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Blakes Competitive Edge™: December 2021 Update

Blakes Competitive Edge™: December 2021 Update
December 21, 2021

Welcome to the December 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

  • Merger review activity remained strong through the month of November with 203 merger reviews having been completed year-to-date. This is a five per cent increase over the number of reviews completed through the same period in 2019 (193), and a 45 per cent increase over the number of reviews through the same period in 2020 (140).

  • The Competition Bureau entered into a consent agreement with Paper Excellence relating to the company’s proposed transaction to acquire the issued and outstanding shares of Domtar Corporation.

  • The federal government issued a mandate letter to the Minister of Innovation, Science and Industry addressing, among other things, the Minister’s approach to competition policy and foreign investment.

  • China Mobile lost its motion to stay the Order in Council requiring it to either divest 

Merger Monitor

November 2021 Highlights

  • 22 merger reviews completed

  • Primary industries: real estate and rental and leasing (41 per cent); manufacturing (23 per cent); and finance and insurance (14 per cent)

  • One consent agreement (remedies) filed

  • 12 transactions received an Advance Ruling Certificate (55 per cent), while nine transactions received a No Action Letter (41 per cent)

January – November 2021 Highlights

  • 203 merger reviews completed

  • Primary industries: real estate and rental and leasing (21 per cent); manufacturing (21 per cent); and mining, quarrying and oil and gas extraction (14 per cent)

  • Three consent agreements (remedies) filed

  • 132 transactions received an Advance Ruling Certificate (65 per cent), while 68 transactions received a No Action Letter (33 per cent)

industry breakdown chart

Merger Enforcement

Competition Bureau enters into consent agreement with Karta Halten B.V.

  • On November 18, 2021, the Competition Bureau entered into a consent agreement with Karta Halten B.V. (Paper Excellence) and its affiliates, relating to the company’s proposed acquisition of Domtar Corporation. Following its review of the proposed transaction, the Bureau concluded that the transaction was likely to result in a substantial lessening of competition in the purchase of wood fibre from the Thompson/Okanagan region of British Columbia (B.C.) where Paper Excellence currently owns a high concentration of pulp mills. To resolve these concerns, Paper Excellence has agreed to sell Domtar’s pulp mill in Kamloops, B.C., to an independent purchaser.

Competition Bureau challenges GFL’s acquisition of Terrapure

  • On November 30, 2021, the Competition Bureau filed a notice of application against GFL Environmental Inc. challenging the company’s acquisition of Terrapure Environmental Inc. The Bureau alleges that the acquisition has likely substantially lessened competition in the markets for the collection and processing of industrial waste across Western Canada and the collection, processing and resale of used oil and related materials generated in certain regions of Western Canada, with the likely result of increased prices and reduced service quality. The Bureau is seeking an order requiring GFL to sell any assets necessary to remedy the alleged likely substantial lessening of competition resulting from the acquisition and requiring GFL to provide the Commissioner with at least 30 days advance written notice of any future proposed merger.

Competition Bureau obtains court orders relating to proposed transaction by PSA Canada Ventures

  • On December 6, 2021, the Competition Bureau obtained court orders from the Federal Court to advance its investigation into PSA Canada Ventures Ltd.’s proposed acquisition of Ceres Halifax Inc., requiring the parties to produce certain information relevant to the Bureau’s investigation of their non-notifiable merger. PSA Canada Ventures and Ceres Halifax are both container terminal operators at the Port of Halifax.

Non-Enforcement Activity

Canada attends G7 Digital Competition Enforcers Summit

  • On November 29 and 30, 2021, the U.K. Competition and Markets Authority hosted the G7 Digital Competition Enforcers Summit as part of its 2021 G7 Presidency. Attendees included the G7 countries, as well as guest countries Australia, India, South Korea and South Africa. At the summit, competition officials discussed opportunities for international cooperation to improve competition in digital markets and developed and published a compendium of approaches that could be taken.

  • ​The compendium provides an overview of how the participating antitrust authorities are working to promote competition in digital markets. It also discusses commonalities between these approaches, including engaging in investigations, studies and enforcement actions, developing specialist teams, considering legislative reform to bolster enforcement tools or introduce an ex-ante regulatory regime and ensuring regulatory cooperation among both domestic regulators and foreign counterparts.

Competition Bureau appoints new Chief Economist

  • On December 1, 2021, the Commissioner of Competition announced the appointment of Dr. Lilla D. Csorgo as the Competition Bureau’s new T.D. MacDonald Chair in Industrial Economics. Dr. Csorgo will act as the Bureau’s Chief Economist for a one-year term.

Section 36 Remedies Under the Competition Act

  • In Drynan v. Bausch Health Companies Inc., 2021 ONSC 7423, the Ontario Superior Court of Justice certified a class action against Bausch Health Companies Inc., Valeant Canada LP and certain other named companies relating to alleged representations that COLD-FX products are “proven by science” or “clinically proven,” contain “clinically proven ingredients,” or have a “clinically proven formula” to help reduce cold and flu symptoms and boost the immune system.

  • Among other causes of action, the plaintiffs pled that the defendants knowingly or recklessly made a false or misleading representation contrary to section 52 of the Competition Act. The defendants opposed the plaintiffs’ claims under the Competition Act on the basis that the plaintiffs failed to plead reliance on the impugned statements.

