Market studies could involve 'lengthy and invasive' information requests, says Nikiforos Iatrou
If used, the new market-study powers under the federal government’s proposed Competition Act amendments will have a “significant” impact on market participants, says Nikiforos Iatrou, partner in McCarthy Tétrault’s competition/antitrust and foreign investment group in Toronto.
Introduced by the federal Liberal government, Bill C-56, An Act to amend the Excise Tax Act and the Competition Act, is currently in second reading. The amendments remove the efficiencies defence for non-competitive mergers and add a new category of agreement between competitors that the Competition Bureau can challenge before the Competition Tribunal. Ottawa also proposes to give the Competition Bureau new powers to conduct market studies.
“The part that I find the most interesting in this is with respect to the market studies,” says Iatrou.
The proposed changes to the Act would introduce the power for the Minister of Innovation, Science, and Industry to initiate a market study. The minister can then apply under s. 11 of the Act for an order compelling the production of records and other information.
In its response to the Canadian government’s consultation on competition policy in March, the Competition Bureau said that the case for formal market study powers has been made evident by “historic price increases” in Canadian grocery stores. The feds have sought advice on whether competition issues are at play, and the Bureau noted that while it has launched a study, it must rely on public and voluntarily supplied information, which “poses obvious challenges and stands in contrast to similar studies carried out by foreign competition agencies.”
The Bureau asked for independent authority to commence a market study, but Ottawa has not complied with that request in its proposed amendments. Only the minister has the authority to initiate a market study.
The new market-study powers could have a significant impact on the market for two reasons, says Iatrou. On a macro level, the studies will involve the Bureau examining a market or industry and producing recommendations based on its assessment of their competitive dynamics, and the Competition Commissioner’s report will identify where he believes market players must change behaviour. Market participants will need to account for the results of the market studies, he says, even though the studies contain no power to order a particular player to do anything.
“It will just be a report that highlights the commissioner’s conclusions but may well forecast future enforcement priorities.”
On the micro level, says Iatrou, market participants will be subject to “potentially lengthy and invasive” information requests. This may include providing long responses to questions, providing data and contracts, and providing internal competition or market analyses.
“As anyone knows who has been the target of a Bureau investigation, those can be very onerous requests,” he says.
“We will have to see how the bureau will adjust to its requests for the purpose of market studies versus enforcement action. But in theory, it could ask for the same type of information that it asks in any Bureau review that it currently conducts.”
