🪄 this one simple trick
Discover more from regs to riches
🪄 this one simple trick
will jumpstart the economy
In the wake of the September election, many have mused as to whether the $600M+ campaign was “worth it.” For some, the striking similarity in terms of seat count has serious “I dream of Jeannie vibes” - blink and our protagonist is in a new outfit while the set and supporting characters remain largely the same.
Given that the structure of power in this new Parliament is virtually indistinguishable from the one prior, it’s reasonable to assume that the policy priorities are identical. But the election provided each party a brief opportunity to pitch different approaches to regulating the innovation economy. Voters were showered with a confetti of competing ideas relevant to antitrust. Our new government should pick up some good ones.
While no one party made an explicit promise to comprehensively review the infrastructure of competition in Canada, each party made nods to the file in their own way. Two highly regulated sectors - telecommunications and banking - seemed to be the most popular entry point to discuss the complexities of competition.
The Liberal platform acknowledged the increasing power asymmetry in the economy, noting that, “Main Street businesses were locked down for months, while big chains reaped record profits.” They also signalled that they will move forward on legislation that will “provide a clear set of rules that ensure fair competition in the online marketplace,” and I am hopeful that such legislation can remain a priority. Their proposed digital policy task force is another vehicle to discuss competition policy reform in support of Canada’s leadership in a digital economy. The characteristics of digital markets should be front and center for this work.
In contrast to the gestures offered by the Liberals, the Conservatives were more precise; promising to lower prices by increasing competition and proclaiming that they will “stand up to corporate Canada and reject mergers that substantially reduce competition and lead to layoffs and higher prices.” They also suggested creating a technology task force within the Competition Bureau to examine whether dominance and anti-competitive behaviour of big tech is damaging to Canadian industry. While examining how algorithms and data give big tech an advantage over Canadian business is an important area of research, decision-makers should be cautious about invoking “Big Tech” as a catalyst for competition research. The simple fact is that there are new business behaviours in our digital economy and we need to make sure that the rules keep up to reflect them.
The NDP missed a massive opportunity to call out Canada’s competition law failures, but captured the power of competition narratively: “making life more affordable for everyday people” and “building an economy that works better for more people,” without drilling down into specifics. No doubt these dual aspirations are held by other political parties.
While these proposed interventions were fragmented, they were also encouraging as they indicate a growing - albeit incremental - consensus of the importance of competition policy in Canada. They also productively highlighted basic literacy gaps held by both political parties and the electorate, but these can be effectively filled by educators.
Pending better briefing on the mechanics of competition policy, we cannot achieve the goal of building back better without addressing the outdated legislative infrastructure - the Competition Act. If we fail to take on the task of modernizing the Competition Act, we will subsequently fail on several related policy objectives. For instance, pharmacare is fundamentally a competition issue; it forces legislators to negotiate drug pricing, supply, and patents with pharmaceutical firms.
We also need to significantly expand the competition conversation to consider labour markets and workers, as suggested in a recent report from the CCPA and comprehensively chronicled in Eric Posner’s new book, “How Antitrust Failed Workers.”
Deeply interrogating market dynamics in a digital economy will also be critical. FTC Chair Lina Khan’s recent memo mentions “dominant intermediaries,” which our current legislation does not explicitly contemplate as a risk. Yet digital intermediaries are increasing the prices of real estate transactions. They are also manipulating shipping prices; Christopher Mim’s new book “Arriving Today,” notes that, “a number of shipping platforms allow shippers to see what rates their competitors are paying, which leads to a form of “monopsony” in which the buyers of truckers’ services hold the balance of power and truckers have none.” The EU is considering the opportunities and challenges that self-employed people face in providing services through online platforms. The lessons they derive will be applicable here, too.
Competition reform is no silver bullet, but rather more of a…trampoline. It can recalibrate the economy, making everyday essentials more affordable, empowering workers, and giving entrepreneurs and small business owners a fair shot. It should be championed by politicians of all stripes.
Looking ahead, it will be difficult to parse the implications of a deficit competition regime from inflation pressures that will increase the prices of all kinds of products. While shoppers may notice wild weekly fluctuations in the price of toilet paper, their minds may not leap to the need for stronger competition enforcement, stricter merger control, or the prospect of a dedicated technology regulator. Articulating the relationships between competition policy and the consumer experience is important foundational work and Canada needs a chorus of perspectives on these issues that reaches beyond Bay Street.
Alongside more voices and better research, the competition file desperately needs a distinct political champion who is unafraid to navigate corporate Canada in relentless pursuit of a level playing field in the digital economy. That said, competition policy cannot be transformed in the blink of an eye.
I dream not of Jeannie, but of a public figure ready to cross their arms and tackle digital competition head on.
📻 I spoke to David Moscrop for a Canada 2020 “Open for Debate,” podcast about - wait for it - competition policy.
📟 Later today I’ll be on a subscriber-only Betakit panel.
Vass Bednar is the Executive Director of McMaster University’s new Master of Public Policy in Digital Society Program.