Welcome to the June issue of Blakes Competitive Edge, a monthly publication of the Blakes Competition, Antitrust & Foreign Investment group. Blakes Competitive Edge provides an overview of recent developments in Canadian competition law, including updates on enforcement activity by the Canadian Competition Bureau (Bureau), recent initiatives and key trends.

Key Highlights

  • The Bureau completes 74 merger reviews through the end of May 2023, 15% fewer than the number completed in May 2022 (87) and 20% fewer than the number completed in May 2021 (92).
  • The Bureau publishes wage-fixing and no-poach enforcement guidelines in advance of the new criminal prohibition coming into effect on June 23, 2023.
  • The Bureau files an application with the Competition Tribunal alleging that Cineplex advertised misleading ticket prices.
  • In a report to Health Canada, the Bureau makes recommendations to promote competition in the cannabis industry.

Merger Monitor

May 2023 Highlights

  • 16 merger reviews completed
  • Primary industries: wholesale trade (19%); real estate and rental and leasing (13%); construction (13%); manufacturing (13%); utilities (13%); mining, quarrying, and oil and gas extraction (13%)
  • One consent agreement (remedy) filed
  • Six transactions received an Advance Ruling Certificate (38%); nine transactions received a No Action Letter (56%)

January – May 2023 Highlights

  • 74 merger reviews completed
  • Primary industries: manufacturing (23%); mining, quarrying, and oil and gas extraction (19%); finance and insurance (15%); real estate and rental and leasing (11%); utilities (7%); wholesale trade (7%)
  • Two consent agreements (remedies) filed
  • One judicial decision filed
  • 30 transactions received an Advance Ruling Certificate (41%); 42 transactions received a No Action Letter (55%)

1334970a.jpg

Merger Enforcement Activity

Competition Bureau reaches consent agreement with Superior Plus Corp. relating to its acquisition of Certarus Ltd.

  • On May 31, 2023, the Bureau announced that it had entered into a consent agreement with Superior Plus Corp. (Superior) to resolve the Bureau's concerns that Superior's acquisition of Certarus Ltd. would likely result in a substantial lessening of competition for the retail supply of portable heating fuels for industrial customers in northern Ontario. This transaction and associated consent agreement, on which Blakes acted for Superior, shows that complex matters can be completed in a timely fashion with proactive engagement.

Terms and conditions governing merger of Bradley Air Services Limited (First Air) and Canadian North Inc. varied under Canada Transportation Act

  • On April 20, 2023, the Governor in Council approved an application to vary the terms and conditions governing the merged entity operating as Canadian North Inc. The parties to the 2019 First Air and Canadian North Inc. merger undertook to comply with the original terms and conditions to secure the Governor in Council's approval of the transaction under Subsection 53.2 of the Canada Transportation Act. Sections 53.1 and 53.2 of the Canada Transportation Act create a parallel merger review process for mergers that involve a transportation undertaking and which are notifiable under the Competition Act. Canadian North sought relief from the original terms and conditions imposed in 2019 after travel restrictions imposed in response to the COVID-19 pandemic limited Canadian North's ability to turn a profit. The Commissioner of Competition reviewed and did not comment on the amended terms and conditions. The amended terms and conditions allow Canadian North to modify and reduce the frequency and the capacity of its schedules to reflect current demand and to increase fares subject to certain limits, curb Canadian North's profits and make Canadian North subject to a quarterly audit by an independent monitor, among other requirements. These amended terms and conditions will remain in effect until the end of June 2026, when the original order will expire.

Other Enforcement Activity

Competition Bureau files notice of application against Cineplex Inc. alleging deceptive marketing practices

  • On May 18, 2023, the Bureau announced that it had filed an application with the Competition Tribunal alleging that Cineplex Inc. had engaged in deceptive marketing by imposing a C$1.50 per ticket fee at checkout for movie tickets purchased online or on Cineplex's mobile application. This is the first application relying on the new section 74.01(1.1) of the Competition Act, which was introduced in 2022. The new provision provides that making a representation of a price that is not attainable due to fixed obligatory charges or fees ("drip pricing") constitutes a false or misleading representation for the purposes of section 74.01(1), except where such fees represent charges or fees imposed by government (e.g., taxes). The Bureau is seeking a declaration that Cineplex has engaged in reviewable conduct and an order prohibiting the continuation of the conduct. It is also seeking orders requiring Cineplex to (1) pay an administrative monetary penalty and (2) pay up to the total amounts Cineplex received as payment for the relevant products, for distribution among persons to whom such tickets were sold.

