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The New Commissioner of Competition Requests Changes to Address Digital Economy Challenges

On May 30th, 2019 the Canadian Competition Bureau hosted the Data Forum: Discussing Competition Policy in the Digital Era. This event followed the unveiling of Canada’s new Digital Charter by Minister Navdeep Bains, Minister of Innovation, Science, and Economic Development and his letter to the newly-appointed Commissioner, Matthew Boswell dated May 21st, 2019.

Numerous experts and senior antitrust enforcers, including from the Canadian Competition Bureau, the US Department of Justice, the US Federal Trade Commission, and the European Commission, gathered to discuss the challenges related to digital platforms, the intersection between privacy and competition law, and data portability. The key takeaways from the event are summarized below:

  • Digital Charter Era: Minister Bains reiterated his commitment to ensure that the Canadian marketplace stays competitive in the new digital era, that Canada be a leader in data economy and respond properly to market abuses. Minister Bains emphasized that the Digital Charter (see our previous summary) is a necessary foundation to build and restore trust for Canadians in the digital era. He stressed the Competition Bureau’s role in this new era, notably asking in his May 21st letter that the Commissioner focus on (i) the impact of digital transformation on competition; (ii) the emerging issues for competition in data accumulation, transparency, and control; (iii) the effectiveness of current competition policy tools and marketplace frameworks; and (iv) the effectiveness of current investigative and judicial processes.
  • Privacy and Competition Law: The intersection of privacy and competition law has been the subject of many discussions in recent years. While privacy laws will deal specifically with breaches of privacy, competition laws will also sometimes overlap in the regulation of practices related to privacy. For instance, the Competition Act could be used to address misrepresentations to consumers with respect to privacy protection. Clarity on the boundaries and complementary of privacy and competition law is needed going forward to avoid a potential enforcement overlap.
  • Data Portability: It is clear from the discussions during the Forum that this is not the end of debates with respect to data portability. While it may be perceived as a solution to increase access to market for smaller businesses and start-ups, data portability comes with its own set of challenges. Speakers raised concerns with respect to intellectual property rights which may be attached to the data being collected and its reorganization.

While some speakers were of the view that the increasing complexity of digital platforms, data accumulation and network effects require competition policy adjustments, most believed that current competition laws around the world provide the right framework to effectively deal with the new challenges raised by the digital economy. In line with the Big Data White Paper released last year (see our previous summary), Commissioner Boswell reiterated that the current analytical principles are appropriate to handle these new challenges, and he foresees an active agenda for the Competition Bureau in the coming years.

Commissioner Boswell however indicated that the Bureau’s enforcement tools should be modernized as follows:

  • Increased Fines: Commissioner Boswell outlined that it is critical to increase fines and penalties in order to provide global digital leaders with the proper incentives to promote compliance and deter anti-competitive conduct. He considers the current maximum level of administrative monetary penalties for abuse of dominance (CDN$10 million for a first breach) as clearly insufficient and ineffective against larger multinational players.
  • Increased Global Enforcement Coordination: Commissioner Boswell advocates for a “globally coordinated approach’’ in order to address trans-border digital concerns. He believes that increased cooperation with authorities from other jurisdictions is needed in the context of civil investigations, and raised the possibility of joint investigations in countries that have similar competition laws. He is also hoping for quicker and increased exchanges of information with foreign authorities in order to facilitate civil investigations. This of course could raise concerns for parties providing information to the Bureau, on a voluntary or compulsory basis.
  • Market Study Power: The Forum mentioned the power of the UK Competition and Markets Authority (CMA) to conduct market investigation, which recently lead to the UK open banking initiative. Although the Bureau does conduct market studies, the Competition Act does not provide it with the formal powers to do so, including to compel the production of information in such context. Commissioner Boswell considers that market studies are very effective in the digital economy to proactively address industry-wide concerns, and asked for effective tools to conduct proper market studies. This would allow the Bureau to make recommendations to regulatory bodies in a more efficient way.
  • Repeal of Efficiencies Defense: Finally, Commissioner Boswell considers that the efficiencies defense, which is unique to Canada, should no longer be available.

For more insight into Commissioner Boswell’s vision for the Competition Bureau, see our previous article Walking the Talk: Canadian Competition Bureau Reiterates and Demonstrates Commitment to Active Enforcement.