Canada: A Deep Dive into Forthcoming Legislative Reforms to the Digital Market

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Introduction

While digital markets have been a focus of the enforcement and advocacy work of the Canadian Competition Bureau (the Bureau) for many years, they gained specific prominence under Commissioner of Competition Matthew Boswell (the Commissioner), who was appointed for a five-year term on 5 March 2019 and whose term as Commissioner is expected to end in 2024.

The Bureau’s Strategic Vision for 2020–2024, published on 11 February 2020, set out Commissioner Boswell’s vision for the Bureau to be ‘at the forefront of the digital economy’.[2]

The increased focus aligned with broader government priorities to update the laws governing the internet and rebuild Canadians’ trust in digital markets, including commitments to protect consumers’ rights online and bring forward new regulations for large digital companies, as set out in the governing Liberal Party’s 2019 and 2021 election platforms.[3]

The Canadian government started a conversation with Canadians in 2016 on how to foster innovation to build a stronger, more competitive Canada. This led to the launch of the National Digital and Data Consultations in June 2018. Following these Consultations, the government enshrined 10 principles into a Digital Charter as the foundation for a ‘made in Canada’ digital approach to guide the government’s policy thinking. The principles include universal access; safety and security; control and consent; transparency, portability and interoperability; open and modern digital government; a level playing field; data and digital for good; strong democracy; free from hate and violent extremism; and strong enforcement and real accountability.[4] Over five years later, the government continues to amend Canada’s laws to reflect these principles.

The re-election of the Liberal Party in 2019 and 2021, together with the Supply and Confidence Agreement the Liberal Party signed with the New Democratic Party (NDP) in March 2022,[5] meant that the government could continue to advance its priorities. Indeed, since that time, the government has, as discussed below, brought forward new regulations for digital platforms, including rules governing online streaming services[6] and rules governing certain digital media intermediaries’.[7] At the time of writing, the government is moving forward with a digital services tax,[8] continues to contemplate competition law reform and is endeavouring to bring forward much promised privacy reform[9] and regulation of online harms.[10]

The approach being proposed in Canada to the regulation of digital markets is multi-pronged, with four different federal regulatory bodies enforcing laws that have an impact on marketplace conduct in digital markets: the Bureau, the Canadian Radio-television and Telecommunications Commission (CRTC), the Office of the Privacy Commissioner (OPC) and a Data Commissioner.[11] The expectation is that the CRTC, the Bureau and the OPC will work closely together on matters that have an impact on the digital economy. The close degree of co-operation between the agencies is clear from the June 2023 announcement of the creation of the Canadian Digital Regulators Forum, a joint endeavour by the Bureau, the CRTC and the OPC, which is intended to strengthen information sharing and collaboration among the agencies, with a focus on matters such as artificial intelligence and data portability.[12]

To date, however, it is the CRTC rather than the Bureau that has been at the forefront of regulations that have an impact on the digital economy. Vicky Eatrides, a former Senior Deputy Commissioner at the Bureau, was appointed Chairperson of the CRTC in December 2022, and former Bureau staff are now working in roles at the CRTC, including Leila Wright, Executive Director, Telecommunications, who was the Bureau’s first Deputy Commissioner for Digital Enforcement and Intelligence before joining the CRTC in February 2023.

For example, Bill C-11, the Online Streaming Act (the OSA), which received royal assent on 27 April 2023,[13] amends the Broadcasting Act to allow the CRTC to set conditions for online streaming services, including Canadian content requirements; regulate spending on Canadian content by categories or individual undertakings; and levy administrative monetary penalties of up to C$15 million. Legal and privacy experts have expressed concern about the Bill’s discoverability requirements, whereby the CRTC would set rules requiring Canadian content to be prioritised and other content to be deprioritised in Canadians’ feeds. In May 2023, the CRTC launched the first of a three-part public consultation regarding the Regulatory Plan accompanying the OSA to determine which online streaming services will be subject to the regulations and the details of the contributions and conditions of services that will be imposed.[14] On 29 September 2023, the CRTC issued a regulatory policy and order setting out which online streaming services need to provide information about their activities in Canada and setting conditions for online streaming services to operate in Canada. The third consultation, which is considering the financial contributions that online streaming services will need to make to support Canadian content, is ongoing, and the CRTC is scheduled to hold a public hearing on this framework beginning 20 November 2023.[15]

Similarly, Bill C-18, the Online News Act (the ONA), which was introduced in April 2022 and received royal asset on 22 June 2023,[16] gives the CRTC the jurisdiction to regulate online platforms to enhance fairness in the Canadian digital media news marketplace and to contribute to the sustainability of the news media industry. The framework applies to ‘digital media intermediaries’, which have a significant bargaining power imbalance with news media organisations. So far, only Google and Facebook are subject to the ONA. These intermediaries are obliged to participate in a bargaining process with news businesses, acting alone or as a group, regarding the intermediaries making available news content produced by news outlets identified by the news businesses. There is a final offer arbitration backstop if the bargaining process fails. In August 2023, the CRTC announced that it will hold a public consultation for the proposed bargaining framework in autumn 2023. Beginning in summer 2024, the CRTC will publish the framework and code of conduct, with mandatory arbitration anticipated to begin in late 2024 or early 2025.[17]

Despite relative enforcement inaction on the competition law front to date, the Commissioner, as will be discussed below, has been successful in advocating for competition law reform as calls for the government to address problems in digital markets intensify.

