Case: Canada (Commissioner of Competition) v. Rogers Communications Inc, 2023 FCA 16 (CanLII)
Keywords: Merger and divestiture, Competition Tribunal, Competition Tribunal Act RSC 1985, c 19 (2nd Supp), Competition Act RSC 1985, c C-34
Synopsis:
The Commissioner of Competition applies to the Competition Tribunal for an order blocking the merger between the Respondents. The transaction originally involves Rogers Communications Inc. and Shaw Communications Inc. Later on, however, a divestiture of Shaw’s subsidiary becomes part of the overall transaction. (See para. 2).
The Competition Tribunal determines – in “413 tightly-written paragraphs” – that the merger would not be likely to prevent or lessen competition, within the meaning of s. 92 of the Competition Act, R.S.C. 1985, c. C-34. (See para. 4).
The Commissioner appeals to the Federal Court of Appeal, asserting inter alia, that the Tribunal erred by failing to consider the original version of transaction (i.e. a merger of the Respondents Rogers and Shaw) rather than the merger with an “additional element proposed after the Tribunal’s proceedings started”. (See paras. 13, 20-23).
The Court of Appeal (Stratas, Boivin, and Locke J.A.) dismisses the Commissioner’s appeal with costs. (See para. 26).
Importance:
The Court of Appeal sourced its jurisdiction in the Competition Tribunal Act, R.S.C. 1985, c. 19 (2nd. Supp.). As outlined by the Court, s. 13(1) of that Act permits reversal of the Competition Tribunal where it has erred on legal points, or “factually suffused” questions of mixed fact and law. (See para. 6).
The Court observed that, with respect to legal points, no deference is owed to the Tribunal – “if it is wrong, we can interfere”. (See para. 7). However, with respect to “factually suffused” questions of mixed fact and law, the standard is palpable and overriding error. Citing the oft-repeated quote from Canada v. South Yukon Forest Corporation, 2012 FCA 165 at para. 46 (i.e. that it is “not enough to pull at leaves and branches and leave the tree standing…[t]he entire tree must fall”), the Court affirmed that palpable and overriding error is a “high threshold” which requires an “obvious error” going to the “very core” of the Tribunal’s decision. (See para. 7).
Applying this standard of review, the Court of Appeal determined that the Tribunal’s two key findings – that the transactions would not be likely to prevent or lessen competition and that, in some key aspects, the transactions actually promote competition – were “amply supported by the evidence…and are unshakeable”. (See paras. 10-11).
Importantly, the Court of Appeal found that the Competition Act “aims to address truth and reality, not fiction and fantasy”. In the context of this case, that means that the Tribunal can examine the merger as it existed when the matter came before it; that it is not “forever shackled to the transaction pleaded by the Commissioner long ago and at an early stage”. (See para. 18; CSX Transportation, Inc. v. ABB Inc., 2022 FCA 96 at para. 12). At the same time, the Court was careful to observe that there may be a case where a change in a transaction subject to review by the Tribunal is so significant that “the hearing is…no longer fair” or the Tribunal can “no longer…effectively evaluate”. (See para. 19).
Of note here, the Court took time to acknowledge not just the Parties for their “high-quality submissions” and efforts in prosecuting the appeal on a “highly expedited basis”, but also the Registry and Court staff who “distinguished themselves once again” in the face of “difficult deadlines”. (See para. 27). Putting this into perspective, the Tribunal’s decision was released on December 31, 2022, and the Federal Court of Appeal delivered judgment from the bench on January 24, 2023.
Counsel for the Appellant, Commissioner of Competition: Alexander Gay, Jonathan Hood, Irene Cybulsky, and Michael Packer (Competition Bureau Legal Services, Gatineau)
Counsel for the Respondent, Rogers Communications Inc: Jonathan C. Lisus, Crawford G. Smith, John Carlo Mastrangelo, and Matthew R. Law (Lax O’Sullivan Lisus Gottlieb LLP, Toronto)
Counsel for the Respondent, Shaw Communications Inc: Kent E. Thomson, Derek D. Ricci, Steven G. Frankel, and Chanakya A. Sethi (Davies Ward Phillips & Vineberg LLP, Toronto)
Counsel for the Respondent, Videotron Ltd: John F. Rook, K.C., Emrys Davis, and Alysha Pannu (Bennett Jones LLP, Toronto)
*Supreme Advocacy LLP wishes to acknowledge the contribution of Jessica Rollins, 3L student at the University of Ottawa, Faculty of Law.