The 2018/19 Annual Report on the administration of the Investment Canada Act (Act) recently issued by the Act’s Director of Investments records a considerable increase in filings under the Act by non-Canadians establishing new businesses in Canada.

During the 4 prior years, the Investment Review Division received, on average, 175 new business filings a year. However, the 2018/19 Annual Report records 255 new business filings, a 45% increase over the prior 4 year average.

The increase in new business filings could be reflective of an increase in the attractiveness of Canada as a place for foreigners to start new businesses. While not discounting the fact that Canada welcomes new investment, another reason for the increase in filings could be foreign investor concerns that their new business activities could attract the attention of Canada’s security agencies under the national security review provisions of the Act.

The Act requires that every non-Canadian who is proposing to or has established a new business in Canada that is either (i) unrelated to any other existing business carried on in Canada by the non-Canadian; or (ii) involves an activity that is related to Canada’s “cultural heritage or national identity” must give notice of that investment to the Canadian government either before or within 30 days of the establishment of that new Canadian business.

A new “Canadian business” has three elements: (i) it must have a place of business in Canada; (ii) it must have an individual or individuals in Canada who are employed or self-employed in connection with the business; and (iii) it must have assets in Canada used in carrying on the business. A new Canadian business is considered to be established at the time that all three required elements are satisfied and a new business notification must be filed with the Director of Investments no later than 30 days from that date.

In the past, some foreign investors and their advisors may not have been aware of this obligation and therefore, did not make the required filings. The fact that the Act has no penalty for the failure to make a filing may have also contributed, in part, to some compliance laxity.

However, the power of the government to launch national security investigations with respect to the business activities of non-Canadians coupled with the right to order non-Canadians to divest of investments posing national security risks to Canada, creates an additional level of risk for foreign investors. It may be that, in an effort to better manage that risk, non-Canadian investors are choosing to have their proposed new business investments cleared by the Investment Review Division well in advance of the establishment of such businesses in Canada.

Under the Act, Canada has, following its receipt of a notification, an initial 45 day period during which to decide whether to initiate a further and potentially more formal national security review of a proposed investment. During this initial period, the security agencies and the other relevant investigative bodies, including Innovation, Science and Economic Development Canada, assess information and intelligence related to the business being established, the terms of the investment and the foreign investor. The Canadian government may also consult with its allies. Lastly, the non-Canadian investor may be required to provide information considered necessary by the government for the purposes of its review. At the completion of the initial review, the Minister may make a decision not to take any further action or, alternatively, may choose to continue with the national security review process prescribed under the Act.

While only a relatively small number of investments are subjected to the more intensive national security review process, a formal national security review can have disastrous consequences for a non-Canadian’s new business planning and implementation. For this reason, we recommend filing new business notices as early as possible in the planning process and before any irreversible business commitments are made.

In the recent case of Computicket v the Competition Commission, the Competition Appeal Court was called upon to analyse and explain the standard that must be met to establish an exclusionary abuse of dominance under South Africa’s Competition Act. The case provides insight into important practical and policy questions – what do we mean by “anti-competitive effects” and how high is the hurdle that must be cleared to establish such effects?

The case involved exclusivity provisions in agreements between Computicket (a firm found to be dominant in the market for outsourced ticketing distributing services) and numerous inventory providers (such as theatres, sports or concert venues and events companies) that employ the services of Computicket to sell tickets to their events. The Competition Tribunal had found that Computicket’s exclusivity requirements contravened section 8(d)(i) of the Competition Act because they (1) constituted the exclusionary act of “requiring or inducing a supplier or customer not to deal with a competitor”, and (2) had anti-competitive effects which were not outweighed by technological, efficiency or other pro-competitive gains.

On appeal, Computicket disputed the Tribunal’s finding of anti-competitive effects, suggesting that the Tribunal had placed excessive emphasis… on the experience of a “single would-be competitor”…, that was (a) not an “efficient competitor”; (b) had focused its efforts on the sale of theatre tickets (which represented no more than 3% of the opportunities in the outsourced ticketing market in the relevant period); and (c) in fact had not been excluded from participation in the relevant market”. Computicket argued that there was no actual foreclosure of a rival, and because the conduct was not shown to have a market-wide effect, the criterion of substantiality was not met.

The dispute provided occasion for the Court to set out the position under pre-existing case law on this subject, and further interpret the key concept of anti-competitive foreclosure when used in the context of exclusionary abuse of dominance in South Africa. The Court’s synopsis, found in paragraphs 25 to 38 of the judgment, is difficult to follow in places, however, our interpretation may be summarised as follows:

  • There must be a causal relationship between the dominant firm’s exclusionary act and the anti-competitive effects.
  • Anti-competitive effects may take the form of (1) actual harm to consumer welfare or (2) substantial or significant foreclosure of the market to rivals.
  • The exclusionary conduct has the effect of foreclosure if it renders the dominant firm’s rivals less effective competitors. Put differently, the conduct must in a non-trivial way diminish the competitive constraints on the dominant firm to which it would otherwise have been subject, and thereby strengthen its dominant position.
  • Foreclosure need not involve the exit of a rival from the market, and may be actual or potential.
  • The inquiry of whether there has been foreclosure may require an “aggregative” examination of the market, exploring issues such as (1) the extent of the firm’s dominance, (2) the extent of sales affected by the exclusionary conduct, and (3) barriers to entry and expansion.
  • However, the aggregative inquiry is not necessarily determinative. Anti-competitive effects could result from an impact on a small firm that plays an important role in constraining the dominant firm in a part of the market.
  • In such circumstances, “substantiality” can be inferred. A market-wide impact need not be proved for the conduct to be “substantial or significant in terms of its effect in foreclosing the market to rivals”.
  • The more substantial the exclusionary effect, the more likely it is that its impact on the market will also be substantial, and the less likely it will be outweighed by pro-competitive gains. But substantiality is not a requirement for a finding of anti-competitive effects.
  • Size and efficiency of a competitor are not determinant factors in establishing likely competitive effects.