Mounting calls for competition law reform

Throughout his term, Commissioner Boswell has been an advocate for competition law reform, working, as directed by the Minister of Innovation, Science and Industry (the Minister) shortly after his appointment in early 2019, to ensure that Canada’s competition infrastructure is fit for purpose and ‘responsive to a modern and changing economy’.[18]

Early in his term, in July 2019, Commissioner Boswell committed to creating a Digital Enforcement Office. The Commissioner was successful in obtaining additional funding to enhance the Bureau’s ‘enforcement capacity and ensure it is equipped with the necessary digital tools for today’s economy’.[19] As part of its 2021 Budget, the government committed to providing the Bureau, which had been hamstrung with budgetary constraints for years, with an additional C$96 million over five years.[20] Using these funds, the Bureau launched its Digital Enforcement and Intelligence Branch (CANARI), which stands for Competition through Analytics, Research and Intelligence, a team of competition specialists, intelligence experts, data scientists and data engineers who form a centre of expertise on digital business practices and technologies and who provide intelligence expertise for all directorates at the Bureau.

Competition law and policy reform is the responsibility of the government, more specifically the Department of Innovation, Science and Economic Development (ISED), not the Bureau. The Bureau is an independent law enforcement agency that enforces four federal statutes: the Competition Act, the Consumer Packaging and Labelling Act (except as it relates to food), the Textile Labelling Act and the Precious Metals Marketing Act.

However, as part of its mandate, the Bureau also participates in a range of activities to promote and advocate for the benefits of a competitive marketplace. In this regard, the Policy, Planning and Advocacy Directorate within the Competition Promotion Branch provides input into departmental and government-wide policy initiatives. In this regard, the Bureau participated in various meetings, consultations and submissions in 2021, 2022 and 2023, including (1) a series of meetings by the federal Standing Committee on Industry, Science and Technology to study competitiveness in Canada, Competition Act reform and related matters; (2) a competition and growth summit convened by the Bureau, where the need for a ‘rigorous and comprehensive review of the Competition Act to ensure that it is fit for purpose’, including with respect to addressing new issues arising out of digital transformation and the rise of large digital platforms acting as gatekeepers across a number of markets, was again recognised; (3) a consultation initiated by Senator Howard Wetston ‘to promote additional dialogue on paths forward for Canadian competition law’ based around a commissioned report on the state of the Competition Act in a digital era;[21] and (4) a comprehensive review of the Competition Act and public consultation on Canadian competition law and policy announced by the Minister in November 2022, which closed as of 31 March 2023 (the ISED Consultation).

The Bureau filed a submission in response to the Wetston consultation in February 2022, largely repeated in the response to the ISED Consultation, proposing a comprehensive set of amendments that would overhaul the Canadian competition regime if fully accepted. The Bureau stated that ‘the new, digital economy has grown a class of so-called “digital giants” that have obtained a high degree of influence across a wide range of economic activity’ through their actions ‘to collect, broker, and benefit from this new wealth of data’. Proposed amendments included reducing standards to be met when analysing the anticompetitive effects of mergers, abuse of dominance and competitor collaborations; eliminating the efficiencies defence; and extending review periods to three years following a merger. Specific to digital markets, the Bureau proposed extending the time during which it can challenge a merger to three years, increasing monetary penalties to up to three per cent of a company’s global revenues and reducing the burden of proof it must meet to challenge the acquisition of small companies such as tech start-ups.[22]

A preliminary phase in modernising Canada’s competition regime[23] designed to address concerns in digital markets, including ‘fixing loopholes; tackling practices harmful to workers and consumers; modernizing access to justice and penalties; and adapting the law to today’s digital reality’, was launched by the federal government as part of its 2022 Budget on 7 April 2022,[24] and amendments to the Competition Act were included in the Budget implementation legislation and passed into law on 23 June 2022.

Specifically, the changes include:

  • adding wage fixing and no-poach agreements as criminal conspiracy offences and removing the cap on potential criminal fines for conspiracies;
  • formally adding drip pricing to the list of prohibited misleading advertising practices;
  • significantly increasing administrative monetary penalties for deceptive marketing and abuse of dominance; and
  • expanding the substantive scope of the Act’s abuse of dominance provisions.

Notably, a series of factors were introduced, likely in response to sustained criticism by the Commissioner and other commentators of the Act’s inability to address anticompetitive actions by big tech companies in digital markets, for the Canadian Competition Tribunal (the Tribunal) to consider when assessing the impact on competition of an act or practice in the context of abuse of dominance and non-criminal agreements between competitors and mergers. These are:

  • the effect of the practice on barriers to entry in the market, including network effects;
  • the effect of the practice on price or non-price competition, including quality, choice or consumer privacy;
  • the nature and extent of change and innovation in a relevant market; and
  • any other factor that is relevant to competition in the market that is or would be affected by the practice.

As at the time of writing, the 2022 amendments to the Act have not been considered judicially.

More competition law changes are on the horizon. ISED’s discussion paper, released in November 2022 with the launch of the public consultation on reform of competition law and policy, underscored the onerous burden the Bureau still faces in challenging alleged abuse of dominance within digital markets.

In addition to, or perhaps overtaking, the government’s priority to rebuild Canadians’ trust in digital markets, is a focus on affordability for Canadians, a key pillar of the Bureau’s 2023 –2024 Annual Plan.[25] In September 2023, the government announced a suite of new measures to support the middle class, including immediate steps to enhance competition across the Canadian economy.[26] Bill C-56, tabled on 21 September 2023, would repeal the efficiencies defence for mergers; expand the civil provisions in Section 90.1 of the Act, dealing with agreements that substantially prevent or lessen competition to capture agreements between any two or more persons, regardless of whether those persons are competitors, if it can also be demonstrated that a significant purpose of the agreement (or a portion thereof) is to substantially lessen or prevent competition in a given market; and introduce a new regime for market studies directed by the Minister of Innovation, Science and Industry. Under this new market studies regime, the Bureau could apply for court orders to compel market participants to produce information and records or provide testimony.[27]

