The Competition Bureau in October embarked on a study of food prices at grocery stores. As everyone knows, in this year of inflation, the bill for groceries has jumped 10 per cent, the steepest increase since the early 1980s. And as in so many sectors of the Canadian economy, a handful of large companies dominate the grocery business.
Seeing the squeeze felt by all Canadians, Ottawa found it politically wise to look like it was taking action. Innovation Minister François-Philippe Champagne said he had asked the Competition Bureau to do something. Thereafter came the news of its industry study.
There is, however, one glaring caveat: The bureau basically said “don’t expect much of us.” And why is that? Well, because of the many holes in the long outdated and often ineffective Competition Act. “This will be a tough study for us to do,” the bureau said. Unlike similar bodies in other countries, the bureau’s power is limited. It can’t even compel grocers to hand over internal information they use to make pricing decisions.
This sorry episode – a charade, really – is no fault of the bureau. It is the system functioning – or, more specifically, not functioning – in the exact way it was designed in the mid-1980s, when the Competition Act became law. Back then, there was a belief that bigger was better when it came to Canadian corporations, and the act reflects this. The rules make it easy to merge, even if competition is sacrificed. The bureau is legally hamstrung in numerous ways when it tries to grapple with anticompetitive concerns, whether it’s studying grocery prices or questioning the Rogers-Shaw deal.
For several years, there has been a growing number of arguments for overhauling the act. Other jurisdictions such as the United Kingdom, European Union and United States, are all further ahead than Canada in rethinking competition law.
Last week, Ottawa launched its long-awaited broad review of the act, the role and powers of the bureau, enforcement of the rules, the challenges of competition in a digital world, and other issues. The government is taking feedback until late February.
The problems, like the bureau’s struggle to investigate essential sectors like groceries, have long been clear.
In recent speeches, Competition Commissioner Matthew Boswell called out “weak business dynamism” in Canada and said the Competition Act enables “high levels of economic concentration – even monopolies.” Some experts consider the act “toothless.” Meanwhile, until the start of some increased funding last year, the bureau was working with the same budget – and fewer staffers – as a decade earlier.
A lot of good ideas are already on the table, including from a recent Senate consultation. The Trudeau government has put forward not only questions but clear indicators of the direction reform could go, and rightly so. Canada is not starting from scratch here; in fact, it’s way behind, and changes are overdue.
Ottawa pointed to the “often narrow” times the bureau is actually allowed to intervene, and to the “constraints” on it when it does. It said reforms could include better ways to address potentially harmful mergers, new rules on abuse of dominance by large companies, thinking more broadly about competition, including the impact of mergers on workers, and simply giving the bureau a greater ambit in which to conduct its work.
In 2007-08, a review that included the Competition Act, led by a former boss of Bell Canada, found little amiss with the law. The review in fact proposed that banks be able to buy insurers; it actually advocated for less competition. (The recommendation wasn’t adopted.) The review also didn’t give much consideration to the digital world. After it was over, there was a sense the matter had been settled. So when debate elsewhere fired up in the 2010s, Canada fell behind.
Decades ago, big may have indeed seemed better in the corporate economy. But as U.S. President Joe Biden correctly said last year in an executive order, widespread corporate consolidation means “competition has weakened in too many markets.” Canadians know this all too well, across the domestic economy – grocers, telecoms, banks.
Ottawa’s readiness to overhaul the Competition Act is welcome. There is finally momentum for the requisite big changes. While the details can sometimes be dense and complicated, the future shape and state of competition is something that matters deeply to all Canadians.