⌛ going wayback
Canada’s Competition Act is a geriatric millennial (established in 1986) and it is overdue for thorough review.
Like the young adults of today, the Act has been through a lot, like: cassette tapes, CDs, the brief and confusing thrill of Napster, the revolution of the iPod, renting our music collections though app stores, and ad-free Spotify. *I personally miss searching for songs based on my mood through Songza, but I will survive.
The Act was last reviewed in 2008 during the “Compete to Win” review. That was a catalytic year for the transformations that now characterise our everyday lives in a digital economy. It was the same year that Apple’s App Store launched - itself now the subject of antitrust suits globally. It was also the year Google launched Android, since fined by the EU Commission for imposing unlawful restrictions on manufacturers of Android mobile devices and mobile network operators in order to consolidate the dominant position of its search engine. That same year, Airbnb was founded, and Uber, WhatsApp, Venmo, Slack, Square, and others followed in 2009. The Smart Objects Alliance was formed (IoT) and the retail DNA test won Time Magazine’s best invention of the year. The sector - if not the whole world - was still in a period of techno-optimism and permissionless innovation that public policy is now working to catch up to.
Back in 2008, globalisation was the force reshaping economies, and at the time of the Compete to Win review, the government’s “objective [was] to ensure that Canada’s policies keep pace with these changes in order to create a highly competitive national economy and help create more and better jobs for Canadians.”
As I wait for the pending review of the Act, I have been spending time nostalgically on the Wayback Machine, perusing the 153 submissions to that review that came in response to the 2007 paper “Sharpening Canada’s Competitive Edge.” It is a fascinating exercise. For instance, the major ‘tech’ submission came from ecommerce platform eBay (which settled a no-poaching antitrust case in the US in 2014). SOCAN’s submission does not anticipate how digital transformation would cannibalise the compensation of musical artists. The Writer’s Guild of Canada contributed, years ahead of the Penguin and Randomhouse merger that preceded the currently proposed merger with Simon & Schuster. The FTC wrote in. Imagine what Lina Khan, Tim Wu or Jonathan Kanter might have to say about Canada’s current law? The Competition Commissioner at the time also wrote in. After the Competition Bureau’s fascinating submission to last year’s Senator Wetston-led consultation, we should hope that current Commissioner Matthew Boswell goes on the record with his perspectives.
The 2008 framing for the Compete to Win report considered whether international competitiveness benefits from a policy that favours domestic competitors. We often see that discussion on “competitiveness” is framed related to Canada’s competitiveness on the international stage. This is a missed opportunity to link to domestic competitiveness. Some allege that Canada cannot afford a strong domestic competition policy because we are a small country (BTW we are the 8th largest economy in the world) and our firms need an accommodating environment at home in order to compete effectively abroad. But there are buckets of research demonstrating that competition is what drives productivity and international competitiveness. And as Commissioner Boswell said in a speech last year, Canada needs more competition.
The Wayback machine reminded me that some of the ideas in the competition space are “zombies” -- we have long been questioning the utility of the efficiency defence, the potential of private action tribunal rights (which have since been expanded slightly for abuses of dominance, but the current configuration is fairly narrows compared to what has been previously imagined) and calling for the Bureau to have market study powers. The pending competition debate is about much more than perennial questions that have come to characterise the thought space in Canada. It is ultimately about whether we are willing to confront the digital transformation of the economy, and associated implications for competition. Looking ahead, we will also need to contemplate the intersectionality of the Act with privacy, labour considerations, and connections to sustainability goals.
Perhaps most striking about my Wayback foray how absent the voices and perspectives of everyday Canadians were from the Compete to Win review. Of the 153 submissions, most came from banks, telecoms, insurers, universities, business groups, airports, lawyers, or government. The sole civil society contribution was from the Public Interest Advocacy Centre and a labour perspective was offered by the National Farmers Union and the Communications, Energy and Paperworkers Union and the Teamsters. In the next round, we should expect to hear from at least UNIFOR, who has been speaking out on the matter of wage-fixing.