The leader of the NDP tabled a private member’s bill (C-352) on 19 September 2023 titled the Lowering Prices for Canadians Act, which proposed to significantly amend the Competition Act to increase penalties for certain anticompetitive acts; change aspects of the review of mergers, including how gains in efficiency and market concentration are taken into account, prohibiting mergers that would result in combined market share above 60 per cent and shifting the burden of proof for mergers where the combined market share is between 30 per cent and 60 per cent; and empowering the Competition Tribunal to prohibit a dominant firm from engaging in any conduct that is legislatively defined to be an anticompetitive act (including a new category of anticompetitive conduct encompassing ‘excessive or unfair selling prices’) without the Commissioner (or a private applicant) having to demonstrate that the conduct is likely to prevent or lessen competition substantially. There would, however, be a requirement to demonstrate such an anticompetitive effect in order to obtain a monetary penalty or to take positive action to restore competition.[28] Such amendments, if passed, will have a significant effect on all sectors of the economy.

It remains to be seen whether the proposals in Bill C-352 will affect Bill C-56, which is now at second reading stage and is working its way through the legislative process. A private member’s bill is not assured of consideration by Parliament, but the NDP leader has stated that Bill C-352 is his priority in the current parliamentary session, and given the governing Liberal Party’s reliance on support from the NDP, it is possible that some of the proposals therein will become law. The government also continues to consider a wide variety of significant potential amendments to the Competition Act, which may become the subject of future government bills.

Enforcement in digital markets

In the Bureau’s Strategic Vision for 2020–2024, the Commissioner identified timely and proactive enforcement action as essential, given the rapid pace of change in the digital economy. The Bureau’s record in this regard is mixed, however.

Mergers

Thoma Bravo acquisition of Aucerna

The Bureau took the unusual step of unwinding a small acquisition of a digital software company in 2019. Thoma Bravo, an American private equity firm, acquired Canadian technology company Aucerna on 13 May 2019. Quorum Business Solutions, a portfolio company of Thoma Bravo, supplied specialised software to the Canadian oil and gas industry. This product, MOSAIC Reserves Software, was the closest competitor of Aucerna’s Value Navigator software.

Thoma Bravo notified the Bureau of the transaction on 13 February 2019, although it is unclear whether the transaction met the minimum thresholds in the Competition Act. After a three-month investigation, the Bureau indicated that it had concerns with the transaction, but the transaction nevertheless closed after the statutory waiting period expired on 11 May 2019. The Bureau filed an application challenging the transaction on 14 June 2019, following which a hold-separate agreement was filed on 24 July 2019 in respect of Quorum’s MOSAIC software and a consent agreement on 20 August 2019. Pursuant to the consent agreement, Thoma Bravo agreed to spin off and sell the MOSAIC software to a Bureau-approved purchaser.

This case illustrates the Bureau’s focus on pursuing mergers below the minimum thresholds that raise competitive issues, particularly those involving the digital economy, as well as the Bureau’s power to unwind a transaction post-closing.

Rogers’ acquisition of Shaw

Rogers Communications announced its plans to acquire Shaw Communications on 15 March 2021, combining two of Canada’s largest telecommunications companies. That same day, the Bureau announced its intention to review the transaction.[29] The Bureau obtained court orders for information from industry competitors in July and August of that year[30] and issued a public request for information, seeking information from the public on specific areas of interest in September 2021.[31]

In May 2022, the Bureau sought a court order to block the proposed transaction, alleging that ‘removing Shaw as a competitor threatens to undo the significant progress it has made introducing more competition into an already concentrated wireless services market’.[32] The Commissioner continued to pursue the case even after the parties entered into an agreement to sell Shaw’s wireless business, Freedom Mobile, to Videotron in June 2022.[33] On 29 December 2022, the Tribunal released an Information Note indicating its intention to dismiss the Bureau’s application, to which the Bureau responded by filing a notice of appeal with the Federal Court of Appeal on 30 December 2022. On 24 January 2023, the Federal Court of Appeal heard and dismissed the Bureau’s appeal from the bench without even hearing from Rogers or Shaw. Following the Federal Court of Appeal’s decision, the Commissioner issued a statement confirming that he would not be pursuing a further appeal.[34]

In his opening comments at the May 2023 annual conference of the Canadian Chapter of the International Institute of Communications, Commissioner Boswell spoke about the Rogers/Shaw decision and defended his decision to challenge the merger, noting an even stronger resolve to continue to vigorously protect and promote competition for Canadians in telecoms markets.[35]

Abuse of dominance

Toronto Real Estate Board investigation

In a landmark dispute that began in 2011, lasted more than seven years and touched on a number of issues common to digital market cases, the Bureau successfully challenged the conduct of the Toronto Real Estate Board (TREB) as it related to data. In particular, it was successful in setting a precedent on the control and use of data as well as the use of privacy and intellectual property as defences to abuse of dominance claims. The tension between privacy and competition was apparent in this case, where it was acknowledged that otherwise anticompetitive restrictions on access to and use of data could be valid if the restrictions were put in place to comply with privacy laws. The privacy justification was not accepted in this case.

TREB owns and operates a database containing current property listings and historical sales data, such as sold prices, for real estate transactions in the Greater Toronto Area, called Multiple Listing Service (MLS). The Bureau alleged that TREB was abusing its dominance by restricting access to and the use of MLS data by real estate agents. It further argued that TREB used its control of MLS data to protect its members from innovative products developed by current or potential competitors, including by restricting the use of virtual office websites.

The Competition Tribunal (the Tribunal) sided with the Bureau,[36] the Federal Court of Appeal (FCA) denied TREB’s appeal,[37] and the Supreme Court of Canada declined to hear an appeal of the FCA’s decision in 2018.[38]

The TREB case illustrates that control of significant amounts of data can be a source of market power, and restrictions on access can be a barrier to entry. Further, as confirmed by the Tribunal, an organisation or company that controls data does not need to compete with the parties allegedly harmed by the conduct for there to be a finding of an abuse of dominance.

