Roundup: Pepsi Accused of Abusing Dominance by Montreal-based Energy Drink Maker
Plus: Everything old is new again as Microsoft becomes an antitrust target, and the feds promise AI competition while reversing the CRTC on streaming rules
My apologies for getting this week’s competition news roundup out a few days late, but I was on vacation… so I had a good excuse! But, as they say in the biz, the news never takes a break – and wow, was that ever true this week. Let’s get to it!
GURU ORGANIC ENERGY is accusing PEPSICO of abusing its dominance of the beverage market in a filing with Canada’s competition court. The application doubles down on a similar civil lawsuit launched by the Montreal-based energy drink maker in April.
Guru is seeking the full benefit derived by PepsiCo from its alleged abuse in the amount of $15 million or whatever sum the Competition Tribunal deems appropriate, if the court agrees to hear its case, according to the company’s notice of application.
The application itself has not yet been posted publicly and lawyers for Guru could not be reached on the weekend, but the notice refers to arguments in the company’s concurrent civil case.
In that lawsuit, Guru alleges that Pepsi violated a distribution agreement the two companies signed in 2021. Pepsi was to be its exclusive distributor for the next 10 years, but the soft drink giant terminated the deal “without cause” as of May 2025, forcing Guru back to direct distribution, according to the company.
Guru is also seeking $15 million in damages in its civil suit, plus profits Pepsi derived from selling an allegedly copied product, and $164,753 in outstanding receivables.
Guru says Pepsi used existing shelf space it had developed with retailers to instead expand the presence of its own offerings, which included copies of Guru products. In the lawsuit, the company says Pepsi began selling “Rockstar Island Bliss” shortly after Guru disclosed specifications of its own “Island Breeze” drink to the distributor.
“When we entered into our agreement with Pepsi’s Canadian distribution arm in 2021, we did so in good faith and invested significantly in the partnership,” said Guru president and chief executive Carl Goyette in a release at the time. “Filing this claim is a matter of defending shareholder value on a set of issues we have attempted to resolve privately.”
In the civil suit, the company said it would file an abuse-of-dominance application with the Tribunal to investigate the alleged use of shelf allocation to disadvantage independent competing brands in favour of Pepsi-owned and -affiliated products.
“Guru believes that the conduct described in its statement of claim raises issues of broader public interest warranting regulatory review.”
Pepsi, for its part, also filed a civil claim in April, seeking approximately $4.4 million for post-termination payables. The company could not be reached for comment.
🎧 ON THE PODCAST THIS WEEK:
💾 BIG TECH
The big news of the week was the federal government’s introduction of a national AI STRATEGY, and there has certainly been no lack of commentary on it. From the founders of COHERE calling it “an incredible step forward” to opposition politicians saying it lacks safety provisions, reactions are running the gamut. If there’s a common thread through much of the analysis, it’s that the “AI for All” document is big on the ambition of making Canada a leader in the field but short on details on how it’s going to happen. We’ll get into it further in the weeks ahead but, for what it’s worth in these parts for now, the strategy does make a point of acknowledging AI’s importance in enabling and supporting competition.
The cloud computing market is highly concentrated, which poses both competitive and sovereignty threats to Canada, according to a new paper from the Canadian Anti-Monopoly Project. Three U.S. companies – AMAZON, MICROSOFT and ALPHABET – control 85 per cent of the Canadian market, which will inevitably lead to lock-in through proprietary technologies, opaque and complex billing, bundling and tying, and the foreclosure of adjacent markets including AI. “A country locked into a small number of providers lacks meaningful choice, whether the threat is coercion by a foreign government or rent extraction by an uncontested monopolist,” the paper says. The organization recommends the federal government require interoperability and portability certifications in all its cloud procurement deals and that it attach similar conditions to any domestic cloud investment programs to avoid entrenching new domestic monopolies. CAMP also suggests that the government insist on removing digital market regulation constraints as it negotiates the Canada-United States-Mexico Agreement this summer.
The Competition Tribunal has handed another defeat to GOOGLE as it defends an ongoing monopoly case brought by the Competition Bureau. Justice Andrew Little this week ordered the search giant to pay more than $358,000 in legal costs relating to a motion it brought that sought to scuttle the Bureau’s case against it, which alleges that the company is abusing its dominance of the online ad and search markets in Canada. Google had argued that the potential damages in the case, which could be in the tens of billions of dollars, were a “true penal consequence” that therefore qualified it as a criminal rather than civil proceeding, in which case the company was due protections under Canada’s Charter of Rights and Freedoms. Little rejected those arguments in March. The Bureau had been seeking costs of more than $370,000. The trial is expected to begin in January 2027.
The heat over the federal government’s Bill C-22, also known as the LAWFUL ACCESS bill, continues to build with a number of smaller competitor tech companies threatening to pull out of Canada if the legislation is enacted as written. Messaging provider SIGNAL and search engine DUCKDUCKGO have both indicated that they would rather not offer services to Canadians at all than do so while also providing law enforcement with encryption back-doors. “In its current form, Bill C-22 would convert the everyday tools Canadians rely on into a sprawling, insecure surveillance apparatus,” Udbhav Tiwari, Signal’s vice-president of strategy and global affairs, told the House of Commons public safety committee this week. “If we are ever forced to choose between betraying the people who rely on us and leaving a market, we will leave.” DuckDuckGo, an erstwhile search competitor to Google, meanwhile, says it will pull its virtual private network offering from Canada if Bill C-22 becomes law.
