Roundup: Who Will Be the Next Competition Commissioner?
Plus: Rogers cements its sports monopoly while cutting jobs and raising prices, and the courts swat down gag orders on airline passenger complaints
It’s been almost seven months since Matthew Boswell, described by many as Canada’s most activist Competition Commissioner ever, stepped down early from his post – and nearly half as much time since applications to replace him closed.
Prime Minister Mark Carney’s government blasted out a flurry of legislation and announcements prior to adjourning parliament for the summer last month. Some, such as the National Food Security Strategy, squarely involved competition issues, but naming a new head of the Competition Bureau was not among them.
It’s a posting many are watching keenly, given that the government and its real intentions on the competition file haven’t been exactly clear. For every Food Security Strategy or declaration of hawkishness, there’s been a shuttering of the Office of Consumer Affairs or rubber stamping of mergers in the resource sector.
Who the feds pick is expected to send a strong signal on whether the PM wants the Bureau to continue in its recent activism vein, or if there might be a reversion to deferring to big industry.
Speaking with insiders in Ottawa and Toronto, you get the sense that the process is indeed moving slowly. One confirmed applicant for the job even told me that they have no idea what’s taking so long. No one seems to know what’s happening for sure, leaving only speculation to fill the void.
One thing is definite – the feds aren’t explaining themselves.
“The appointment process remains ongoing and an announcement will be made in due course,” says Hans Parmer, a spokesperson for Innovation, Science and Economic Development Minister Melanie Joly. The Governor in Council is responsible for naming the next commissioner on the recommendation of the ISED minister.
Part of the reason for the delay, as several sources mention, could be that the Bureau’s recent spate of activism may now be incongruous with Canada’s newly strained relationship with the United States.
During most of his seven years as commissioner, Boswell lobbied the previous Trudeau government – to much success – to amend Canada’s competition laws so that the Bureau would have more power to challenge and stop mergers and to intervene in abuses of dominance, among other things.
But Carney’s declaration of a “rupture” with the U.S. and push for larger sovereignty-building projects means the government may be returning to favouring a “national champion” philosophy.
At the very least, the government is increasingly looking like it wants more say over its agencies’ decisions so that they align with the politics of the current situation. A good example is the recent Online News Act boondoggle.
Originally instructed by the Trudeau government to make foreign streaming companies “pay their fair share” of cultural content production, the Canadian Radio-television and Telecommunications Commission in May issued long-awaited rules that would have required the likes of Netflix, Amazon, Apple and others to pay 15 per cent of their revenues into relevant funding bodies.
But, as they did last year when they scrapped a digital sales tax on those same foreign streaming services, the feds quickly stepped in to quash that CRTC ruling in June.
Though they cited consumer affordability as the reason, it’s well known that U.S. trade officials – not to mention President Donald Trump – were not happy with what amounted to new taxes on American companies. At a time when Canada is trying to negotiate trade agreements and avoid antagonizing the U.S., the larger priority won out.
The CRTC did as it was told, but the government completely changed the task at hand at the last minute. The next competition commissioner may have to thread that same moving needle.
Calgary-based Keyera’s $5.3 billion recent acquisition of Houston-based Plains All American Pipeline’s Canadian natural gas business is a comparable example. While the Bureau announced in early May that it was challenging the deal, the transaction was ultimately allowed to close later in the month.
The Bureau could have used the same powers that Boswell successfully lobbied for to stop the deal, but chose not to. It also declined to explain why it took this route, but the fact that the acquisition involved an American company exiting the country while making a Canadian firm stronger – despite concerns about the harm to competition – hasn’t been lost on observers.
As one competition lawyer told The Globe and Mail, “The Bureau is now in the position of having allowed precisely what its advocacy said the law must prevent.”
This uncertainty over what the Bureau’s stance should be – activist or not – has resulted in fewer candidates putting their names forward, especially from private practice, according to several sources. They also say that private practitioners are concerned about their post-Bureau job prospects in industry if the commission is indeed instructed to maintain its activist bent.
