The Government of Canada is calling on the Competition Bureau to address the “unprecedented challenges” arising from digital technology, including scrutinizing the potentially anti-competitive nature of Big Data while maintaining the innovation that advancements in the tech sector provide the economy.
In Bains’ letter, he asks the bureau to work with his department in considering “the impact of digital transformation on competition; the emerging issues for competition in data accumulation, transparency and control; the effectiveness of current competition policy tools and marketplace frameworks and the effectiveness of current investigative and judicial processes.” The letter notes that the Competition Bureau has “already been very active in this space.”
“There seems to be a consensus that new business models require a different form of oversight or regulation and Canada wants to participate in the conversation that will ultimately develop that framework and to understand what variant of that framework is best for the Canadian context,” says Goodmans LLP partner David Rosner, who is a member of the firm’s competition, antitrust and foreign investment group.
The accumulation, control and possible abuse of data is a topic on which the bureau has been focused and is reflected in its involvement encouraging governments to permit ride-booking companies such as Uber Technologies Inc. and Lyft, as well as in the bureau’s new abuse of dominance enforcement guidelines, Rosner says.
In February 2018, the Competition Bureau released a discussion paper titled “Big Data and Innovation: Key Themes for Competition Policy in Canada.” The paper states that, although “the emergence of firms that control and exploit data can raise new challenges for competition law enforcement,” the existence of these firms and the technology “is not, in and of itself, a cause for concern.” The “traditional framework” of competition law enforcement was still useful in confronting these changing commercial practices and technologies, the paper states.
“There may be some question among officials whether [the Competition Act] that is . . . more than 30 years old and which was developed before our economy underwent a services innovation and a digitization of innovation — before the free trade agreements — is up to snuff,” says Rosner.
Large companies that harvest user data and use that data for targeted advertisements to finetune their services to match consumer behaviour and taste or sell that data to other companies gain a huge advantage in the marketplace, says Michael Caldecott, an associate in McCarthy Tétrault LLP’s business law group. The scope of their operations gives them insight into consumers and the market that a smaller competitor may struggle to replicate, says Caldecott, whose practice focuses on competition and antitrust law and foreign investment review.
In some countries, competition regulators have taken the position that the Googles and Facebooks of the world should be forced to license their data to a small or medium-sized business, which is a “pretty hard-line approach, at least within the competition law world,” Caldecott says. But the bureau has “not taken a firm line yet on this issue,” he says.
On the other hand, major data collectors also use their power in ways that can be seen as pro-competitive, says Caldecott.
“The bureau's aware of the potential pro-competitive aspect to these companies packing Big Data,” he says. " . . . They're typically using the data to improve the consumer experience on their platform or on their website or in their e-commerce environment.”
The debate about where Big Data lands in the eyes of competition law is part of a larger discussion, mostly happening in the U.S. and Europe, says Caldecott. One school of thought says that, if a company with data on hundreds of millions of people doesn’t use that advantage to raise prices for consumers, there is no problem, he says. The other school, known as “hipster antitrust,” says that what’s seen as anti-competitive behaviour should be reimagined to include companies whose possession of user data gives them an effective monopoly — and is harmful to competing companies — even if they don’t gouge customers.
Matthew Boswell was named commissioner of the Competition Bureau on March 5. In Bains’ letter, he states: “You begin this role at an important time for Canada, when our increasingly data-driven economy is unlocking critical innovations and unparalleled opportunities for inclusive growth. The Government of Canada is committed to making Canada a world-leading country for innovation.”
Historically, much of the fundamental research that drove technological innovation happened in government labs, but now there is more private-sector innovation than ever and the “innovation pipeline” is fuller than it’s ever been, says Rosner.
“There are people who call for sweeping changes to legislation,” he says. “There is some awkwardness about seeking big oversight or big change at a time when it's simply undeniable that there is this much innovation. And indeed, that innovation, its volume and scale is what’s causing us to have this conversation in the first place.”