Why Canada needs an urgent competition upgrade


Remarks by Matthew Boswell, Commissioner of Competition

Annual Conference of the Canadian Chapter of the International Institute of Communications (IIC Canada)

Ottawa, ON

May 16, 2023

(As prepared for delivery)

Good afternoon.

Before I get started with my remarks, I acknowledge this splendid venue, the National Arts Centre, is built on the traditional unceded territory of the Algonquin Anishinaabeg People. I’m humbled to be speaking to you from these territories. And I’m pleased we can all be here today at this important gathering place.

I also want to thank the International Institute of Communications’ Canadian Chapter for the invitation. The organizers have put together a terrific program. As a result, this event is once again putting Canadian communications issues at the forefront of public policy discussions.

Just as important, you’re reframing the way people think about communications in Canada. No longer a niche topic about telecom and broadcasting, communications are ubiquitous now.

It’s in the DNA of how we live, what we do, how we grow our economy and where we go as a country.

You see its impact on the digital economy. On how businesses and governments think about the communications sector. This conference’s dynamic program is proof. You’re talking about privacy, artificial intelligence, the risks of online harm and cybersecurity. And competition.

Yes, competition is not a new topic at these events, but things are different this year. Competition issues are grabbing headlines across the country. The Government of Canada has launched a comprehensive review of Canada’s competition laws. And we’re seeing a vigorous public debate about the importance of competition policy in the modern world.

Competition seems to be having its moment in the sun in Canada. Finally!

Today, we’re all thinking deeply about the kind of marketplace we want for ourselves and for generations to come.

How can we make it fair, accessible, equitable and prosperous for all?

We’re asking those important questions as we modernize Canada’s competition infrastructure. Because we all see this moment as one where we can—and we must—recalibrate the role of competition in our economy.

To put it in plainer terms, Canada has an urgent need for a nationwide competition upgrade.

So what does that entail? I’ll use my time here today—from my vantage point as Commissioner of Competition—to talk about the opportunities and the challenges of making that big upgrade.

Role in telecom

The best place to start talking about that is by looking at the role of competition in our telecom markets.

We need more there. We all know this.

When Canadians are polled on it, they say resoundingly that the lack of competition in the telecom sector is really troubling for them. It’s no surprise. They get a monthly reminder when the bill comes in for the telecom services they pay for. It’s consistently higher here than in other countries.

They get another reminder, of course, when they look at the news headlines, particularly on the changing ownership of telecom in Canada.

Plenty has been said about the Competition Bureau’s challenge of the Rogers/Shaw merger. I will be blunt: it was a tough loss for us.

While it didn’t go our way, I fully stand by our decision to challenge that merger. And I couldn’t be prouder of our team of investigators and litigators.

We put forward a responsible, evidence-based case. That is our job. We carefully scrutinized all the evidence, knowing the differing incentives of all parties.

We fought the right fight for the right reasons and on the right principles.

But hard work on either side never secures an outcome. We respect the decisions of the Tribunal and of the courts.

Sure, we were disappointed. But our resolve now is even stronger to continue to vigorously protect and promote competition for Canadians in telecom markets.

On that note, as many of you know, we are participating in the CRTC’s ongoing review of its approach to internet services competition in Canada.

Urgency and agency of greater competition

There’s another reason why competition policy is increasingly at the forefront of our national conversation. Digital giants dominate today’s global economy. They’ve got unprecedented economic power here and elsewhere.

That fact raises important questions about their role as gatekeepers in Canada and around the globe. And about whether our existing competition laws can hold them accountable for any anti-competitive conduct.

Now add inflation to the mix, and you can see how competition policy has gone from being a podium topic to a kitchen table issue across this country. And almost overnight.

Now, people are asking: do we have enough competition in Canada? Are we treating this issue as seriously as we should? And do we want more of what we’ve been experiencing? Or do we want something…better?

