Why are Dye and Durham being checked abroad and not at home?

This is a confusing message to citizens about the purpose of our government policy

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Competition authorities in two comparable countries — the United Kingdom and Australia — are examining the implications of the acquisition history of Canadian software company Dye & Durham Corp. Strangely enough, the Canadian Competition Bureau is not.

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In the UK, Dye & Durham could be forced to sell its UK operations following an assessment by the UK competition regulator. The Australian competition regulator recently expressed concerns over a proposed purchase by Dye & Durham of Link Administration Holdings Ltd.

Meanwhile, in Canada, a group of lawyers has independently filed a class action lawsuit against Dye & Durham and others for alleged competition law violations. The lawsuit alleges that the defendants colluded to charge an artificially high fee for the use of their real estate transaction software.

If you want competitive justice comparable to other jurisdictions, you may need to take a DIY approach. However, the lawsuit focuses on Dye & Durham’s potentially anticompetitive behavior, not the company’s aggressive acquisition strategy. Still, Dye & Durham’s recent acquisition of Telus Corp.’s Telus Financial Solutions meets the Canadian merger review threshold.

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But instead of defending its explicitly monopolistic acquisition strategy with the Competition Bureau, Dye & Durham is bolstering its business strategy by extending its contract with the Province of Ontario to provide electronic business registration services. provincial government.

“We are making sure Ontarios have access to critical digital tools that make doing business in our province easier,” Ross Romano, secretary of government and consumer services at the time of the announcement in March, said in a company press release.

It’s unbelievable that Dye & Durham have managed to evade criticism in the house. One of the reasons Canada is not currently investigating the company could be that the Competition Bureau does not have the authority to collect information for market studies prior to a formal investigation. This means that it cannot access information from companies that can help highlight potentially anti-competitive market trends, as other competition authorities can. Another reason could be our weak merger control regime, which allows malicious transactions.

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The Competition Bureau itself acknowledged these shortcomings in a recent response to former Senator Howard Wetston’s investigation into Canada’s Competition Act. While extending the merger review period to more than a year may facilitate better observation of market developments, citizens expect our competition authority to be more effective, as they feel it is too easy for large companies to take advantage of.

Complicating further a potential competition case from Dye & Durham is that provinces oversee consumer protections and the federal government oversees competition. So even if price increases from a wholesaler or a business-to-business service provider are passed on to consumers, Canadian competition law does not explicitly address excessive pricing. Consumer protection authorities may have to intervene on the basis of a price push if the Competition Office is unable or unwilling to intervene, even though prices have risen significantly as a result of mergers.

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Dye & Durham’s own structure might shelter it from competition rules, as laws have not kept up with the digital economy. A new book by economist James Bessen describes how companies use software to dominate industries, destroy innovation and undermine regulation. Bessen argues that “information technology is changing the nature of markets, innovation and business organization, exacerbating economic divisions and undermining government regulation.” The nature of software challenges our existing regulatory structures and processes, exposing the need for an overhaul.

There is some evidence that Dye & Durham’s predatory approach to acquisitions could lead to customers shifting to their competitors, which in turn could lead investors to get behind the company’s rivals. In theory, that could fuel competition in the legal software market without the need for government intervention. The emerging market may have been boosted by the company’s price increases, but there is also evidence that other companies have followed Dye & Durham’s lead by raising prices.

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However, there is no denying that competition law is evolving faster elsewhere than in Canada. As a result, a Canadian company is under public scrutiny by competition authorities in two large, Anglophone democracies, but not here in Canada, although the company has similarly consolidated its market power by buying up rivals and raising their prices significantly.

Canada’s forthcoming review of the Competition Act will need to examine how best to approach merger enforcement guidelines for a global, data-driven, digital economy. The information necessary to determine whether an investigation is warranted is unlikely to be publicly available or voluntarily provided by interested parties, making it reasonable to equip the Competition Office with the same capabilities as its international colleagues.

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Further, in cases where the Competition Office does not investigate the practices of a Canadian company or a merger, but another jurisdiction does, the Competition Office should provide a brief reason why it is not to establish liability. When peer jurisdictions bring competition proceedings against a Canadian company and Canada does not, it sends a confusing message to citizens about the purpose of our government policies. The lack of comparable studies on the market implications of Dye & Durham’s acquisitions and pricing is a sobering reminder of how Canadian competition law continues to favor the concept of economic efficiency over other considerations, consistently elevating corporate interests over consumers and small businesses in the process. Private cases or class action lawsuits are not a substitute for the full capacity of a modern Competition Office.

Vass Bednar is an adjunct professor of political science at McMaster University and executive director of the school’s Master of Public Policy in Digital Society program.

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