TREB argued that the limitations put in place on the access to and use of its data were justified as necessary to protect individual privacy and as a valid exercise of its intellectual property. The Court rejected both arguments. On privacy, the Court found that TREB had introduced the policies restricting the use of its data based on a desire to restrict competition and maintain control over the data, and that there was no evidence that the data restriction policies had been informed by TREB’s privacy policies. The Court acknowledged that privacy could be a valid justification for limits on the use of or access to data if the limits were enacted to meet some regulatory or statutory obligation.

Regarding TREB’s argument that the restrictions were a valid exercise of its intellectual property in the MLS system, both the Tribunal and the FCA rejected this argument, finding that there was no copyright in the MLS database and that the Competition Act ‘precludes reliance on copyright as a defence to an anti-competitive act’.[39]

Quebec Professional Association for Real Estate Brokers investigation

On 15 February 2023, the Federal Court granted the Bureau a court order to advance an investigation into whether the Quebec Professional Association for Real Estate Brokers, an association that offers online brokerage services in Quebec, had engaged in conduct contrary to the abuse of dominance provisions of the Act.[40] The investigation is ongoing at the time of writing.

Amazon investigation

On 14 August 2020, the Bureau announced its investigation into whether Amazon engaged and is continuing to engage in anticompetitive behaviour on Amazon.ca, its Canadian marketplace. The Bureau highlighted three specific areas of interest:

  • any past or existing Amazon policies that may have an impact on third-party sellers’ willingness to offer their products for sale at a lower price on other retail channels, such as their own websites or other online marketplaces;
  • the ability of third-party sellers to succeed on Amazon’s marketplace without using its ‘Fulfilment by Amazon’ service or advertising on Amazon.ca; and
  • any efforts or strategies by Amazon that may influence consumers to purchase products it offers for sale over those offered by competing sellers.

The abuse of dominance investigation is ongoing, and there has been no conclusion of wrongdoing thus far.[41] The Bureau previously investigated Amazon’s marketing practices, finding that representations made regarding the ordinary selling price of products on Amazon.ca were misleading. The investigation concluded with a consent agreement registered on 11 January 2017 and Amazon paying C$1.1 million in fines.[42]

Separately, a proposed class action against Amazon for allegedly conspiring to artificially inflate prices for retail e-commerce across Canada through anticompetitive agreements that prohibited third-party sellers from selling products to consumers on any e-commerce website other than Amazon.ca or Amazon.com for a lower price than the price the third-party sellers charge for the same products on Amazon.ca and Amazon.com was recently dismissed by the Federal Court on 28 August 2023. The Court found that Amazon’s agreements that set floor prices did not amount to criminal price-fixing under the Act.[43]

Inquiry into Meta

On 1 August 2023, Meta Platforms Inc (Meta), in response to the enactment of the ONA, announced that Canadian news content would no longer be viewable by people in Canada.[44] On 7 August 2023, the Canadian Association of Broadcasters, News Media Canada and the Canadian Broadcasting Corporation filed an application for a formal inquiry under Sections 9 and 79 of the Competition Act into Meta’s decision to block news content for Canadian users in response to the ONA. The Minister proclaimed his support for this complaint on X (formerly Twitter) the next day.

Deceptive marketing

Deceptive marketing continues to be a focus of the Bureau. Since Commissioner Boswell was appointed, the Bureau has been active in this area and concluded investigations into deceptive marketing practices in digital markets by way of registered consent agreements with FlightHub Group Inc; StubHub Inc, Ticketmaster and LiveNation; and Facebook.

Facebook investigation

In a case highlighting the Bureau’s use of the Competition Act’s deceptive marketing provisions to address privacy concerns, the Bureau and Facebook ended an investigation into Facebook’s representations about the disclosure of personal information with a settlement agreement registered on 19 May 2020.[45] Pursuant to the agreement, Facebook agreed to pay C$9 million in fines and an additional C$500,000 in costs.[46]

From its investigation, the Bureau concluded that Facebook had given users the impression that they had greater control over access to their personal information than was actually provided; instead, access to personal information of users and their friends was provided to third-party developers in a manner that was inconsistent with its privacy claims.[47]

Facebook agreed not to make false or misleading representations about the disclosure of personal information, including about the extent to which users can control access to their personal information on Facebook and Messenger.

Facebook voluntarily cooperated with the Bureau in its investigation and entered into the settlement agreement noted above; however, an investigation by the OPC on the same issues and seeking similar remedies has taken a different turn, with Facebook challenging the OPC’s application to the Federal Court for a declaration that Facebook contravened Canada’s privacy law, the Personal Information Protection and Electronic Documents Act.[48]

FlightHub investigation

The Bureau concluded an investigation into online travel agency FlightHub by registering a settlement agreement on 24 February 2021, which included a C$5 million penalty against the company and a C$400,000 fine each for two of FlightHub’s directors.[49] The agreement also prohibits FlightHub and its directors from making false or misleading statements or claims, as well as requiring the removal of online reviews, which appear to be made by customers but were posted by the company and its employees.[50] The Bureau concluded that FlightHub had been misleading customers regarding the price of flights as well as the cost and terms of cancellation, seat selection and rebooking policies. FlightHub also made millions from fees that it actively concealed from consumers.[51]

The FlightHub settlement agreement is notable for several reasons. First, the penalty is the largest levied for drip pricing cases. Drip pricing is where a customer is shown a headline price, to which mandatory fees are then added. This form of deceptive marketing has been a significant priority for the Bureau. Second, this case represents the first time the Bureau successfully enforced rules against astroturfing – the practice of using fake reviews or engagement to create the impression of a large, supportive community of users or customers.[52]

Other recent drip pricing investigations involving digital markets include StubHub, which resulted in a C$1.3 million penalty in February 2020,[53] and LiveNation/Ticketmaster, with a C$4.5 million penalty in June 2019,[54] as well as investigations into the rental car industry, with penalties ranging from C$700,000 to C$3 million between 2016 and 2018.[55] In addition, the amendments to the Act included in the 2022 Budget implementation legislation formally added drip pricing to the Act’s civil and criminal misleading advertising provisions.

