Backgrounder: Study on the Economic Benefits of Pro-Competitive Reforms in Canada

Backgrounder: Study on the Economic Benefits of Pro-Competitive Reforms in CanadaThe Competition Bureau commissioned an independent study to better understand how Canada’s economy could benefit from more competition-friendly regulations.

February 4, 2026 – GATINEAU (Québec), Competition Bureau

The Competition Bureau commissioned an independent study to better understand how Canada’s economy could benefit from more competition-friendly regulations.

The study, conducted by a team of international experts in productivity and regulatory policy, found that pro-competitive reforms in key sectors could grow the economy by as much as 10% over the long-term, boosting living standards by $7,500 per Canadian.

On this page:

• Why this study matters
• What the study looked at
• Key findings
• Pro-competition reforms
• Implications for policy and research
• Footnotes

Why this study matters?

Canada faces persistent productivity challenges. Confronting these challenges is key to building a more affordable, prosperous and resilient economy.

Many experts have suggested that weak competitive intensity and regulatory barriers are partly to blame for Canada’s poor record on productivity. This study helps put a number on the costs of barriers to competition, and the potential benefits of reform.

What the study looked at

The study focused on regulations in sectors that play a key role in the Canadian economy, including:

• Network sectors (energy, transportation, communications)
• Retail distribution (liquor, gasoline, grocery, medicine)
• Professional services (accounting, legal, engineering, and architecture)

These sectors are critical because they provide goods and services used by other industries. When these sectors work better, the rest of the economy benefits.

The authors of the study gathered data on how these sectors have been regulated in Canada and in 14 other Organisation for Economic Co-operation and Development (OECD) countries over a 25-year period, and paired this data with economic performance indicators.^{Footnote 1}

Using an economic model, the researchers estimated the productivity gains that Canada could realize by easing regulatory barriers to competition in these sectors in line with international best practice.

Key findings

Below are some of the key findings of the study:

Canada has fallen behind: While Canada had a relatively pro-competitive regulatory stance in the 1990s, we have not kept pace with our peers. Using the OECD Product market regulation (PMR) indicators, the study found that our regulatory environment ranks among the least competition-friendly in the sectors studied.

There is a big opportunity: The study found that aligning Canada’s regulatory policies with the most competition-friendly country in each sector could increase productivity by 10% over the long term. That would boost Canadian living standards by $7,500 per person. More modest reforms to bring our regulatory competitiveness in line with U.S. levels would generate a smaller but still significant 5% boost in GDP per capita.

These estimates are conservative: The total benefits of pro-competitive reform are likely greater. The study did not account for positive spill-over effects that reforms would have in agriculture, mining, or the public sector, nor did it consider the benefits of liberalizing other barriers to competition where there would be sizable gains such as:

• Barriers to internal trade and labour mobility
• Foreign investment restrictions
• Public procurement restrictions

Pro-competition reforms

Pro-competitive reforms aim to eliminate unnecessary restrictions on competition, while still protecting legitimate regulatory goals like health, safety, security and the environment.

The purpose of this study was to quantify the benefits of such reforms and it does not recommend specific regulatory changes.

The OECD identifies four common ways that regulations can hinder competition. These are presented below along with examples of pro-competitive reforms that policymakers can consider.

1. Limiting the number or range of suppliers: Sometimes regulations restrict who can compete in a market.

Reforms could include:

• Simplifying licensing or permit requirements that create unnecessary hurdles for new businesses or professionals.
• Easing exclusive rights or monopolies that block others from entering a market (e.g. provincial monopolies).

2. Limiting how businesses compete: Sometimes regulations limit the ability of firms to compete on the merits.

Reforms could include:

• Removing pricing or advertising restrictions that prevent businesses or professionals from offering better deals.
• Ensuring rules are competitively neutral so that they do not unnecessarily favour some firms or business models over others (e.g. existing players over new entrants).

3. Reducing the incentive to compete: Sometimes the presence or absence of regulation can reduce pressure to compete.

Reforms could include:

• Reviewing standards in self-regulated professions like suggested fee guides and compensation structures that can limit competition.
• Removing exemptions from competition law that exist in certain regulated sectors (e.g. transportation mergers).
• Restricting the use of non-compete agreements in labour markets that can prevent workers from moving to a competitor or starting their own business.

4. Limiting consumer choice or information: Sometimes competition suffers because consumers cannot effectively compare options or switch providers.

Reforms could include:

• Making it easier for consumers to change suppliers so that firms have to compete to attract and retain business (e.g. through consumer data rights; see our recent study on data portability for more details).
• Improving transparency around pricing and service quality to facilitate comparison shopping.

By tackling these sorts of barriers to competition, where possible, governments can strengthen competition, boost productivity, and deliver better outcomes for Canadians.

Policymakers at all levels of government are encouraged to use the Bureau’s step-by-step guide to help them assess the competition impact of new and existing policies, and tailor those policies to maximize the benefits of competition to the economy.

Implications for policy and research

The study provides evidence that pro-competitive reforms could deliver major economic benefits over the long-term. Seizing this opportunity will require a long-term, coordinated effort within and across levels of government. Other countries have shown that this is doable, and governments across Canada are already making much needed progress. For example, national competition reforms adopted by Australia in the 1990s led to a permanent boost in GDP of 2.5%, which equates to approximately A$5,000 per household today. Australia is currently undertaking another round of such reforms, with anticipated gains of a similar magnitude.

The Bureau encourages researchers and policymakers to build on this research to help chart what a national competition agenda could look like. By working together to encourage greater competition, we can build a more affordable, prosperous and resilient economy.