It is unclear from the judgment whether anything ultimately turned on the Court’s articulation of the subtleties within the foreclosure test. The Court found that the exclusive contracts were “substantial in terms of foreclosing the market to rivals” and “there is evidence pointing to actual harm on consumers (although the latter is not necessary to show).” This finding may well have been made even on Computicket’s formulation of the appropriate test.

Nevertheless, the case develops the test for abuse in an important way. By jettisoning Computicket’s version of substantiality, the Court seems to have lowered the bar for establishing abuse of dominance. Taken to its logical limit, the judgment could be applied to find an abuse of dominance in circumstances where conduct is likely to have a potential impact on one small, inefficient firm in one small portion of the market, provided that (1) the firm plays an important role in constraining the behaviour of the dominant firm in a part of the market, (2) the conduct renders the small firm a less effective competitor, and (3) there are no countervailing pro-competitive effects arising from the conduct.

On the one hand, the judgment does not change the law fundamentally. The exclusionary abuse provisions that apply an “effects test” for exclusionary abuse continue to do so, as is international best practice. One may argue, however, that this outcome applies a theme that is in line with the prevailing policy sentiment in South Africa, which is to strengthen the ability of competition law to address concentration in markets and to promote the ability of small firms to effectively participate.

In the context of recent changes to the Competition Act that explicitly protect small and medium sized businesses, this case gives dominant firms further cause to be increasingly vigilant in evaluating the potential effects of potential market strategies on smaller challengers.

Overview of the administration of the Investment Canada Act

While there are a number of federal and provincial statutes that are sector-specific and that limit foreign investment in Canada, the Investment Canada Act (“ICA”) is the only statute of general application in Canada that provides for the review and approval of foreign investments. For investments other than investments in cultural businesses, the ICA is administered by the Investment Review Division (“IRD”) of the federal Department of Innovation, Science and Economic Development (“ISED”). Investments in cultural businesses are administered by the Cultural Sector Investment Review (“CSIR”) unit of the federal Department of Canadian Heritage (“Heritage Canada”). Where a transaction involves both non-cultural and cultural businesses, both IRD and CSIR may be involved. IRD is solely responsible for the administration of the national security provisions of the ICA. Decisions to approve or disallow investments are made by the Minister of ISED for transactions not involving cultural businesses and by the Minister of Canadian Heritage in the case of transactions involving cultural businesses. Both ministers may be involved in the review process where a transaction involves both cultural and non-cultural businesses. The federal Governor-in-Council (“GIC”) (essentially, the federal cabinet) is the ultimate decision-maker with respect to investments considered potentially injurious to national security.

2018-2019 Annual Report

On December 27, 2019, the Annual Report on the administration of the ICA for the fiscal year commencing April 1, 2018 and ending March 31, 2019 (the “Annual Report”), was published.

The following are some of the more noteworthy observations contained in the Annual Report:

Increased FDI; filings at an all-time high; very few transactions subject to net benefit review

  1. Foreign direct investment (“FDI”) inflows and cross-border M&A activity in Canada increased in the fiscal year relative to prior years and this translated into an all-time high number of filings under the ICA.
  2. In total, 962 investment filings were certified as complete under the ICA, with only nine being applications for net benefit review and 953 being notifications. As illustrated below, the number of notifications increased significantly from the previous fiscal year although net benefit reviews are at about one-half the number they were in fiscals 2015, 2016 and 2017. The increase in notifications is likely primarily a consequence of increased FDI but also possibly (as implied in the Annual Report) a consequence of increased compliance with the notification provisions of the ICA to manage the possibility of a national security review (“NSR”). The reduction in net benefit reviews is no doubt attributable to the substantial increase in applicable review thresholds for most transactions.
  3. Importantly, the above figures do not take into account net benefit reviews administered by Canadian Heritage in relation to purely cultural transactions. Canadian Heritage’s “Results Report” for the 2018-2019 fiscal year has not, as of the date of this comment, been published.

National security reviews

  1. There were nine notices issued to investors advising them that a GIC order requiring a NSR may be issued. Of these nine, seven were subsequently subject to an order for such a NSR, ultimately resulting in two GIC final orders requiring divestiture and two withdrawals of the investment; three resulted in no further action under the ICA.
  2. The average length of review for the seven investments subject to a NSR order was 161 days from certification to final resolution.
  3. The Annual Report states that in assessing investments under the NSR provisions of the ICA, the terms of the investment under review, the nature of the assets or business activities involved and the parties (including the potential for third party influence) are considered. The Annual Report also notes that, increasingly, parties are voluntarily engaging with the IRD in advance of less than control investments when the proposed investment may present factors set out in the Guidelines on the National Security Review of Investments.
  4. Of the seven investments for which NSR orders were issued in fiscal 2019, four originated in China, two in Switzerland and one in Singapore. Of the 14 investments for which NSR orders were issued in fiscals 2017, 2018 and 2019 combined, 10 originated in China, two in Switzerland, one in Singapore and one in Cyprus.
  5. The 14 investments involved transportation including transportation infrastructure (three), information technology (four), pharmaceutical (one), machinery and equipment manufacturing (three), credit intermediation (one), electronic shopping (one) and heavy and civil engineering construction (one).

Destination and source of investments

  1. Based on the Annual Report and annual reports relating to prior fiscal years, we have developed the following tables:


  • Resources: Significant decrease in number of investments as compared to two previous years.
  • Business and Services Industries: Large increase in number of investments.
  • Other Services: Large increase in number of investments.

