2023 Fall Economic Statement Brings Important Changes to Canada's Competition Law
November 28, 2023 - Today the federal government released the text of the proposed amendments to the Competition Act hinted at in last week's Fall Economic Statement. The proposed changes are wide-ranging, going beyond the scope of Bill C-56 proposed in September. Highlights of the proposed legislation include consideration of labour markets and industry concentration in merger analysis, stronger powers to pursue agreements that harm competition, meaningful access for private parties to bring cases and a system of authorizations for agreements to meet environmental policy goals.
"Combined with Bill C-56, the legislation to implement the 2023 Fall Economic Statement make important improvements to Canada's Competition Act," said Keldon Bester, Executive Director of the Canadian Anti-Monopoly Project. "Taken together the two pieces of legislation give the Competition Bureau and Canadian businesses a stronger set of tools to protect consumers, workers and producers from unfair methods of competition. Though there is still work to be done, especially regarding protecting Canadians from further consolidation in already concentrated markets and exploitative practices, these changes are the start of an important shift away from the Competition Act that big business was allowed to write nearly four decades ago."
In the coming days CAMP will put out a more detailed explainer laying out the major changes in the Fall Economic Statement and what work remains to build a fairer economy in Canada.
Opening Statement of CAMP Executive Director Keldon Bester to the Standing Committee on Finance
Thank you to the committee for inviting me to speak today on this important topic.
My name is Keldon Bester and I’m the Executive Director of CAMP, a Canadian think tank dedicated to addressing the issues caused by monopoly power in Canada. This is an exciting time for competition policy, and CAMP is glad to see parties across parliament putting forward plans to strengthen Canada’s competition law and protect affordability for Canadians.
C-56 is an important investment in the future of competition in Canada, and CAMP is happy to support it. By removing the efficiencies defense, giving the Commissioner of Competition the power to conduct market studies, and expanding the scope of enforcement against anticompetitive agreements, C-56 makes material positive contributions to the Competition Act.
I’ll be frank, these changes will not make groceries more affordable tomorrow. The situation today is the result of decades of thinking at the heart of the Competition Act that supported consolidation and reduced competition at the expense of Canadians. The work to reverse that thinking will take time. As I mentioned, we see these proposed changes as investments that will pay off for Canadians in the coming months, years, and decades and in sectors far beyond just grocery.
That being said, within the current scope of C-56, we propose two changes to strengthen the bill so that it might better serve Canadians in the near term.
First, the Commissioner of Competition should have the independent authority to conduct market studies without the direction of the Minister. C-56 provides appropriate checks and limits on the Commissioner's use of the market study power, and as such independent study authority should be granted to preserve the agency's independence.
Second, powers related to anticompetitive agreements should be further strengthened to ensure meaningful enforcement. This means adding the ability to pursue past agreements and penalties for those who engage in these agreements, the absence of which currently renders the provision ineffective.
With these changes, C-56 will deliver more benefits to Canadians sooner. Looking beyond C-56, more comprehensive change is still needed to the Competition Act to ensure competitive markets for Canadians going forward.
Even with the removal of the efficiencies defense, Canadians will not be fully protected from further consolidation of important markets. Future reform should introduce presumptions against mergers in already concentrated markets, banning them outright in highly concentrated ones. It should also set the standard for remedies to harmful mergers at preserving or improving competition for Canadians, not making things worse at a more acceptable pace.
For markets already characterized by a small number of players, we need stronger provisions to ensure that any dominance isn’t abused at the expense of Canadian businesses, consumers and workers. Today abuse of dominance cases are few and far between and can take years to investigate. Expanding the scope of the provision and streamlining its enforcement should be a key priority for reform.
Finally, the enforcement of the Competition Act should be more transparent and decentralized. The Competition Bureau has made important strides in communicating how it works to Canadians, but the agency remains largely a black box and we fall short of peer jurisdictions like the United Kingdom. Canada’s competition law enforcement is also quite centralized, with the Competition Bureau responsible for all markets across our 2 trillion-dollar economy. By allowing private parties to seek damages under the Competition Act, Canada will have more eyes on the ground to identify and address unfair methods of competition going forward.
Today, with C-56 this committee has an opportunity to make material improvements towards a more robust competition law. After C-56, the priority should be to finish that work with more comprehensive reform of the law that Canadians depend on to protect competition and affordability.
