With recent proposed amendments to the Competition Act, the federal government has signalled that boosting competition will be key to its efforts to lower the cost of living in Canada.
Although a positive first step, the amendments leave untouched much of the law that forms the guardrails — or rules and regulations — for responsible competition in Canada. These guardrails need more than an update. They should be completely overhauled, to protect and promote not just competition but fair competition.
Fairness is deeply felt by Canadians. But it’s not easy to define. Building a definition of fairness requires normative judgments and value-based decisions about the kind of competition we want to see in our economy. Sabotaging a competitor, for example, may represent fierce competition, but it has no benefit for Canadians.
Some may bristle at the inclusion of fairness in any discussion of competition. But this notion is not foreign to Canada’s competition law. The Competition Act already contains nods to fair competition in its purpose clause, and in its prohibition on deceptive marketing and cartel conduct — when competitors collaborate to price fix or restrict supply.
The multiple goals of Canada’s Competition Act include equitable opportunity for small and medium-sized businesses, protecting a fair shot for these businesses to challenge larger rivals. By prohibiting deceptive marketing and cartel conduct outright, Canada’s law already imports ideas of fair competition.
As Canadian policy makers consider the future direction of its competition legislation, international peers are rediscovering the role of fair competition. Late in 2022, the US Federal Trade Commission (FTC) released a statement outlining that the agency would begin enforcing its authority over unfair competition, effectively reversing a terse 2015 statement that had declared the power effectively comatose.
In January of 2023, the FTC announced it would use this authority to outlaw so-called non-compete contracts that kill competition in the labour market by preventing workers from freely changing jobs. In resurrecting its authority over unfair competition, the FTC’s action is a step toward fulfilling its original mandate of establishing guardrails for fair competition in the United States.
Three changes could put Canada on the same path toward an economy centred on fair competition. First, Canada’s Competition Act has multiple goals that indirectly assert the benefits of competition. These should be made explicit through a provision that protects and promotes fair competition.
Second, policy makers should widen the applicability of existing abuse of dominance laws — measures that prohibit the abuse of dominant market share by major players — to discourage giants from engaging in anti-competitive conduct. This would better prevent firms with market power from abusing that power to disadvantage new entrants and challengers.
Finally, Canada needs a system that defines unfair business practices and creates presumptions and rules against their use. An example would be the banning of exclusivity agreements that chill competition to benefit an already dominant corporation. Deeming this practice unfair would encourage buyers to compete for the business of suppliers and make products available to a broader range of retailers. Such rules could also extend to the arrangements preventing retailers from competing to their full potential in the grocery sector, as recently explored by the Halifax Examiner.
A key assumption of the existing approach is that sacrificing competition can bring efficiencies that help consumers. The current cost-of-living crisis is an opportunity to reconsider this flawed assumption and develop new thinking. Such thinking is long overdue in Canada.
This article first appeared in the Toronto Star.
