Canadian Competition and Foreign Investment Law: The 2015 Year in Review
The Competition Bureau’s stated aim is to prioritize the investigations and enforcement actions that will have the greatest impact on the Canadian economy and consumers. The Bureau’s efforts to implement this can be seen across a wide swath of the competition law landscape, including: challenging a gas station merger at the Competition Tribunal, pursuing enforcement action against car rental companies and department store retailers for their advertising of prices, and its ever increasing competition advocacy efforts in the broadcasting industry. This 2015 Year in Review covers these and other top stories in more detail. The events of 2015 set the stage for the Bureau to continue on its path of challenging business practices, competitor collaborations and transactions that present competition concerns in consumer-facing and critical sectors of the Canadian economy.
While some of the Competition Bureau’s enforcement activities resulted in fines and guilty pleas in 2015, it faced significant setbacks in cases involving government contracts and chocolate. Another notable event from 2015 was a court decision impacting settlement privilege in criminal proceedings: where a cartel member provides information against other members of the cartel to the Crown in exchange for immunity from criminal prosecution, that information must be disclosed to the other members that are charged. For detailed discussion see: Cartel Enforcement
We cover contested mergers – Tervita, Parkland and Staples – which provide insight into efficiencies, interim injunctions and cross-border cooperation, respectively. We also report on a number of deals reviewed by the Competition Bureau in industries such as media & books, pharmaceuticals and hotels. These and other events in 2015 continue to underscore the benefits of concluding competition analysis as early as possible in order to develop an appropriate strategy and avoid challenges. For detailed discussion see: Mergers (Competition Act).
National security reviews of proposed mergers continue to be hot topic. As we have discussed in the past, the Canadian government has been steadily increasing its focus on national security and rejecting mergers due to national security concerns. This has been a concern for foreign investors (especially state-owned enterprises (SOEs) and Canadian businesses. 2015 was an eventful year in national security: for the first time, the national security review process is being challenged, a uranium mine deal was approved and a SOE’s attempt to build a new fire alarm systems factory was blocked. Other important events from 2015 which will impact foreign investment into 2016 and the future include the extension of national security review timelines and the increase of the “net benefit” review threshold to $600 million. For detailed discussion see: Mergers (Investment Canada Act — Foreign Investment Review).
Consistent with the Bureau’s aim to prioritize investigation and enforcement actions in consumer facing industries, the Bureau’s abuse of dominance cases in 2015 involved investigations, settlements and Tribunal decisions impacting residential water heaters, realtors and home sellers, medical devices and consumer products. For detailed discussion see: Reviewable Practices.
The Competition Bureau has been very active in price advertising enforcement: in 2015, a retailer was ordered to pay a $3.5 million administrative monetary penalty (AMP), the Bureau announced it is seeking $30 million in AMPs from two rental car companies over non-optional fees, and two major department store retailers were ordered to produce records and information in connection with the Bureau’s investigation into their regular price claims for mattresses. These events signal this is an area which companies should keep an eye on in 2016 and beyond. In other news, the Bureau accepted sizable consumer refunds and donations, among other things, to address concerns it had with certain companies’ activities. For detailed discussion see: Misleading Advertising.
The courts continue to wrangle over the availability of common law and equity remedies for contraventions of the Competition Act, in view of Section 36 which provides a statutory cause of action in such situations. Access to the Competition Bureau’s investigative file in criminal matters by class action plaintiffs is hotly contested by the Federal Government. For detailed discussion see: Class Actions.
In 2015, the Competition Bureau stepped up its advocacy efforts (including providing commentary on the broadcasting industry) as well as published comprehensive guidelines dealing with corporate compliance programs and intellectual property enforcement. Also, the Bureau underwent an internal re-organization which consolidated several of its branches by streamlining its structure into three primary pillars: (i) mergers and civil matters; (ii) cartels and deceptive marketing; and (iii) advocacy and compliance. For detailed discussion see: Other Developments in 2015.