Supporting competition on the road to economic recovery

Speech

Remarks by Matthew Boswell, Commissioner of Competition
CBA Competition Law Fall Online Symposium
October 21, 2020
(As prepared for delivery)

 

Good afternoon everyone, and thank you to the CBA for inviting me to speak today.

It is a pleasure to be with you all again, even though the circumstances are certainly different than they were a year ago when we gathered in Ottawa.

You may recall that in May of 2019, shortly after I was appointed Commissioner, I spoke at the CBA Competition Law Section’s Spring Forum. During those remarks, I set out a vision for the Bureau, and explained how realizing that vision would be like climbing a metaphorical mountain. I acknowledged then that there would be obstacles and there would be course corrections on the way up that mountain, but I never expected to encounter a sheer rock face in the form of a global pandemic. 

This pandemic has been a major course correction, for sure, but every day my colleagues at the Bureau impress me with their incredible adaptability and commitment to our vision. The Bureau team has kept moving forward during these changing and challenging times and I am so grateful to all of them for their professionalism and determination. And, I am also grateful to all of you in Canada’s competition community for keeping things running as smoothly as possible as we all navigate the challenges of the pandemic. Thank you.

A little under a year ago, I was pleased to see our CRTC intervention advocating for more competition in Canada’s wireless sector discussed in a Globe and Mail editorial. The piece was titled, “Hey Canada, pick up the phone. Competition is calling.” A catchy title to be sure, and I think a good reminder of the challenges and the opportunities in front of us. 

Our challenge is making competition more central to Canada’s economic affairs. And our big opportunity is helping Canada reap the rewards of healthy competition in our economy: a more productive, dynamic and resilient economy that empowers consumers. The pandemic has served to put those challenges and opportunities into even starker relief and today I would like to focus on why it is more important than ever that we answer that metaphorical phone call.

Competition in a time of crisis

Even in times of economic difficulty, the principles of competition ensure that markets operate for the benefit of Canadians. Although recently Canada’s immediate focus has rightfully been on securing the health, safety and economic security of Canadians, competition has an important role to play in Canada’s economic recovery. Competition is critical to keeping products and services that Canadians rely on affordable and accessible during these challenging times.

We know from history that economic crises provide opportunities for some companies to consolidate their market power or for others to engage in anti-competitive activity. This conduct can cause increased prices, reductions in the quality of products and services, or decreased investment in innovation. Such actions can prolong an economic downturn and ultimately hinder an economy’s productivity and competitiveness. While competition law enforcement is responsible for addressing anticompetitive behaviour, strategies that will facilitate entry and competitiveness after this crisis are equally important. Greater competition means higher productivity, and vigorous competition will be even more important in the wake of the pandemic.

Back in the 1930s, in the depths of the Great Depression there was much debate on whether there was too much competition and whether it was making survival too difficult for the dwindling number of businesses that remained. Some argued that Canada should follow America’s example of establishing industry-driven controls and practices. James Ilsley, a Member of Parliament who would go on to be Canada’s Minister of Finance, spoke eloquently against adopting such an approach. Competition isn’t burdensome, he argued, rather “competition is the best protection the public has.” That is, of course, still true today. Canadians need the protection that competitive markets provide when they are at their most vulnerable, when trust, affordability and choice are in highest demand. We are in the middle of an ongoing health and economic crisis, and, as we head into winter, now more than ever, Canadians will need the protection that fair and vigorous competition provides.

Adjusting to challenges

As I mentioned at the outset, this year we have found our path strewn with new and, in some cases, existing challenges that have taken on more importance. As a result, we have had to consider new pathways and novel approaches to our work in order to respond effectively.

So, what are some of those challenges and how are we responding to them in our work?

The first challenge we encountered came into view almost immediately as we all began to see and understand the dramatic impact that COVID was having on the normal functioning of the economy. As a result, the Bureau, like many of our international counterparts, released its COVID-19 competitor collaboration guidance, providing a flexible but principled approach to collaborations necessary to ensure the supply of critical products and services. This guidance was unprecedented and represented a significant departure from our traditional enforcement guidance on competitor collaborations. But it was something we felt was necessary given the circumstances in the marketplace. Our guidance remains in place and we anticipate that it will remain in place until we return to something more closely resembling the pre-COVID “normal”.

Sadly, in the months ahead, it is possible that we will need to be ready for a rise in failing firm merger transactions. In assessing these transactions, we will need to maintain our normal rigour and analytical framework while also being mindful of the need to conduct our work in a timely manner. Relaxing our standards in a crisis period could have long-term implications in key sectors where the irreversible and immediate enhancement of market power through strategic acquisition could lead to deeper and longer-term implications for the economy and its recovery. Rigour and speed need not be at odds. Where the parties to the proposed transaction come in early and provide the evidence, data and information required for the Bureau to do its work quickly, parties may get the certainty they need. We will pay close attention to the need for urgency where companies are in true financial distress without compromising the public interest in competition, which is vital to support short- and long-term economic recovery efforts.

