🍀 seven reasons

Canada’s #1 competition problem


Canada’s real competition problem is capacity.

Competition policy is an important instrument that can be used to regulate behaviour between businesses and create beneficial outcomes for the economy and society,  including: greater economic efficiency and innovation, more product variety for consumers and better prices, the ability for entrepreneurs to start businesses and bring new products to market and overall economic fairness. It’s hot shit. 🔥

💬 You can read the text from this speech here.

Yet it remains notably absent from Canada’s technology tool kit. As the country’s digital policy agenda has taken shape, it has included many other approaches: a digital sales tax, debating whether technology platforms should pay for news, new privacy and consumer protection legislation, updating the Broadcasting Act, and consulting on a proposed approach to Online Harms

The OECD has advised that, “competition policy and competition authorities have a very relevant role to play to ensure a robust economic bounce-back and recovery in the long-term.” Competition policy could have been a sleeper hit in the last election because it is a  pocketbook issue jackpot and President Biden’s recent Executive Order should have been a wake up call

The Competition Policy Review Panel’s 2008 report “Compete to Win,” chided the country, proclaiming that we lacked a “competitive mindset.” I would venture that Canada is anti-competitive because we fundamentally lack the capacity to improve our competitiveness. This lack of capacity is the primary barrier to better competition discourse and outcomes, and I believe there are seven key failings that will prevent a basic review of the Competition Act from showing up in a new mandate letter. 

For one, our Commissioner of Competition (Matthew Boswell) lacks the intellectual  independence to speak freely on matters of competition, as the Bureau is nested under the Ministry of Innovation, Science and Economic Development (ISED). When compared to his international peers, people may interpret his quieter voice as indicating that we do not have policy challenges or opportunities when it comes to competition in Canada. This may not be the case, and it’s why we should “Free Boswell” - Parliament should move the Competition Bureau out of  ISED in order to reduce the perception of political interference and give the Commissioner more voice and autonomy

Secondly, alongside our muzzled Commissioner, there is a basic literacy gap that is a barrier to entry into the conversation. Few people truly understand how our legislation works, and there are many misconceptions. This has led to a concentration of competition conversations that are sector-specific,  such as in telecommunications. This lack of  familiarity with the Act was evident in some of the platform proposals discussed in the recent federal election. Though embarrassing, this problem is solvable through novel learning interventions like a bootcamp or crash course. Lets do it.

It is imperative that more people are invited into conversations about competition. If competition policy remains the sole domain of economists and lawyers, the public conversation will remain limited at best and captured by private players at worst. 

Third, public policy and public administration programs are graduating too many young people who have never been exposed to the basic mechanics of competition policy. This is an oversight that can be similarly corrected. The Competition Act is a core piece of legislation that shapes the business behaviours that facilitate the innovation economy and it should be familiar to policy practitioners. 

State of Competition in Canada

Fourth, alongside a disempowered Commissioner and a general lack of literacy among both the public and some policymakers, there is a general dearth of scholarship on competition issues in Canada compared to other jurisdictions. This further inhibits public discourse and contributes to the perception that there are no competition issues worthy of our collective interrogation. Many of the current leading scholars on the subject are retiring, and it is not clear who the next generation of scholars will be - or how many. 

🤓 Apologies to Rob Clark (Queen’s) and Jeffrey Church (Calgary).


Fifth
, existing competition expertise has been privatized, migrating from the independent ivory tower to potentially conflicted consultancies like Charles River Associates, Brattle Group, and Analysis Group

Sixth, in addition to a general lack of education and modest scholarship on competition, Canada lacks strong, effective consumer advocacy groups, leaving everyday people voiceless and disoriented. The Public Interest Advocacy Centre (PIAC) has not stood up for a basic review of the Competition Act. The Confederation of Independent Business (CFIB) has similarly been silent on the challenges entrepreneurs and independent businesses face when competing with corporate monopolies to policymakers - like the US-based initiative Access to Markets is working to do. In contrast, volunteer-led Not Amazon has single-handedly built a constituency of consumers who favour small, independent businesses–though their narrative is anchored around rejecting Amazon and not modernizing competition policy (which is totally cool!).  You could argue that the Competition Bureau’s recent Request for Information on the Rogers-Shaw merger was the result of (albeit uncoordinated) public pressure. Consumers have policy power, but it is being squandered and lacks coherence.

Seventh, unions in Canada are failing to advocate at the intersection of labour and competition. This means that progressive voices are also absent. Further, though the NDP championed, “making life more affordable for everyday people” and “building an economy that works better for more people,” in their recent platform, they did not connect those aspirations to competition policy reform. 

Share regs to riches

Our lack of capacity dampens our collective curiosity. This means that policymakers don’t consider questions like whether Shopify’s App Store may be anticompetitive, how to think about anti-competitive behaviours from digital infrastructure layers, or whether alternative lending programs for entrepreneurs limit their mobility.   

The digital environment is characterized by new and sometimes counterintuitive competition issues.

For instance, in the US, the FTC put hundreds of businesses on notice about fake reviews and other misleading endorsements. Researchers are puzzled over the surprising result that more market entrants in the delivery app space actually raises the commission fee. A recent investigation by The Markup found that Amazon places products from its house brands and brands that are exclusive to the site ahead of those from competitors—even competitors with higher customer ratings and more sales. While the activity of self-preferencing could be interpreted as an abuse of dominance, Canada’s competition regime is currently silent on this behaviour common to digital platforms (but also brick and mortar environments), not considering the market dynamics of delivery commissions, and not taking on fake reviews.  

While our ability to engage in a meaningful competition conversation is constrained by a lack of capacity across government, academia, and consumer groups, there is still a suite of policy interventions and opportunities that may not fall directly under the Act, but have real and robust pro-competitive effects.  

  • ISED has recently held consultations on the Copyright Act. There is enthusiasm for the “Right to Repair” in Canada, and this should be considered part of any dialogue on competition reform. 

  • The Bureau could better protect and incentivize antitrust whistleblowers through creating a reward or bounty system (as has been called for by US Senator Amy Klobuchar) for individuals who expose anti-competitive conduct or turn in cartels. Soliciting more input and feedback from everyday people will be productive. 

  • The Bureau could work toward open meetings for merger reviews, potentially engaging more Canadians in the activities of the Bureau.

But at the Federal level, courageous ideas won’t matter if we refuse a basic - and long overdue - review of the Competition Act. The country is suffering from not just a lack of political leadership but of a profound lack of imagination. Canada needs to consider the power and potential of applying a competition policy lens to the economic recovery. A Finance Minister and Deputy Prime Minister with a professional background as a business journalist is an ideal champion for the file. Policy inertia isn’t doing anyone but dominant incumbents any favours.

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*The Bureau is gearing up to address competition in digital markets w/ a new Digital Enforcement and Intelligence Branch - a centre of expertise on technology and data...to act as an early-warning system for potential competition issues in the digital and traditional economies.


👩‍🎤 I’ll be moderating a panel on workplace surveillance that’s coming up in November. Here is a PPF podcast that I hosted on the subject earlier this year, and here is an oped in the National Post. Join us!

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Vass Bednar is the Executive Director of McMaster University’s new Master of Public Policy in Digital Society Program and a Public Policy Forum Fellow.