Bureau advocacy for competitive markets

While the Bureau’s enforcement record is somewhat limited, the Bureau continues to advocate for competition in digital markets. For example, the Bureau hosted a financial technology (fintech) workshop in February 2017, followed by a fintech market study, published in December 2017, which looked at the reasons why Canada lagged behind peer nations in the adoption of fintech innovations.[56]

In January 2021, the Bureau provided comments to the Department of Finance’s Advisory Committee on Open Banking in support of competitive and innovative open banking regulatory design.[57] The Advisory Committee on Open Banking’s final report was published in April 2021.[58]

Similarly, with respect to digital healthcare, in 2022, the Bureau published a series of three reports stemming from a market study of Canada’s healthcare industry, which examined how procompetitive policies can support digital healthcare through greater innovation, choice and access.[59] The reports collectively make the following recommendations:

  • harmonise privacy and data governance rules across Canada;
  • require primary healthcare electronic medical records (EMR) companies to comply with anti-blocking rules;
  • establish interoperability standards for primary health care EMR systems;[60]
  • remove barriers that harm competition, such as fragmentation and complexity of the Canadian legal framework, strict demands in request for proposal requirements, focus on price rather than value, culture of risk aversion, lengthy procurement cycles and overly prescriptive policies;
  • support innovation-friendly procurement processes;[61]
  • review provider payment models;
  • harmonise provider licensing rules in Canada; and
  • modernise policies to facilitate digital healthcare delivery.[62]

With respect to telecommunications markets, the Bureau previously made submissions to the CRTC in 2019 and 2020 in response to notices of consultation relating to mobile wireless services[63] and is participating in the CRTC’s ongoing review of its approach to internet services competition in Canada [64]

Conclusion

The government exercised diligence in evaluating various tools available to ensure properly functioning digital markets in Canada and has been slow to adopt comprehensive reform. However, building on actions and promises in its previous mandate and responding to political pressure to act, the government has now moved decisively and appears positioned to take additional substantive action with comprehensive reform of the Competition Act.

If the aggressive set of policy changes proposed by the Bureau, among others, is implemented, it is expected that there will be an impact on competition and innovation in digital markets in Canada. It remains to be seen whether reform promotes a level playing field and the trust and fairness in digital markets that the government desires or whether it results in unintended consequences that disadvantage Canadians.


Notes

1 Elisa K Kearney and Alysha Manji-Knight are partners at Davies Ward Phillips & Vineberg LLP.

2 Competition Bureau Canada, ‘The Competition Bureau’s Strategic Vision for 2020–2024: Competition in the digital age’, 11 February 2020, online: www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04513.html.

3 Liberal Party of Canada, ‘Forward: A Real Plan For The Middle Class’, 2019, online: https://2019.liberal.ca/wp-content/uploads/sites/292/2019/09/Forward-A-real-plan-for-the-middle-class.pdf; and Liberal Party of Canada ‘Forward. For Everyone’, 2021, online: https://liberal.ca/our-platform/.

4 Government of Canada, ‘Canada’s Digital Charter in Action: A Plan by Canadians, For Canadians’, online: https://ised-isde.canada.ca/site/innovation-better-canada/en/canadas-digital-charter/canadas-digital-and-data-strategy.

5 The agreement was announced on 22 March 2022 and lasts until Parliament rises in June 2025. The NDP commits to supporting the government on confidence and budgetary matters and not moving a vote of non-confidence or voting for a non-confidence motion during that time. The Liberal Party commits to not calling an election during that period and to act on policy priorities identified by the NDP. The agreement is not legally binding, and either party can withdraw at its discretion. For more information, see https://pm.gc.ca/en/news/news-releases/2022/03/22/delivering-canadians-now.

6 Bill C-11, An act to amend the Broadcasting Act and to make related and consequential amendments to other Acts, 1st Sess, 44th Parl, Canada, 2023, online: https://www.parl.ca/LegisInfo/en/bill/44-1/c-11 [Bill C-11].

7 Bill C-18, An Act respecting online communications platforms that make news content available to persons in Canada, 1st Sess, 44th Parl, 2023, online: https://www.parl.ca/LegisInfo/en/bill/44-1/c-18 [Bill C-18].

8 Canada refused to support the one-year extension of a moratorium on imposing new digital services taxes in the context of the Organisation for Economic Co-operation and Development (OECD)/G20’s ongoing work on a multilateral convention (MLC). Although preferring a multilateral solution to the taxation of the digital economy, if an MLC has not come into force by 31 December 2023, Canada intends to enact the Digital Service Tax Act (DSTA) by 1 January 2024, with retroactive effect to 1 January 2022. The DTSA would apply a 3 per cent tax rate on in-scope digital services revenue exceeding C$20 million. Large businesses (either Canadian or non-resident with Canadian users) that meet either of two thresholds would be subject to the tax. The first is a total revenue threshold, which captures businesses with total revenue from all sources of €750 million or more in a fiscal year. The second is the Canadian in-scope revenue threshold, which captures businesses that earn more than C$20 million of Canadian revenue from online marketplace services, online advertising services, social media services and user data revenue. For more information, see Government of Canada, ‘Digital Services Tax Act‘, 14 February 2022, online: https://www.canada.ca/en/department-finance/news/2021/12/digital-services-tax-act.html.