Of course, competition is about more than just lowering prices and ensuring fair play among businesses—even the big ones. It makes our economy better and stronger. It unlocks innovation and productivity. It’s how we maintain a high standard of living—not just ours but that of our children and grandchildren, too. That’s not just rhetoric: we must not underestimate the impact that our policy choices today will have on the future Canadian economy.

Competition policy today affects macroeconomic outcomes tomorrow. It affects household incomes. It is the causal link to prosperity.

Given these facts, are we really doing enough to promote competition as an engine of growth? That’s what people are asking now.

A report published a few months ago by three economists at the Centre for Productivity and Prosperity at HEC Montreal defines the challenges we face as a country. Their report is called “Canada’s Lagging Productivity: Could the Problem Be Insufficient Competition?

As one of the most comprehensive reviews of competition in Canada in the last decade, it reviews the history, perceptions, data and research on competition and productivity in our country.

They find that we’re falling behind. Our living standards are declining relative to our peers. And the situation will continue to get worse over the long-term unless we do something to boost productivity. Their prescription: “put competition back at the heart of Canada’s economic strategy”.

The takeaway message is harsh but clear. Unless we get really serious, really fast about competition, we’re going to be relatively poorer as a country.

But with urgency, there is agency.

The report’s authors say what’s needed is a nation-wide effort to boost competitive intensity. Do that by easing regulatory barriers to competition, investment and internal trade. And by giving greater priority to consumer interests in our competition policies.

As Commissioner of Competition, I say the evidence is clear. We must embrace competition as a central pillar of our economic strategy. That report is our latest wake-up call. Ignore it at our peril.

Taking these necessary steps are part of a longer journey. It will not happen overnight.

And it only happens if we continue to win hearts and minds in making that big upgrade to competition policy that I talked about earlier.

A nationwide competition upgrade means making allies among Canada’s leading public policy thinkers.

As I see things, there are three steps we must take to successfully address Canada’s competition challenges.

First, we must have a well-resourced competition agency, equipped with the right skills and the right tools.

Second, we must strengthen Canada’s competition laws in both digital and traditional markets. That means a comprehensive reform of Canada’s competition laws.

And third, we must tackle a wide scope of regulatory barriers through a nationwide, whole-of-government effort.

So far, the Government of Canada has taken two important steps to get us to where we need to be.

Let’s talk more about those successes. And about what we must do next.

A competition agency for the digital age

On the first point, the Competition Bureau is now better equipped for the digital age. In 2021, the government increased our budget by $96 million over the next five years, and $27.5 million ongoing thereafter. We’re investing these funds wisely to build an organization equipped for the complexity and challenges of the digital economy.

One of the pillars of our growth plan is the creation of the Digital Enforcement and Intelligence Branch. It’s powering our modern approach to competition law enforcement. Leveraging emerging technology and tools as well as behavioural insights, the new Branch acts as an early-warning system for competition problems.

I’m pleased to say that since the launch in 2021, our new Branch now has 20 people and it will keep growing significantly. That includes a data and analytics team, design thinking practitioners, technology analysts, behavioural economists and intelligence analysts.

The speed and disruptive nature of recent developments in AI in both our economy and the way we work have amplified the need keep building these skills.

Now let’s talk about that second step…

Modernizing the Competition Act

The Government of Canada last year introduced initial improvements to Canada’s Competition Act. It quickly followed up by launching a comprehensive consultation on Canada’s competition framework.

The Bureau participated in this consultation and our submission made more than fifty recommendations to modernize our laws.

Contrary to some reactions we’ve heard: these recommendations are NOT radical.

For instance, we’ve pointed out how there are some potholes in the Competition Act that are figuratively bigger than those seen on Ottawa’s streets every spring. We must fix those. And to continue the analogy, we also must distinguish potholes from the unnecessary speed bumps that keep hampering our ability to hold businesses to account for anti-competitive behaviour.

That's why we’re pleased that the government has a holistic view on ensuring a workable, responsive solution.

Our recommendations are informed by our experience administering and enforcing the Act across all sectors of our economy. In many ways, we’re advocating to harmonize our laws with our peer countries—including our closest partners like the U.S., the U.K. and Australia—where competition is a much more prominent economic policy objective.

