5 days ago
Canada needs a wartime competition policy
Joshua Krane is a competition lawyer at MLT Aikins LLP.
The changes to Canada's competition laws over the past 2½ years marked a notable consensus across the political spectrum. Politicians of all stripes agreed that Canada's competition laws were out of step with those of global counterparts and contained gaps when it came to wage fixing, drip pricing and anti-competitive agreements.
Parliament made it easier to challenge mergers by removing the 'efficiencies defence' that allowed those for which the cost savings exceeded the anticipated negative effects. It put the onus on the parties to show why their merger would not prevent or lessen competition substantially when their combined market share would exceed 30 per cent.
The Competition Bureau recently released its annual plan called 'Strengthening competition in a changing economy.' While the plan notably focuses on using the new enhanced enforcement powers given to the bureau by Parliament to stop anti-competitive activity, it does not recognize that Canada needs to be on a war footing when it comes to regulatory enforcement.
New Industry Minister Mélanie Joly said it herself: We need a 'wartime philosophy,' and this philosophy should be reflected in the bureau's enforcement plans.
As a first step, the bureau should revise its approach to 'Made in Canada' claims so Canadian consumers can more readily support domestic companies when they shop. The current guidelines are too onerous for businesses and limit the ability of manufacturers to make 'Made in Canada' claims when they import raw materials that we don't produce locally. Companies that manufacture products here should be able to say their products are 'Made in Canada' without fear of prosecution.
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Prioritizing investigations of anti-competitive conduct that makes life less affordable for Canadians is an important objective. What's missing from the bureau's plan is a commitment to direct enforcement activity against firms whose conduct is undermining industry and diverting profits outside of the country. Several of Canada's key industries are being fundamentally disrupted by foreign competition, including news and media. The bureau has a role to play in helping to protect these important industries, including meeting with key industry leaders and prioritizing enforcement.
Much ink has been spilled over how the efficiencies defence has saved otherwise anti-competitive mergers. While the defence was invoked only in rare cases, Canada may have overstepped by removing it entirely. There should be a relief valve to allow some mergers that enhance productivity but might temporarily result in higher prices.
Competition Bureau investigating proposed merger of companies that make medical isotopes
There is a growing consensus that Canada needs to build its domestic industrial capacity in the face of global threats. The government imposes tariffs to help do this. Until our international trade situation calms down, the bureau should consider a relief valve in the application of the merger law in exceptional cases where mergers are needed for productivity enhancement to better align Canada's trade and competition policy.
Finally, there is an important role for the bureau to play in advocating for policies that prioritize the construction of infrastructure in other areas of government. Again, this is about balancing short-term affordability and long-term resiliency.
In the telecom sector, for example, the bureau should be pushing for rules that limit incumbents from reselling each other's networks. Canadian investment in network infrastructure supports jobs and investment, enhances productivity and promotes resiliency.
The steps taken recently to modernize Canada's competition laws were laudable. Now we need to see those tools deployed to ensure that Canada succeeds in the face of increasing threats to our economy.
