April 8, 2020
During the COVID-19 outbreak, the Canadian Competition Bureau (Bureau) has been issuing new guidance in relation to its key enforcement priorities, primarily in relation to competitor collaborations and deceptive advertising (see: Statement from the Commissioner of Competition regarding enforcement during the COVID-19 coronavirus situation). In this respect, on April 8, 2020, the Bureau issued new detailed guidance relating to its enforcement approach for competitor collaborations. The Bureau also announced that it would be offering informal guidance specifically relating to competitor collaborations formed during the COVID-19 outbreak. See: Competition Bureau statement on competitor collaborations during the COVID-19 pandemic.
In making the announcement, the Bureau generally acknowledged that during the current pandemic, business collaborations of limited duration and scope may be required to “ensure the supply of products and services that are critical to Canadians”, such as collaborative buying groups or sharing supply chain resources such as distribution facilities.
The Bureau also said that it wished “to signal that in circumstances where there is a clear imperative for companies to be collaborating in the short-term to respond to the crisis, where those collaborations are undertaken and executed in good faith and do not go further than what is needed” that it would generally refrain from commencing enforcement.
The Bureau’s announcement amplifies its earlier guidance issued on March 20, 2020, in which it said that “Canada’s competition laws accommodate pro-competitive collaborations between companies to support the delivery of affordable goods and services to meet the needs of Canadians.” See, for example, conspiracy and joint ventures.
More specifically, the Bureau announced that it had established a new dedicated team to assess proposed competitor collaborations and provide advice for guidance to be issued to parties by the Commissioner. The Bureau is requesting that parties to proposed competitor collaborations that wish to receive guidance provide the following information: the firms involved and the parameters of the collaboration (including its scope and duration); a description of how the collaboration is intended to achieve a clearly identified COVID-19 public interest objective; why the collaboration is necessary to meet this objective; and any guidance sought from other relevant authorities.
The Bureau also outlined the following criteria that may be applicable to guidance issued by the Commissioner, among others: conditions may be imposed to ensure that the impact on competition is limited only to the extent necessary to meet the critical needs during the current pandemic; any informal advice would be time limited (and subject to review after the initial time period should parties request an extension); and the Commissioner may make the guidance public.
The Bureau also underscored, however, it would not hesitate to commence enforcement where parties attempted to abuse the “flexibility or guidance offered … as a cover for unnecessary conduct that would violate the Competition Act.” The Bureau is presumably referring to hard-core anti-competitive conspiracies (e.g., price-fixing, market division/allocation or output restriction agreements) that do not meet the policy rationales set out in its new guidance.
While the Bureau has the statutory ability to provide binding written opinions under section 124.1 of the Competition Act to parties proposing to engage in conduct that may violate the Act, its new program will be to provide informal advice to parties proposing to engage in competitor collaborations. As such, it is in essence announcing that, where it is satisfied that the criteria it has set out are met, it will not exercise its enforcement jurisdiction for the duration of the guidance provided.
The Bureau’s new program of providing advice in relation to COVID-19 related competitor collaborations is reminiscent of the written opinions it provided prior to the 2009 amendments to the Competition Act coming into force (albeit, in that case, which opinions were provided under specific legislative authority).
In summary, the Bureau is clearly signaling that it does not want parties contemplating legitimate competitor collaborations to be chilled in cooperating (e.g., through the means of a joint venture, buying group or other vehicle) where the collaboration meets the public interest criteria set out in its new guidance.
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