Thank you for your time today and I look forward to your questions.
Competition, the 2023 Fall Economic Statement, and What to Look for Next
This week the federal government released the 2023 Fall Economic Statement (FES), outlining the government’s economic plan ahead of next year’s budget and providing updates on a number of policy files. In exciting news, this year’s FES included additional detail on the government’s intention to comprehensively reform the Competition Act beyond the reforms already proposed in Bill C-56.
While the language of the FES is encouraging, the legislative text that will bring that language into force remains to be seen. For each Competition Act reform proposal mentioned in the FES, we’ve provided examples of what CAMP will be looking for in terms of a Competition Act that supports a fairer and freer economy.
Proposed Amendments to the Competition Act in the Fall Economic Statement
“Strengthen the tools and powers available to the Competition Bureau to enable it to crack down on abuses of dominance by bigger companies, such as predatory pricing”
Canada’s abuse of dominance framework is one of the primary tools for policing the monopoly power that has been allowed to accumulate in the economy. While reporting suggests that the amended Bill C-56 will expand the scope of the abuse of dominance provisions in the Competition Act, there is room for further improvement of the abuse of dominance framework. CAMP will be looking for the inclusion of exploitative conduct such as unfair prices or terms as an abuse of dominance, closing the legitimate business justification loophole for conduct that harms competition, and streamlined information gathering powers to increase the speed of Competition Bureau investigations that today can take years to complete.
“Further modernize merger reviews, including by empowering the Competition Bureau to better detect and address "killer acquisitions" and other anti-competitive mergers”
As the primary line of defense against further consolidation of the Canadian economy, a strong merger enforcement framework is a top priority for a reformed Competition Act. Building on the removal of the efficiency defense in Bill C-56, CAMP will be looking for structural presumptions against mergers in already concentrated industries, a wider window for the Competition Bureau to intervene against potentially harmful mergers, and a stronger stance against the acquisition of potential competitors and serial acquisitions that roll up previously diverse markets.
CAMP will also be looking for improvements in how we solve the competitive issues arising from harmful mergers. Rather than crafting complex and risky remedies, the Competition Act should encourage simplified remedies like outright blocks of problematic transactions. Additionally, the government should direct the Competition Bureau to use the market study powers included in Bill C-56 to evaluate the consequences of past remedies and decisions not to block mergers.
“Enhance protections for consumers, workers, and the environment, including by prohibiting misleading "greenwashing" claims and improving the focus on worker impacts in competition analysis”
Although 2022 amendments to the Competition Act included important pro-labour provisions against wage-fixing and no-poach agreements, the effects of conduct like mergers on the labour market has not been an area of focus for Canada’s competition law. To remedy this situation, CAMP will be looking for the addition of effects on labour markets as a dimension for the Competition Bureau’s analysis of suspect conduct.
“Empower the Commissioner of Competition to review a wider selection of anti-competitive collaborations and seek meaningful remedies to ensure that harmful conduct is not repeated”
Currently the Competition Act provisions against agreements that prevent or lessen competition only apply to current or proposed competitor collaborations and provide no penalties for engaging in these agreements. This means that the Competition Bureau cannot pursue past agreements that have harmed competition and does not deter competitors from entering such agreements. CAMP will be looking for amendments that allow for enforcement against past agreements and monetary penalties to deter future agreements.
“Broaden the reach of the law by enabling more private parties to bring cases before the Competition Tribunal and receive payment if they are successful.”
Today the Competition Bureau, an organization with approximately 400 staff, is responsible for monitoring competition across the entire Canadian economy. In countries like the United States, the important work of government agencies like the Competition Bureau is complemented by the eyes on the ground of private parties that encounter harms to competition firsthand. Under the current framework the standard for a private case to be heard by the Competition Tribunal is high, and no damages are awarded in the case of a victory. CAMP will be looking for amendments that lower the standard for leave to the Competition Tribunal and allow those parties to seek damages for harms experienced in order to decentralize enforcement of the Competition Act.
“Ensure legal cost awards during case adjudication do not prohibit a robust defense of competition”
In the wake of the Competition Tribunal’s decision to stick Canadians with a $13 million bill for the legal fees of Rogers, Shaw and Videotron, CAMP will be looking for the government to remove the provision of the Competition Tribunal Act that allows parties to seek damages against the Commissioner of Competition.