*Because there was one application calculated in asset value, to preserve commercial confidentiality and to prevent the risk of identifying the individual investment, the specific amount of the assets was not included in the total for this amount throughout the Annual Report.

Observations – Number of Investments

  • Increase in investments from India.
  • Steady increase in investments from US and EU.
  • Decrease in investments from China two years ago – but steady in 2018-19.

Observations – Value of  Investments

  • Steady increase by the US and EU; steady decrease by Japan and India.
  • China: significant decrease in enterprise value. Although, when comparing the asset value, there is a large increase from $28 million in 2017-2018 to $1.457 billion in 2018-2019.
  • Australia: large increase in enterprise value of investments.


  • Different sectors in the US and EU consistently ranking in the same order in terms of number of investments.
  • Some movement in ranking of sectors in China. In 2018/2019 the sectors rank in the same order as the US and EU, after a decline in resources, other services and manufacturing sector investments over the past two years.

Earlier this month, John Pecman published a highly topical article in Competition Policy International on the dominance and durable market power that Big Tech companies are said to have in today’s economy and on the responses from international competition agencies titled “Dethroning the Digital Platform Champions”.

“One has to applaud the success of the so-called “Tech Superstars”, often referred to as “GAFA” (Google, Amazon, Facebook, Apple). The great innovations they have developed for consumers and businesses alike contribute significantly to Canada’s gross national well-being. Their collective success should be admired both by those of you who believe in the power of capitalism to grow the economy and by those of you that believe the most innovative and efficient companies, those that invest and take risks, should reap the rewards, along with their shareholders, for having tipped the “winner takes all” race….

… Increasing concentration in many sectors is a result of growing economies of scale which results in larger, more efficient firms as opposed to smaller ones. Quite rightly, competition authorities worry about, and are empowered to take action against, companies with market power who engage in anti-competitive behavior to maintain or enhance their market power….”

To read more, visit:

Since the Supreme Court of Canada’s trilogy of decisions in Pro-Sys, Sun-Rype and Infineon, plaintiffs have had considerable success certifying private antitrust/competition class actions in Canada. The province of Ontario’s proposed changes to its class action legislation may change that trend.

On December 9, 2019, the Ontario government introduced Bill 161, the Smarter and Stronger Justice Act, 2019. Bill 161 is omnibus legislation that includes proposed amendments to Ontario’s Class Proceedings Act, 1993 (the “CPA”). Many of the proposed changes arise from recommendations made by the Law Commission of Ontario (“LCO”) in its July 2019 Final Report on Class Actions.

The proposed changes to the CPA are both numerous and significant. If implemented, the changes will impact all types of class actions, including private class action enforcement under Canada’s Competition Act (the “Act”). At a glance, the proposed changes would:

  • amend the preferable procedure portion of the certification test (more on this below);
  • streamline appeal routes arising from the certification decision;
  • reform and expedite the carriage motion process;
  • require the registration of class actions and create a database of all ongoing cases;
  • provide a process for automatic dismissals for delay unless the plaintiffs file a certification motion within a year after the originating process is issued;
  • create procedures for the multijurisdictional coordination of class actions with other provinces;
  • encourage pre-certification preliminary motions that can dispense with the proceeding or narrow issues;
  • require “plain language” in court-approved notices;
  • explicitly provide for cy-près orders where it is impractical or impossible to directly compensate class members;
  • strengthen the settlement approval process, including heightening evidentiary and reporting obligations; and
  • require earlier notice to the Public Guardian and Trustee and the Office of the Children’s Lawyer of cases affecting individuals that they represent.

Of these changes, the most significant would be to the preferable procedure portion of the certification test that currently requires plaintiffs to prove that a class action would be the “preferable procedure for the resolution of the common issues”. Implications for antitrust/competition private enforcement are discussed more fully below.

I.  Preferable Procedure: New Superiority and Predominance Requirements

Currently, the preferability analysis under the CPA has two core components: even if there is an identifiable class whose claims raise common issues, those issues will not be determined through a class proceeding unless: (1) such a proceeding would be inherently fair, efficient and manageable; and (2) a class proceeding is better than other reasonably available procedures for obtaining redress for class members. The representative plaintiff bears the onus of demonstrating some basis in fact that a class action would be preferable to any other reasonably available means of resolving the class members’ claims. However, if the defendant relies on a specific alternative to the class action, the defendant has the evidentiary burden of proving the viability of the alternative.

Plaintiffs would bear the burden to satisfy additional preferability requirements if the proposed changes are enacted. A class action would be a preferable procedure for the resolution of common issues only if, at a minimum:

  • it is superior to all reasonably available means of determining the entitlement of the class members to relief or addressing the impugned conduct of the defendant, including, as applicable, a quasi-judicial or administrative proceeding, the case management of individual claims in a civil proceeding, or any remedial scheme or program outside of a proceeding; and
  • the questions of fact or law common to the class members predominate over any questions affecting only individual class members.

Professor Jasminka Kalajdzic and Paul-Erik Veel helpfully discuss the implications of these changes to the preferability test in their respective blog posts. As they discuss, the proposed changes would introduce a superiority test and a predominance requirement similar to the US Federal Rule 23(b)(3).

With respect to the superiority test, the phrases “determining the entitlement of the class members to relief” and “addressing the impugned conduct of the defendant” seem to compel plaintiffs to demonstrate that a class action is preferable to resolve the class members’ claims entirely, including ultimate relief for each class member.