Several private practice lawyers are understood to have applied nevertheless. Acting commissioner Jeanne Pratt – who took over when Boswell stepped down in December – is also widely believed to want the job full time, though she declined to comment when I asked her. Several sources have pegged CRTC chair Vicky Eatrides as interested, but she did not return a request for comment.
Not everyone is concerned with the lack of an appointment yet, since it is possible that a candidate may already have been selected and the government is merely waiting for the right time to announce it.
“I have noticed that under this federal government, appointments are often made when politically opportune,” says University of Ottawa law professor and competition expert Jennifer Quaid. “From that vantage point, late summer [or] early fall is a better moment to highlight this appointment to the head of an agency that plays a key role in supporting the economy, just as we get into the budget season.”
And now on to the rest of the news…
🎧 ON THE PODCAST THIS WEEK:
Video Game Layoffs Fuelling Historic Union Movement
In December last year, Ubisoft Halifax employees voted overwhelmingly in favour of establishing a union – 74 per cent said yes. Just a few weeks later, the French company shut the studio down and laid off everyone.
💾 TECH
Related to this week’s podcast (above), MICROSOFT kicked off the week by cutting a whopping 4,800 jobs, or about two per cent of its global workforce. Much that number, or 3,200 jobs, are coming over the next two years from the company’s Xbox video games division, which is also going to experience some reverse consolidation as four studios – Compulsion Games, Double Fine Productions, Ninja Theory and Undead Lab – are being spun off. The company is blaming a “not healthy” games division and the need to cut costs overall as it spends billions on the artificial intelligence race. Ironically, that race is causing demand for processing hardware to spike and thus dampening consumer sales of computers and game consoles, which are both central to Microsoft’s and Xbox’s core businesses.
📱 TELECOM
It was a busy week for ROGERS, which announced on Monday that it was buying the remaining 25 per cent of MAPLE LEAF SPORTS & ENTERTAINMENT that it didn’t already own. The $4.3 billion deal with entrepreneur Larry Tanenbaum’s Kilmer Sports gives the cable giant 100 per cent ownership over all of Toronto’s major sports teams – including the Blue Jays, Maple Leafs, Raptors, TFC and Argonauts – as well as venues including the Scotiabank Arena and Rogers Centre, plus the Sportsnet broadcast and streaming network. The company now plans to spin off at least some of MLSE to investors, with The Globe and Mail reporting that a long list of partners have inquired about getting a piece, including billionaires, private equity managers, sovereign funds and even Saudi Arabia’s Public Investment Fund. The purchase from Kilmer has not yet showed up on the Competition Bureau’s list of merger and acquisition reviews, though it surpasses the mandatory $93 million threshold for inclusion by a wide margin.
Following the MLSE news, ROGERS on Tuesday shut down six local radio stations across Canada, cutting 230 jobs in the process. The affected stations were Sportsnet 650 and 1130 AM in Vancouver, Sportsnet 960 and 660 NewsRadio in Calgary, 96.7 NewsRadio in Halifax and 570 NewsRadio in Kitchener, Ont. The company said declining audience and advertising were responsible.
And lastly, ROGERS is also significantly raising season ticket prices for some Blue Jays fans. A subscriber and friend of Do Not Pass Go writes that her seats in the 500 level are going up nine per cent next season, a steep increase from the three or four per cent in previous seasons. Attendance and therefore demand is strong this season but, as is always the case with season tickets, it’s bold to be raising prices – especially by a large amount – when the current team is objectively difficult to watch.
✈️ AIRLINES
The Ontario Superior Court has struck down as unconstitutional a federal gag order on airline passenger compensation complaints. In his decision on Thursday, Justice Charles Hackland wrote that the Canadian Transportation Agency’s non-disclosure rules – which prevent passengers from publicly disclosing the results of their complaint mediation efforts – violate freedom of expression laws under the Charter of Rights and Freedoms. The government agency had argued that the process, which involves complaints resolution officers (CRO), required secrecy so that airlines including AIR CANADA and WESTJET could have more frank discussions with passengers. But advocacy group Air Passenger Rights argued that the complaints process closely resembles a court and CROs effectively act as judges, so it must be subject to the same transparency rules as an open court. “If it walks like a duck and quacks like a duck, it’s a duck,” Gabor Lukacs, head of the group, tells Do Not Pass Go. “This is great news for restoring democratic rights in Canada.” The CTA has 90 days to implement transparency changes.
