On August 24, 2023, the Canadian Radio-television Telecommunications Commission (CRTC) released its plan to implement the Online News Act (the Act). Public consultations will begin in fall 2023.
 
The Act was passed on June 22, 2023, and is expected to come into force on or before December 19, 2023. It establishes a mandatory bargaining regime supervised by the CRTC, whereby eligible news businesses can seek compensation from digital news intermediaries who are making news content available on their platform. For example, a Canadian news outlet could seek compensation from a social media service for links sharing their news stories.
 
A digital news intermediary is a new term in Canadian communications law, and is defined in the Act by three characteristics: (1) being a communications platform (including social media services and search engines); (2) hosting news content by news outlets; and (3) making such news content available to Canadians. News content is broadly defined as content in any format that reports or explains events of public interest. News content is made available if any portion of the news content is reproduced, or access to it is facilitated by any means, for example, through a hyperlink. As a result, the Act captures a broad range of news shared in any way on communications platforms.
 
However, the Act only applies where there is a significant bargaining power imbalance between digital news intermediaries and news businesses. The three inclusive factors that determine a significant bargaining power imbalance are: (1) size; (2) whether the digital news intermediary operator’s market gives it a strategic advantage over news businesses; and (3) prominence in the market. There is currently little guidance on the meaning of these factors. The Canadian Government is expected to publish draft regulations for public consultation specifying the application of the Act and the criteria for being exempted from its scope.
 
To circumvent the mandatory bargaining regime, digital news intermediaries can independently initiate negotiation with Canadian news outlets to compensate them for news in order to seek an exemption order from the CRTC. Exemption orders must be granted in accordance with the public interest factors set out in Section 11 of the Act for each digital intermediary following a public hearing held by the CRTC.
 
If a digital news intermediary does not receive an exemption order from the CRTC, a news outlet can seek a designation as an eligible news outlet and initiate a bargaining process with the operator of the digital news intermediary. Sections 18 to 22 impose a duty on digital news intermediaries to bargain with eligible news businesses in good faith regarding an appropriate compensation amount for the display of news content. If the parties cannot reach an agreement, negotiations will proceed to final offer arbitration. Arbitrators must be selected from a roster established by the CRTC.
 
The CRTC’s newly announced plan to implement the regime set out in the Act includes three phases scheduled between fall 2023 and early 2025.
 
In fall 2023, the CRTC intends to launch a public consultation addressing the following topics:

• How bargaining and arbitration process will work.

• A code of conduct parties will follow to support fair negotiations.

• The eligibility process for news organizations.

• Addressing complaints from eligible news organizations when online platforms act unfairly.

• Data the CRTC should collect to fulfill its mandate under the Act.

In summer 2024, the CRTC intends to publish the framework and code of conduct for bargaining. Additionally, it will consider applications from news organizations for designation as an eligible news business, begin recruiting independent arbitrators for the final offer arbitration regime contemplated in the Act and start information gathering. The CRTC anticipates that mandatory bargaining will begin in late 2024 or early 2025, once eligible news businesses have been designated and arbitrators selected.
 
There are two relevant considerations that can be observed from the CRTC’s plan:

• First, it does not appear that the CRTC intends to designate news outlets as eligible until late 2024 to early 2025. A news outlet must be designated to trigger the bargaining process, and as a result, the bargaining regime likely will not be operative until that time.

• Second, the CRTC’s proposed implementation plan and related timeline does not address exemption orders. It is not clear from this plan whether digital news intermediaries can seek exemption orders prior to late 2024 or early 2025, or when the CRTC will pass regulations related to exemption proceedings. As a result, it may be difficult for digital news intermediaries to sequence when they should begin negotiating compensation agreements with news outlets, if they intend to seek an exemption order. This is an important issue that interveners will no doubt raise in the public consultation scheduled to take place in fall 2023.

We anticipate further consultation and developments related to the Act before it comes into force on December 19, 2023.