The preferability requirement is generally met when the common issues form a substantial ingredient of the class members’ claims even if individual issues trials or claims assessment processes are necessary to finally dispose of each class member’s claim.  However, and as Professor Kalajdzic notes, the proposed enumerated list of “other reasonably available means”, namely “a quasi-judicial or administrative proceeding, the case management of individual claims in a civil proceeding, or any remedial scheme or program outside of a proceeding” suggests that the onus is shifting entirely back to plaintiffs to prove that none of the other procedures are superior.

With respect to the predominance requirement, the phrase “questions of fact or law common to the class predominate over any questions affecting only individual class members” suggests that the number of common issues must predominate over any individual issues for the preferability requirement to be met.

If interpreted like US Federal Rule 23(b)(3), certification judges will engage in a rigorous assessment of whether common questions of law or fact predominate over individual questions. While jurisprudence arising from the predominance requirement under US Federal Rule 23(b)(3) is somewhat varied, certification judges consider whether there would be too many individual issues to be resolved notwithstanding that common issues may form a substantial ingredient of the class members’ claims, rendering the class action impractical and unlikely to promote judicial economy.

As a practical matter, the proposed preferability test could cause future intended class actions with one or a few common issues (focused on liability) to not satisfy the certification test because individual issues focused on harm and damages outweigh the commonality. As discussed below, this is particularly relevant for competition class actions where the issues in dispute tend to focus on loss or damage allegedly suffered by class members and increasingly the ultimate relief of each class member – whether a direct, indirect and umbrella purchaser – rather than whether a violation of the Act has, in fact, taken place.

II.  Implications the New Preferability Requirements would have on Antitrust/Competition Class Action Enforcement

Section 36(1) of the Act provides a statutory right of action for damages to any person who has suffered loss or damage as a result of conduct contrary to Part VI of the Act (i.e. criminal offences under the Act). Class actions alleging conduct contrary to Part VI of the Act typically involve collusion (e.g., price-fixing, bid-rigging) and, to a lesser extent, criminal deceptive marketing practices.

A court may order a remedy under section 36(1) of the Act if a person proves, on a balance of probabilities, loss or damage suffered as a result of conduct contrary to any provision of Part VI of the Act. Compensable loss or damage under the Act is limited to single damages—namely, an amount equal to the loss or damage proved to have been suffered by that person, and any additional amount that the court may allow not exceeding the full cost to that person of any investigation in connection with the matter and of proceedings under section 36(1).

Accordingly, a prerequisite to recovery under section 36(1) is actual damage or loss suffered by the plaintiff, as well as a causal connection between the damage or loss suffered and the impugned conduct, regardless of the impugned conduct at issue. For example, the elements of a collusion offence are that competitors agreed to engage in certain impugned conduct, whether fixing prices, restricting output or allocating markets. However, for a private plaintiff to obtain damages for conduct underpinning these offences, the private plaintiff must prove that it suffered actual loss or damages, as well as a causal connection between the conduct underpinning the offence and the loss or damage claimed.

By way of further example, for the offence of false or misleading representations under the Act, it is not necessary to prove that a person was, in fact, misled or deceived in order to obtain a conviction. However, for a private plaintiff to obtain damages, the plaintiff must prove that it suffered actual loss or damage, as well as a causal connection between the false or misleading representation and the loss or damage claimed.

Recognizing the interconnection between public and private enforcement of competition laws in Canada, the Act permits a private plaintiff to use the “record of proceedings” in the criminal court in which the defendant was convicted of the offence as rebuttable proof that the defendant engaged in the impugned conduct. As many price-fixing class actions in Canada follow guilty pleas, plaintiffs are relieved from proving that the defendants committed an offence contrary to the Act, absent evidence to the contrary.

Having regard to the foregoing, liability is typically not an issue of focus in competition class actions. Liability typically preoccupies a limited number of common issues, such as (i) whether the defendants, or any of them, engaged in specified conduct contrary to a section under Part VI of the Act; and (ii) what is the period in which the conduct at issue took place. As noted, the “record of proceeding” typically addresses these common issues entirely or in part.

In contrast, and as demonstrated in many US antitrust class actions, commonality in respect of loss damage suffered and the predominance requirement presents unique and complex challenges for plaintiffs. It is not uncommon for economic models to fall far short of establishing that damages are capable of measurement on a class wide basis, including where proposed economic models do not provide a clearly defined list of variables and lack proof that data related to the proposed variables exist.

Class definitions in Canadian price-fixing class actions, particularly following the Supreme Court of Canada’s recent decision in Godfrey, are vast and diverse, encompassing direct, indirect and now umbrella purchasers. There is no shortage of skepticism regarding the viability of economic methodologies seeking to establish that the alleged overcharges have been passed on to various levels in the distribution chain. There is also skepticism regarding methodologies offering a realistic prospect of establishing loss on a class-wide basis.

If it is established that there is a need for individual inquiries to determine loss or damage under section 36(1) of the Act and what ultimate relief each class member is entitled to, then loss or damage issues may be found to overwhelm questions common to the class. Further, if certification judges see fit to inquire into the merits of the case as part of the predominance analysis – which is not unprecedented in US antitrust class actions – proposed methodologies purporting to offer a realistic prospect of establishing loss on a class-wide basis may be subject to significant probative challenges. Having particular regard to these issues, plaintiffs may not be able to satisfy the proposed preferability requirements.

Of course, even if the proposed preferability requirements are implemented, they will be interpreted by Ontario’s certification judges. There is no way to predict how these new changes would be interpreted and the outcome of those decisions. However, the proposed preferability requirements could be game changers in a province where plaintiffs have otherwise had considerable success certifying private antitrust/competition class actions.

The competitiveness and reach of Canadian wireline and wireless services are critical to the economic prosperity and social inclusion of Canadians. It is not surprising therefore that the Canadian Competition Bureau identified telecommunications as a priority area in its 2019-2020 Annual Plan.