AIR CANADA will finally have a French-speaking chief executive, with current Scandinavian Airlines president and CEO Anko Van der Werff taking the reins in January. He’ll be replacing outgoing boss Michael Rousseau, who has faced criticism for years for his inability to speak French fluently, which is a problem for an airline based in Montreal. Here’s proof that the new guy can talk the talk. Now, perhaps critics can focus on the real issue, which is that neither head of Canada’s two major airlines – Van der Werff, who is Dutch, or WESTJET CEO and German native Alexis von Hoensbroech – are Canadian.
Speaking of WESTJET, the airline’s flight attendants this week opened a strike vote that will continue until July 15. The main issue for workers is similar to what their colleagues at AIR CANADA struck over last year – unpaid time spent on the ground, which the Canadian Union of Public Employees union estimates at 35 hours each per month. The earliest a strike could happen under federal law is Aug. 2. Air Canada attendants last year won a victory of sorts in a settlement with the airline after defying a government return-to-work order. As we reported here in April, Air Canada used scare tactics to convince Jobs and Families Minister Patty Hajdu to issue the order, warning her that flight disruptions from a possible strike would be worse than those that occurred following 9/11 and the Covid-19 outbreak.
👉 IN CASE YOU MISSED IT:
Canadian Workers Among the Most Restricted by Non-Compete Clauses
Canadian workers are among the most restricted by non-compete clauses in a new survey of 15 countries by the Organization for Economic Co-operation and Development.
🕺 ENTERTAINMENT
The CBC continues its excellent reporting into STUBHUB, the ticket resale website that is increasingly finding itself at the centre of regulatory and legal trouble. In the latest bit of news, it’s revealed that the company’s chief executive Eric Baker is also part-owner and managing director of ANDRO CAPITAL, a fund that buys and then sells millions of dollars worth of tickets on the website. According to filings with the U.S. Securities and Exchange Commission, Stubhub has a deal with an affiliate of Baker’s fund to bankroll other mass scalpers to help them buy and post large numbers of tickets for resale on the site. The company is currently under investigation in British Columbia and Texas and the subject of two proposed class-action lawsuits in the United States for its recent cancellation of thousands of World Cup tickets.
GROCERIES & RETAIL
If you bought beef in Canada over the past decade, you may soon be eligible for a payment under proposed class-action settlements. JBS USA, SWIFT BEEF, JBS PACKERLAND and JBS CANADA have agreed to pay $7.4 million in the settlement, with NATIONAL BEEF also on the hook for $495,000. Similar to the ongoing bread price-fixing scandal, the involved companies were accused in 2022 of conspiring to raise the price of beef in Canada. The settlements, which don’t include admissions of wrong-doing, need to be approved by courts, with hearings for all provinces except Quebec scheduled for Sept. 10. Quebec’s hearing is scheduled for Dec. 1.
The Competition Bureau isn’t going to challenge the private equity takeover of PIZZA HUT. Stamford, Conn.-based LONGRANGE CAPITAL got the green light – at least in Canada – on July 2 for its $2.7 billion (U.S.) purchase of the pizza chain, with the exception of its operations in China, from YUM BRANDS. The Kentucky-based company put the underperforming chain, which has 620 locations in Canada, up for sale in November.
🚨 COMING UP
In light of the Microsoft Xbox news above, we switched gears this week to run a timely podcast interview with Jon Huffman, former lead programmer and union organizer at Ubisoft Halifax, in which we discussed the video game industry’s growing labour movement. This Tuesday, we return to our originally scheduled programming featuring EMMA HARRIS, co-founder of the Novel veterinary clinic in Burlington, Ont., to talk about the intersection of pet care and big business and the effects that private equity roll-ups are having on service prices. Don’t you dare miss it.