The Canadian Bar Association’s Competition Law Section held its Fall Online Symposium last week (October 20-22). Dozens of panelists, both from the public and private sector, addressed a variety of  exciting issues connected to competition law and foreign investment enforcement in the time of COVID-19. Some of the highlights of the Symposium were the key note speech by Commissioner Boswell, the panels on failing firms, expedited proceedings and foreign investment, and the Virtual Cocktail Event hosted by the Young Lawyers Committee. A key takeaway from the conference was the ongoing effort by professionals on all sides of the competition bar to strike a balance between the rigorous and strong enforcement required to protect the Canadian economy, and the efficiency and flexibility needed to face business challenges caused by the COVID-19 pandemic.

Key Note Speech by Matthew Boswell, Commissioner of Competition

Commissioner Boswell’s key note speech was consistent with the Bureau’s messaging throughout the COVID-19 pandemic. The Commissioner’s view is that competition is not an obstacle to Canada’s economic recovery. Instead, he views competition as critical to maintaining the affordability of products and services. Conference participants heard about:

  • how competition is key to a resilient economy;
  • how the pandemic is creating increased opportunity for consolidation and other anticompetitive actions that would deepen the economic downturn and hinder recovery; and
  • that the way to achieve strong competition is through a strong and principled approach to compliance and enforcement.

The Commissioner remarked that while some may argue for industry specific regulation, the Bureau stands by its view that the best protection for the Canadian economy is healthy competition He also pointed to the Bureau offering some flexibility in recognition of these uncertain times by highlighting the Bureau’s recently published statement on competitor collaboration during COVID-19. (The utility of these guidelines, however, has received mixed reviews from the private bar, and as of yet no private parties have made use of the Bureau’s rapid response team, which was meant to provide additional informal advice in connection with these guidelines).

Failing Firms

As discussed in our Refresher on the Failing Firm Defence, one of the factors the Bureau considers when reviewing a merger is whether the business, or part of the business, of a party to the proposed merger has failed or is likely to fail. Known as the ‘failing firm defence’, the loss of the competitive influence of a failing firm is not attributed to a proposed merger where such competitive influence would have been eliminated in any event by way of the firm’s failure (i.e., the merger would not eliminate an effective competitor).

The panelists highlighted the issue of forecasting market conditions in the current unpredictable and unprecedented context of the COVID-19 pandemic as one of the primary difficulties that competition lawyers and regulators are grappling with when representing, or evaluating the submissions of, failing (or flailing) firms.

While it has historically been reasonable to look at current conditions as the best forecast of future conditions, that assumption no longer holds true. The panelists noted that not only are regulators faced with the challenge of modeling the impact of the failing firm’s exit from the market, but also with the added difficulty of modeling how the market is changing generally, apart from the specific transaction, which is a difficult task.

These difficulties, in the opinion of the panelists, apply just as much if not more in the case of flailing firm arguments, as in failing firm arguments.

Interestingly, the panelists noted that they have not yet seen an appreciable increase in assertions of the failing firm defence. However,  given the increase in insolvency filings, it may be that we will see this in the future. As noted by Commissioner Boswell in his key note speech, the Bureau also expects to see an increase in these transactions. In that speech, the Commissioner stated that the Bureau will maintain the normal rigour and framework for assessing failing firms, while appreciating the need to be timely.

Expedited Proceeding

A panel discussion on expediting litigation and the need for speed in challenging times, moderated by Antonio Di Domenico, looked at recent use of private arbitration in a U.S. antitrust merger dispute and the first application of an expedited proceeding before the Competition Tribunal in Canada.

The panelists discussed the many benefits of arbitration, including decreased delay. Further, panelists discussed how parties benefit from increased certainty in arbitration, as they will know when the decision is scheduled to be released by the arbitrator. Arbitration also has the benefit of providing better, and less procedurally difficult, protection of confidentiality, as the proceedings are closed to the public.

The panel also discussed the first, albeit unsuccessful, application in Canada to use an expedited proceeding process before the Competition Tribunal. The panelists highlighted that the expedited process will not be granted unless it is reasonable and advisable, in light of the circumstances of the case. Further, the parties must show that benefits are to be gained which justify adoption of the process.

The diverse panelists agreed that adoption of new tools and process that allow for increased efficiency through expedited processes would benefit all sides involved, caveated by the need to ensure a balance is struck with the requirements of procedural fairness.

National Security and Foreign Investment

The panelists, including Andrew House, discussed the enhanced scrutiny for reviews under the Investment Canada Act that had been introduced due to the COVID-19 pandemic, as well as the extended timelines for national security reviews.

The panelists discussed the purpose of this new enhanced scrutiny. In their view, it was likely due, at least in part, to a fear of distressed Canadian businesses being taken advantage of on the global market by opportunistic investors. That is, by investors such as state-owned enterprises who do not face the same risks and impacts caused by the COVID-19 pandemic as such enterprises are not as vulnerable to the state of the market.

The panelists noted certain strategies to cope with the delay and uncertainty caused by long and drawn out review processes, such as the timing of notifications, early discussions with regulators and risk allocation between the parties to the transaction. This discussion showed the difficult balance that must be struck between the business impact of such enhanced measures and the increased importance of these reviews for protecting Canadian businesses.

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Photo of Robin Spillette Robin Spillette

Robin has been involved in a variety of transactional matters, including mergers and acquisitions for both public and private companies, reorganizations, securities regulation matters and private placements. Robin has also assisted companies with a variety of competition and foreign investment law matters, including…

Robin has been involved in a variety of transactional matters, including mergers and acquisitions for both public and private companies, reorganizations, securities regulation matters and private placements. Robin has also assisted companies with a variety of competition and foreign investment law matters, including investigations and merger review proceedings under the Competition Act, and matters under the Investment Canada Act.