True to this plan, in August of this year the Bureau released the results of its study of competition in Canada’s broadband industry – identified by the Bureau as “the engine of the digital economy”. The study examined the role of carrier or facilities-based competitors and reseller competitors in the Canadian broadband industry. Reseller competitors obtain wholesale access to carrier broadband networks at tariffed rates set by the Canadian Radio-television and Telecommunications Commission (CRTC).

The Bureau Broadband Study concluded that:

  • broadband resellers have obtained market shares of 15-20% where they focus their marketing efforts;
  • carriers make substantial investments in network facilities and engage in dynamic competition; and
  • wholesale access rates must be set “at the correct level to ensure that investment incentives are maintained, while at the same time ensuring sufficient scope for wholesale-based competitors to continue to offer competitive discipline in the marketplace”.

Within days of release of the Bureau Broadband Study, the CRTC approved reductions of up to 77% in the wholesale rates Canadian wireline carriers can charge resellers for access to their broadband networks – a decision that is now the subject of appeals to the Federal Court of Appeal, the Federal Cabinet and the CRTC. While the Bureau did not participate in the CRTC proceedings that led to the CRTC’s rate decision, the Bureau’s caution about getting wholesale rates right is a core issue in the Cabinet Petitions.

The Bureau has also been active in the CRTC’s ongoing wireless wholesale proceeding. At issue in this proceeding is whether Canadian carriers should be mandated to grant wireless resellers – also referred to as “mobile virtual network operators” or “MVNOs” – wholesale access to their wireless networks. At the request of the Bureau, the CRTC expanded its interrogatories to carriers to cover information that might be sought by the Bureau in complex merger analysis and other market investigations under the Competition Act. Relying on a 2014 amendment to the Telecommunications Act, the CRTC also disclosed confidential responding information to the Bureau. This information is the basis of lengthy further comments recently filed by the Bureau in the CRTC proceeding.

As with broadband markets more generally, the stakes of regulatory intervention in wireless markets are high as Canada competes for its spot in the 5G world.

On November 12, 2019, Jenna Ward and Justine Reisler attended the Global Competition Review’s 3rd Annual Women in Antitrust Conference in Washington, D.C. with over 100 female delegates from around the world. During this conference, female thought leaders discussed a variety of topics, including (i) big tech; (ii) killer acquisitions; (iii) information sharing; and (iv) the potential impact of elections on antitrust.

Where are we Today with Enforcement against Big Tech?

The panelists explored concerns about market power in digital markets as discussed in numerous reports commissioned by antitrust agencies from around the world. The panelists also discussed calls for new ‘Digital Authorities’ in the reports coming from the United Kingdom, Australia and the United States.

The panelists emphasized that economists already have the tools needed to assess antitrust concerns in the context of big tech, but noted that the application of these tools may need to be re-thought in certain specific areas, such as when considering non-price effects. For example, large technology companies often offer free products to consumers on one platform and profit from selling different products on another complementary platform, which leads to winner-take-all markets where it appears difficult for new competitors to enter. That being said, panelists acknowledged that technology markets may be contestable – Facebook was a popular example.

Data, referred to as the new “oil”, was another key topic for the panelists. However, the panelists aptly noted that data has its limits as a competitive advantage, being non-rivalrous and often less valuable with age (i.e. data can become stale). The panelists expressed reservations about the promise of data portability to resolve the problem of winner-take-all markets in big tech. While it was acknowledged as a ‘nice to have’ for consumers, there are challenges to be addressed in terms of balancing data portability with privacy laws.

The panelists reminded attendees that the notion that existing antitrust laws are insufficient to handle the modern technology of our time is nothing new (i.e. oil and railroads). However, a key takeaway is that regulators and the international competition bar will need to be more creative in fashioning remedies to address competition concerns in this new era of big tech.

Killer Acquisitions

The panelists took the time to define “killer acquisitions”,  also known as “strategic acquisitions”, depending on your perspective, which are acquisitions by a large company of an innovative nascent company that may have no, or a very small, market share. The panel was quick to emphasize that such acquisitions represent only a handful of hundreds of thousands of transactions. It also cautioned against injecting hyperbolic language into antitrust policy discussions to invoke a sense of morality, as if a merger review decision was one of life and death. The panelists agreed that regardless of what we call such acquisitions, the analytical framework for evaluating them already exists. Moreover, enforcement agencies already analyze the rationale for a transaction and assess whether there is an anti-competitive purpose or effect.

The panelists acknowledged that many start-ups are created with the intent of ultimately being purchased by a larger market participant. In this regard, the panelists recognized the potential risk of chilling innovation in light of increased scrutiny of “killer” or “strategic” acquisitions in the tech space.

The highly speculative nature of post-closing discussions of what would have happened had a certain merger been blocked was emphasized by the panelists. Even with the benefit of hindsight, we will never know what would have happened if the merger review decision went the other way. Questions surrounding the probability of a new product developing into a viable alternative or whether a target could have survived without the acquisition are ones which are very difficult for regulators to assess. Furthermore, if a product survives in a killer acquisition, and continues to be available in a market but customers are not choosing it over the dominant product, does that mean the acquirer under-invested or is it because the product is inferior? The suggestion of re-opening merger decisions was not popular; panelists prefer to see stricter enforcement of existing abuse of dominance provisions.

When Conversation becomes Collusion

The panelists discussed the point at which the exchange of information becomes anticompetitive conduct – or worst of all, a cartel. All agreed that the line between lawful information exchanges and collusion is hard to pin down, in part because there is a lack of clarity both in the guidelines within jurisdictions and because of the differences between the guidelines provided by different jurisdictions. This makes information sharing particularly tricky for multinational corporations operating across jurisdictions. The panelists agreed that it would be useful to see more coordination between competition enforcement agencies in developing common guidelines on this topic.