We also know that government procurement, which makes up nearly 15% of Canada’s annual GDP in normal times, will rise to support stimulus measures. It follows then that we will need to heighten vigilance and outreach to detect and deter illegal conduct such as bid-rigging, which can vastly inflate the costs of projects to Canadians.

In order to deter and detect this type of illegal conduct in our economy, the Bureau team:

  • Has developed pre-recorded bid-rigging awareness material that can be delivered virtually;
  • Has proactively reached out to all levels of government in Canada with a view to educate, raise awareness to facilitate detection; and
  • Has provided outreach sessions to the Canadian procurement community throughout the pandemic.

A month before the pandemic began, the Bureau released our “Strategic Vision” for the next four years where we set out our objective of being a “world-leading competition agency, one that is at the forefront of the digital economy […]” in all aspects of our work. The pandemic has caused the already rapidly expanding digital economy to accelerate its expansion even further.  As a result, our reliance on digital firms to communicate, shop, learn, and work has only grown. There is no doubt that we are fortunate to have these digital technologies, which have allowed us to rapidly transition to a new way of living. But, our increased dependence on these digital firms also means that the Bureau needs to double its efforts in all aspects of our work related to the digital economy.

For Canadians to continue to realize the benefits of digital markets, we need to ensure competition in those markets is healthy. That means strong and principled enforcement of our existing laws. As we set out in our Annual Plan, we will continue to focus enforcement efforts on key sectors of our economy, such as digital services and online marketing. The Bureau has already undertaken a number of actions in this area, such as our digital enforcement call out, our recent settlement with Facebook related to false or misleading claims regarding privacy and, in terms of competition promotion, our intervention to the CRTC during their recent wireless proceeding.

We are also constantly challenged with how best to conduct our investigations in the digital economy. To that end, and with a view towards continuous improvement, we are currently hosting our first Digital Enforcement Summit. This four-part Summit Series is bringing together international and domestic enforcement partners to share their experiences in organizational design and methods for pursuing cases in this rapidly changing data-driven and digital environment. We are also focusing our tenure as President of the International Consumer Protection and Enforcement Network on issues of consumer trust in digital markets. And, our Chief Digital Enforcement Officer has developed the Bureau’s Digital Strategy and created our Innovation Garage, where we bring together Bureau staff to consider new approaches and new digital tools for use in all our investigations.

Finally, we also need to ensure that our laws and resources are fit for purpose in the digital and data-driven economy. To that end, we continue to prioritize work with our federal partners to ensure that Canada has a competition law regime that effectively protects and promotes competition in all markets in the digital age.

We have a challenging path ahead, no doubt, but we are also faced with an unprecedented opportunity to build a stronger and more competitive Canada.

Building a stronger, more competitive Canada

Despite the many challenges we are facing, the past eight months have also shown us the value of resilient and adaptive markets across all segments of our economy. Just like the economy itself, a more diverse and diffuse market is a more resilient one. We often talk about the benefits of competition in terms of increased efficiency and productivity, but firms facing more intense competition are often more adaptable to new realities. Indeed, the Competition Act’s purpose clause recognizes the role of competition in promoting the adaptability of the Canadian economy.

Of course, approaches designed to boost Canada’s competitive potential extend well beyond the Bureau’s work and Canada’s competition laws. These approaches to promote and encourage competition can come from any level of government through policies and regulations. To that end, we have developed a toolkit based on the Bureau’s experience and international best practices to help regulators and policy-makers at all levels understand the potential competitive implications of the rules they administer. Beyond assessing existing rules, the toolkit also aims to help policy-makers design regulations that spur rather than hinder competition, while meeting their intended policy objectives. So far, response from the regulatory community has been very positive, and we look forward to seeing the results of the toolkit in action.

As much as life has changed since March, there is still very much a need for assertive enforcement of Canada’s competition laws to protect Canadian consumers and businesses. I also know that there is an even greater opportunity for Canada to reap the rewards of a more competitive and resilient economy in the long term.

The authors of the 2008 Wilson report, Compete to Win, said it well: “Competition matters. It brings dynamism to our economy. It means good jobs for our citizens. It is not merely an economic concept. Being open to competition serves Canada’s national interest.” As Canadians continue to face economic hardship, we must all remember the wise words of James Ilsley that “competition is the best protection the public has”. 

We should also elevate the role of competition in driving the dynamism and responsiveness of our economy, looking for opportunities to promote competition by reducing barriers and encouraging entry to existing and new sectors. For those of you participating in the ongoing conversations on the future of Canada’s economic policy, I encourage you to keep the benefits of competition to all Canadians at the forefront of your thinking.

I look forward to working with all of you to face the challenges and seize the opportunities that the coming months will bring to competition enforcement and promotion.

Thanks, once again, to the CBA for inviting me to speak today.

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