Seizing the Moment to Build a More Competitive Canada
Remarks from Matthew Boswell, Commissioner of Competition
Canadian Bar Association Competition Law Fall Conference
October 20, 2022
(As prepared for delivery)
Hello everyone and thank you for attending the Fall Competition Law Conference here in Canada’s capital. We’ve been to some great virtual conferences over the past two years, but it really is great to be back at the CBA in person. I’m looking forward to connecting with many of you over the next two days.
Before I begin my remarks, I want to acknowledge that the historic Chateau Laurier is built on the traditional unceded territory of the Algonquin Anishnaabeg (Ah-nish-in-a-bek) People. I’m humbled to be speaking to you from these territories, and I’m grateful to the First Nations for their care and teachings about our earth and our relations. May we honour those teachings.
We are gathering here at an important time for competition – a moment of significant opportunity and collaboration that we must seize. More and more Canadians from all corners are recognizing the important role of competition and speaking up for more competition. I want to talk about some of the priorities that I am laser focused on right now, day in and day out to make sure competition is working for all Canadians.
Protecting competition for Canadians
We’ve been hard at work, using all of our enforcement tools, to protect competition for Canadians, because we can’t afford complacency right now. Competition is increasingly recognized as a household issue, and there is a major international shift happening toward stronger antitrust enforcement.
We must act now to create the right circumstances for competition in Canada, because a competitive marketplace is key to building a stronger economy that works for all Canadians.
This is why we are continuing to build our investigation and litigation capacity to take timely and evidence-based enforcement action - including injunctions - in both traditional and digital marketplaces.
We’re asking ourselves, “what is the risk of not taking action” more often than we did in the past.
We are focused on making sure markets that matter to Canadians don’t become even more concentrated through problematic mergers, where we’ve seen an unprecedented amount of litigation.
There are three active merger cases before the Competition Tribunal right now, with five applications challenging mergers filed in the last three years. This includes the Rogers-Shaw application, where a hearing is pending.
Against this backdrop, we have seen parties who choose to close deals in the face of our significant competition concerns with no suitable remedy. In these cases, merging firms can expect that we are ready, willing and have the litigation capacity to prioritize protecting the public interest in competition by bringing a responsible case to the Tribunal.
We’ve also put forward many consent agreements, where litigation was not required and cases were resolved expeditiously, because litigation is not the only resolution.
Amendments to the Competition Act
And, of course, this past year, the Government took important steps toward modernizing our competition laws and policies.
When I spoke at this same conference last year, I offered my perspective on why Canada needs a comprehensive review of the Competition Act. Since then, Minister Champagne has spearheaded a renewed focus on competition in Canada. Important initial amendments to the Competition Act became law in June, and the government will be launching a thorough review.
These initial amendments to the Act are an important steppingstone to modernize and strengthen our ability to protect Canadians from anticompetitive conduct.
Among others, these amendments:
- criminalize wage-fixing and no-poach agreements.
- increase maximum fines and administrative monetary penalties.
- clarify that incomplete price disclosure is a false or misleading representation.
- expand the definition of anticompetitive conduct; and
- allow private access to the Competition Tribunal to remedy an abuse of dominance.
We know from engaging with our stakeholders that Canadians want good guidance, clarity and predictability. To that end, we plan to update our drip pricing guidance, publish new stand-alone guidance on no-poach and wage-fixing agreements, and significantly revise our Abuse of Dominance guidance. We will undertake this work because we know that these issues are top-of-mind for Canadian businesses who want to comply with the law.
Competition and the cost of living
Another thing on everyone’s minds these days is inflation. We’re witnessing the largest price increases we’ve seen in decades, and that’s really worrying for Canadians. For many, it underscores the importance of competition to keep prices in check in key sectors of the economy. Of course, competition enforcement is not a silver bullet, but it does have an important role to play.
We’re operating with a heightened sense of vigilance and working closely with our domestic and international partners to detect and root out anti-competitive conduct that risks making the current situation worse.
An inflationary environment can provide more cover for anti-competitive conduct. So, we need to be on guard, detecting new ways that firms might collude, price signal, mislead consumers or harm the competitive process.
We also know that market power can be exercised in a variety of ways other than through price. An example of this is “shrinkflation.” Things like packaging in smaller volumes and other discrete reductions in value or quality can be more difficult to detect and measure. But they matter for consumers. If aggressive efforts to bring inflation under control prove fruitful, perhaps at the expense of economic growth, policymakers may shift their focus to generating economic growth. It is important to remember that policy measures to increase competitive intensity also have the added bonus of driving productivity gains. Simply put, more robust competition policy is a double-duty solution -- it helps lower inflationary pressures while driving productivity.
Looking forward: Seizing the moment
So, it really is an exciting time for competition policy. We’ve done a lot in the last year, and there is a renewed vigour and attention to the state of competition in Canada and the need to reform our laws. As I mentioned, the government will be launching a broad consultation that will debate some tough issues. I view this process as a critical steppingstone to building a stronger Canadian economy.
