The C.D. Howe Institute Competition Policy Council (the Council) met on Friday, October 13, 2023, to debate the calls for bright-line rules and presumptions, and whether such proposals are an appropriate approach to competition law enforcement that would effectively address issues of affordability and lagging productivity in Canada.
The tabling of a Private Member’s Bill on September 18, 2023, by Jagmeet Singh, leader of the New Democratic Party, titled Lowering Prices for Canadians Act1
brought this discussion into scope as it proposes bright-line tests and presumptions specifically in the context of Canada’s merger review laws. A November 16, 2023, Motion in the House has proposed that during its consideration of Bill C-56, the Affordable Housing and Groceries Act, the Standing Committee on Finance expand the scope of the proposed changes to the Competition Act proposed in the bill to include revising the legal test for abuse of dominance.
The Verdict: The Standing Committee on Finance must exercise caution as it reviews the legal test for abuse of dominance. The majority of the Council continues to believe that competition law in Canada should remain effects-based. The removal of an effects-based analytical framework is more likely to protect competitors over the competitive process, which by its nature involves winners and losers, and is likely to deter pro-competitive conduct and chill innovation and investment in Canada. Given Canada’s falling productivity2
and the need to bolster competition in our economy, the majority of the Council is especially concerned with the costs of mistakenly condemning pro-competitive behaviour. Given the speed with which these amendments have come forward and the diversity of views on this topic as expressed during the consultation on the Future of Competition Policy in Canada, the Council is disappointed in the lack of consultation on the legislative proposals and debate on their implications.
- 1On September 18, 2023, NDP leader Jagmeet Singh introduced Bill C-352, a Private Member’s Bill which includes, among other amendments, proposals to introduce market-share thresholds into the merger review process of the Competition Act in the form of (1) presumptions of illegality, and (2) rebuttable presumptions of illegality and shifting burdens. The bill contemplates: a prohibition on mergers which result in a combined market share of 60 percent or more; a rebuttable prohibition on mergers which would result in a combined market share between 30 percent to 60 percent, unless the merging parties can demonstrate that the merger will be beneficial; and a rebuttable presumption against the merger where it will cause a significant increase in concentration or market share.
- 2OECD data reveal that Canadian productivity diminished by 9 percent between 2000 and 2022, falling to roughly 72 percent of that of the US.