9 Bill C-27, the Digital Charter Implementation Act, was tabled in April 2022 to strengthen Canada’s private sector privacy law, create new rules for the responsible development and deployment of artificial intelligence (AI) and continue advancing the implementation of Canada’s Digital Charter. It took almost one year to get through its second reading in the House of Commons. Following its second reading, which was completed on 24 April 2023, Bill C-27 is under consideration by the Standing Committee on Industry and Technology (the INDU Committee). The Bill follows its predecessor, Bill C-11, which was introduced in November 2020 but died on the Order Paper with the announcement of the federal election in August 2021.

10 The Liberal government made a campaign promise to introduce a legislative and regulatory framework for social media platforms addressing online harms within the first 100 days of its post-2021 election mandate. However, following heavy criticism during a public consultation in July 2021, the government went back to the drawing board on the proposed framework. See Liberal Party, ‘Protecting Canadians from Online Harms’, 2021, online: https://liberal.ca/our-platform/protecting-canadians-from-online-harms/ and Government of Canada, ‘What We Heard: The Government’s propose approach to address harmful content online’: 3 February 2022.

11 Bill C-27 introduces three proposed acts, the Consumer Privacy Protection Act, the Personal Information and Data Protection Tribunal Act and the Artificial Intelligence and Data Act, which would set out the process for establishing an AI and Data Commissioner. See Government of Canada, ‘Bill C-27 summary: Digital Charter Implementation Act, 2022’, 18 August 2022, online: https://ised-isde.canada.ca/site/innovation-better-canada/en/canadas-digital-charter/bill-summary-digital-charter-implementation-act-2020.

13 Bill C-11 supra footnote 6.

14 CRTC, ‘Broadcasting Notice of Consultation CRTRC 2023-138’, 12 May 2023, online: https://crtc.gc.ca/eng/archive/2023/2023-138.htm.

15 CRTC, News Release, ‘CRTC takes major step forward to modernize Canada’s broadcasting framework’, 29 September 2023, online: https://www.canada.ca/en/radio-television-telecommunications/news/2023/09/crtc-takes-major-step-forward-to-modernize-canadas-broadcasting-framework.html and Broadcasting Regulatory Policy CRTC 2023-329 and Broadcasting Order CRTC 2023-330, 29 September 2021, online: https://crtc.gc.ca/eng/archive/2023/2023-329.htm.

16 Bill C-18 supra footnote 7.

17 CRTC, ‘CRTC announces plan to implement Online News Act’, 24 August 2023, online: https://www.canada.ca/en/radio-television-telecommunications/news/2023/08/crtc-announces-plan-to-implement-online-news-act.html; CRTC, ‘Building a bargaining framework for the Online News Act’, 24 August 2023, online: https://crtc.gc.ca/eng/industr/info.htm.

18 Minister of Innovation, Science and Economic Development Navdeep Bains, ‘Letter from Minister of Innovation, Science and Economic Development to the Commissioner of Competition’, May 2019, online: www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04464.html. The letter to Commissioner Boswell reflected a focus on digital markets in mandate letters from the Prime Minister to the Minister of Innovation, Science and Economic Development over the past several years, including calls for enhanced online data privacy rights, measures to ensure that the revenues of ‘web giants’ are shared fairly with creators and media, and a clear set of rules that ensure fair competition in the online marketplace.

19 Government of Canada, ‘Budget 2021: A Recovery Plan for Jobs, Growth, and Resilience’, 19 April 2021, online: www.budget.gc.ca/2021/home-accueil-en.html at p. 141.

20 The re-election of the Liberal government in September 2021 means that the additional C$96 million funding commitment is very likely to continue to be realised over the coming years.

21 Canada, Parliament, House of Commons, Standing Committee on Industry, Science and Technology, Competitiveness in Canada, 43rd Parl, 2nd Sess, No. 33 (22 April 2021) (Chair: Sherry Romanado), online: www.ourcommons.ca/DocumentViewer/en/43-2/INDU/meeting-33/evidence (see testimony of Ms Kaylie Tiessen at 11.30); Canada, Parliament, House of Commons, Standing Committee on Industry, Science and Technology, Competitiveness in Canada, 43rd Parl, 2nd Sess, No. 30 (22 April 2021) (Chair: Sherry Romanado), online: www.ourcommons.ca/DocumentViewer/en/43-2/INDU/meeting-30/evidence (see testimony of Mr David Vaillancourt at 12.50); Canada, Parliament, House of Commons, Standing Committee on Industry, Science and Technology, Competitiveness in Canada, 43rd Parl, 2nd Sess, No. 29 (7 April 2021) (Chair: Sherry Romanado), online: www.ourcommons.ca/DocumentViewer/en/43-2/INDU/meeting-29/evidence (see testimony of Commissioner Boswell at 15.10); and Competition Bureau Canada, ‘Canada Needs More Competition: takeaways from the Competition and Growth Summit’, June 2021, online: www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04595.html). See also Howard Wetston, ‘Competition Consultation’, online: https://sencanada.ca/media/368379/letter-pdf.pdf. Professor Edward Iacobucci found that ‘the Act is generally well-suited to addressing economic harms in digital markets’ because of its reliance on ‘general, flexible standards for assessing conduct’. Professor Iacobucci also identified opportunities for incremental substantive amendments to the Act, but cautioned that these ‘amendments do not result necessarily from the emergence of digital markets, and would be appropriate in any event’ (see Edward M Iacobucci, ‘Examining the Canadian Competition Act in the Digital Era’, 27 September 2021, online: https://sencanada.ca/media/368377/examining-the-canadian-competition-act-in-the-digital-era-en-pdf.pdf).