Non-Enforcement Activity

Competition Bureau publishes enforcement guidelines for Competition Act amendments regarding wage-fixing and no-poach agreements

  • On May 30, 2023, the Bureau published its final enforcement guidelines for the new criminal prohibition against agreements between employers to fix, maintain, decrease or control wages or other terms or conditions of employment (wage-fixing agreements) or not to solicit or hire each other's employees (no-poach agreements). The prohibition comes into force on June 23, 2023. While these guidelines are not binding, they provide insight into the Bureau's enforcement approach to the new provision. Key changes in the final guidance clarify that the Bureau is unlikely to investigate pre-existing no-poach or wage-fixing agreements where parties to the agreements take no steps to reaffirm or implement the provision on or after June 23, 2023. Further, the changes recognize the important role that labour-related restraints can play in business agreements and arrangements, such as franchise agreements and certain service-provider–client relationships. For more information regarding the enforcement guidelines, see our June 2023 Blakes Bulletin: New Enforcement Guidelines for Wage-Fixing and No-Poach Agreements.

Competition Bureau submits report regarding legislative review of the Cannabis Act

  • On May 26, 2023, the Bureau published its submission to Health Canada and the members of the Cannabis Act legislative-review Expert Panel in support of Health Canada's legislative review of the Cannabis Act. In its report, the Bureau identified five barriers to competition for cannabis producers in relation to entry and expansion in the industry: licensing requirements and regulatory compliance costs; limits on the THC content of edible cannabis products; prohibitions on cannabis promotion, packaging and labelling; Canada's excise duty framework; and a lack of industry standardization (the latter two barriers are outside the scope of the legislative review). The Bureau provided three recommendations to support the goal of modernizing policies and promoting a more competitive legal cannabis industry, including for Health Canada to (1) review the cannabis licensing process and regulatory compliance to ensure minimal intrusion to competition, (2) review and consider adjusting limits on the THC content of edible cannabis products to allow legal cannabis producers to meet consumer demand and better compete with the illicit market, and (3) review and consider easing restrictions on cannabis promotion, packaging and labelling to empower consumers to make informed purchasing decisions and provide cannabis producers with more flexibility to compete and innovate.

Canadian Digital Regulators Forum established with a goal to better serve Canadians in the digital era

  • On June 9, 2023, the Bureau announced that the Canadian Digital Regulators Forum (Forum) was established via a partnership between the Competition Bureau, the Canadian Radio-television and Telecommunications Commission (CRTC) and the Office of the Privacy Commissioner of Canada (OPC). These three agencies have agreed to exchange best practices, conduct research and collaborate on matters of common interest, such as artificial intelligence and data portability. The Terms of Reference of the Forum state that the Forum's purpose is to strengthen information-sharing and collaboration on subject matters of common interest that relate to digital markets or platforms.

Investment Canada Act

Non-Cultural Investments

January 2023 Highlights

  • Zero reviewable investment approvals and 80 notifications filed (73 for acquisitions and seven for the establishment of a new Canadian business)
  • Country of ultimate control: United States (64%); Austria (11%); United Kingdom (6%); China (4%)

February 2023 Highlights

  • Two reviewable investment approvals and 89 notifications filed (64 for acquisitions and 25 for the establishment of a new Canadian business)
  • Country of ultimate control: U.S. (56%); Austria (9%); U.K. (5%); China (3%); France (3%)

March 2023 Highlights

  • One reviewable investment approval and 18 notifications filed (11 for acquisitions and seven for the establishment of a new Canadian business)
  • Country of ultimate control: U.S. (37%); Pakistan (16%); India (11%); France (11%)

January – March 2023 Highlights

  • Three reviewable investment approvals and 187 notifications filed (148 for acquisitions and 39 for the establishment of a new Canadian business)
  • Country of ultimate control: U.S. (57%); Austria (9%); U.K. (6%); France (4%); China (3%)

1334970b.jpg

Blakes Notes

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.