The Canadian Competition Bureau says it is closely monitoring big technology firms “to ensure they do not engage in anti-competitive conduct,” as regulators around the globe crack down on the world’s leading digital companies.
“Should evidence come to light of anti-competitive conduct that may affect the Canadian marketplace, the bureau won’t hesitate to take appropriate action,” agency spokesperson Jayme Albert said in a statement to the Star.
On Tuesday, the U.S. Department of Justice said it was launching a sweeping antitrust review of internet giants and whether they had abused their power to stifle competition. The U.S. Federal Trade Commission is already undertaking a similar investigation.
The competition bureau was responding to questions by the Star as to whether a similar action will be undertaken by the federal agency responsible for monitoring and regulating competition in Canada. Recent steps, including the hiring this month of its first Chief Digital Enforcement Officer, indicate that the agency is bulking up to take on the big technology companies.
And experts say it is only a matter of time before Canada joins the United States and the European Union in antitrust investigations.
“This is a big deal and we should be paying attention because this will impact Canada,” said professor Mihkel Tombak, Hatch Chair in Technology Management at the University of Toronto and an expert in antitrust issues. “I think it’s inevitable that the Canadian authorities here will be looking at how they should be taking a more aggressive stance.”
In Canada, it will be up to the competition bureau to determine whether an investigation is warranted. And one former commissioner says she thinks the agency will eventually have to follow the lead of European and U.S. counterparts.
“I think regulators are very interested in the issue and that the competition bureau will eventually do something, the question is what?” said Melanie Aitken, co-head of the Antitrust Group at law firm Bennett Jones and the former Canadian Commissioner of Competition in an interview. “These are really tough decisions facing the competition commissioner.”
The scope of the conversation around these issues in the U.S. and elsewhere is broad, but Aitken says defining the issues will be paramount.
“Some think it’s a privacy issue, others may think it’s a data protection or competition problem. And certainly a privacy issue can relate to a competition issue. A lot of people are trying to get their arms around what can be legitimately addressed. And what mechanisms or tools to use to do so.”
The U.S. did not mention which tech companies would be under investigation. But this month, the Federal Trade Commission fined Facebook $5 billion for mishandling user information. In Europe, Amazon is already under an antitrust investigation by the EU’s Competition Commission announced last week. And critics of big tech have been more vocal than ever, calling for the break up of some companies.
“The EU has been more aggressive on investigating these companies, but the U.S. is following suit,” says U of T’s Tombak. “What often happens in competition cases is that companies get prosecuted in other jurisdictions and Canadians take a similar path.”
The big question, says Tombak, is if the big firms are “stepping over the line” and choking off small firms that contribute to innovation.
“It’s not illegal to be in a dominant position. You may be dominant because you’re really good. But if you’re abusing that position, that’s a problem.”
The competition bureau’s Albert said the bureau could not confirm whether an official investigation into technology firms was underway.
“The bureau is required by law to conduct its work confidentially,” said Albert.
However, he pointed out that the bureau is working closely with the federal innovation department and policy-makers to “take a look under the hood” of digital competition policy and recently hosted a forum looking at that subject in May.
In July, the bureau hired former IBM executive George McDonald as its first Chief Digital Enforcement Officer. McDonald will “boost our digital intelligence gathering skills,” said Albert.
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Given the more limited Canadian resources to investigate tech giants, lawyer Aitken, who was also on the steering committee of the International Competition Network, says the bureau may do more “surgical strikes” addressing narrower issues at the most egregious offenders.
“I think the bureau will more likely be looking at discreet behaviours or acquisitions rather than embarking on a massive investigation, which is possible in the United States, which is more resource capable,” said Aitken.
Tech giants have traditionally been given a hands-off approach by antitrust regulators focused on pricing at least in respect to acquisitions of competitors. In the usual scenario, if one company gobbles up a competitor in the market, competition is reduced and pricing may go up. But products offered by companies such as Facebook and Google are seemingly free. However, that thinking has shifted.
“A typical analysis of mergers and antitrust is whether prices go up,” said Aitken. “But often with these powerful platforms you’re not really going to find price effects … So how to determine the material effect on competition so as to block a merger will be a real challenge for the competition authorities.”
U of T’s Tombak says one wider issue to be considered is whether antitrust legislation will impact innovation overall.
“Do big firms contribute disproportionately to innovation? The jury is still out.”
Tombak says Canadian regulators have traditionally been more moderate than their U.S. or European counterparts with antitrust legislation.
“Our corporate culture is to nudge them to do the right thing rather than haul them to court,” says Tombak. “Here in Canada we like to talk and work things out.”
In some cases that hasn’t worked too well. The Canadian Privacy Commissioner announced this year it is taking Facebook to court over privacy violations and “refusing to implement recommendations to address deficiencies.”
Former competition bureau commissioner Aitken says, in her experience, which includes high-profile litigation against the Toronto Real Estate Board over opening up the Multiple Listing Service, and challenging Visa and Mastercard over card acceptance rules, getting compliance from companies through enforcement remains one of the most important tools for Canadian regulators.
“Advocacy is important. But it alone doesn’t get you far. You need to have the resources and the right tools to back them up. That’s a powerful way to correct behaviour.”
Tony Wong is the Star’s technology reporter covering big tech, disinformation and regulation. Follow him on Twitter: @tonydwong