As the concluding attraction of this year's Canadian Bar Association Competition Law Fall Conference, Commissioner of Competition Matthew Boswell gave a speech highlighting the Competition Bureau's enforcement priorities for the year ahead. He underscored the Bureau's view that "Canada needs more competition", including through a comprehensive review of the Competition Act.

The highlights from the Commissioner's speech are summarized below.

More Money for Increased Enforcement

In Budget 2021, the Canadian Government promised $96 million in funding over five years, and an additional $27.5 million on an ongoing basis, to enhance the Competition Bureau's enforcement capacity.

In his speech, the Commissioner outlined the priority areas for the increased funding:

  • the creation of a new Digital Enforcement and Intelligence Branch that will act as an "early-warning system" for competition issues in both the digital and traditional economies;
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  • strengthened enforcement teams (e., hiring more officers to conduct investigations, more lawyers to litigate cases, and more external experts to bolster the Bureau's claims); and
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  • enhanced advocacy capacity, which in practice likely means an expanded Competition Promotion Branch to advocate for regulatory and other policy changes across Canada.

The Commissioner specifically noted that the Bureau's Mergers Directorate would not be receiving any of the additional Budget 2021 funds, as that branch is fully funded by filing fees received from merging parties.

However, the Commissioner also forecasted that, with rising costs of conducting merger reviews and a review of the filing fee scheduled within two years, merging parties can likely expect a further increase in filing fees in the near future to "properly fund operations". Currently, the filing fee for notifiable mergers in Canada is approximately C$75,000, and the Bureau conducts approximately 200 – 250 merger reviews per year.

Challenges Stopping Mergers

The Commissioner devoted a significant portion of his speech to what he perceives to be significant issues with the current merger review process and the legal standards that inhibit the Bureau's ability to prevent allegedly anti-competitive mergers from closing.

The majority of his comments focused on the recent Secure/Tervita litigation, where the Bureau filed a last-minute injunction to stop two waste companies from closing their proposed merger. The Bureau's initial request to stop closing, pending the hearing of an injunction, was rejected by both the Competition Tribunal and the Federal Court of Appeal, and the Bureau's subsequent request for a hold separate order (to restrict integration of the merged business, pending adjudication of the Bureau's complaint) was also rejected by the Tribunal.

The Commissioner highlighted the difficulties that the Bureau faces in reviewing the potentially hundreds of thousands of documents, that it requires merging parties to produce, in a timely fashion to complete its reviews of complex transactions before merging parties can legally close their transactions. The Commissioner's concerns about resource constraints were similar to concerns recently expressed by the US Federal Trade Commission in the context of its "second request" process.

As a result, the Commissioner indicated that the Bureau will be adopting a litigation-focused approach for transactions where merging parties refuse to enter into a timing agreement with the Bureau (i.e., an agreement to not close a transaction once the statutory waiting period has expired). For such cases, given the enhanced prospect of litigation, the Commissioner said that merging parties can expect a decrease in transparency and engagement from the Bureau team assessing their transactions.

Advocating for Changes to the Competition Act

The Commissioner highlighted perceived gaps in the Competition Act inhibiting effective enforcement of competition laws in today's economy, including:

  • weak maximum fines that are perceived as a cost of doing business rather than a meaningful deterrent to anti-competitive conduct;
  • strict and impractical legal tests to prevent alleged anti-competitive mergers;
  • the absence of private enforcement for certain anti-competitive behaviours; and
  • weaknesses in the cartel provisions that allow "buy-side" agreements that are harmful to workers such as wage-fixing and no-poach agreements.

The Commissioner also repeated his long-held critique that the efficiencies defence in merger reviews (which provides that mergers cannot be blocked if they result in cost savings and other efficiencies that outweigh and offset their competitive harms) may not be working in the best interest of Canadians.

The Commissioner concluded that a comprehensive review of the Competition Act is required to modernize it for the 21st century. Pointing to international efforts in the US, UK, Europe, and Australia, the Commissioner urged the federal government to get onboard lest Canada remain at a standstill and lose ground as other jurisdictions boost competitive intensity in their economies.

The Commissioner's perspective about the insufficiency of the Canadian merger review regime are an interesting contrast to his predecessor's "firm belie[f]" – following substantial amendments to the Act in 2009 – that "we now have a coherent process in place that ... promotes timely, responsible and focused reviews of proposed mergers" and that "[n]o longer does [the Bureau's] ability to evaluate mergers before it is too late ... turn on the parties' risk tolerance."

The Road Ahead

Although the Competition Bureau has been sounding the alarm about modernizing the Competition Act for a number of years, the societal, political, and international conditions may be aligning to result in legislative change in Canada.

Businesses in Canada looking to conduct strategic M&A in the near future should think carefully about more burdensome merger review timelines, similar to what has recently been experienced in the United States. If all of the Commissioner's proposals are implemented, successfully completing strategic mergers in Canada will take longer, be more costly, and will be more likely to result in litigation.

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