Open Banking and Employee Ownership
The good news on the competition front coming out of the FES wasn’t just limited to the Competition Act. The statement also included important commitments in the important policy areas of open banking and employee ownership.
On the open banking front, the government made a long-awaited commitment to implement an open banking framework in Budget 2024 and expand the membership of Payments Canada, the governing body responsible for the regulation of Canada’s payment sector. Taken together the two actions will open up Canada’s banking and payments markets to Fintechs that have been pushing for a fair shot at competing with the big banks.
For employee ownership, the FES contained tax incentives to support the creation of Employee Ownership Trusts (EOTs), financial vehicles that allow business owners to sell their companies to their employees. These changes provide an important alternative to business owners who might otherwise sell their businesses to a competitor or private equity firm. By providing an exit option that preserves choice and competition, strong employee ownership incentives protect Canada’s economy from further consolidation.
In tandem with a modernized competition policy, both open banking and employee ownership have the potential to restructure how competition plays out in important sectors of the Canadian economy and are welcome actions from the government.
Pressure mounting on Liberals to block HSBC-RBC merger
CBC News
“Canadians should not have to bear the cost of eroding competition in our banking sector as a result of our weak competition laws. Minister Freeland must block this transaction and protect competition,” Bester said in a media statement.
CAMP Response to 2023 Fall Economic Statement
November 21, 2023 – Today the federal government released the 2023 Fall Economic Statement, including a roadmap for the future of the Competition Act with indications of reforms across abuse of dominance, merger enforcement, and consumer protection. Though the text of the proposed legislation has yet to be released, it appears to represent the most comprehensive proposed reforms to the Competition Act since its introduction in 1986.
“The direction on the future of the Competition Act in the Fall Economic Statement is a welcome sign that the government recognizes the role of competition in making life more affordable for Canadians,” said Keldon Bester, Executive Director of the Canadian Anti-Monopoly Project. “The government has an opportunity to reverse course on a body of law that has allowed consolidation and reduced choice for consumers across the economy. Making the most of that opportunity will mean a harder line against mergers in concentrated markets, empowering the Competition Bureau to stop abuses of corporate dominance, and allowing companies to challenge the anticompetitive activity they face when trying to operate their businesses. Initial signs from the government are very positive and CAMP looks forward to reviewing the proposed legislation in detail.”
The proposed legislation follows the government’s introduction and amendment of Bill C-56, which made interim amendments to the Competition Act focused on the efficiencies exemption for mergers, the ability of the Bureau to conduct market studies, and powers to respond to anticompetitive agreements. In order to secure NDP support for the bill, amendments were made to include stiffer penalties for anticompetitive conduct, greater independence for the Commissioner of Competition in launching market studies, and an expanded scope for the abuse of dominance provisions.
CAMP Supports Stronger Competition Laws, Sooner
November 17, 2023 - The federal NDP have agreed to support Liberal's Bill C-56, the Affordable Housing and Groceries Act on the condition that amendments are made to incorporate elements of the NDP's proposed Bill C-352, which proposed more expansive changes to the Competition Act. New to the Bill C-56 are increased penalties for cartel conduct and abuse of dominance, authority for the Commissioner of Competition to independently conduct market studies, and an expanded scope for the act's abuse of dominance provisions.
"We are glad to see the NDP take the opportunity to get Canadians stronger competition law sooner," said Keldon Bester, Executive Director of the Canadian Anti-Monopoly Project. "In particular we welcome the independent authority of the Commissioner to bring market studies and a broader scope for Canada's abuse of dominance laws. For markets that are already highly concentrated, something Canadians are all too familiar with, strong abuse of dominance laws are important to check concentrated corporate power and protect much needed competition."
Though the federal government has indicated it is working on a more comprehensive set of reforms for the Competition Act following its public consultation, Bill C-56 was proposed to address outstanding issues with Canada's competition law in the interim. In March, CAMP proposed a wide-ranging set of reforms for a Competition Act designed to support a fair economy including stronger protections against harmful mergers, better tools to prevent monopolies from abusing their dominance, and more transparent and decentralized enforcement.