  • The court rejected this argument, holding that a plaintiff is not required to establish individual reliance on, or even awareness of, a representation, and instead must establish that the plaintiff suffered damages by obtaining less value than expected based on the misrepresentation. The court further held that a plaintiff is not required to plead the difference in value between the product as advertised and the actual product ― merely pleading that such a difference exists is sufficient.

Federal Government Mandates Letter to Minister of Innovation, Science and Industry

  • The federal government has released its mandate letter to the Minister of Innovation, Science and Industry. The letter sets out more than 30 deliverables for the Minister, including items addressing the Minister’s approach to competition policy and foreign investment. Many of the objectives outlined in the mandate letter appeared in the Liberal Party of Canada’s 2021 election platform.

  • The mandate letter instructs the Minister to introduce legislation to advance the Digital Charter, a set of 10 draft principles introduced by the Ministry of Innovation, Science and Economic Development in 2019 with the aim of helping Canada to become a competitive, data-driven digital economy. In addition, the Minister is instructed to “enhance consumer protection and ensure a level playing field for all businesses” and “undertake a broad review of the current legislative and structural elements that may restrict or hinder competition,” including by reviewing the mandate of the Commissioner of Competition. One focus of the review is to ensure that Canadians are protected from anti-consumer practices in “critical sectors,” such as oil and gas, telecommunications, and financial services.

  • The mandate letter also instructs the Minister to “contribute to broader efforts to promote economic security and combat foreign interference by reviewing and modernizing the Investment Canada Act to strengthen the national security review process and better identify and mitigate economic security threats from foreign investment.” It requests that the Minister work with the Minister of Natural Resources to develop and launch a “Canadian Critical Minerals Strategy” and use all tools, including the Investment Canada Act, to ensure the protection and development of Canada’s critical minerals. At the same time, the letter instructs the Minister to attract anchor investments in key areas, including minerals processing, cell manufacturing, and zero-emissions vehicle parts and assembly manufacturing.

Investment Canada Act

China Mobile loses motion to stay Order in Council requiring divestiture or wind-up

  • In China Mobile Communications Group Co., Ltd., China Mobile International (Canada) Inc., and China Mobile International (UK) Limited v. Canada (Attorney General), Minister of Innovation, Science and Industry, and Governor General in Council, 2021 FC 1277, the Federal Court dismissed China Mobile’s motion to stay an Order in Council requiring China Mobile to divest or wind up its Canadian subsidiary, CMI Canada, pending the resolution of its judicial review application concerning the same Order.

  • China Mobile established CMI Canada in 2015 but failed to file the requisite “new business” notification under the Investment Canada Act. It filed a corrective notice in October 2020 after it was contacted by the Director General of the Investment Review Division of Innovation, Science and Economic Development Canada regarding the investment. The ensuing review process resulted in the Governor in Council issuing the challenged Order under the Investment Canada Act in August 2021, on the basis that China Mobile’s investment was injurious to national security. In response, China Mobile has commenced a judicial review application and brought a motion to stay the Order.

  • In its decision, the court agreed that there was a serious issue to be tried in China Mobile’s application for judicial review ― whether the Minister is entitled to refer an investment to the Governor in Council based on the risk of possible (but not necessarily likely) future action by the investor ― and that China Mobile would suffer irreparable harm if its motion was not granted. It was not relevant that harms alleged by China Mobile resulted in part from its failure to file a “new business” notification under the Investment Canada Act. However, the court found that the balance of convenience did not favour granting the motion, as the harms alleged by China Mobile were less serious and based on weaker evidence that than those alleged by the respondents and would largely be addressed if China Mobile succeed in its underlying judicial review application.

September 2021 Highlights

  • For non-cultural investments: zero reviewable investment approvals and 71 notifications filed (58 for acquisitions and 13 for the establishment of a new Canadian business)

  • Country of origin of investor (non-cultural): U.S. (63 per cent), Switzerland (six per cent), Sweden (four per cent) and China (four per cent).

January – September 2021 Highlights

  • For non-cultural investments: zero reviewable investment approvals and 825 notifications filed (624 for acquisitions and 201 for the establishment of a new Canadian business)

  • Country of origin of investor (non-cultural): U.S. (61 per cent), U.K. (five per cent), France (three per cent) and Germany (three per cent)

industry breakdown chart

Annual 2020 Update – Cultural Investments

  • Information regarding Investment Canada Act decisions for cultural investments: July – December 2020 now published

  • For cultural investments in 2020: three reviewable investment proposal approvals and 21 notifications filed (14 for acquisitions and 10 for the establishment of new Canadian business)

Blakes Notes

  • On December 1, 2021, Navin Joneja and Julie Soloway were appointed Co-Chairs of the Blakes Competition, Antitrust & Foreign Investment group.

  • To read more thought leadership insights from the Competition, Antitrust & Foreign Investment group, please click here.

  • For the latest legal and business updates regarding COVID-19, visit our Resource Centre.

Contact Us

If you have any questions, please do not hesitate to contact your usual Blakes contact or any member of the Blakes Competition, Antitrust & Foreign Investment group.