Canada’s Competition Bureau says it will allow companies that normally compete with each other to temporarily work together to deliver key services or products in response to the coronavirus pandemic.
Lawyers say the more relaxed approach to anti-collusion laws is meant to help ensure continued access to essential items, which could include groceries, cleaning supplies, medications and medical equipment, such as masks and gloves. Businesses could potentially co-operate by swapping information on stock levels or sharing distribution centres, for example.
In a statement on Wednesday, the federal competition watchdog said it recognizes the exceptional circumstances of the COVID-19 outbreak “may call for the rapid establishment of business collaborations of limited duration and scope" to ensure they can supply critical products and services."
“Firms may need to form collaborative buying groups or share supply chain resources such as distribution facilities to ensure access to the necessities of life for all Canadians,” the Competition Bureau said.
“Where firms are acting in good faith, and motivated by a desire to contribute to the crisis response rather than achieve competitive advantage, the bureau does not wish to see specific elements of competition law enforcement potentially chill what may be required to help Canadians.”
Leading anti-trust authorities in other jurisdictions have already issued guidelines to permit some collaboration between competitors, in some cases weeks earlier than Canada, including Britain’s Competition and Markets Authority, the European Competition Network and the U.S. Department of Justice and Federal Trade Commission.
In a general statement on the coronavirus crisis published March 20, Commissioner of Competition Matthew Boswell did include a paragraph noting that Canada’s existing laws “accommodate pro-competitive collaborations between companies to support the delivery of affordable goods and services to meet the needs of Canadians.” But some competition lawyers say the bureau’s new guidelines are a welcome resource.
“This was a noteworthy addition and a needed one, because other jurisdictions around the world had released similar guidance, and the bureau’s was missing in action,” said Antonio Di Domenico, a competition-law partner at Fasken Martineau DuMoulin LLP. “There was certainly a demand for more clarity in Canada."
Michael Kilby, a partner at Stikeman Elliott LLP, said the statement adopts a “reasonable and balanced approach." He said regulators "clearly don’t want to chill collaborations to meet urgent demand or to resolve supply issues. ... They’re balancing that against their ongoing and constant desire to ensure that there isn’t illegal price-fixing or cartel conduct.”
Some Canadians have complained about price gouging on goods that are in high demand because of COVID-19, but the Competition Bureau does not regulate pricing. Some provinces address it through consumer protection legislation and, in the case of Ontario, through an emergency order passed in late March that prohibits charging “unconscionable prices" for necessary goods, which include: protective medical equipment, non-prescription medication used to treat COVID-19, disinfecting products and personal hygiene products including soap and paper goods.
Mr. Di Domenico said the Ontario price-gouging list, while not exhaustive, provides some examples of where the bureau’s new guidelines might permit collaborations to deliver much-needed products.
The bureau also said Wednesday it will offer a “rapid assessment” process to give companies greater certainty before proceeding with a proposed collaboration.
Randall Hofley, a partner at Blake, Cassels & Graydon LLP, said the bureau should be able to reallocate resources to providing such assessments in part because merger activity has slowed as a result of the pandemic.
“I am hopeful that the assessments and the informal guidance will be rapid, as that is what business needs and must receive to make the process of use and effective in the public interest,” he said.
However, he noted that the statement includes a number of caveats and also says the bureau could seek input from all levels of government as well as other parties, a potentially time-consuming process that could dissuade companies from asking for an assessment in the first place.
“I suspect that in many cases, parties will rely on their judgment and [advice from] their counsel and elect not to rely on this procedure. But the fact that it’s an option is useful,” said Stikeman’s Mr. Kilby.
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