As we anticipate another kick at the competition can, we should be pushing to hear much more from entrepreneurs and small businesses. The Institute for Local Self-Reliance’s 2022 Independent Business Survey revealed that two-thirds of respondents felt that Amazon’s control over the online market was a significant challenge, and that big competitors were strong-arming suppliers to win special discounts while forcing suppliers to charge independent businesses more. Canada needs to hear from the Canadian Federation of Independent Businesses, the Retail Council of Canada, and Shopify (on behalf of merchants) on these issues. We also need to hear from consumer groups. A new lens on competition will invite Canada’s largest grocers to the table - already under fire for allegations of “greedflation” and wage fixing during the pandemic. More unions may step forward to discuss these issues and the monopsony power of gig platforms. Voices from international scholars and regulators would be a welcome reminder that competition legislation no longer occurs in national vacuums. Comments from all political parties would help to surface aspects of cross-partisan appeal. What else? We will also probably hear references to supply management and general deregulation efforts, and that’s okay.
A novel reality for Canada’s competition legislation is that the historical new-ness of this foundational economic legislation means that many of the people that helped to create it are still alive. This lends itself to a certain defensiveness that makes criticisms of the current Act implicitly personal instead of about the law’s contemporary shortcomings. The economy has changed, and there is no going back. The competition issues are not unique to Canada, but a product of how the digital economy has fundamentally restructured ecommerce.
In early February, Minister Champagne forecasted a review of the Act that has yet to be launched. But the window of opportunity to move forward here in Canada is slipping shut after being cracked open last year by researchers and activists. Like, if we don’t have updates to the legislation by Fall 2023 will anything pass?
Since that announcement, the federal NDP have pushed for a Parliamentary Committee to probe grocer’s profits, while the federal Conservatives - for all their charged discussion of “gatekeepers” - have failed to acknowledge the widely recognized activity of digital gatekeeping. Nonetheless, in this inflationary period, increasingly price-conscious consumers are likely to welcome a review of the legislation that has facilitated the concentration of Canada’s economy.
There is a legitimate role for the state to make the digital economy more free. The trifecta of policy instruments for a digital economy is generally recognized to be: content, data, and competition. Legislative interventions like C11 and C18 begin to address content in Canada, and the updated C27 will clarify appropriate data collection and use. But aside from some modest upgrades that surprised stakeholders tucked into the Budget Implementation Act, Canadians primed for the difficult work of reconsidering such a significant piece of legislation have been left hanging.
The Wayback Machine isn’t the only source of nostalgia. Those who have vehemently opposed any changes to the Competition Act seem incapable of acknowledging the realities of our digital age. Expect loyal defenders of the status quo to protest that further revisions to the Competition Act could have “unintended consequences,” to caution that we shouldn’t “rush” reform, and insist that changes risk “chilling foreign investment” as “Canada is not a must-have market.” All of these claims lack concrete evidence and are intended to generate doubt for decision makers and preserve a gatekeeper-friendly status quo. To my mind, the biggest factor chilling change thus far has been how defensive and protective industry stakeholders have been as other jurisdictions like Australia, the EU, and US have been hard at work updating their legislation environments to benefit citizens.
A more concrete/rational policy reason for Canada’s comparative reluctance to tackle systematic competition reform could be potential trade implications. During the USCMA negotiations, Canada’s plan to implement a Digital Sales Tax was a sticky point as it targeted American tech firms. Some may try to frame a review of the Act as being in response to big tech firms, but the forthcoming review is just as much about Canada’s homegrown monopolies as it is our digital context. If Canada’s competition review is framed as a tactic to tame the largest technology companies instead of an overdue exercise in maintaining the relevance and strength of the law itself, it will risk becoming overly politicised. Regardless, the economy has long evolved past the 1980s context that forged the Act itself and we can’t go Wayback. It is time for Canada’s Competition Act to move from being a cassette to a streaming service - or at least play a new tune.
First! (And I particularly liked this issues opening tweets. My choice of weapon is the lead pipe.)