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🇨🇦 Competitiveness in Canada
Standing Committee on Industry, Science and Technology (INDU)
💼 Earlier today I offered a five-minute testimony to the Standing Committee on Industry, Science and Technology during their meeting on Competitiveness in Canada.
I share them below for reference.
*Another reference, a May 2020 brief: Turning the tide: the role of competitive markets in Canada’s economic recovery.
My name is Vass Bednar and I am the Executive Director of McMaster University’s new Master of Public Policy in Digital Society Program.
As I am the co-author of a forthcoming white paper on “the State of Competition Policy in Canada,” I will focus my remarks on the potential for reform of the Competition Act, particularly as it relates to the digital economy. I will also circulate the paper to members of the Committee when it is published in the coming days.
When I started researching competition policy in Canada I was struck by the lack of scholarship on the subject. Most publications come either directly from government officials or private sector actors, and there is not a whole lot of material that sits in a neutral middle space. I’d like to see more of that.
I also observe a striking amount of capture in the sector. I’m not sure how that contributes to any inertia, but I sense that the Canadian public is increasingly impatient with the legislation’s facilitation and maintenance of oligopolies in our economy. If we want to give our own companies a chance to compete, and protect consumers from new forms of online harm, we should proceed with a review of the Competition Act.
It has been said that Canada “does not treat competition policy seriously,” and tolerates high corporate concentration in an effort to be competitive internationally. In fact, former Competition Commissioner John Pecman has lamented that the Bureau lacks the kind of independence that could make it more effective.
To my mind, what it comes down to is that there are structural limitations in our legislation that hinder our ability to curb anti-competitive practices, especially for today’s digital economy, this puts us at a disadvantage compared to other countries.
One quick example is the seemingly arbitrary threshold for a merger review which leads the Bureau to potentially overlook anticompetitive mergers. Another example is fines. The current commissioner Matthew Boswell, has acknowledged that, “the maximum penalties for anti-competitive behaviour … lack the teeth necessary to deter anti-competitive behaviour.”
There is also the question of whether Canada should even make an effort to emulate either the US or the EU. We are likely to benefit from the historic antitrust investigations into global tech firms just due to natural spillover effects.
But other authorities will not scrutinize troubling digital competition issues in our own backyard.
It is important to me that we act as anticipatory regulators that can spot harms on the horizon and act accordingly.
Consider a company that admitted to fixing the price of bread, and may have been colluding on wages with other grocers - Loblaw. Now look at how their deepening across finance (PC Financial), health (Shopper’s Drug Mart, PC Health App, powered by League), insurance, and the grocery spaces provides a novel case study of market power that can be achieved through detailed targeted ads and reduced privacy as they refine their proprietary advertising platform, Loblaw Media; emulating a playbook refined by Facebook and Amazon. While this may impact competition, it can also harm consumers by constraining their ability to access everyday essentials at a cheaper price as Loblaw grows their market share.
Right now, Canadian competition policy is silent on such Orwellian activities, because the legislation and current guidelines do not adequately comprehend or even consider whether and how data creates a competitive advantage. Yet issues on data collection and processing are at the centre of current antitrust cases all around the world.
Put simply: Canada’s Competition Bureau does not have the toolkit for a digital economy.
As part of any modernization, it will be critical for Canada’s competition authority to redefine “dominance” via volume and maybe even richness of data, and also understand the competitive harms that can flow from dominant firms that hold large volumes of information.
Maybe the most important lesson Canadian policymakers can learn from the US’ recent work investigating past activity from Facebook, Amazon, and Google and also by China’s efforts against Alibaba is that it is difficult and may seem disingenuous to retroactively change the policy environment in order to rationalize investigations against massive digital companies.
Canada’s competition policy no longer serves our best interests and digital markets are fundamentally different from traditional ones.
This alone warrants modernizing the Act, alongside more robust privacy legislation in order to manage these abuses and promote dynamism.
Otherwise, companies that pump up prices on bread for single moms can continue to trade on their personal information. Time for legislation to catch up.
*On “capture,” shouldn’t we get a list of McMillan LLP’s competition clients when thought leadership like this is offered?
Vass Bednar is the Executive Director of McMaster University’s new Master of Public Policy in Digital Society Program.