Vass Bednar is the executive director of McMaster University’s new master of public policy in digital society program
Last Friday, U.S. President Joe Biden introduced an executive order on promoting competition in the American economy. Proclaiming that “capitalism without competition isn’t capitalism, it’s exploitation,” his administration outlined its ambition to promote fair competition throughout every agency with the authority to structure markets.
The order was received enthusiastically by Democrats and Republicans alike, demonstrating unique bipartisan appeal. While it is likely to lead to significant antitrust conversations in the years to come, Canadian competition authorities continue to deny our competition realities and it is unclear whether we will take any inspiration from the order.
Some of the order could benefit Canadian consumers in terms of spillover effects. From a trade perspective, the order’s aim to “lower prescription drug prices by supporting ... programs that will import safe and cheaper drugs from Canada” is particularly encouraging.
However, Health Canada is further delaying new drug pricing regulations to Jan. 1, avoiding policy conversations with pharmaceutical companies for a third time. Canada’s drug prices are now the third highest among the Organization for Economic Co-operation and Development countries – about 25 per cent above the OECD median.
Further, Canada does not require that pay-for-delay settlements – agreements whereby a generic drug producer agrees to hold back its product from the market – be reported to the Competition Bureau. Mr. Biden’s order encourages the U.S. Federal Trade Commission to outright ban “pay for delay” and similar agreements by rule, and Canada doesn’t even know where they exist.
Other areas affected by the executive order, including the sale of over-the-counter hearing aids, aren’t applicable here. Health Canada tackles those through the Canadian medical devices regulations. Courts in Canada are reluctant to enforce non-compete clauses found in employment contracts, which the Biden order suggests will be banned or limited.
A particularly pioneering aspect of the order pledges to “make it easier and cheaper to repair items you own by limiting manufacturers from barring self-repairs or third-party repairs of their products.” While there have been compelling calls for similar “right to repair” legislation in Canada, concerns over copyright laws have hindered progress.
While there has been significant public discourse regarding telecommunications as of late, it is not the only sector suffering from a lack of competition. The country’s agriculture sector is similarly consolidated. It’s getting more expensive to fly. Meat-packing concentration makes Canada’s food system vulnerable. Our five biggest banks famously hold about 89 per cent of market share, potentially impeding policy progress on payments modernization and open banking. And court files suggest the grocery giants discussed fixing more than bread prices.
And yet we consistently refuse to have an honest conversation about competition in this country. Legislators and experts continue to avoid opportunities to consider productive policy interventions. Studies indicate that Canadian industries are on average twice as concentrated as their U.S. counterparts, and a study shows that levels of consolidation have risen over the past 20 years, a trend the authors attribute, in part, to “weak antitrust legislation and practices and increased barriers to entry.”
This year’s Competition and Growth Summit cautioned against new regulations, conflating modernization with the “red tape,” and barely touching on the characteristics of competition in digital advertising markets. A 2018 paper from the Competition Bureau on big data and innovation essentially concluded that any complaints were simply sour grapes from disrupted incumbents.
Some have mused that the absence of “populist” anger in Canada is an explanation for our complicity in competition. But this failure is not one of the general population. The policy and research community has done a poor job illuminating trends in our agricultural, digital, railway and pharmaceutical sectors. Our collective comfort with the airline, banking, media and telecommunications oligopolies that have come to characterize the country seems to have prevented us from exploring new ideas related to competition.
Canada doesn’t necessarily need to rush to mimic Mr. Biden’s sweeping antitrust agenda. Rather, we must initiate a comprehensive research agenda that examines trends of consolidation across all industries.
To start, Canada could similarly strike a formal council with the heads of most cabinet agencies and regulators to meet about competition, creating critical links between the Competition Bureau and the Privacy Commissioner, the Canadian Radio-television and Telecommunications Commission, the Ministry of International Trade Diversification, and the Minister of Small Business, Export Promotion and International Trade of Canada (and others).
Competition could be considered in all government decision-making, like the Gender Based Analysis Plus (GBA+). We could even work toward open meetings for merger reviews, potentially engaging more Canadians in the activities of the Bureau.
The Competition Bureau could also consider whether there are mergers that don’t meet the current government review threshold but do raise concerns when considered in a digital context. Analysis of the past six years of concluded merger reviews by the Competition Bureau suggests that about 9 per cent of reviews concern Canada’s tech sector. Out of these reviews, the bureau did just three in-depth investigations, based on publicly available data.
While Mr. Biden’s order directs an app store study by the Department of Commerce, Canada could similarly consider whether Shopify’s app store is ever anti-competitive, given that it is a dominant online marketplace. While price discrimination is a criminal offence under the Competition Act, officials could consider whether algorithmic personalized pricing is problematic.
As my collaborator Robin Shaban has suggested, we need to reorient our competition laws so that they tackle monopoly directly rather than permit it. While Canadians were promised a discussion around reviewing the Competition Act this past spring, no such public consultation was ever launched. The standing committee on industry, science and technology held encouraging hearings on the Competition Act in April to little fanfare.
Looking ahead to a federal election that will ostensibly be about the economy, I suggest we seize upon the mantra of “build back better” with an eye to understanding the trends in consolidation that have likely been amplified by the pandemic.
Modernizing our Competition Act will ensure the legislation is an instrument of innovation that considers Canada’s hardest-hit businesses. Perhaps one day Canada will have an anti-monopoly policy agenda of our own worth mirroring. Until then, it’s time to hold a mirror up to ourselves and actually look at it.
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