COVID-19 causing delays in merger review process: Competition Bureau

Watchdog adapting priorities to address issues associated with pandemic

COVID-19 causing delays in merger review process: Competition Bureau
Fasken partner Antonio Di Domenico is co-Leader of the firm’s antitrust/competition and marketing group and former counsel to Canada’s Commissioner of Competition.

The Competition Bureau says COVID-19 will lead to delays in the merger review process and competition authorities around the world are adapting their policies to address the pandemic.

“The Bureau has signalled that merger reviews and the merger process may be delayed as a result of COVID-19. Much of that arises from delays in getting a hold of people,” says Antonio Di Domenico, partner and co-Leader of Fasken Martineau DuMoulin LLP’s antitrust/competition and marketing group and former counsel to Canada’s Commissioner of Competition.

On March 18, Competition Commissioner Matthew Boswell issued a letter to the executive of the Canadian Bar Association Competition Law Section announcing there would be delays in merger reviews. As businesses are now operating remotely, it is “increasingly difficult” for staff to connect with third-party market contacts – customers, suppliers and competitors – in a timely manner, the letter stated. The Bureau is calling on merging parties to contact case teams and management in the Mergers Directorate “as early as possible on complex matters and throughout the conduct of a review.”

In less complicated times, the Bureau holds itself to a standard for review of a proposed transaction of two weeks for non-complex transactions and 45 days for complex transactions, according to an article by Fasken’s John Pecman, Antonio Di Domenico, Huy Do, Chris Margison, Andrew House, Jenna Ward and Justine Reisler. In the event the Bureau issues a “supplementary information request,” the standard turnaround is set at 30 days from the date of the response to the request. The authors note these service standards are non-binding.

Competition law is being affected worldwide by the COVID-19 pandemic. Many competition watchdogs are suspending laws that prohibit collaboration between competitors. Agencies such as the European Competition Network, the UK’s Competition and Markets Authority and the U.S. Federal Trade Commission have all announced a loosening of the rules around collusion, so that supply and distribution of medical and food supplies can be intensified during the COVID-19 pandemic.

“The Bureau, to be clear, has not done that in Canada,” says Di Domenico. “But the Bureau has indicated that pro-competitive collaborations aimed at responding to COVID-19 are encouraged.”

Though Canada has not suspended any laws in the area of competitor collaboration, Canadian competition law would likely allow for similar teamwork among competitors to address the COVID-19 crisis, the Fasken lawyers wrote in their bulletin. In Canada there is a difference between criminal collusion – price-fixing, bid-rigging and colluding to limit output, for example – which is unlawful regardless of its anti-competitive effect, and competitor collaboration – for example, research and development, or joint purchasing agreements – which are “presumptively legal” if there’s no anticompetitive effect. Competitors cooperating to address supply shortages to address health and food needs would likely be seen as pro-competitive.

COVID-19 will also create a priority shift at the Bureau, says Di Domenico.

“The Bureau has signalled that it may need to prioritize certain items in favour of others. These are urgent marketplace issues that directly arise from COVID-19.”

The Bureau has not specified the emerging urgent issues, Di Domenico adds. But it’s “reasonable to assume” the Bureau’s priority shift will lift deceptive marketing claims into greater focus because of the prevalence of false performance claims on products advertising an ability to prevent, treat or cure COVID-19. Claims related to a refusal to supply critical products and services will likely also take a higher priority, he says.

Di Domenico notes that though price-gouging is not “directly within the jurisdiction of the Bureau,” the Bureau may see it as an abuse of market power and choose to engage on the issue, if only on the public-relations front.

The Bureau will also be seeing national security through a different lens, with an eye to the scarcity of medical supplies and other resources needed to address the pandemic. Any transaction – even with a Canadian ally – that would make the “mass acquisition” of scarce products such as medical protective equipment, could be blocked under national security grounds, according to Fasken’s bulletin.

“COVID-19 has created conditions in which even close allies and friends may need to compete for critical resources, particularly in the health field,” the article states.

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