Every week, you send us your questions on the economy, finances, markets, etc. Our journalists try to answer them with the help of experts.
Why doesn’t Canada imitate the United States and go get hundreds of millions from multinationals, most of which are American? These companies make profits all over the world, but pay fines only in the United States. We are depriving ourselves of enormous sums; is it simply so as not to offend our neighbor? Lack of courage, of resources?
Stephane Pomerleau
With the Californian giant Alphabet having just been found guilty of violating anti-monopoly law in the United States with its famous search engine Google, Mr. Pomerleau’s question is a burning issue.
On the other side of the Atlantic, the European Union has also achieved success against the technological giants. After a warning from Brussels in June, Apple has just announced changes to its App Store. The company, the largest market capitalization in the world, will have to make more room for other software providers.
So if Americans and Europeans can tame the beast, why not Canada?
“We don’t have the same laws or the same resources,” summarizes Jennifer Quaid, professor at the University of Ottawa and specialist in business law.
And above all, not the same population.
If Google and Apple cannot do without the hundreds of millions of American and European consumers, the approximately 40 million inhabitants of Canada do not weigh heavily in the balance for them.
Competition law expert Pierre Larouche of the University of Montreal cites the example of the owner of Facebook and its reaction to the Online News Actwhich provides for the payment of royalties to news media. Instead of paying, Meta simply decided to remove all Canadian journalistic content from its platform.
“Facebook in Canada said, ‘It’s not worth it, it’s too much hassle,'” he said.
A less effective law
The problem, however, is not just the smaller population. “Our law is a little less robust,” says Pierre Larouche. “Tech giants have more means of defence in Canada.”
To declare illegal the near-absolute dominance of the Google search engine in electronic devices, the US Department of Justice used the old Sherman Act.
This 1890 law casts a wide net. Specifically, Washington invoked its Section 2. It punishes “any person who monopolizes, or attempts to monopolize, or associates or conspires with others to monopolize any branch of commerce.”
In the European Union, the provisions are contained in four lines, Pierre Larouche points out. As in the United States, the authorities have the power to interpret them to decide how they will apply the law. It is then up to the judges to decide whether their position is reasonable or not.
Nothing as direct in Canada, according to Mr. Larouche.
There Competition Act is too detailed, it gives companies too much ammunition to defend themselves.
Pierre Larouche, expert in competition law
“The U.S. Federal Trade Commission’s mandate is also broader than the Competition Bureau’s,” says Jennifer Quaid. “It has responsibilities including consumer protection.”
Ongoing investigations
Ottawa is not inactive, however. In recent months, the Competition Bureau has filed applications with the Federal Court to force Alphabet and Amazon to hand over documents needed for investigations.
But according to Pierre Larouche, the best way to make gains against the tech giants is probably to wait for Washington and Brussels to obtain settlements against them. “It would be difficult for them to explain afterwards that they are not giving us the same thing.”
The Facebook case
Meanwhile, the disparities between the American and Canadian decisions are striking. To illustrate, Jennifer Quaid mentions the agreement that Ottawa concluded with Facebook in 2020.
The company was under investigation for transmitting personal information of users of the platform, in violation of the rules it claimed to apply. The Competition Commissioner finally agreed to end its actions in exchange for the payment of a fine and investigation costs totaling 9.5 million.
In the United States, for similar violations, the Federal Trade Commission, in 2019, obtained instead… 5 billion US dollars. Washington, however, accused Facebook of having violated a previous judgment on these issues, issued as early as 2012.
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