On October 5, 2023, the Competition Bureau (the “Bureau”) hosted a summit (the “Summit”) on competition law and policy in Canada. Among other things, the Summit included discussions focusing on Canada’s current economic landscape; the main barriers to competition in Canada; Canadians’ diverse perspectives on competition issues in Canada; and building a whole-of-government competition agenda.
This blog posts discusses a number of key themes and takeaways that emerged from the Summit, and which may inform the government’s approach in the ongoing competition law reform process. Among other things, these themes included: (i) the need to implement an all of government approach regarding competition policy in Canada, (ii) lack of competitive intensity in Canada driven, in part, by regulatory barriers and burdens, and (iii) the need to modernize Canada’s competition laws.
Speakers at the Summit included the Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry, Matthew Boswell, Commissioner of Competition, and various other key stakeholders from Canada and abroad.
Notably, the discussions during the Summit were largely grounded in the growing concern that has been increasingly called out by consumers in Canada – inflation and rising prices – with both Minister Champagne and Commissioner Boswell beginning their remarks by highlighting these issues.
All of Government (and Beyond) Approach
During his opening remarks, Commissioner Boswell set the tone for the Summit, setting out how the promotion of Competition in Canada requires coordination from “all of government”, and input and assistance from “people from a large variety of business, legal, academic, and government organizations who understand the need for a collaborative approach to encourage robust competition in Canadian marketplaces.”
In this regard, Commission Boswell highlighted how the United States is similarly “making competition a priority across their entire regulatory system” – including, among other things, with the introduction of President Biden’s Executive Order on Promoting Competition in the American Economy. The approach in the US was further expanded upon during the key note address by Timothy Wu (Julius Silver Professor of Law, Science and Technology, Columbia Law School; White House Former Special Assistant to the President for Competition Policy). During his speech, Wu described an “anti-trust revival” currently taking place in the US, and outlined four pillars underpinning antitrust reform in the US: (i) activating the presidency to give political valency to antitrust; (ii) appointing enforcement officials with a fresh perspective, (iii) adopting an aggressive whole-of-government approach, and (iv) working to appoint members of the judiciary who are more conscious of economic justice issues. With respect to lessons Canada could take away from the United States experience, Wu highlighted three main points: (i) the revival of competition policy requires political support from the highest levels of government; (ii) the revival must be lead from both inside and outside government and must be both an intellectual and political movement; and (iii) it must be acknowledged that it is a long process.
Concentration and Decline in Competitive Intensity
One of the major issues discussed during the summit was the decline in competitive intensity in Canada – and the resulting consequences for Canadians (including the stagnation of Canadian GDP and Canada’s alleged failure to show up as a productive and innovative global competition).
Notably, Commissioner Boswell noted that, according to the OECD’s Product Market Regulation Survey – Canada ranks “near the very bottom among all of [its] OECD peers” with respect to regulatory barriers and competition in a broad range of key economic sectors. Commissioner Boswell also discussed a now published Bureau report studying the competitive intensity in Canada between 2000 and 2020. Commissioner Boswell explained that this report looked at various indicators of dynamism and competition in the Canadian economy as a whole, including concentration, entry and exit and mark-ups and profits. According the Commissioner Boswell, the report shows that Canada’s competitive intensity has significantly decreased over the last two decades.
Others speakers raised regulatory barriers in Canada as an issue related to the lack of competitive intensity, including barriers for new businesses, barriers for foreign investment and duplication and lack of harmonization across the provinces.
The Need for Modernized Competition Policy
During his opening remarks, Minister Champagne highlighted that it was a broadly held opinion among stakeholders, academics, consumer groups and others that Canada’s competition laws, in their current form, are no longer fit for purpose – and that this needs to be addressed. Minister Champagne discussed the ongoing consultation and amendment process as the first steps in this reform, and also highlighted the recently introduced Bill C-56. Notably, Minister Champagne described Bill C-56 as including only a few targeted measures and noted that the “mission” is not yet accomplished – hinting at the potential for further reforms in the future.
Commissioner Boswell similarly highlighted the need for competition reform during his remarks, noting that, beyond the immediate need to address raising prices for Canadian consumers, the Competition Act, more generally, needs to be modernized in order to “stimulate [the] economy” and address “restrictions that harm the competitive process.”
The Summit included many high-level discussions regarding the direction of competition policy in Canada and also provided some takeaways:
- Expect reform – and many rounds of it: Bill C-56, discussed above, contains a limited number of relatively discrete proposed amendments. This bill tackles some of the most prominently discussed issues, including market studies and the efficiencies defence. Notably, an independent members bill (Bill C-352) has also been introduced by the leaders of the NDP Party, Jagmeet Singh, which similarly includes the introduction of market studies and the removal of the efficiencies defense, but also includes a number of additional amendments aimed at, among other things, introducing excessive pricing and unfair selling price prohibitions, simplifying the burden the Bureau bears under the abuse of dominance provisions and introducing structural presumptions in merger reviews.Notably, remarks from Minister Champagne made it clear that Bill C-56 is just the beginning (without commenting on Bill C-352) – and that additional, more far-reaching changes should be expected.
- Consumer focused policy shift: The tenor of the Summit, with its focus on price increases, inflation, harm to consumer, and barriers to small and medium sized businesses, suggests that reforms to competition policy may focus on addressing harm to consumers and empowering small and medium sized businesses.
- Competition Bureau Report: Takeaways from the Summit should be considered in conjunction with the Bureau’s now released report: Competition in Canada from 2000 to 2020: An Economy at a Crossroads, which was released on October 19, 2023. According to the Bureau, its report tracks the decline in Canada’s competitive intensity over the last two decades. In summary, the report found that (i) concentration rose in markets where concentration was already high, and the number of concentrated industries increased, (ii) the stability in firm ranks has risen, meaning that the position of the largest firms is being decreasingly challenged, (iii) fewer new firms are entering markets, and (iv) firms’ profits and markups have increased. We expect the Bureau to rely on this report, among other things, when commenting on Competition Act reforms. We also expect stakeholders to critically assess the Bureau’s analytical framework and conclusions.