On March 31, Canada's Minister of Innovation, Science and Industry, François-Philippe Champagne, green-lit the merger of Canadian telecom giants Rogers and Shaw, attaching a laundry list of conditions to one of the most consequential takeover sagas in the country's history.
But it was an important date in Canadian competition policy for another reason — one offering more hope for the future of competition. On the same day, the government concluded the first government-led consultation on Canada’s federal competition law, the Competition Act, in more than a decade.
While submissions to the consultation are not yet public, the Competition Bureau had earlier made public its comprehensive set of recommendations for the future of competition policy in Canada. In having taken this more public route (beginning with its submission to the 2022 review of Canada’s competition law by then Senator Howard Wetston), the Bureau joins its peers in Australia and the United Kingdom in offering a more open voice on the future of competition law.
Canada’s competition law must be informed by the needs of Canadians and the kind of economy we wish to create. And the Bureau’s front-line expertise is useful in understanding how that purpose can actually be administered. By taking seriously the Bureau’s enforcement experience while keeping it necessarily subordinate to the democratic wishes of Canadians, policy makers can develop an effective and enforceable competition law framework.
So, what is that front-line perspective and what notable changes does the Bureau wish to see?
More Skeptical Treatment of Mergers in Concentrated Markets
In the wake of Toronto-based Rogers Communications' takeover of Calgary-based Shaw Communications, which it opposed (clearly without success), the Bureau is hoping to develop more assertive enforcement against mergers that would be harmful to Canadian consumers. Indeed, spanning the detection, intervention and resolution of anti-competitive mergers, the Bureau’s recommendations include a key divergence from the existing treatment of merger activity.
Although this proposal was floated in its 2022 submission, in 2023 the Bureau makes a more forceful argument for structural presumptions in merger enforcement. This is the idea that mergers over a certain market share should be considered harmful by default. This approach would reverse a current state that considers mergers benign or beneficial by default and only intervenes in a select few transactions (well under one percent of transactions in recent years). Such presumptions would become progressively more skeptical of mergers in sectors with higher levels of concentration, which is relevant to an economy characterized by a few major corporations in key markets.
Beyond just taking a stronger stance against harmful mergers, this approach would bring Canada into closer alignment with jurisdictions like the United States that already rely on such presumptions to guide enforcement decisions. In their own joint letter to the consultation, the US Federal Trade Commission and Department of Justice speak to the merits of these structural presumptions, noting that scholars consider the market share thresholds “critical for effective horizontal merger enforcement.”
Taken together, the Bureau’s 14 merger-focused recommendations would be a welcome departure from a body of law that has been hesitant to intervene even in mergers that present clear harms to Canadians. Because of the industry built up around mergers and acquisitions, with the tens of millions in legal and financing fees associated with Rogers-Shaw as just the most recent example, a less permissive merger regime would certainly be controversial and the subject of intense lobbying. But it would be the right thing to do for Canadians.
Despite its investigations into Google and Amazon, both assumed to still be under way, the Bureau has not litigated a single abuse of dominance case since 2016.
A Wider Net for Tackling Abuse by Dominant Corporations
One area where the Bureau’s thinking has evolved since 2022 is in its view of Canada’s “abuse of dominance” provisions — measures intended to curb anti-competitive conduct by firms with a commanding market position.
Currently, to bring a successful abuse of dominance case, the Bureau must clear three hurdles: prove that a corporation or group of corporations is dominant, show that the corporation is engaged in conduct-weakening competition, and show that the conduct has had a substantial effect in a market. The Bureau now argues that this three-part test has become overly complex and prevented intervention against harmful conduct by dominant players.
The Bureau’s recent enforcement activity would seem to bear this out. Despite its investigations into Google and Amazon, both assumed to still be under way, the Bureau has not litigated a single abuse of dominance case since 2016. This, as enforcers around the world have ratcheted up enforcement against anti-competitive conduct, with a focus on incumbents in digital markets. While there can be no “correct” number of cases, this lack of activity, paired with the Bureau’s openness about its frustration, is a strong signal that something is amiss in the status quo.
The Bureau suggests two potential paths for reform, pointing to Australia and the United States as models. Of the two, Australia offers a more decisive stance against anti-competitive conduct. Rather than requiring effects be proven, Australian competition law focuses on halting anti-competitive conduct. Reform of this kind is likely to better protect small and growing players.
By broadening its ability to intervene against anti-competitive conduct, the Bureau’s proposed abuse of dominance reforms would be key steps to resurrecting a seemingly dormant element of our law.
More Transparent and Decentralized Enforcement
Shifting from the rules that govern corporate behaviour to the administration of those rules, the Bureau in its 2023 recommendations recognizes the need for greater transparency and the merit of decentralizing enforcement. Tucked away near the end of the Bureau’s submission are two recommendations that could have an outsized impact on the future of competition law enforcement in Canada.
First, the agency requests that the requirement to conduct inquiries in private be repealed. Although this is unlikely to result in transparency such as that seen in leading international partners like the United Kingdom, it does suggest that the current level of transparency is not satisfactory. Canadians stand to benefit from a clearer picture of competition enforcement.
The Bureau also appears to have become more confident in the role that a wider range of actors could play in enforcing our competition law. Today the approach is deeply centralized, with the majority of enforcement activity originating from the Bureau and moving through the Tribunal. The Bureau proposes decentralizing enforcement to the market participants who often feel its effects most directly, by lowering the bar for cases to be brought and allowing for damages to be gained in compensation.
Proposed transparency and private access reforms are unlikely to grab headlines. But these recommendations could have far-reaching benefits, creating a richer and more diverse body of competition law and providing Canadians with a better view into whether our laws are truly serving us.
Where Do We Go from Here?
If history is any indicator, the process to bring in a truly modern Competition Act will be long and hard-fought. Although targeted amendments were passed rapidly in 2009 and 2022, the path to the coming into force of the Competition Act in 1986 began in earnest in 1971 and spanned multiple governments. Even in the context of a global competition movement, any government looking to revitalize Canada’s competition laws will face strong opposition. Incumbents will pour resources into the fight against meaningful reform. Threats from tech giants and commentary from status quo-friendly outlets suggest the process is already under way.
The scope of new recommendations proposed by the Bureau gives us an idea of just how deep the issues with Canada’s competition policy are. But it also suggests the scale of the opportunity if Canada takes up the challenge. Canadian citizens and businesses are directly and materially affected by these laws. It’s up to us to make our voices heard as the process unfolds.
