regs to riches
regs to riches
🦄 wanted: new thinking

🦄 wanted: new thinking

🚫 self-preference gatekeepers

Whether Canada needs new competition laws is up for debate, but to have that debate Canada definitely needs new competition thinkers. 

Enforcers appear united on the fact that we need to review Canada’s Competition Act. The current Competition Commissioner (Matthew Boswell) has said that a Competition Act review is “overdue” and the former Competition Commissioner (John Pecman) has said that, “There is no doubt that Canada’s competition laws could be tuned-up to better oversee the digital economy.”

So what’s stopping the country from proceeding with a basic review of crucial economic legislation? 

I recently outlined seven reasons that Canada has a competition capacity problem. They are:

  • the Competition Commissioner lacks the intellectual independence to speak freely on matters of competition because the Bureau is nested within the Ministry of Innovation, Science, and Economic Development (ISED);

  • we have a basic literacy gap on the file that is a barrier to entry into the conversation;

  • public policy and administration programs graduate too many new practitioners that have never been exposed to the basic mechanics of competition policy;

  • we have a dearth of scholarship on competition issues in Canada;

  • existing expertise has been privatized;

  • we lack strong, effective consumer advocacy groups;

  • and unions in Canada are failing to advocate at the intersection of labour and competition.  

Readers suggested two additional reasons: that we have weak regulators, and that competition commentary used to come from government-funded think tanks that no longer exist (hence C.D. Howe’s lone voice on competition). It’s true that the competition file lacks a political champion. But it’s also true that practitioners in the space seem to be actively advocating against any kind of creativity or innovation as part of that prospective review. They are experts in how the current system works, but not how it should work.Their expertise in the current status quo of narrow competition law shouldn’t give them the definitive word on whether it should or could be improved.  A low-key campaign  by incumbents to shut down debate on the file appears to be emerging. I hadn’t anticipated a tenth reason for competition policy to languish - private interests and regulatory capture that inhibits true intellectual freedom. 

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Resisting  modernizing the Competition Act is a boon for the status quo and I think we can expect efforts against modernization to ramp up as reforms are considered. These efforts, if they go uncriticized, will ensure that there is no political pressure for reform and a lack of urgency. 

An example of this phenomenon is a paper recently commissioned by Senator Howard Wetston, “Examining the Canadian Competition Act in the Digital Era” authored by  Ed Iacobucci. The paper argues for an efficiency-focused policy approach to the Competition Act and against comprehensive reform, though it does suggest targeted interventions. I’m hopeful that the Senator - a former Chairperson of the Ontario Securities Commission - can catalyze more conversation with this policy provocation instead of shutting them down.

Read the paper

At this point, Canada’s resistance to exploring policy innovation is an embarrassment. While other jurisdictions are having courageous conversations about rethinking antitrust tools for multisided platforms, digital platforms, and competition policy for the digital era, a merger recently moved forward where the Competition Tribunal agreed with the Competition Commissioner that it would cause “irreparable harm.” The legislative guardrails that we have to block or pause harmful mergers are failing. Yikes!

Soothing claims that the Act is “flexible” enough for a digital economy is not reflected in the cases that the Bureau takes on. The TREB case that considered data and privacy took 7 years, and the Bureau almost always loses when it challenges mergers in court. We don’t need to replicate “Big Tech” cases currently explored elsewhere; but we do need to consider their implications and what precedents could be set for Canadian firms

Canada’s competition legislation also overlooks workers. Meanwhile, competition authorities in the U.S. have multiple ongoing cases looking into harms to workers caused by monopolies, and are set to hold a virtual public workshop exploring competition in labor markets in early December. It would be relatively straightforward for Canadian officials to host a similar exploration as a complement to reviewing the Act. 

While pondering whether new laws are needed, Canadians may also wonder about the Markup’s recent Amazon investigation that 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, judging from the volume of reviews - and wonder how our legislative environment can or will consider the same. They may also notice the FTC putting hundreds of businesses on notice about fake reviews and other misleading endorsements, and wonder how we might similarly approach that behaviour here at home. A recent CBC “Go Public” investigation found take-home pay is changing for Instacart workers - but no policy actors have moved to tackle (or even talk about!) monopsony in online labour markets.  

While Canadian officials have never explicitly considered whether Shopify’s app store has ever abused its dominance in light of other app store antitrust cases, the firm recently reversed its decision to ban Mailchimp from their marketplace - perhaps in anticipation of a review.

Preemptively discounting the vague prospect of “new laws” ignores the promise and potential of new privacy and consumer protection legislation that can better empower citizens to own and port their data, and also disregards the exciting implications of an open baking regime for competition in Canada’s banking sector. It’s short-sighted.  

It’s no secret that the Competition Bureau is disadvantaged by a high standard of evidentiary proof and limited concept of consumer harm. It is also not well-served by an oligopoly of private-sector players that pump the breaks on new conversations. In seeming to take offense that new voices are gathering momentum, attention and interest, these incumbents only reveal their anxiety that they are losing their tight control of the competition conversation in Canada.

The country needs an inspired marketplace of ideas that doesn’t self-preference gatekeepers.  

Canadian policymakers have rushed to replicate policy proposals on online harms, privacy, and a digital sales tax. It’s well past time for us to participate in vigorous conversations about competition in and for a digital era; whether it leads to new laws, simply updates old ones, or just builds confidence in the one we have. For too long, there’s been a monopoly of sorts on our competition thinking. The few voices that we do have lack diversity in experience, expertise, perspective, and perhaps most importantly - demographic background. We can do so much better.

It’s time to disrupt competition policy in Canada. 

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For new readers (welcome!) the newsletter has recently focussed on competition issues in Canada and strayed from contextualizing cool Canadian companies in regulatory realities. I’ll get back to those case studies, but in the meantime, you can catch up with some recent posts:

Thanks for reading! 🙏

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.

regs to riches
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