By Konrad von Finckenstein, former chair of the CRTC, and Philip Palmer, former general counsel at the Justice Department focused on communications law
The Online News Act, Bill C-18, states as its purpose “to regulate digital news intermediaries” in order to bring fairness to the Canadian news marketplace. Digital news intermediaries are simply any online social media or search platform that carries links to or produces search results for news items.
The language of the Act is couched neutrally, but the announced intent is to regulate digital news intermediaries such as Meta (Facebook) and Alphabet (Google) so as to force them to bargain with Canadian news businesses with the objective of seeing the platforms compensate news businesses for the erosion of their share of advertising revenues. The legislation is controversial, and the many pros and cons of the bill have been widely aired. The issue that has not been given attention is a very fundamental one:
Does Parliament have the authority to enact a scheme to regulate platforms?
Canada has a federal system of government. The powers to legislate with regard to specific subject matter has been assigned to either Parliament or the provincial legislatures. Each is sovereign in those subject areas.
As a general rule, unless a business category (such as banking) is specifically assigned to Parliament, the regulation of businesses – even ones incorporated federally and operating interprovincially – is assigned to the provinces as a matter of local works and undertakings or property and civil rights within a province. The exception to this general proposition is that Parliament is given legislative power with respect to:
91(10)(a) Lines of Steam or other Ships, Railways, Canals, Telegraphs, and other Works and Undertakings connecting the Province with any other or others of the Provinces or extending beyond the limits of the Province.
In 1932, it was determined that broadcasting by radio waves constituted such an interprovincial undertaking. In 1989, the members of the then Telecom Canada consortium were found to be an interprovincial undertaking. The key, as found in both cases, was the employment of equipment (radio transmitters or transmission lines) to facilitate communications across provincial and international boundaries.
Neither Facebook nor Google control radio transmitters or transmission lines that cross provincial boundaries. It is our understanding that Facebook and Google are reliant on telecommunications common carriers to communicate with their users. It is the carriers who control the facilities that link the platforms with their clientele. It is the carriers who are subject to federal regulation as interprovincial undertakings.
The mere fact that a firm is a giant, or that it conducts business throughout Canada (or internationally), does not render it subject to the jurisdiction of Parliament. The Bay and Best Buy, both of which operate nationally, are subject to provincial rather than federal regulation. A law firm that offers advice by means of telecommunications is not by that fact subject to federal regulation as an interprovincial undertaking.
In our view, neither Meta nor Alphabet is an interprovincial undertaking within the meaning of s. 92(10)(a).
C-18 touches on copyright – a subject matter within the authority of Parliament. The Act prevents platforms from relying on copyright exceptions and limitations when bargaining with news businesses. While that provision (s.24) may be justifiable under the subject matter of copyright, the broader regulatory scheme could function without s.24. This indicates that the scheme, as a whole, does not rest on Parliament’s jurisdiction over copyright.
Attempts have been made to lever the Trade and Commerce power (s. 91(2)) to regulate particular categories of business (such as the securities industry). The jurisprudence has repeatedly found that the Trade and Commerce power cannot be relied upon to regulate a single industry. C-18 is an attempt to regulate a single business activity: platforms facilitating Canadians’ access to news. We do not believe the Trade and Commerce power can be employed to regulate the online platforms’ facilitating access to news.
There remains one further federal head of power that might give rise to federal jurisdiction: the so-called national concern doctrine. It was most recently employed by the Supreme Court to permit the federal government to override provincial jurisdiction to set carbon pricing. This power has rarely been invoked and the jurisprudence demands that it be employed rarely. While not limited to situations of emergency, most cases have at least that flavour. While Canadian legacy news businesses are clearly in decline, it is unclear that the problems of the legacy elements of the news industry rise to the level of either a national emergency or a matter beyond the competence of provincial governments to master. Indeed, despite the crisis in legacy media, the availability of both foreign and domestic news and commentary has never been greater. For most interested citizens their issue is not in finding news but managing the flood of it – whether paid for or for free.
The federal government never publishes the constitutional opinions upon which it is acting, so we cannot say what arguments the government may rely on if the Online News Act is challenged on constitutional grounds. We simply note that there is no apparent constitutional mooring for the Act. The history of federal attempts to regulate industries in Canada is a junkyard of wrecked dreams. We believe the Online News Act is a prime candidate to join the metaphorical debris.
The framers of the legislation themselves seem to have had some doubt as to federal jurisdiction. That doubt is reflected in the definition of Digital News Intermediary that provides:
digital news intermediary means an online communications platform, including a search engine or social media service, that is subject to the legislative authority of Parliament and that makes news content produced by news outlets available to persons in Canada. (underlining added)
The reference to the legislative authority of Parliament is unnecessary unless the drafters are acknowledging that there may be online platforms that facilitate access to news that are not subject to the authority of Parliament. The bill provides no hint as to which characteristics might distinguish a platform subject to the legislative authority of Parliament from one that not subject to Parliament’s legislative competence.
Given the uncertainty of the constitutional status, the government would be well advised to refer the whole matter by reference to the Supreme Court of Canada, prior to promulgation, to clarify whether it has the necessary power to enact this bill.
Photo of Heritage Minister Pablo Rodriguez.
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