The Bureau will be part of the consultation, and we will reiterate and expand on recommendations from our submission to Senator Wetston’s consultation, not taken up by the Budget Implementation Act.
Our perspective on the law is informed by our work to enforce the law and protect the public interest, and there are many areas where we plan on contributing our views. For today, I want to focus on three broad areas that we see as priorities for reform.
First is merger reform. I think many would agree that this is the most important area of debate and reform. Our laws should not act as a barrier to stopping anti-competitive mergers.
Current provisions enable high levels of economic concentration – even monopolies – in the Canadian economy. This is out-of-step with what other comparable countries are doing. Our substantive merger tests, including the efficiencies defence, have not changed since 1986.
We’ve made procedural changes to extend statutory waiting periods and strengthen the Bureau’s information-gathering powers, hoping that more time and information would lead to better enforcement outcomes, leaving substantive tests intact.
Those changes do not address the shortcomings and outcomes not in the public interest resulting from of our current law as interpreted by the Competition Tribunal and the courts.
Our laws allow mergers to monopolies in wholly domestic markets when the objective of merger laws is to prevent an enhancement of market power to the detriment of Canadian businesses and consumers. Decisions and interpretations under our current framework have also led to increasing complexity, burden and time for all parties involved in a context where speed and certainty are of the essence for both the public interest and merging parties.
We need a framework that:
- stops anti-competitive mergers that harm the public interest as quickly and expeditiously as possible,
- that restores competition to pre-merger levels when they do occur and,
- that allows the vast majority of mergers that do not harm the public interest to proceed as quickly as possible.
Consumers and the economy suffer from under-enforcement and inadequate remedies. And businesses suffer from a complex and unpredictable system.
It’s time that we revisit the substantive tests set out in the Competition Act and ask whether they are serving Canadians.
The second issue is connected to the first but is more general and extends to all areas of our work not just mergers -- and that is: timeliness. Cases just take too long.
That’s partly because of our complex tests and associated case law, but it’s also because of procedural inefficiencies in things like information-gathering, litigation, and access to interim measures.
To be clear, I do not place blame for these inefficiencies on any particular party. And I recognize the Bureau’s role here and we are constantly working internally to find ways to be more nimble and timely in our own investigations.
I view this as an overall systemic failure. And I think it is a pernicious one, because it contributes to a sense of apathy among complainants, consumers and general public. The perception is that not only is our work technocratic and mired in complexity, but it takes forever.
This prevents competition law – an incredibly important tool – from serving Canadians as it should. We need to work together to solve it, or policymakers and stakeholders could look to far more interventionist regulatory solutions. This partly explains the push in some jurisdictions for more prescriptive regulations instead of ex post competition law enforcement.
And the final area I want to highlight is the Bureau’s ability to promote competition in Canada through market studies.
The Act empowers us to be a positive voice for competition in government policymaking. This is important because government policy, at all levels of government, almost always affects how businesses in Canada can compete.
We are mandated to help policymakers come to the best decisions for all Canadians. And we’ve responded strongly to that mandate. During the last 15 years, we’ve provided meaningful, evidence-based advice to governments on: finance, telecommunications, health care, pharmaceuticals, transportation, and regulated professions like lawyers and accountants.
We’ve done meaningful work in this area, and we can still do better, but our ability to do this important work is limited by inadequate powers. Unlike our counterparts in the vast majority of G7 countries, the Bureau does not have formal powers to compel information that is relevant to our competition promotion work.
A lack of relevant information can impair our ability to diagnose competition problems. This, in turn, limits the extent of evidence-based advice that the Bureau can provide to policymakers. For example, unlike our enforcement files, the Bureau often does not do econometric analysis during market studies, because the underlying data is difficult to collect on a voluntary basis.
So, even our best advice today can sometimes be lacking. Saying “more competition is good” is not as powerful as being able to say “Canadians can pay up to 40% less” by adopting a specific policy. And we need that power so that we can provide sound advice to policymakers, who, in turn can develop policies that encourage a more competitive economy.
To conclude, I believe that we’re making important strides in the right direction. The last year has been an important one for the Bureau. Our budget increase, and the policy reforms that have already been enacted will make a big difference to the state of competition in Canada. The Bureau is continuing to invest in our people and in our capacity to enforce the law. We have demonstrated that we are ready, willing and able to litigate, when necessary, and we will continue to do so going forward.
Competition is a key pillar of our economy, and we must take action to ensure that our competition law and policy are fit for purpose in the modern economy. This will pay great dividends for the future prosperity of Canada and Canadians. I ask for your support and engagement as we work to help strengthen Canadian competition laws and policies even further, for the benefit of all Canadians.
Thank you and enjoy the rest of the conference.
Commissioner of Competition
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