The panelists noted that trade association meetings are particularly high risk. They recommended that companies have competition counsel present during these meetings in order to minimize the risk of competition concerns arising.

The following practical tips arose from this panel discussion:

  • Limit the information exchanged to historical – rather than future – information.
  • Disseminate aggregated – rather than disaggregated – information.
  • Prohibit sales and marketing personnel from receiving competitively sensitive information, if such information is shared at all.
  • Always seek advice from competition counsel.

For more practical advice about information sharing, see Mitigating the Risk of Pre-Closing Information Exchanges.


The conference closed with a lively and interactive discussion concerning the impact of the upcoming U.S. presidential and European parliamentary elections on competition law. The consensus seemed to be that politics matters less in antitrust than people may think because there is a bipartisan understanding that antitrust is about economics and that regulators need to pick cases they can win in court.


Thank you to the conference chairs, moderators, panelists, sponsors and GCR for organizing an event that brings together women from the global antitrust community.

As previously reported in more detail in our recent blog Canadian National Security Review Ends in Divestiture , as one of a number of closing conditions to its acquisition of Genworth Financial, Inc. (Genworth), China Oceanwide Holdings Group Co., Ltd. (Oceanwide) was required to obtain Canadian regulatory approval of its indirect acquisition of control of Genworth’s Canadian subsidiary Genworth MI Canada Inc. (Genworth Canada).

In considering whether to grant that approval, the Office of the Superintendent of Financial Institutions (OSFI) was required to consider a number of factors including the potential impact of the transaction on Canada’s “national security”. At issue from a national security perspective was Canada’s concern about China-based Oceanwide obtaining access to sensitive personal data regarding Genworth Canada’s Canadian customers.

When the Canadian regulator failed to grant its approval in a timely fashion, at least from the parties’ perspective, Genworth, in the words of its CEO, found itself with “no choice” but to dispose of Genworth Canada in order to remove the need for the OFSI clearance. Canadian headquartered Brookfield Business Partners L.P. (Brookfield) then stepped in to purchase Genworth’s 57% stake in Genworth Canada thus removing the Canadian national security roadblock to the closing of the Oceanwide/Genworth merger. Or so it was thought.

It now seems that OSFI views the Genworth/Brookfield transaction as also raising a potential national security concern. As a result, the clearance process that one might have assumed would be a smooth sailing experience for Brookfield has encountered some headwinds slowing that clearance process down.

Genworth reported in an earnings call on October 30, 2019 that an agreement entered into with Genworth Canada when it went public in 2009 requires Genworth to provide transition services to Genworth Canada for a 12 to 18 month period immediately following Genworth selling its majority stake in Genworth Canada.

Because Genworth will likely, for some period of time, be providing transition services to Genworth Canada, including IT infrastructure and accounting-related support functions, after Oceanwide has acquired control of Genworth, OSFI is concerned about Oceanwide’s ability to access sensitive personal data about Genworth Canada’s Canadian customers during that transition period. OSFI has now asked Genworth, Brookfield and Genworth Canada to work together to develop a mitigation plan to ensure that appropriate data protections are in place during the portion of the transition period that continues to run after the closing of Oceanwide’s purchase of Genworth.

Other than the OSFI clearance, Genworth reported that Genworth and Brookfield have received all other required approvals to complete the sale of Genworth Canada and that the parties are still targeting closing the transaction by the end of 2019. One question that remains is whether the parties, which now include Brookfield, will find OSFI more responsive to providing the requested clearance than it was when only Oceanwide and Genworth were asking for a similar decision.

In August 2019, Genworth Financial, Inc. (Genworth) announced that it had agreed to sell its approximate 57% shareholding in Canadian subsidiary Genworth MI Canada Inc. (Genworth Canada) to Canadian headquartered Brookfield Business Partners L.P. (Brookfield) for approximately C$2.4 billion. Genworth Canada, through one of its subsidiaries, is Canada’s largest private-sector residential mortgage insurer. The deal is expected to close before the end of 2019.

One of the more interesting aspects of the announced deal is the reason that Genworth decided to divest of what its CEO had referred to as “one of [Genworth’s] top performing businesses”.

In October 2016, China Oceanwide Holdings Group Co., Ltd. (Oceanwide), a company incorporated in the People’s Republic of China, agreed to acquire Genworth. As a result, Oceanwide was required to obtain Canadian regulatory approval of its indirect acquisition of control of Genworth Canada and, in considering whether to grant that approval, the Canadian regulator was required to consider a number of factors including the potential impact of the transaction on Canada’s “national security”.

When the Canadian regulator failed to grant its approval in a timely fashion, at least from the parties’ perspective, Genworth, in the words of its CEO, found itself with “no choice” but to dispose of Genworth Canada in order to remove the need for such clearance. Brookfield then stepped in and agreed to purchase Genworth’s stake in Genworth Canada.

Why such a drastic action was required in order to avoid the need for a Canadian regulatory approval should be of interest to foreign investors considering making direct or indirect investments in Canada.


The October 2016 merger agreement between Oceanwide and Genworth contemplated that the transaction would have to clear numerous regulatory hurdles in the United States, Canada, Australia, New Zealand and the People’s Republic of China before it could close – not unusual for a transaction involving multinational companies.

What probably was not expected was that the regulatory hurdles would turn the proposed takeover into a 3-year marathon transaction that still has not closed. That delay in closing appears, in large part, to have been caused by national security concerns raised in both the United States and Canada. Most recently, a 12th waiver and agreement extended the closing to December 31, 2019.

