Canada’s Competition Bureau obtained a court order to require Google to produce records and information relevant to the Bureau’s ongoing investigation into whether the global internet giant’s advertising practices harm competition.
The Bureau said it was expanding its investigation – which began in 2020 –to review whether Google’s practices could violate provisions of the Competition Act, including the Act’s “abuse of dominance” provisions, updated In late December 2023.
In a news release announcing the decision of the Federal Court of Canada, the Bureau said it was originally focused on “allegations that Google was leveraging its market power in the supply of video advertising into the market for advertising buying tools.” However the investigation has now expanded to cover whether Google is using its market power to harm competition, and using predatory pricing in its display advertising.
The Bureau said the court order was required to determine whether Google’s advertising was intended to harm competition, affected competitors or the competitive process, or “resulted in higher prices, reduced choices and hindered innovation in the online display advertising services market in Canada.”
Google is the dominant search engine in Canada, and also owns four of the largest online advertising technology services in Canada, including DoubleClick, AdX, and Google Ads.
The Competition Act’s tests for establishing abuse of dominance were changed in December, as part of a package of legislative reforms largely sought by the Competition Bureau.
Under the previous legislation, the Competition Tribunal could only find abuse of dominance if it was convinced that a dominant firm had engaged in acts that were or were intended to be predatory or exclusionary or harm competition, and that the practice had the effect of substantially preventing or lessening competition in a market.
The revisions essentially change the “and” in that sentence to “or”, so that dominance can be said to occur where the dominant firm intended to harm competition (even if it didn’t succeed), or if there was a substantial harm to competition (even if it didn’t intend to).
(Jurisprudence had established that only reduced competition which could not be attributed to superior competitive performance is relevant.)
In its submission to the government’s consultation on competition policy reform, the Bureau sought a reduced emphasis on having to prove effects, arguing that proving both intent and effect required complex economic evidence and modelling.
The Act changes also bumped up the penalties, but only if anticompetitive intent and effects can be demonstrated. Otherwise, remedies are limited to requiring the dominant firms to stop the conduct.
Google representatives indicated the firm would continue to engage with the Bureau in its investigation, and that “Canadian businesses choose to use our advertising products because they’re effective and reliable in helping them reach their customers and grow.”
The Bureau release noted there is no conclusion of wrongdoing at this time.