On April 8, the Canadian Competition Bureau acknowledged that the COVID-19 crisis may require the rapid establishment of business collaborations of limited duration and scope to ensure the supply of critical products and services. The Bureau does not wish to see concerns related to competition law enforcement "potentially chill" activities that may be necessary to help Canadians.
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The Bureau used its announcement to "signal" that where there is a clear imperative for companies to collaborate in the short term to respond to the crisis (rather than to achieve competitive advantage), it will generally refrain from exercising scrutiny under the Competition Act, provided that the collaboration is undertaken and executed in good faith and does not go further than what is needed. However, the Bureau also stressed that it will have zero tolerance for any attempts to abuse this flexibility as cover for unnecessary conduct that would violate the Act. Accordingly, any business considering a deviation from its regular practices should still proceed with caution.
The Bureau also acknowledged that some businesses may desire specific feedback from the Bureau before entering into a proposed competitor collaboration. To that end, it has established a rapid response team to provide "informal guidance." Companies seeking such guidance should provide the Bureau with the following information at a specially created email address (CB-COVID19-BC@canada.ca):
- The firms involved and the parameters of the collaboration including its proposed scope and duration;
- A detailed description of how the collaboration is intended to achieve a clearly identified COVID-19 related objective in the public interest;
- An explanation of why the collaboration is necessary to meet this objective; and
- A description of any guidance sought from relevant authorities on whether the collaboration contemplated will actually further Canada's response to COVID-19.
The Bureau indicated that the following operational considerations will also apply to any requests for informal guidance:
- The Bureau may seek input on the proposed collaboration from other parts of government at all levels, stakeholders, and market contacts;
- The Commissioner may require conditions to ensure the impact on competition is limited only to the extent necessary to meet the critical needs in this emergency period;
- Any informal guidance would be time limited and would be reviewed after the initial time period should the parties request that the guidance be extended;
- The guidance provided would not insulate conduct from the possibility of private action;
- It would be within the Commissioner's purview to make the guidance public to support transparency; and
- At the conclusion of the time period (if not extended by the Commissioner), each of the parties would be expected to provide written confirmation to the Commissioner that the collaboration has been terminated.
The Bureau did not provide specific time estimates for responding to requests for informal guidance (and part of that will depend on how quickly the parties provide the Bureau with the requested information and answer any questions), but it did say in general terms that the "aim of this team will be to facilitate rapid decisions to enable business to support the crisis response efforts."
Implementing a Competitor Collaboration
Notwithstanding the Bureau's announcement, it would be prudent for any business that is considering veering from its usual practices with respect to competition law compliance in response to the COVID-19 crisis to review the proposal with its own legal counsel prior to implementation. From there, a decision can be made as to whether to seek specific informal guidance from the Bureau, based on a combination of the nature of the proposed competitor collaboration and the risk tolerance of the parties. Generally speaking, any proposal to engage in a competitor collaboration that would normally constitute a criminal offence (e.g. price fixing, customer or market allocation, limits or controls on supply) is higher risk. In contrast, other forms of competitor collaborations, as well as vertical relationships between suppliers and customers, are lower risk.