22 Competition Bureau, ‘Examining the Canadian Competition Act in the Digital Era: Submission by the Competition Bureau’, 8 February 2022, online: www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04621.html.

23 ibid.

24 Government of Canada, ‘Budget 2022: A Plan to Grow Our Economy and Make Life More Affordable’, 7 April 2022, online: https://budget.gc.ca/2022/home-accueil-en.html at p. 72.

25 Government of Canada, ‘2023-2024 Annual Plan: Driving competition forward for all Canadians’, 17 April 2023, online: https://ised-isde.canada.ca/site/competition-bureau-canada/en/how-we-foster-competition/education-and-outreach/2023-2024-annual-plan-driving-competition-forward-all-canadians.

26 Prime Minister of Canada, ‘Fighting for the middle class’, 14 September 2023, online: https://www.pm.gc.ca/en/news/news-releases/2023/09/14/fighting-for-the-middle-class.

27 Bill C-56, An Act to amend the Excise Tax Act and the Competition Act, 1st Sess, 44th Parl, 2023, online: https://www.parl.ca/DocumentViewer/en/44-1/bill/C-56/first-reading [Bill C-56].

28 NDP, ‘Jagmeet Singh introduces bill to lower prices for Canadians’, 18 September 2023, online: https://www.ndp.ca/news/jagmeet-singh-introduces-bill-lower-prices-canadians and Bill C-352, An Act to amend the Competition Act and the Competition Tribunal Act, 1st Sess, 44th Parl, 2023, online: https://www.parl.ca/legisinfo/en/bill/44-1/c-352 [Bill C-352].

29 Competition Bureau Canada, ‘Competition Bureau to review the proposed acquisition of Shaw by Rogers’, 15 March 2021, online: www.canada.ca/en/competition-bureau/news/2021/03/competition-bureau-to-review-the-proposed-acquisition-of-shaw-by-rogers.html.

30 Competition Bureau Canada, ‘Competition Bureau obtains court orders to advance investigation of Rogers’ proposed acquisition of Shaw’, 5 August 2021, online: www.canada.ca/en/competition-bureau/news/2021/08/competition-bureau-obtains-court-orders-to-advance-investigation-of-rogers-proposed-acquisition-of-shaw.html.

31 Competition Bureau Canada, ‘Competition Bureau seeks information from market participants to advance investigation of Rogers’ proposed acquisition of Shaw’, 28 September 2021, online: www.canada.ca/en/competition-bureau/news/2021/09/competition-bureau-seeks-information-from-market-participants-to-advance-investigation-of-rogers-proposed-acquisition-of-shaw.html.

32 Competition Bureau Canada, ‘Competition Bureau seeks full block of Rogers’ proposed acquisition of Shaw’, 9 May 2022, online: www.canada.ca/en/competition-bureau/news/2022/05/competition-bureau-seeks-full-block-of-rogers-proposed-acquisition-of-shaw.ht.

33 Videotron, ‘Rogers, Shaw and Quebecor announce agreement for sale of Freedom Mobile’, 17 June 2022, online: https://corpo.videotron.com/en/pressroom/rogers-shaw-and-quebecor-announce-agreement-sale-freedom-mobile.

34 Government of Canada, ‘Statement from the Commissioner of Competition on the Federal Court of Appeal’s decision regarding Rogers-Shaw merger’, 24 January 2023, online: https://www.canada.ca/en/competition-bureau/news/2023/01/statement-from-the-commissioner-of-competition-on-the-federal-court-of-appeals-decision-regarding-the-rogers-shaw-merger.html.

35 Competition Bureau Canada, ‘Why Canada needs an urgent competition upgrade’, 16 May 2023, online: https://www.canada.ca/en/competition-bureau/news/2023/05/why-canada-needs-an-urgent-competition-upgrade.html.

36 The Commissioner of Competition v. The Toronto Real Estate Board (27 May 2011), CT-2011-003, online: Competition Tribunal https://decisions.ct-tc.gc.ca/ct-tc/cd/en/item/462552/index.do?q=CT-2011-003.

37 The Toronto Real Estate Board v. Commissioner of Competition, 2017 FCA 236, online: www.canlii.org/en/ca/fca/doc/2017/2017fca236/2017fca236.html [TREB].

38 Toronto Real Estate Board v. Commissioner of Competition, 2018 CanLII 78753 (SCC), online: www.canlii.org/en/ca/scc-l/doc/2018/2018canlii78753/2018canlii78753.html.

39 TREB, supra footnote 36 at Paragraph 176.

40 Competition Bureau Canada, ‘Competition Bureau seeks input from market participants to inform an ongoing investigation of Amazon’, 14 August 2020, online: www.canada.ca/en/competition-bureau/news/2020/08/competition-bureau-seeks-input-from-market-participants-to-inform-an-ongoing-investigation-of-amazon.html.

41 Competition Bureau Canada, ‘Competition Bureau seeks input from market participants to inform an ongoing investigation of Amazon’, 14 August 2020, online: www.canada.ca/en/competition-bureau/news/2020/08/competition-bureau-seeks-input-from-market-participants-to-inform-an-ongoing-investigation-of-amazon.html.

42 Competition Bureau Canada, ‘Competition Bureau statement regarding its inquiry into Amazon’s price advertising in Canada’, 11 January 2017, online: www.canada.ca/en/competition-bureau/news/2017/01/amazon-changes-pricing-practices-pays-1-1-million-settle-price-advertising-case.html.

43 Stephanie Difederico and Jason Edmond Casey v Amazon.com, Inc., Amazon.com.ca, Inc., Amazon.com services LLC, Amazon Services International, Inc. and Amazon Services Contracts, Inc., (August 28, 2023), 2023 FC 1156.

44 Meta, ‘Changes to News Availability on Our Platforms in Canada’, 1 June 2023, online: https://about.fb.com/news/2023/06/changes-to-news-availability-on-our-platforms-in-canada/.

