digital economy. The information may be used to initiate new investigations or to support those that are already ongoing.