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Blakes Competitive Edge ™: September 2021 Update | Blake, Cassels & Graydon LLP


Welcome to the September issue of Blakes competitive advantage, a monthly publication of the Blakes Competition, Antitrust & Foreign Investment group. Blakes competitive advantage provides an overview of recent developments in Canadian competition law, including updates on the Competition Bureau’s (Bureau) enforcement activities, recent initiatives and key trends.

Highlights

  • The Competition Tribunal affirms the importance of merger efficiency as a primary objective of merger reviews in Canada by rejecting the request of the Commissioner of Competition to require that certain assets related to the merger of Secure and Tervita be separated and independently operated.

  • Merger review activity remained strong through late summer and year-to-date is broadly in line with pre-pandemic levels, with 146 merger reviews completed through the end of August. This is a 7% increase from the number of exams completed during the same period in 2019 (137), and a 49% increase from the number of exams during the same period in 2019 (137). same period in 2020 (98), which saw a significant drop in merger activity in the second and third quarters due to Covid-19.

  • China Mobile International (CMI) seeks judicial review of an order of August 9, 2021 under the Investment Canada Act, demanding the divestiture or liquidation of its operations in Canada, on the grounds that the government could not have reasonably determined that CMI constituted a threat to Canada’s national security.

  • The leaders of Canada’s federal political parties have released their 2021 election platforms, including proposals affecting Canadian competition and foreign investment laws.

Fusion Monitor

Highlights for August 2021

  • 18 merger reviews completed

  • Primary industries: manufacturing (28 percent); mining, quarrying, and oil and gas extraction (22%); real estate and rental and leasing (17%); retail trade (11%); and finance and insurance (11%)

  • Zero Consent (Recourse) Agreements Filed

  • 12 transactions received an advance ruling certificate (67%), while six transactions received a letter of no action (33%)

Highlights from January to August 2021

  • 146 merger reviews completed

  • Primary industries: manufacturing (23%); mining, quarrying, and oil and gas extraction (18%); real estate and rental and leasing (14 percent); and finance and insurance (12%)

  • A consent (appeal) filed

  • 97 transactions received an advance ruling certificate (66%), while 48 transactions received a letter of no action (33%)

Application of mergers

Competition Tribunal affirms importance of merger efficiency as primary objective of merger reviews in Canada

  • On August 16, 2021, the Competition Tribunal issued a decision rejecting the competition commissioner’s request to require that certain assets related to the merger of Secure Energy Services Inc. (Secure) and Tervita Corporation (Tervita) be separated and operated independently. The Tribunal concluded that the benefits to the merging parties and the efficiencies generated by the transaction were quantified, clear and non-speculative, and that there was no evidence quantifying harm to customers or consumers. by the merger presented by the statutory auditor. This decision emphasizes that efficiencies are of paramount importance in merger reviews and prompts merging parties and the Bureau to assess efficiencies at an early stage. For more information on the importance of efficiencies in merger reviews, visit the Blakes Competition, Antitrust & Foreign Investment group online site. publication published on August 24, 2021.

Investment Canada Act

China Mobile International seeks judicial review of August 9, 2021 divestiture order

  • On August 9, 2021, the Governor in Council ordered the divestiture or liquidation of the Canadian operations of Chinese state-owned China Mobile International (CMI Canada) within 90 days, citing national security grounds. Established in 2015, CMI Canada has not filed a “new business” notification under the Investment Canada Act when it was first created and did not file a corrective notice until October 2020. On September 7, 2021, CMI Canada filed an application for judicial review of the August 9 order. CMI Canada argues that the government could not have reasonably determined that CMI Canada poses a threat to Canada’s national security because it does not have direct access to critical infrastructure, sensitive personal information or telecommunications data and does not own or operate any transmission facilities in Canada.

Highlights for May 2021

  • For non-cultural investments: zero reviewable investment approvals and 105 notifications filed (76 for acquisitions and 29 for the creation of a new Canadian business)

  • Country of origin of the investor (non-cultural): United States (56%), United Kingdom (eight percent), China (five percent) and Austria (four percent)

Highlights from January to May 2021

  • For non-cultural investments: zero reviewable investment approvals and 460 notifications filed (347 for acquisitions and 113 for the creation of a new Canadian business)

  • Country of origin of the investor (non-cultural): United States (59%), United Kingdom (6%), France (3%) and Germany (2%)

distribution table by country

Canadian Federal Election

Canada’s federal leaders commit to change Canada’s competition and foreign investment laws

As part of the Canadian federal election on September 20, 2021, Canada’s federal political parties released their election platforms containing various proposals to modernize and amend Canadian competition and foreign investment laws. The strengths of the platforms are:

  • The conservative Platform commits to improving and modernizing Canadian competition laws with a focus on pricing and more scrutiny of merger reviews, requiring the Competition Bureau to investigate bank charges in Canada and increasing competition in the Canadian telecommunications industry. Regarding foreign investment, the Conservatives are committed to protecting intellectual property (IP) by strengthening the Investment Canada Act making national security reviews mandatory, modifying the “net benefits” test to take into account intellectual property effects, and creating a presumption against takeovers by Chinese public entities.

  • The liberal Platform is committed to modernizing Canada’s competition laws to ensure fair competition for online markets. In terms of foreign investment, the liberals are committed to modernizing the Investment Canada Act provide additional tools to assess threats to the economic security of foreign investors.

  • The New Democratic Party (NDP) Platform is committed to modernizing Canada’s competition laws to meet the new challenges posed by the digital economy and empower the Competition Bureau to investigate anti-competitive practices in the retail gasoline market. On foreign investment, the NDP pledges to increase the use of national security reviews under the Investment Canada Act.


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