From: James Musgrove and Hannah Johnson
To: Competition Law Observers
Date: February 3, 2023
Re: A Modest Suggestion for Ottawa’s Unwise Competition Act Proposals: First, Do No Harm
Canada, as much of the world, is engaged in reappraising its approach to competition and antitrust policy. Less than a year ago Canada enacted significant changes to its Competition Act, including massive increases to fines and penalties, changing the definition of abuse of dominance, creating an entirely new offence related to wage fixing and no-poach arrangements, allowing private party challenges to abuse of dominance conduct – as well as a number of other meaningful changes.
Hot on the heels of these changes – indeed in advance of some of them coming into force – Innovation, Science and Economic Development Canada launched a consultation on a breathtakingly broad range of additional, more fundamental possible changes, as outlined in its Discussion Paper.
The Discussion Paper does not articulate specific statutory amendments, nor does it express an overall goal except to assert a desire to improve the functioning of the Act to better achieve its existing purposes.
But all its contemplated changes run in one direction.
None suggest more marketplace freedom; all suggest more control over the conduct of economic actors – particularly large firms. This despite the fact that the focus of Canadian competition policy ostensibly remains consumer welfare and a dynamic, efficient, innovative Canadian economy – setting basic rules and then allowing firms to compete aggressively in a free market setting.
Instead we get proposals for a considerably more regulated approach, less room for aggressive competition, less focus on the importance of efficiency/consumer welfare and more on “fairness,” presumptions of harm rather than evidence of it, and a “precautionary” approach to marketplace activity.
Herewith an incomplete list of the discussion paper’s ideas:
- Lowering the test for challenging mergers, and in particular mergers involving “nascent” competitors in the tech sector, so that it is not necessary to show a likely substantial lessening of competition.
- Extending the limitation period to challenge mergers from one year to three years.
- Lowering merger notification thresholds.
- Easier injunctive relief for mergers and for other conduct under the Act.
- Eliminating the efficiencies defence.
- Undertaking an assessment of the impact on workers/labour/employment, as well as competition issues, when reviewing mergers.
- Reducing or eliminating the requirement to show a substantial lessening of competition in abuse of dominance cases.
- Reducing or eliminating the requirement to demonstrate anti-competitive intent – particularly in complex industries such as tech.
- Establishing rules and presumptions for conduct involving large firms, rather than requiring proof of injury to competition in order to be prohibited.
- Expanding the application of the concept of joint dominance.
- Establishing a “fairness” focus for some of the Act’s provisions.
- Allowing damages actions, including class actions, for abuse of dominance.
- Reducing the need for agreements under the cartel provision.
- Criminalizing agreements about product purchases.
- Widening the scope of enforcement under Section 90.1, which permits the Competition Tribunal to prohibit behaviour.
- More enforcement tools to fight misleading advertising, as well as amendments mandating that certain conduct be deemed “misleading.”
- Granting the Competition Bureau compulsory evidence gathering powers to facilitate market studies.
These ideas would be the most dramatic amendments to the Competition Act ever considered. They would fundamentally alter the structure of competition law in Canada – in our view in a negative way.
We have explored some of our concerns in a paper we submitted to the consultation process last week, “What’s It All About, Matthew? Some Thoughts on The Future of Competition Policy in Canada,” which argues that many of the contemplated changes appear likely to do more harm than good, and are not based on any clearly demonstrable need.
Most will cause firms to compete less aggressively – in our view to the significant detriment of the Canadian economy. Change is in the global antitrust zeitgeist, but that’s no reason for root and branch statute revision that will upend a competition policy approach that has served Canadians well.
These changes contain significant risks to the economy, and to the prosperity of Canadians. Caution is warranted in considering such a fundamental restructuring of Canadian competition law.
We propose the adoption of an Antitrust Hippocratic Oath: First, Do No Harm.
James Musgrove is a partner and Hannah Johnson is an associate in the competition and antitrust group at McMillan LLP.
To send a comment or leave feedback, email us at firstname.lastname@example.org.
The views expressed here are those of the authors. The C.D. Howe Institute does not take corporate positions on policy matters.