Canadian Competition And Foreign Investment Law: Trends And Developments To Watch For In 2019

We are pleased to present our forecast of key trends and developments to watch for in Canadian competition and foreign investment law enforcement in 2019.

Competition in the Digital Economy to Remain Top Priority

The Competition Bureau's enforcement efforts and public statements relating to the digital economy in 2018 were wide-ranging and preview what is to come in 2019 and beyond.

Competition enforcement in digital economy cases will continue to be a top priority with the Bureau placing the digital economy first in its list of priorities in its annual plan.1 The Bureau defines digital economy cases as those that "support innovation and the competitiveness of the digital economy (including but not limited to e-business, online promotions, sales and transfers, infrastructure support) by deterring anti competitive conduct such as impeding new entrants, products or services and stopping deceptive marketing practices online" 2. In the summer of 2018, the Bureau said it would commence 10 digital economy investigations and in the fall, it reported that it was advancing 41 digital economy investigations.3 To build enforcement capacity in this area, the Bureau created a new position: Chief Digital Enforcement Officer

The Bureau has set its sights on digital economy investigations with high impact and consumer focus, such as drip pricing practices.4 Stemming from a series of investigations into drip pricing practices by car rental companies, the Bureau reached consent agreements5 with two car rental companies to correct what the Bureau concluded were misleading advertisements. Each company also had to pay an administrative monetary penalty.6 The Bureau concluded that the companies' prices, advertised across various media (including online, mobile applications and emails), were not attainable due to mandatory fees added later during the purchasing process. The Bureau has also launched an action against Ticketmaster for allegedly using drip pricing in its online sports and entertainment ticket price advertising. 7 The Bureau alleges that Ticketmaster's mandatory fees often inflate the advertised price by more than 20% (in some cases by 65%). Given that most businesses have an online presence and use digital media to advertise, the Bureau can be expected to continue to pursue deceptive marketing practices impacting this area.

One of the biggest stories in 2018 was the Supreme Court of Canada's decision to refuse leave to appeal the Federal Court of Appeal decision in the Toronto Real Estate Board case. The Federal Court decision affirmed the Competition Tribunal's holding that the Toronto Real Estate Board ("TREB"), a trade association, had abused its dominant position by restricting the manner in which its member real estate agents could use and disseminate information from the multiple listing service it controls, including historical listings and sales prices. The Supreme Court's decision, which the Bureau touts as a "win for innovation"8, marks the end of a saga that took more than seven years to litigate. Among other reasons, the case is important as it confirms that an organization could be found to be engaged in an anti-competitive practice when it restricts access to data. For other important takeaways from the case, see our previous article, The End of a 7-Year Saga: Supreme Court of Canada refuses leave to appeal in abuse case against Toronto Real Estate Board.

The Bureau is also scrutinizing competition in the digital economy in other ways. It is studying pricing practices in the digital economy, including new and evolving pricing techniques. In its Big Data white paper, it reported on key competition policy themes for Big Data. Although Big Data is rapidly changing the way that business is conducted, the Bureau's view is that its existing analytical principles and enforcement tools remain appropriate for evaluating Big Data cases. For further insight, see our previous article, Bureau Releases Key Competition Policy Themes for Big Data. In respect of FinTech, the Bureau plans to carry out 10 FinTech-focused advocacy interventions.9 In the area of broadband internet services, the Bureau has commenced a market study to assess whether changes to internet regulations may enhance competition in the broadband sector.10 In the realm of social media marketing, the Bureau recently published guidance on influencer marketing best practices. The key takeaway: conspicuous disclosure. To learn more, see our previous article, Influencer Marketing: Understanding Disclosure Best Practices.

Cartel Enforcement: Increased Burdens and Uncertainties under Updated Immunity and Leniency Programs

In September 2018, fundamental and controversial changes to the Bureau's immunity and leniency programs came into effect with the release of the new immunity and leniency bulletin.11 The changes carry with them increased burdens and uncertainties for applicants which has led many to question whether such changes undermine the immunity and leniency programs.12

For example, a new "grant of interim immunity" stage - a conditional immunity agreement setting out the applicant's obligations in order for immunity to be finalized - will increase uncertainty as it would result in a final immunity agreement only being provided several years after the initial proffer. The new privilege review process is also concerning, specifically in relation to whether external counsel's notes and other documents created during the internal investigation (in Canada or in other countries) would have to be disclosed and whether such disclosure could result in a waiver and loss of privilege in other jurisdictions. In addition, the new bulletin emphasizes the risks of revocation of immunity or expulsion from the leniency program which also creates uncertainty for applicants of the programs. Furthermore, the updated immunity and leniency programs have been criticized for not containing an express debarment exemption for leniency applicants, who therefore face debarment from federal public procurement under the Canadian government's Ineligibility and Suspension Policy...