Remember when MICROSOFT was the U.S. government’s biggest antitrust target? Well, everything that’s old may be new again as the company appears to be in the crosshairs again. The Federal Trade Commission is reportedly gathering business agreements, licensing arrangements and interoperability information from companies that do cloud services and AI deals with the tech giant. Microsoft insists there’s plenty of competition in those businesses, but its practices are drawing considerable attention from enforcement agencies – not just in the U.S., but also in Europe, the U.K. and Japan.
And speaking of MICROSOFT antitrust cases of yore, everything old really is new again as a consortium of competing web browser makers have penned an open letter to say “enough is enough” in response to how the company is apparently favouring its own software. “Microsoft leverages its immensely powerful position as the supplier of the ubiquitous Windows PC operating system, as well as many productivity and other must-have apps, to push users towards its first-party browser, Edge, through tactics that restrict, distort, and subvert user choice,” says the letter from the Browser Choice Alliance, which counts GOOGLE Chrome, OPERA and MIDORI among its members. The group says Microsoft needs to allow third parties to compete for pre-installation and default deals with Windows PC makers, bring back the ability for users to easily switch default browsers, and stop using operating system updates to push users back to Edge, among other measures.
And also on the topic of alternative browsers, DUCKDUCKGO – of several-items-above fame – says its demand is exploding as web users look for for ways to surf the web without drowning in AI slop. The company says results on its no-AI search page were up nearly 30 per cent week-over-week, while its U.S. app installs also rose 18 per cent. The growth in interest was certainly sparked by GOOGLE’s recent announcement that it intends to prioritize AI results over its traditional search through its engine and Chrome browser.
🕺 ENTERTAINMENT
The other big news of the week was the federal government’s reversal on the ONLINE STREAMING ACT. Culture Minister Marc Miller on Wednesday told the CRTC to rethink its recent implementation of the legislation that would have required streaming companies including NETFLIX, AMAZON and APPLE to pay 15 per cent of their Canadian revenues into funds that would help fund the production of Canadian TV shows and movies. Citing the likelihood of those companies passing on the fees to customers in the form of price hikes – and perhaps not as openly admitting that the scheme was proving to be a major irritant to the United States at a time when Canada is trying to negotiate a new trade deal – Miller announced that content producers would instead be getting $600 million in new annual government funding. While some producers welcomed the funding, others were vocal in their displeasure at letting the streaming companies off the hook. The Canadian Media Producers Association, for example, pointed out that the streaming companies have consistently and frequently raised prices since entering Canada, and that “this will continue regardless of any government action.”
The Ontario government is raising the maximum fine on scalpers for selling tickets above face value to $25,000 per offence, from $10,000, starting June 10. That’s cool and all, but given that tickets for everything from concerts to Blue Jays games to World Cup soccer matches continue to sell on STUBHUB at massively inflated costs, there appears to be zero enforcement so far. Worse still, City of Toronto officials bragged over the weekend that they have sold most of the 3,546 World Cup tickets they bought last year as “a revenue generation strategy.”
Gabe Newell, founder and president of VALVE, denies that his company’s Steam platform is a monopoly in online games. “Customers have enormous choice,” he said in defence of his company and an ongoing U.S. antitrust lawsuit against it. The problem, according to the independent studios that brought the lawsuit in 2021, isn’t with customers’ choices but rather that Steam – the dominant online games platform – allegedly forbids them from selling their products at lower prices on other platforms. This “most-favoured nation” setup is driving up the price of games and fees for developers and studios, according to the lawsuit. According to a new Bloomberg report on previously unreported conversations between Newell and some of the studios, the Valve founder denied that such clauses existed even when presented with internal communications in which company employees appeared to be enforcing the rule. A similar case is underway in the U.K. as well.
Fresh off their antitrust win over Live Nation, several U.S. states including California, New York and Colorado are considering a lawsuit to block PARAMOUNT’s takeover of WARNER BROS. DISCOVERY. The states believe the $111-billion (U.S.) merger will result in job losses, lower wages and fewer films and TV shows being produced.
🛒 GROCERIES & RETAIL
We started above with the federal government’s AI strategy, so we may as well end with it here. The Toronto Star notes that the 50-page document released this week contains a line that promises to tackle SURVEILLANCE PRICING – where merchants utilize customer data to set personalized prices – but, as per much of the rest of the strategy, there’s little beyond that. “Canada will also strengthen its privacy laws to ensure that Canadians’ personal information is not used inappropriately, including for surveillance pricing,” the strategy paper says. NDP leader Avi Lewis, who recently called on a nationwide surveillance pricing ban, tells the paper that it appears to be an afterthought to the government. “They haven’t committed to banning the practice,” he said. “They committed to dealing with this by protecting Canadians’ privacy, so those are different things.”
🚨 COMING UP
Is the ability to protest – whether politically or economically – a privilege reserved only for a certain class of people? STEPHEN GASTEYER, an associate professor of sociology and expert on protests at Michigan State University, joins the Do Not Pass Go podcast this Tuesday to discuss why those people affected most by oligopolies often have the least ability to do something about it – and how it’s therefore doubly important for the people with privilege to take action.