Watchdog ‘reviewing’ EU Google crackdown

Fined $6.7B over Android restrictions

The federal Competition Bureau says it is “carefully reviewing” the recent rebuke that Google LLC received for violating the European Union’s antitrust rules.

The European Commission announced on July 18 that it had fined Google approximately $6.7 billion over “illegal practices” connected to the company’s Android mobile operating system.

According to the commission, the search giant had “imposed illegal restrictions” on Android device manufacturers, as well as on mobile network operators, since 2011. A release said this was done “to cement (Google’s) dominant position in general internet search.” Alphabet Inc., Google’s parent company, has said it intends to appeal the European Commission’s latest decision.

A Competition Bureau spokesperson told the Financial Post that the Canadian agency, while mindful of the differences between the legal regimes, “continues to monitor firms in the digital economy, including Google, to ensure they do not engage in anti-competitive conduct.”

Ruest, 63, moved into the interim role in March after CN announced the surprise resignation of chief executive Luc Jobin, who had been on the job for less than two years. At the time, the railway was facing an onslaught of criticism from customers and government officials over operational challenges caused by increased demand and what the company called “insufficient network resiliency, coupled with severe weather conditions.”

One of Ruest’s first moves in March was to issue a formal apology to customers “for not meeting expectations of our grain customers, nor our own high standards.” Since then, the company has embarked on a record capital spending program to deal with increased demand and strained capacity, focusing on expanding rail infrastructure in Western Canada. On Tuesday, the company said it has increased its capital spending program by another $100 million, bringing the total to $3.5 billion.

In a statement, CN’s board chairman Robert Pace credited Ruest’s leadership for bringing the company together to quickly tackle services challenges that first arose in the fall of 2017.

“In JJ, we have the best. He brings vision, energy, and speed to the role,” Pace said in a statement.

“Following a global search, the board concluded that JJ is the right leader to accelerate CN’s innovation strategy, to lead the company forward, and to restore and retain industry-leading metrics and best-in-class customer service.”

RBC Capital Markets analyst Walter Spracklin said in a note that the appointment of Ruest — who has been with CN for 22 years, including eight years as chief marketing officer — was “favourable” as it brings continuity to the executive team.

“We continue to have a favourable investment thesis on the CN shares and we expect the company will continue to improve its service, clear the backlog and realign costs in 2018,” Spracklin wrote.

CN’s operating ratio — a measure of railway efficiency that calculates operating costs as a percentage of revenues — increased from 57.5 per cent to 58.2 per cent, which the company said was the leading figure in the industry.

CN’s adjusted net income increased by 11 per cent to $1.1 billion, or $1.51 adjusted diluted earnings per share, as compared to $1 billion, or $1.34 adjusted diluted earnings per share, during the same time last year.

Revenues also increased by nine per cent to $3.6 billion, with shipment revenues increasing across nearly all categories, including coal, metals and minerals, petroleum, chemicals, grain and fertilizers.

CN Rail and smaller rival Canadian Pacific Railway have been investing in rail infrastructure to ease capacity constraints following a surge in demand from producers of grains and other commodities. Even oil producers are increasingly using railways to ship crude as production has exceeded pipeline capacity.

CN shares were mostly unchanged Tuesday at $112, down 0.5 per cent.