Not everyone agrees with our recommendations. And frankly, that’s okay. Some wish for more drastic measures. Others tend to frame even modest competition reform as some kind of scary bogeyman with the aim of striking fear in the hearts of policymakers.

It depends on how you look at the nature of the challenge in front of us. Some would have you believe that competition reform is a zero-sum game between consumers and business. That if you change something, it’s only good for one and not the other. And some say that any modernization of our competition laws would somehow harm investments in Canada.

I don’t buy that thinking at all.

Modern, effective competition laws are good for consumers and businesses. And when we talk about the realm of businesses, I don’t just mean small business owners and entrepreneurs—those who clearly need fair conditions to compete squarely with the big guys.

In fact, everyone wins from having competitive markets. Even those big guys. Every business is a customer, too. Each one relies on competitive supply chains to build and move products and to grow. It’s never a matter of us versus them. Good laws lift all boats. As a result, the same businesses that might be considered as targets of Competition Act investigations can just as easily be complainants in other cases.

The same applies to international investment. What company would ever want to invest here if they thought they’d have to deal with monopolies? Or that they’d have to compete against rivals who are able to engage in unchecked anti-competitive conduct?

Here’s what really matters for business and investment: certainty and predictability. Money goes where it’s most welcomed.

That’s why we need clear laws that meet international best practices. And as the law enforcer in this area, the Bureau fully recognizes the importance of our role in producing guidance that clarifies the bounds of competition law and gives businesses predictability.

That’s what we have always done. And that’s what we will continue to do. Proudly. And effectively.

Building a competition mindset

So that takes me to the third point on the action list of getting Canada on the right track to make that big upgrade on competition. I’ll repeat what I said earlier: we must tackle a wide scope of regulatory barriers to competition through a whole-of-government effort.

So far, we’ve undertaken a comprehensive review of the Competition Act. It’s the foundation of our competition infrastructure in Canada, and the area in most urgent need of attention. But there’s more to do.

In my view, we must look at government-imposed restrictions on competition—those that can’t be addressed via competition enforcement. This is important in Canada, because there are many regulated sectors of our economy where there are barriers to competition. That includes our communications, transportation, banking and agricultural sectors.

So I’m going to be blunt here because I like to think that I am among friends.

Now is the time to look at how all of us in the public sector, at all levels of government–municipal, provincial and federal–can seek to stimulate our economy by addressing restrictions that harm the competitive process. Some of those may be foreign ownership restrictions, inter-provincial trade barriers and supply management issues. Others include barriers to labour mobility and investment. They involve all levels of government.

Restrictions such as these are often introduced to serve another policy objective. And there are often many ways to achieve a policy objective. I believe we need to be asking ourselves: is there a more competition-friendly way to achieve that policy objective?

None of what I just said comes as news to anyone in this room, of course. There’s wide consensus within the business and academic community about the nature and source of this issue. And we’ve all seen the damning economic data that confirms the extent to which these regulatory barriers to competition are holding us back when we should be racing forward.

Between 2010 and 2020, Canada fell from 8th to 23rd on the World Bank’s Ease of Doing business indicator. That’s an annual survey focused on business regulation affecting small and medium enterprises.

And just as troubling, Canada’s regulatory environment is ranked among the least conducive to product market competition, according to the OECD. It’s not a great look for us.

So why am I sharing all these gloomy statistics with you? Because, to borrow an old adage, the problem contains the solution.

Each of those sobering indicators tell us there is a sizeable opportunity to accelerate Canada’s economic growth through smart, pro-competitive regulatory reform.

For example, a study published by the IMF found that Canada could boost GDP by a staggering 4%…just by eliminating our internal trade barriers in goods alone. According to one of the authors of the study, this would boost Canada's economy (and I am quoting here) “by nearly $90 billion per year,” or approximately “$5,000 to $6,000 per household per year.”