45 Facebook, Inc. (19 May 2020), CT-2020-004, online: Competition Tribunal, https://decisions.ct-tc.gc.ca/ct-tc/cdo/en/item/471812/index.do.

46 Competition Bureau Canada, ‘Facebook to pay $9 million penalty to settle Competition Bureau concerns about misleading privacy claims’, 19 May 2020, online: www.canada.ca/en/competition-bureau/news/2020/05/facebook-to-pay-9-million-penalty-to-settle-competition-bureau-concerns-about-misleading-privacy-claims.html.

47 ibid.

48 The Canadian Press, ‘Facebook takes Canada’s privacy commissioner to court over personal data probe’, 20 April 2020, online: www.theglobeandmail.com/canada/article-facebook-takes-canadas-privacy-commissioner-to-court-over-personal.

49 FlightHub Group Inc. (24 February 2021), CT-2019-003, online: Competition Tribunal, https://decisions.ct-tc.gc.ca.

50 Competition Bureau Canada, ‘Investigation of FlightHub ends with $5.8M in total penalties for company and directors’, 24 February 2021, online: www.canada.ca/en/competition-bureau/news/2021/02/investigation-of-flighthub-ends-with-58m-in-total-penalties-for-company-and-directors.html.

51 ibid.

52 The Bureau reached a consent agreement with Bell Canada in October 2015 relating to the posting of positive reviews and high ratings of Bell apps by Bell employees without disclosing that they were employees of Bell Canada. Bell agreed to an enhanced corporate compliance programme and paid an administrative monetary penalty of C$1.25 million. Competition Bureau Canada, ‘Bell Canada reaches agreement with Competition Bureau over online reviews’, 14 October 2015, online: www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03992.html.

53 Competition Bureau Canada, ‘StubHub to pay $1.3 million penalty for advertising unattainable prices for event tickets’, 13 February 2020, online: www.canada.ca/en/competition-bureau/news/2020/02/stubhub-to-pay-13-million-penalty-for-advertising-unattainable-prices-for-event-tickets.html.

54 Competition Bureau Canada, ‘Ticketmaster to pay $4.5 million to settle misleading pricing case’, 27 June 2019, online: www.canada.ca/en/competition-bureau/news/2019/06/ticketmaster-to-pay-45-million-to-settle-misleading-pricing-case.html.

55 Competition Bureau Canada, ‘Avis and Budget to pay a $3 million penalty to resolve concerns over unattainable prices’, 2 June 2016, online: www.canada.ca/en/competition-bureau/news/2016/06/avis-and-budget-to-ensure-prices-advertised-are-accurate.html; Competition Bureau Canada, ‘Hertz and Dollar Thrifty to pay $1.25 million penalty for advertising unattainable prices and discounts’, 24 April 2017, online: www.canada.ca/en/competition-bureau/news/2017/04/hertz_and_dollarthriftytopay125millionpenaltyforadvertisingunatt.html; Competition Bureau Canada, 22 February 2018, ‘Enterprise Rent-A-Car Canada to pay a $1 million penalty for advertising unattainable prices’, online: www.canada.ca/en/competition-bureau/news/2018/02/enterprise_rent-a-carcanadatopaya1millionpenaltyforadvertisingun.html.

56 Competition Bureau Canada, ‘Technology-led innovation in the Canadian financial services sector’, 14 December 2017, online: www.competitionbureau.gc.ca.

57 Competition Bureau Canada, ‘Competition Bureau comments to the Advisory Committee on Open Banking’, 18 January 2021, online: www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04571.html.

59 Competition Bureau Canada, ‘Unlocking the power of health data: Digital Health Care Market Study – Part 1‘, 23 June 2022, online: ised-isde.canada.ca/site/competition-bureau-canada/en/unlocking-power-health-data; Competition Bureau, ‘Improving Health Care Through Pro-competitive Procurement Policy: Digital Health Care Market Study – Part 3’, 5 October 2022, online: ised-isde.canada.ca/site/competition-bureau-canada/en/improving-health-care-through-pro-competitive-procurement-policy; and Competition Bureau, ‘Empowering health care providers in the digital era: Digital Health Care Market Study – Part 3’, 24 November 2022, online: ised-isde.canada.ca/site/competition-bureau-canada/en/how-we-foster-competition/education-and-outreach/publications/Empowering-health-care-providers-in-the-digital-era.

60 Digital Health Care Market Study – Part 1.

61 Digital Health Care Market Study – Part 2.

62 Digital Health Care Market Study – Part 3.

63 See, for example, Competition Bureau Canada, ‘Review of Mobile Wireless Services - Comments of the Competition Bureau on Telecom Notice of Consultation CRTC 2019-57’, 15 May 2019, online: www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04431.html; Competition Bureau Canada, ‘Submission to the Telecom Notice of Consultation CRTC 2019-57 — Further Comments of the Competition Bureau’, 25 November 2019, online: www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04510.html; and Competition Bureau Canada, ‘Submission to the Telecom Notice of Consultation CRTC 2019-57 - Final Comments of the Competition Bureau’, 15 July 2020, online: www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04540.html.

64 Government of Canada, ‘CRTC launches review of approach to Internet services competition and lowers some wholesale rates effectively immediately’, 8 March 2023, online: www.canada.ca/en/radio-television-telecommunications/news/2023/03/crtc-launches-review-of-approach-to-internet-services-competition-and-lowers-some-wholesale-rates-effectively-immediately.html. The Bureau previously conducted a market study in 2018 into competition in Canada’s broadband internet sector. See Competition Bureau Canada, ‘Delivering Choice: A Study of Competition in Canada’s Broadband Industry’, 7 August 2019, online: www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04470.html.

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