Future of Competition Bureau yet to be charted

The first half of 2019 should see the appointment of a new commissioner of competition, a development that will shape the Competition Bureau’s direction and priorities for at least the next five years — all the more so because competition law is undergoing a global rethink again.

Future of Competition Bureau yet to be charted
Brian Facey says that, ‘about every 15 years, people start questioning the purpose of competition law.’

The first half of 2019 should see the appointment of a new commissioner of competition, a development that will shape the Competition Bureau’s direction and priorities for at least the next five years — all the more so because competition law is undergoing a global rethink again.

“About every 15 years, people start questioning the purpose of competition law,” says Brian Facey, the Toronto-based chairman of Blake Cassels & Graydon LLP’s competition, antitrust and foreign investment group.

“Some people think it’s about competition law and economics, some think it’s about wealth and employment and some think it’s about social issues like the environment.”

The debate ranges from the populist antitrust policies of Columbia University professor Tim Wu, who espouses a “noneconomic value” approach, which he claims trumps considerations of overall efficiency, to those who seek reforms that will make consumer welfare and interests integral to the purpose and mandate of competition law and to those such as George Addy and Anita Banicevic, competition lawyers in Davies Ward Phillips & Vineberg LLP’s Toronto office, who seek a more non-intrusive regulatory approach to better promote innovation in our age of digital disruption.

Addy, senior counsel in the competition, antitrust and foreign investment group at Davies’ Toronto office, who led the Competition Bureau from 1993 to 1996, says he is deeply concerned that the speed and depth of technological disruption will provoke overreaction from regulators.

“I liken it to what happened with the Y2K scare,” he says. “I’m not sure that the antitrust authorities getting on the regulatory bandwagon understand how the digital economy works or the implications for the Canadian economy, and I do hope that we don’t get into a process where regulators start seeing themselves as experts on how the digital economy works.”

That is not to say that the Competition Bureau doesn’t have a role in the new economy.

“My concern is that the bureau didn’t even define their role before throwing resources at the issue — even as they’re unable to meet their own internal guidelines for processing merger reviews in a timely fashion,” Addy says.

Banicevic, also a competition and foreign investment review partner in Davies’ Toronto office, points out that the bureau even seems intent on forging into issues that are the province of other regulators.

In September 2017, for example, the bureau issued a draft discussion paper entitled “Big Data and Innovation: Implications for Competition Policy in Canada.”

The paper outlines the Competition Bureau’s preliminary views on how it will approach data-related considerations in a number of areas.

“From a privacy perspective, it appears that the bureau may be seeking to apply the misleading advertising provisions of the Competition Act to privacy-related statements that mislead consumers into disclosing personal information or buying products and services,” Banicevic says.

The conundrum is that collecting personal information without consent is already under the purview of the federal privacy commissioner appointed under the Personal Information Protection and Electronic Documents Act.

“In other words, there’s already a specialized regulator in place that is examining these issues and is committed to updating its compliance guidance in this arena,” Banicevic says. “When overlap occurred in the past, the bureau has deferred to the more specific mandates or expertise of other regulators.”

However that may be, the Competition Bureau emphasized in its most recent annual plan that the digital economy will remain an important priority area both from an enforcement and policy perspective. As things stand, recent data from the bureau notes that it concluded 10 digital economy cases between April 1 and Sept. 30, 2018 and had 27 more ongoing at the end of that period.

“I believe this trend will continue throughout 2019 and likely beyond,” says Facey, who notes that the bureau is set to appoint a new chief digital enforcement officer soon.

“I also expect that this thinking will evolve into new investigations and likely enforcement activities in areas like misleading advertising, mergers that involve acquisitions of startup technology companies and potential big data issues.”

What’s clear is that the new commissioner, who has significant discretion to investigate and bring enforcement actions in Canada regarding mergers, criminal conspiracies, abuse of dominance allegations, misleading advertising and other areas, will set the agenda for the Competition Bureau.

“It will be interesting to see how the new commissioner intends to tackle the key competition issues of the day —  use of big data, consumer protection in a digital age and heightened scrutiny of mergers to name a few — and whether this will lead to other changes in enforcement policies at the bureau,” Facey says.

The previous commissioner, economist John Pecman, was the first Competition Bureau leader who was not a lawyer. That will likely change, as the names being bandied about to replace Pecman are all lawyers.

A leading candidate for the permanent appointment is the current interim commissioner, Matthew Boswell, whose term expires at the end of May.

He is a former assistant Crown attorney in Toronto who was most recently senior deputy commissioner, Mergers and Monopolistic Practices Branch at the Competition Bureau.

Also said to be in the mix are: Vicky Eatrides, interim senior deputy commissioner, Cartels and Deceptive Marketing Practices Branch; Randall Hofley, a Blakes partner currently serving a two-year secondment as general counsel and senior enforcement advisor with the Department of Justice at the Competition Bureau Legal Services; and Susan Hutton, a partner in the competition, foreign investment and international trade groups at Stikeman Elliott LLP.

“Bearing in mind that there’s a commissioner but no actual commission, just who is appointed will make quite a big difference because they have a ton of discretion,” Facey says.

“As might be expected, however, the candidates who are already at the commission are less likely to be friendly to business than lawyers who come from the private bar. On the other hand, the good news is that all the names I’ve heard are pretty rational people.”

Anthony Baldanza, a business law partner at Fasken Martineau Dumoulin LLP in Toronto, who focuses on competition law, foreign investment law and negotiated transactions, says that 2019 will also be telling with regard to the Competition Bureau’s revised immunity and leniency programs.

The immunity and leniency programs have been around since 2000 and 2010, respectively.

They provide incentives for parties to come forward and co-operate with the Competition Bureau in the investigation and prosecution of others involved in anti-competitive conduct and are widely regarded as the bureau’s most important tools for detecting criminal offences under the Competition Act.

In September 2018, the bureau updated both programs.

The main changes increased the incentives for those who come forward first by making immunity available only to the first applicant, eliminated automatic immunity for directors, officers and employees and required applicants to provide more evidence of an offence than was previously required.

According to Baldanza, the efficacy of the new program has yet to be determined.

“It will be interesting to see whether the revised program gets any traction, because it’s not nearly as attractive to applicants as it once was.”

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