In the United States, the parties agreed to file a joint voluntary notice with the Committee on Foreign Investment in the United States (CFIUS). CFIUS has the power to undertake national security reviews in respect of transactions in which a non-American proposes to acquire control of a U.S. business.

The CFIUS review in this case proved initially problematic but, after protracted negotiations and re-filings, CFIUS concluded in June, 2018 that there were “no unresolved national security concerns with respect to the proposed transaction.”

It was reported that the CFIUS clearance had stalled because of concerns about China-based Oceanwide having access to sensitive U.S. personal data which Genworth obtained and retained in the ordinary course of its financial services business. In a press release, Genworth confirmed that Genworth and Oceanwide had, in order to obtain the CFIUS clearance, entered into a mitigation agreement with the U.S. government that, among other things, requires Genworth to use a U.S.-based, third-party service provider to manage and protect personal data related to Genworth’s U.S. policyholders.

Because of Genworth’s controlling interest in Genworth Canada, the proposed indirect acquisition of control of Genworth Canada by Oceanwide also required the filing of a notification under the Investment Canada Act and, because at least one of Genworth Canada’s subsidiaries is regulated under the Insurance Companies Act by the Office of the Superintendent of Financial Institutions Canada (OSFI), the prior approval from the Canadian Minister of Finance (MoF). Under both pieces of legislation, Canadian regulators are required to take into consideration potential Canadian national security concerns, and under the Insurance Companies Act, OSFI may also take into account “Canada’s international relations”.

Oceanwide submitted a notification under the Investment Canada Act on December 1, 2016 and received confirmation on December 6, 2016 that the proposed transaction would not be subject to that Act’s economic “net benefit” review and approval process.

The Investment Canada Act also expressly provides for a separate review process with respect to Canadian related investments by non-Canadians if the Minister of Innovation, Science & Economic Development (Innovation Minister) has reasonable grounds to believe that such an investment could be injurious to Canada’s national security. The December 6 confirmation did not rule out the possibility that such a national security review might still be conducted; however, that review process had to be initiated by notice issued within 45 days of Oceanwide’s December 1, 2016 notification and its does not appear that such a notice was issued by the Innovation Minister.

Oceanwide also filed its application for MoF approval with OSFI on December 8, 2016. As noted above, national security and Canada’s international relations are factors that may be considered under the Insurance Companies Act in deciding whether to grant that approval.

During an earnings conference call in early May, 2019, Genworth’s CEO reported that, although the Canadian filings had been made in December 2016, given the changes to the transaction and delays caused by the CFIUS clearance process, the parties had not started “significant discussions” with the Canadian regulator until January 2019. The CEO also confirmed that a mitigation approach similar to that agreed to with CFIUS had been presented to the Canadian regulator and that the parties had met with OSFI in person several times to answer OSFI’s questions and to provide additional information regarding the proposed mitigation plan. Further, during the last meeting in early February 2019, OSFI had informed the parties that OSFI had all of the information that it needed to complete its review. Since then, the Canadian regulator had been reviewing the matter but had not committed to a time frame for the completion of that review.

By the end of June 2019, the parties still had not received Canadian clearance and, as part of a further waiver and agreement to extend closing to November 30 2019, Oceanwide agreed that, in the absence of any substantive progress in discussions with OSFI, Genworth could solicit interest for a potential disposition of its controlling interest in Genworth Canada. Genworth’s CEO stated that “the lack of transparent feedback or guidance from Canadian regulators about their review left us no choice but to look at strategic alternatives for [Genworth Canada] that would eliminate the need for Canadian regulatory approval of the Oceanwide transaction.”

A press report stated that OSFI had confirmed that it was continuing its review of Genworth’s application in consultation with the Department of Finance and Public Safety Canada. Further, in an email OSFI stated that “while there is no specific time limit on the assessment of applications, OSFI endeavours to complete all application assessments as quickly as possible”. Obviously not quickly enough for the parties, given the announcement of the disposition of Genworth Canada to Brookfield about a month and half later and over six months after Genworth and Oceanwide reportedly had completed their substantive submissions to OSFI.

Canadian National Security Reviews Pursuant to the Insurance Companies Act and the Investment Canada Act

Little is publicly known about how OSFI conducts its national security assessments. However, given OSFI’s acknowledgement that Public Safety Canada was involved in the Genworth matter, it is likely appropriate to assume that the process is similar to that used by the Innovation Minister in conducting national security reviews under the Investment Canada Act.

As part of that review process, the Innovation Minister consults with the Minister of Public Safety and Emergency Preparedness, who, in providing advice, will take into account and often reflect the views of his or her own department as well as those of security agencies and relevant departments such as the Canadian Security Intelligence Service, Communications Security Establishment, National Defence and Royal Canadian Mounted Police, among others.

The Guidelines on the National Security Review of Investments issued under the Investment Canada Act provide a non-exhaustive list of factors that can be taken into consideration in connection with a national security review including factors such as the potential effect of the foreign investment on Canada’s defence capabilities and interests, the potential effects of the foreign investment on the transfer of sensitive technology or know-how outside of Canada, the potential impact of the investment on the security of Canada’s critical infrastructure, and perhaps of specific relevance to the Genworth transaction in light of the mitigation agreement that CFIUS required and Canada’s ongoing diplomatic issues with China, the potential of the investment to enable foreign surveillance or espionage, and the potential impact of the investment on Canada’s international interests, including foreign relationships.

Investments originating from China appear to have attracted particular interest from Canada’s national security apparatus. The Innovation Minister’s 2017/2018 Annual Report confirms that, during the period April 1, 2012 to March 31, 2018, 15 national security reviews were conducted under section 25.3 of the Investment Canada Act. Of those reviews, two thirds involved investments originating from China, with the result that 2 were blocked, 3 required divestitures, 4 were allowed with conditions and 1 was withdrawn.

