The Bureau is in the final stages of hiring a chief digital enforcement officer, with the mandate to improve and modernize the regulator’s approach to digital enforcement
May 23, 2019 10:44 AM EDT
Less than three months after his appointment as Canada’s Commissioner of Competition, Matthew Boswell’s presence is already being felt.
Boswell, a former assistant crown attorney who has been with the Commission since 2011, was appointed to the permanent position in March after serving as interim commissioner since May 2018.
The former senior litigation counsel at the Ontario Securities Commission makes no bones about his agenda.
“At a high level, we want the (Competition) Bureau to be among the leaders in the world in terms of how we do our work,” he said in an interview with the Financial Post. “That means vigorous enforcement in an increasingly digital age, something that will require quicker and more nimble responses from a staff empowered with cutting-edge tools and techniques.”
To that end, the Bureau is in the final stages of hiring a chief digital enforcement officer, with the mandate to improve and modernize the regulator’s approach to digital enforcement.
Also on the Commissioner’s radar are the telecommunications sector, pharmaceutical and infrastructure sectors.
“Telecommunications has a handful of industry players that hold significant market power, the pharmaceutical industry raises issues about access to generic drugs and biosimilar products, and cracking down on bid-rigging with respect to public contracts in the infrastructure space is a top priority,” Boswell said. “We’ll be paying particular attention to high impact and consumer enforcement cases.”
By way of example, the Bureau is pursuing its ongoing litigation against Ticketmaster, Live Nation and affiliated companies. These companies are allegedly making deceptive claims to consumers when advertising prices for sports and entertainment tickets because consumers must pay additional fees that are added later in the purchasing process — so-called “drip pricing.”
“We’re already starting to see the Commissioner’s focus on active enforcement playing itself out, and what that inevitably means is that there will be more litigation,” says Anita Banicevic, a competition lawyer in Davies Ward Phillips & Vineberg LLP’s Toronto office.
The Bureau is also continuing its litigation against four engineering executives charged with bid-rigging on 21 City of Gatineau infrastructure contracts awarded between 2004 and 2008.
One of them, Dave Boulay, a former director and assistant vice-president at the Dessau engineering firm, pleaded guilty in January and was sentenced to 12 months incarceration. Within two months, Dessau agreed to pay a $1.9 million fine for its role in the scheme. Genivar Inc. (now WSP Canada), also implicated, settled by paying a $4 million penalty.
Other ongoing cases involve allegations that the Vancouver Airport Authority has restricted competition on in-flight catering services; and that Hudson’s Bay engaged in misleading advertising regarding mattresses and sleep sets.
As Boswell sees it, he’s merely continuing the work of his predecessor, John Pecman, to whom he reported directly.
“Under John’s leadership, there were dramatic changes, including a tremendous emphasis on compliance, collaboration with business and lawyers, empowering Canadians and promoting competition,” Boswell said. “These goals are still important to the Bureau, and as Commissioner, I’ll continue to be a vocal advocate for competition with a strong focus on enforcement.”
But Pecman was an economist, the first non-lawyer to lead the Bureau. Boswell, a lawyer, insists the pair’s differing backgrounds won’t make much of an impact in term of the Bureau’s priorities and approach.
“John came to know the legal side as well as anyone, and I’ve been soaking in the economics for eight years,” he said.
Still, the increased focus on legalities, especially the attention to process, is already apparent. It’s most evident in the Bureau’s recent shake-up of the investigative process to advance Boswell’s goal of making enforcement even more active.
“The Bureau is trying to get as litigation-ready as possible,” Banicevic said. “That includes greater resort to injunctions pending litigation.”
In other words, expect to see more attempts by the Bureau to stop a merger pending completion of the review process, and greater emphasis on modifying conduct with regard to misleading advertising and abuse of dominance while cases are being investigated and processed.
It also appears that the Bureau will be confronting executives of companies under investigation in a more direct way. Recently, it obtained court orders to orally examine executives in a merger review.
“Oral examinations are a tool that has not been used frequently in Canada, in contrast to the U.S., where such examinations are typical,” Banicevic says.
Competition lawyers also told the Financial Post that the Bureau is now resorting to search warrants, traditionally reserved for criminal conduct, in civil proceedings.
Supporting all this, according to Boswell, will be expanded intelligence gathering aimed at detecting transactions and conduct that might raise Competition Act issues.
The legislation empowers the Commissioner to review any merger in Canada. But parties are only required to give advance notice of a merger to the Bureau when the target’s assets in Canada or revenues from sales exceed $96 million, and when the combined Canadian assets or revenues of the parties and their respective affiliates in, from or into Canada exceed $400 million — thresholds that are revised annually.
“The Bureau is clearly looking for other ways to bring transactions forward for review,” Banicevic says. “So expanded intelligence gathering could result in considerably more scrutiny of mergers that fall below the thresholds.”
There are also no signs that criticisms that have long plagued the Bureau will abate.
Competition lawyers have long complained that the Bureau is wasting resources on pursuing its own policy agenda rather than merely applying the law as found in the legislation and as interpreted by the courts.
By way of example, they assert that the Bureau’s recent draft guidelines regarding the “efficiencies” defence, which prohibits the Competition Tribunal from preventing a merger producing efficiencies that will be greater than the anti-competitive effects of the transaction, is out of step with jurisprudence from the Supreme Court of Canada that has given teeth to the defence. Lawyers also say that the Bureau is overstepping its boundaries by lobbying for legislative elimination of efficiencies arguments.
Boswell, however, remains adamant that the efficiencies defence won’t be an easy ride for anyone asserting it.
“It’s a big deal for parties to ask us to refrain from challenging a merger on the basis of the efficiencies it creates,” Boswell said. “If they want me to do that, they better expect to meet the appropriate evidentiary burden, one that is subject to the same stringency we use to determine whether the transaction has anti-competitive effects — and certainly not a waive-through exercise.”
Controversy has also surrounded the Bureau’s increasing appetite for “market studies,” which lawyers say are not within the regulator’s statutory purview, as well as the Bureau’s forays into “common ownership” issues regarding the simultaneous ownership of shares in two or more competing companies by a financial investor, where the shareholdings are not large enough to give the investor control of any of the companies.
Finally, Boswell dismisses criticisms that policy distractions and agenda are at least partly responsible for the Bureau’s alleged failure to meet its own internal performance standards, particularly in the merger review process.
These criticisms, Boswell maintains, are misplaced. Non-complex reviews, he points out, take 10.2 days to resolve on average.
“Our statistics show that between October 2018 and March 2019, the merger team met its service standards for both the 100 non-complex and 82 complex cases that it reviewed,” he said.
According to the Commissioner, many delays are due to circumstances the Bureau can’t control. These include the need to co-ordinate reviews with other jurisdictions, delays in parties’ response times, and settlement negotiations.
“Overall, given our resources, the Bureau engages in a tremendous amount of enforcement activity,” he says.