Outgoing competition watchdog Melanie Aitken’s warning against coddling national corporate champions is sparking a lively debate about the sometimes troublesome balance between competition and regulation in Canada.
Former industry minister and deputy prime minister John Manley, who now speaks for many of Canada’s largest firms, countered that the country desperately needs flagship companies such as BCE Inc. and Bombardier Inc.
“God willing, Research In Motion will survive. But we lost Nortel … we lost Alcan. We don’t have many of these companies that carry the Canadian flag on a global basis and give us the opportunity to build the kinds of supply chains and networks that fuel the rest of the economy,” said Mr. Manley, president of the Canadian Council of Chief Executives.
“Of course there’s a balance and competition is an important element of it. But it’s a little bit harsh to suggest that if you’ve got a big Canadian company it must have got there by screwing Canadian consumers.”
Mr. Manley said he and other industry ministers spent decades working to nurture “national champions,” and for good reason. “We do need companies that can play globally,” he said. “It’s to our benefit.”
Ms. Aitken, who stepped down Friday after three years as head of the Competition Bureau, has raised concerns recently about the impact of BCE’s $3.4-billion takeover of Astral Media on concentration in broadcasting. In an interview Thursday, she warned against promoting “national champions.”
“If you coddle companies at home by allowing them to exploit Canadian consumers in order to be big on the world stage, you have done your own people a disservice … If that’s the way that a deal comes in, wrapping itself in the flag, I’m skeptical about the real efficiencies that are pushing the deal.”
Many experts say Ms. Aitken has a point, at least when it comes to regulated industries.
Having large domestic companies is undeniably good for the country, but scale shouldn’t be the ultimate objective of government policy, said William Robson, president of the C.D. Howe Institute.
“You want size to be a consequence of good performance,” not the result of exploiting a captive market in the home market, he said.
BCE, for example, has made the case to the federal broadcast regulator that its Astral Media purchase should go ahead in part because Canada “needs companies with the scale to compete against foreign content companies like Netflix, Apple, Google and Amazon.”
The notion of “national champions” has largely fallen out of favour, said political scientist David Wolfe, co-director of the globalization and regional innovation program at the Munk School for Global Affairs. However, he acknowledged that “lead anchor” companies, such as Bombardier, can help pull small and medium-sized companies into the global marketplace.
That’s not the case with regulated telecom companies, such as BCE’s Bell Canada subsidiary, which enjoy “big protected positions” in the domestic market, he pointed out.
Laval University economist Stephen Gordon said there’s never a good reason to create national champion companies. He likened these protected industries to “infants that never grow up.”
“We don’t have to have Canadian-based industries if we’re not delivering good services to Canadians,” he said.