Canada Needs a Modernized Competition Law

The country is well behind its global peers in taking the reform of competition laws seriously, but this may be about to change.

July 27, 2022
5G
A visitor walks past a 5G poster during the 2019 Mobile World Congress (MWC) in Shanghai, China, 26 June 2019. (REUTERS)

Canada is well behind its global peers in taking the reform of competition laws seriously, but this may be about to change: the most recent federal budget gave notice of a broad consultation on the Competition Act, the cornerstone law that governs the terms of free and fair competition.

The Competition Act protects individuals and businesses from abuse at the hands of powerful economic actors, whether that abuse is in the form of cartel conduct, monopolistic and deceptive practices, or harmful mergers. And harm needs to be thought of broadly — for example, the harms caused when a major telecommunications company in a market with limited competition goes down, such as Canada recently experienced with the Rogers outage in early July.

Sadly, Canada is increasingly an outlier among partners such as the United States, the United Kingdom, the European Union and Australia. These jurisdictions have not only conducted in-depth studies and consultations about the fitness of their competition laws for today’s digital economy but are also now advancing legislative and regulatory actions to bring their laws and enforcement capacity up to speed. Although initially motivated by the rise of a select few firms in digital markets, these studies have allowed these players to re-evaluate the thinking and assumptions guiding competition law in all sectors of their economies.

For its part, Canada’s competition law remains very much a product of the era in which it was enacted in 1985, nearly 40 years ago. Although seeking to achieve multiple purposes, Canada’s competition law favours an outdated view of efficiency. It allows for mergers that harm consumers in exchange for economies of scale seen four decades ago as important for a thinly populated trading nation. As Canada’s economy becomes increasingly digital and less bounded by geography, law rooted in this kind of thinking will be increasingly out of step.

In anticipation of this consultation, CIGI recently hosted a series of talks bringing together speakers with different perspectives on competition, including Canada’s Commissioner of Competition Matthew Boswell, international competition and privacy practitioners, and leading Canadian academics and advocates.

Three points from CIGI’s Competition Policy Series events should be taken to heart in the government’s pending consultation.

First, this conversation must bring in a diverse set of voices beyond the expert legal and economic communities that have dominated the field thus far. Although discussions around competition may seem at first glance complex and esoteric, decisions about competition have outcomes that directly affect Canadians, such as the choice of goods and services available to them, the prices they pay and the wages they take home. Indeed, as Matthew Boswell has noted, competition benefits all citizens. While there is certainly a role for expert opinion, the government’s consultation on the Competition Act is an opportunity for policy makers to hear from individuals and businesses from all areas of the economy about both the benefits of competition and the harms caused by anti-competitive conduct.

Second, competition law should be seen as one lever in a more holistic approach to the policy challenges brought about by digital markets, rather than as a domain isolated from other policy areas. We must recognize that factors such as privacy are intertwined with competition, so the law can and should incorporate such factors into its analysis.

The government’s consultation should reflect this reality and investigate opportunities for increased collaboration and coordination among seemingly disparate regulators, both domestically and abroad.

Finally, although our own legal and economic context is unique, there is much we can learn from the challenges faced, and addressed, by our peer nations. Jurisdictions such as the European Union have recognized and moved to address issues similar to those we encounter in Canada, including lengthy competition cases that delay resolution of competitive harms, and uncertainty around the effectiveness of the tools used to address those harms. By building on these lessons, Canada can make up for lost time and more rapidly create an effective set of laws suited to our current context, while still incorporating what our global peers have learned.

In its most recent Budget Implementation Act, Canada’s federal government took important, targeted steps in addressing long-standing gaps in the country’s competition law, including the ability of employers to agree to fix the wages of employees, and anemic fines for monopolistic and deceptive conduct. The coming consultation is an occasion Canada can use to lay a strong foundation for bold and more far-reaching reform of its competition law.

But to best use that moment, it must give all citizens an opportunity to contribute their perspectives on an issue that affects them daily.

This article first appeared on iPolitics.

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.

About the Authors

Keldon Bester is a CIGI fellow and an independent consultant and researcher studying issues of competition and monopoly power in Canada.

Robert (Bob) Fay is the managing director of digital economy at CIGI. The research under his direction assesses and provides policy recommendations for the complex global governance issues arising from digital technologies.