A Carney Government Must Double Down, Not Retreat, on Competition

Last night the looming presence of a Trump administration cast a long shadow over the election that brought in a Liberal government last night. Now that the campaign is over, focus will quickly shift to how a Carney government will handle the threat to Canada’s economy and sovereignty.

Well before the election, whispers began calling for Ottawa to soften its stance on competition policy and to embrace the outdated notion of creating national champions through consolidation as a shield against turbulent times. This would be a grave mistake.

Now, more than ever, robust competition policy isn’t a peacetime luxury but a critical tool for navigating economic volatility, safeguarding our economic independence, and building resilience against external shocks. Weakening our resolve on competition would be akin to disarming precisely when the threats are mounting.

Canada has, commendably, made strides on competition in recent years. Federal legislation passed in 2023 and 2024, backed unanimously by all MPs, aimed squarely at tackling the cost-of-living crisis by strengthening the Competition Act. These reforms weren’t mere tinkering; they empowered the Competition Bureau to launch meaningful investigations into sectors that profoundly impact Canadians’ daily lives – from the grocery aisles and gas pumps to the opaque world of digital advertising. The Bureau’s ongoing suit against Google’s alleged abuse of dominance in online advertising is a prime example of this renewed vigour, signalling a welcome shift towards tackling bigger monopolies, more frequently.

But, this progress could be fragile as a new government takes the helm. The economic tremors emanating south of the border risk reviving misguided calls to sacrifice competition at the altar of perceived stability. Allowing dominant players to further consolidate in pursuit of elusive scale won’t make Canada stronger; it will make our economy more brittle, less innovative, and ultimately more vulnerable. Decades of permitting market concentration have already left Canadians with fewer choices and higher prices in critical sectors like telecommunications, banking, and transportation. We’ve seen the consequences in everything from cell phone bills to air travel fiascos.

Simultaneously, powerful external forces are pushing back. American tech giants, sensing alignment with a U.S. administration hostile to international regulation – whether it’s Europe’s Digital Markets Act or core policy areas like taxation – are increasingly assertive. We saw this playbook during the debate over Bill C-18, where Meta blocked news access and Google threatened similar action. These platforms are not just companies; they are integral parts of Canada’s economic and communications infrastructure, controlling key gateways for information and commerce.

Ceding ground on regulating their conduct, whether through competition law or other means, isn’t just an economic issue – it’s a fundamental question of sovereignty. Trading away strong competition enforcement would leave Canadian firms exposed to unfair practices and diminish our capacity to uphold our own laws against powerful foreign entities that operate within our borders. It sends a signal that economic might can override fair play.

The path forward requires doubling down on competition, not retreating. A strong competition policy is a two-pronged weapon: it directly addresses the cost-of-living pressures felt by Canadian households by fostering choice, challenging price-gouging, and preventing dominant firms from extracting excessive profits. It also serves as a bulwark to our economic independence by ensuring a level playing field where Canadian businesses, large and small, aren’t stifled or shut out by the anti-competitive tactics of dominant domestic or foreign firms. Competition policy is key to ensuring all corporations compete fairly.

To make this vision a reality, the federal government must take decisive action:

1. Back the Bureau: The government must send a clear signal that it supports the Competition Bureau’s mandate to challenge anti-competitive conduct, regardless of whether the firm is domestic or foreign. This includes firmly standing behind high stakes, necessary investigations and litigation like the one against Google’s dominance in online advertising.
   
2. Invest in Enforcement Capacity: The Competition Bureau needs the resources to match its expanded mandate and the complexity of modern markets, especially digital ones. Despite recent progress, its real funding remains below early 2000s levels. Increasing annual funding from the current $60 million towards $100 million is a necessary investment to enable effective monitoring and enforcement in critical sectors, ensuring the Bureau can act swiftly and effectively, not just reactively.
   
3. Break Economic Bottlenecks: Competition policy is just one ingredient in a more competitive and resilient economy. Across sectors like banking, transportation, and communications, key economic infrastructure is under the control of powerful gatekeepers. The new government should adopt an approach to regulation of federal sectors that transforms these economic bottlenecks into the foundation of a more diverse and dynamic economy while preserving Canadian ownership. 

In an era defined by economic uncertainty and geopolitical shifts, retreating on competition policy would be a mistake. It is precisely through a commitment to open, fair, and competitive markets, enforced by a well-resourced and independent regulator, that Canada can bolster its economic resilience, empower its citizens and businesses, and safeguard its sovereignty. The time for half-measures is over; Canada needs a competition policy ready for the challenges ahead.