Just as tantalizing: they find that lower-income regions would benefit the most.

Other studies estimate benefits of a similar magnitude–again, we are talking about GDP-level gains–from easing foreign investment restrictions and other regulatory barriers to competition.

Being smart is not just a red-tape cutting exercise

Don’t mistake what I’m saying here as advocacy for untrammelled de-regulation. Or of seeing the solution as nothing but a red-tape cutting exercise. This is about being smart in how we regulate. Doing it in a way that facilitates the vital role market forces can play in driving better economic outcomes for all.

So, yes, we must be more deliberate in our choices. Sometimes what’s needed are new pro-competitive policies to stimulate competition in Canada.

Here’s a timeless example: look at telephone-number portability in telecom. By implementing a system around number portability, the CRTC ensured customers were able to keep the same telephone number when changing service providers. That was critical to lowering switching costs for customers. And it allowed for a better playing field: more conducive to competition.

So now let’s apply that same principle to data portability in the digital economy. Let’s empower customers to move their data between service providers and lower the barrier to switching. It’s sensible. And it’s smart.

That’s why the open banking work of Finance is so critical to unlocking competition and innovation in the financial sector. More generally, we fully understand the competitive potential of features of Bill C-27 (the Digital Charter Implementation Act). In its current form, if enacted, it would help give Canadians the freedom to move their information from one organization to another in a secure manner.

Ultimately this is about bringing a competition lens to everything we do. And making it a nationwide, whole-of-government, all levels of government, priority.

I’m not proposing that Canada become some outlier in this endeavour. Our international partners are doing this, and have been for years.

Some of you may be familiar with President Biden’s Executive Order on Promoting Competition in the American Economy, supported by the White House Competition Council. It is making competition a priority across their entire regulatory system. It’s an economic strategy and it’s delivering results.

Likewise, a recent speech by Australia’s Minister responsible for competition and productivity growth showcases—via the Australian experience—the transformative power of competition to drive productivity growth. Much can be learned here from the Australian experience, given the similarities in our two economies.

Their Minister discussed the experience in Australia with its whole-of-government competition policy reforms in the 1990s. These are regarded as the most significant and successful economic reforms in Australia’s history. And it involved efforts and coordination at all levels of government.

It is estimated these reforms—implemented over nearly 15 years—led to a permanent increase of at least 2.5 percent in Australia’s GDP, or around $5000 per household. Among other things, the reforms included a review of over 1,800 laws and regulations. In doing so, they found opportunities to boost competition across numerous sectors of the economy.

There’s plenty to learn from the examples I’ve cited. And that’s what we are going to keep doing. I’m very proud to announce that the Bureau is looking at hosting a Summit in the Fall to explore what a whole-of-government competition agenda could look like. Plus, we will look at how this could contribute to Canada’s long-term economic prosperity. This will be a thought-provoking event, aimed at hearing the evidence and learning from our international counterparts.

To be clear, we see tackling government barriers to competition as a complement to Competition Act reform: not a substitute.

One can’t just wave a magic competition wand at the problem and transform an economy that’s $2.2 trillion in size. In fact, opening up markets to greater competition is self-defeating unless we first do the legwork of having the right rules in place to guard against anti-competitive conduct and mergers that would otherwise erase all the gains. Again, let’s be smart about this.

Keep building a culture of competition

One of my ongoing priorities as Commissioner is to build a culture of competition in Canada. When a competition culture is healthy, everyone—from consumers to businesses to government officials—understands the power and tremendous value of competition. And then everyone works hard to see it thrive in all sectors of the economy.

Culture is defined by the choices we make, based on what we decide matters to us. It changes slowly. But when it does, we all move forward, never backward. And the outcomes of those choices tell the story of who we are.

Recognizing all of this, the task of building a competition culture is a long-term effort. The work needed will continue well past my time as Commissioner.

Our competitive potential is unlimited. The untapped potential to unlock productivity and growth is, in my view, the single greatest area of economic opportunity for our nation.

Thank you for your time today.

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