Applied Systems, a player in the insurance software industry, finds itself under the scrutinizing gaze of the Canadian Competition Bureau, which has launched an inquiry into alleged “anti-competitive” behavior. Adding to the intrigue, the Federal Court of Canada, on November 14, 2023, issued an order mandating Applied Systems Canada to provide records and written information pertinent to the Competition Bureau’s ongoing investigation.
This inquisition by the Competition Bureau aims to unravel whether the alleged conduct of Applied Systems is casting a shadow over competition within Canada’s insurtech sector. The bureau has also set its sights on determining whether Applied Systems is in violation of the Competition Act’s restrictive trade practices provisions, including the abuse of dominance clause.
The Competition Bureau is quick to emphasize that, as of now, no conclusions have been drawn regarding wrongdoing on the part of Applied Systems. But what exactly does “abuse of dominance” entail, you may ask? It’s a sinister dance wherein a business or a consortium thereof engages in activities that stifle or significantly diminish market competition.
Should Applied Systems be found guilty of abuse of dominance, a range of punitive measures could be meted out, including negotiated settlements, mandates for structural and behavioral changes, prohibitive and prescriptive orders, or administrative penalties amounting to a maximum of CA$10 million for the initial infraction and CA$15 million for subsequent violations.
In response to these ominous developments, Applied Systems has declared its unwavering cooperation with the Competition Bureau’s inquiry. Rich Cohan, Chief Legal Counsel for Applied Systems, asserts that no breaches have been identified and expresses confidence in their compliance with the Competition Act. Cohan avows the commitment of Applied Systems to its mission of delivering innovation for the global insurance value chain and maintaining the protection of millions worldwide.
Applied Systems, headquartered in the United States, serves as a provider of insurance broker software, with a strong presence in the US, Canadian, UK, and Irish markets. Its Canadian arm boasts over 350 employees, placing the company among the top 2% of IT employers in Canada.
Notably, Canada revised its Competition Act in June 2022, expanding its reach and clarifying anti-competitive practices as those intended to exert a predatory, exclusionary, or punitive influence on competitors or competition itself. The move comes as Canada grapples with the increasing consolidation of industries dominated by corporate giants, prompting calls for a comprehensive overhaul of competition law to foster more competitive markets. Matthew Boswell, Commissioner of Competition for the Competition Bureau, has emphasized the need for modernizing competition law in Canada to align with international best practices.
