Report Reveals the Extent of Canada’s Competition Problem

Earlier this month, Minister of Innovation, Science and Industry François-Philippe Champagne announced his intention to review Canada’s Competition Act, beginning with potential near-term changes to address wage fixing, deceptive pricing practices and Canada’s anemic penalties for anti-competitive conduct. The day after the announcement, the Competition Bureau released its submission to Senator Howard Wetston’s recent consultation on the Competition Act, laying out the enforcer’s vision of the problems with our current law, and of what a modernized competition regime could look like for Canadians.

While the interest signalled by the minister is a positive step, the breadth of issues highlighted by our sole competition enforcer, hardly a radical advocate, shows how out of step Canada is with its competition laws, especially relative to international peers already acting to update their laws.

The most troubling aspect of the Bureau’s submission is its commentary on its ability to address threats to competition in fast-moving digital markets. The motivation for international reviews in Australia, the United Kingdom, the European Union and the United States over the past five years has been the fitness of competition law regimes for the competitive challenges of digital markets, recently summarized in a Group of Seven policy compendium. The Bureau suggests that across mergers, abuse of dominance and agreements between competitors, the Competition Act does not adequately support the protection of competition, particularly in its protection of emerging competitors. Regarding mergers, the Bureau goes so far as to say it would be “particularly difficult — or even impossible” to block the acquisition of a nascent competitor, especially in a dynamic market.

While the Competition Bureau’s contributions to the policy dialogue are invaluable, they come well after other countries have not only studied their own laws but also begun to take action to address the weaknesses identified in those studies. Last year, the United Kingdom began consulting on reformed competition legislation, based on the recommendations of the 2019 Unlocking Digital Competition: Report of the Digital Competition Expert Panel (“the Furman Report”). The reforms are intended to better address the power of entrenched players in digital markets deemed to have “strategic market status,” including consideration of a higher bar for dominant players to acquire competitors. The European Union has already completed its consultation on the Digital Markets Act introduced in 2020, which is anticipated to pass later this year.

If the Bureau’s concerns are justified — a point sure to be contested by Canadian competition law practitioners — Canada is years behind partner countries in assessing the extent of the limitations of our law, let alone in modernizing our legislation to address those limitations.

Read the full publication here.