The Competitor : Canada Competition / Antitrust Blog by Stikeman Elliott Lawyers & Attorneys

Susan M. Hutton and Sharon Seung

On January 26, 2011, Canada’s Competition Bureau announced that it has applied to the Competition Tribunal for an order to dissolve CCS Corporation’s acquisition of Complete Environmental Inc., which owns the Babkirk Secure Landfill located in northeastern British Columbia. Interestingly, the theory of harm in this case is founded on a likely “prevention” rather than a “lessening” of competition – typically harder to prove.

CCS’ acquisition of the Babkirk Secure Landfill is said to be likely to substantially prevent competition for the disposal of hazardous waste produced largely at oil and gas facilities in northeastern British Columbia. According to the Commissioner of Competition: “[b]y purchasing, rather than face competing with the Babkirk Secure Landfill, CCS will prevent the entry of competition into the market for secure hazardous waste disposal in Northeastern British Columbia.” Complete Environmental had received regulatory approval to open the landfill in February 2010, but had not yet started construction. According to the Bureau, had the Babkirk Secure Landfill opened, it would have become a competitor to CCS, which currently operates the only two operational secure landfills for hazardous waste in British Columbia.

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Shawn Neylan

As we discussed late last year, the Canadian government recently rejected BHP Billiton's proposed acquisition of PotashCorp. The government's actions have put the Investment Canada Act (ICA), and the process for government approval of proposed transactions, back into the spotlight. On that note, we thought that we'd take this opportunity to answer some frequently asked questions about the legislation.

Q: Is Canada still open to foreign direct investment?

A: Absolutely. Although a recent high profile transaction received a heightened level of public and political attention, and there is also some uncertainty whether there may be a general policy and/or legislative change on the horizon, there is no doubt that the Canadian government is generally supportive of foreign direct investment. Since the ICA came into force a quarter of a century ago, over 99% of reviewable transactions have been approved. As discussed in more detail below, only two transactions were rejected and they each had unique circumstances.  

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An article in the Globe and Mail considers whether enhancements to the Competition Bureau's enforcement tools  have led to more aggressive scrutiny of corporate mergers in Canada. Some in the legal community see an increase in the Competition Bureau's demands for remedies emerging from the Bureau's ability, since 2009, to request additional documents and information from merging parties without having to obtain court approval, and to extend waiting periods while such requests are complied with. Others, however, disagree that the Bureau's substantive approach to merger review has been affected by the enhanced investigative powers. According to the head of Stikeman Elliott's Competition Law practice group, Lawson Hunter, who was quoted in the article,

I don’t see any evidence that the bureau is getting more aggressive in how they are analyzing mergers because of these changes at all.

Commissioner of Competition Melanie Aitken, has also suggested that the Bureau is taking a cautious approach to its expanded powers. In a September 2010 speech to the CBA Fall Competition Law Conference, Ms. Aitken stated:

The Guidelines [the Bureau's Merger Review Process Guidelines, which explain the Bureau's approach to administering Canada's merger review process] also emphasized our commitment to use our new information gathering powers judiciously, only in respect of those transactions that raise significant competition issues and for which the Bureau requires additional information to conduct a sufficiently thorough review.

Since the introduction of the amendments in 2009, the Bureau has issued only ten SIRs [Supplementary Information Requests, also called "second requests" in the United States]. To put this into perspective, the Bureau has received more than 300 merger filings over this same period, approximately 90% of which were cleared within the initial 30-day review period.

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This past weekend, the UK's Guardian published an interesting article on the practice of celebrity endorsements on social networking sites like Twitter. As described by the Guardian, the Office of Fair Trading, the UK's consumer and competition authority, investigated a media company last year that engaged in remunerating individuals that published online content promoting the company's clients. At issue was the fact that the content was published "without sufficient disclosures in place to make it clearly identifiable to consumers that the promotions had been paid for." In the United States, the Federal Trade Commission suggested last year that the disclosure of sponsored tweets be made using a hashtag like #paid or #ad.

At home, meanwhile, the Financial Post recently reported on the Competition Bureau's response to the issue.

In Canada, a spokesman for The Competition Bureau said that promoted tweets in Canada must conform to existing Canadian advertising legislation.

Anyone endorsing a product must actually use the product and their opinion of the product must not have changed, he said. However, Canadian law does not have any specific laws governing the use of promoted tweets on Twitter.

Thus, Canadian companies (and social media users) should be reminded that even in the Twitterverse, the Deceptive Marketing Practices provisions of the Competition Act continue to apply.

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Some of the most rapidly-evolving issues facing Canadian businesses concern the increasingly-complex labyrinth of advertising regulations, anti-spam legislation, privacy issues and the rise of competition law-related class action lawsuits. Companies must remain on top of the latest developments in these areas in order to effectively manage their risk.  The webcast of a recent seminar hosted by Stikeman Elliott LLP, which featured panellists from the Competition Bureau and members of the firm's Competition/Antitrust Group, is now available on-line. Printed materials are also available.

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