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.