The 10 reviewed Chinese investments involved a range of business activities including telecommunications, computer equipment and related services, electrical equipment, ship building, heavy and civil engineering construction and pharmaceutical businesses.

Given Canada’s interest in protecting its defence capabilities, sensitive technologies and know-how and infrastructure, it can be understood why such sectors attract special attention. A casual observer might however have been surprised that an indirect investment in a Canadian insurance company managed to set off national security alarm bells in Ottawa.

When the Investment Canada Act and a number of other federal laws were amended in 2009 to provide for national security assessments, the risk posed by allowing foreigners to obtain access to large volumes of the personal data of Canadians might not have been top of the mind with Parliamentarians. However, if this was ever the case in 2009, matters have clearly evolved as evidenced by a number of data-related transactions reviewed by CFIUS in the U.S. and now Canada’s review of the Genworth transaction.

CFIUS recently broadened its interest in foreign investments to include both acquisitions of controlling and non-controlling interests in what it refers to as “TID US businesses” – i.e., critical technology, critical infrastructure and sensitive personal data businesses. Canada’s review of the Oceanwide/Genworth transaction suggests that it is equally concerned in protecting sensitive Canadian personal data. In any event, it is safe to say that the industries or business activities that may attract the interest of Canada’s security agencies have broadened since what may have initially been expected in 2009.

Potentially complicating the decision-making process in the Genworth transaction was the strained diplomatic relation between the People’s Republic of China and Canada.  Factors such as the PRC’s ongoing detention of 2 Canadian citizens (allegedly in response to Canada’s detention at the request of the U.S. Department of Justice of Huawei senior executive Meng Wanzhou), trade actions taken against Canadian agricultural products and the then looming 2019 federal election in Canada all would very likely have impacted on the clearance process. Additionally, since the Investment Canada Act defines what may constitute a “state-owned enterprise” very broadly, it is also conceivable that the Canadian regulators may have been concerned with the extent of China’s ability to influence the operations of Oceanwide, further complicating an already complicated clearance process.

While one could easily conclude, based on the foregoing, that politics played a role in the clearance process, the secrecy surrounding the substantive aspects of national security reviews in Canada makes it difficult to know definitively why, after CFIUS had conditionally cleared the transaction in the US, Canada could not or was unwilling to move more quickly to come to a similar decision. However, given the uncertainties of timing and whether approval would ultimately be granted, Genworth’s decision to cut the Gordian knot represented by the ongoing Canadian review process and to simply divest its interest in Genworth Canada becomes more understandable.

Takeaways from Oceanwide’s experience include the reality that it is vital for a foreign investor to consider at an early stage in any merger or similar transaction that may have a Canadian aspect to it whether the transaction might raise national security concerns in Canada, and that such concerns may be considerably broader than might be conventionally considered a matter of national security. Canada’s relations with friends and foes alike – and even the domestic electoral calendar – could drive decision-making as easily as the hard assessments of traditional security agencies. In the final analysis, Oceanwide/Genworth also stands as a reminder that, while investors might hope that transactional reviews are limited to the strict confines of traditional security assessment, the express role of ministers and Cabinet in the two Acts means that politics must never be discounted in anticipating final outcomes.

Non-Canadian secured lenders should be aware that they may have a filing obligation under the Investment Canada Act (Act) if they acquire control of a Canadian business in connection with the realization on security granted for a loan or other financial assistance.

Until 2009, such transactions were entirely exempt from the Act. Specifically, paragraph 10(1)(c) of the Act classified a transaction involving “the acquisition of control of a Canadian business in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the provisions of this Act” (Realization Exemption) as an exempt transaction to which no provision of the Act applied.

However, when the Act was amended in 2009 to add a separate review process for foreign investments potentially impacting on Canada’s national security, the Realization Exemption was amended to add the following condition: “if the acquisition is subject to approval under the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act”.

Effectively, the amendment changed the law to require a non-Canadian lender to provide notice under the Act when the realization of security granted for a loan or other financial assistance results in the direct or indirect acquisition of control of a Canadian business. Transactions involving approvals under the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act remain exempt from this requirement because such approvals take national security into consideration as a part of the approval processes that take place under those other acts.

Presumably the reason that notifications under the Act are required in connection with realizations by non-Canadians is to permit Canada’s security services to consider whether the non-Canadian lender’s acquisition of control of the Canadian business raises any potential national security issues. Under the Act, the Minister of Innovation, Science, and Economic Development (Minister) has 45 days, unless extended, from the date that a notification is certified as complete to initiate a national security review in respect of a transaction. If a notification is not filed, the 45-day period commences on the date that the transaction first comes to the Minister’s attention.

Should the Minister have reasonable grounds to believe that the realization of security could be injurious to Canada’s national security, he can issue a notice commencing a formal national security review process pending the conclusion of which the transaction, if it has not already taken place, may not be implemented.

While the Act does not provide for a penalty for the failure to provide a notification, should a realization ultimately be determined by the Governor in Council to require action to protect Canada’s national security, the Governor in Council may make any order that it considers advisable to protect Canada’s national security, including prohibiting the realization or, if the realization has occurred, requiring a divestiture of the Canadian business.

Filing a notification under the Act will not prevent a national security review where the realization could be injurious to national security. But filing a notification in advance of realizing on the security may still be advantageous as it would open a dialogue with the Minister at an earlier stage and demonstrate a willingness to comply with the Act. Note that investors are given the opportunity to make representations to the Minister in a national security review. Such pre-acquisition dialogue may allow for more flexibility in negotiations toward less burdensome or costly measures to address the national security concern(s).