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Calls for more progressive laws on competition face push back from Bay Street establishment


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Calls for more progressive laws on competition face push back from Bay Street establishment

Even the head of Canada’s competition watchdog agrees: the country’s laws on anti-competitive markets and mergers need a major overhaul.

But calls for change face stiff opposition from the legal and economic establishment.

For more than a year, a small but growing group of academics and researchers has been arguing that Canada’s Competition Act, which has long focused heavily on economic efficiency and hasn’t undergone a substantial update since 1986, should be reformed to foster a more inclusive economy in the digital age.

It’s time to rethink the laissez faire approach that assumes markets are naturally competitive, those critics say, arguing that unchecked corporate dominance is bad for workers, consumers, democracy and even the environment.

Matthew Boswell, commissioner of the Competition Bureau, delivered a blunt message in October to a Canadian Bar Association conference that draws the country’s most prominent lawyers in the field, most of whom work at firms that represent business interests.

“It’s high time we pause and ask ourselves whether our competition laws are really working in the best interest of all Canadians,” Boswell said.

He took particular aim at the “efficiencies defence” which can save a merger that is bad for competition and consumers if the tie-up creates enough cost savings or other efficiency gains. Some experts have said it could play a role in the bureau approving the megamerger between Rogers Communications Inc. and Shaw Communications Inc.

Boswell might have been seizing on ideas that have gained traction in the U.S., where President Joe Biden has appointed noted progressives to senior roles in the antitrust space, including Federal Trade Commission chair Lina Khan.

Thirty-two-year-old Khan wrote a seminal Yale Law Review article on Amazon in 2017, arguing for new scrutiny of big tech and monopolies — her detractors call it “hipster antitrust.”

Boswell’s remarks came about a year after Robin Shaban and Vass Bednar began to loudly lobby for competition law in Canada to go beyond a focus on economic benefits. The pair, along with others working in the space, have met with resistance from this country’s business law establishment.

Shaban, an economist by training, once worked as a merger review officer at the Competition Bureau. She thought competition law was meant to “benefit people,” but says she quickly learned, “That’s just not what it’s about.”

She quit to pursue a PhD in public policy and co-founded Vivic Research, a social justice-oriented economic research firm. In 2020, she teamed up with Bednar, executive director of the master of public policy program at McMaster University, who Shaban calls a “powerhouse in terms of sharing ideas.”

They began publishing newspaper opinion pieces on topics such as the Rogers/Shaw merger, big tech and wage fixing and wrote a research report for McGill University’s Centre for Media Technology and Democracy, arguing Canada’s laws were “not designed to protect competition in the digital world.”

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“People want to hear different perspectives than what the Bay Street community puts out,” Shaban said in an interview.

While Canada lacks the well-funded civil society groups that tend to take on corporate interests in the U.S., she said, she has seen increasing interest in competition issues from those in the labour movement and other academic and policy “wonks” like herself.

Senior lawyers and economists have responded to Shaban and Bednar with op-eds of their own, charging that arguments in favour of undoing big tech mergers are “mistaken” or calling “hipster antitrust proponents” virtue-signallers whose ideas threaten prosperity.

“While the United States is a market leader in populist outrage and hyperbole, Canada is not far behind,” wrote economist Robert Atkinson in a defence of the productivity of large corporations published by the Macdonald Laurier Institute think tank. He pointed to writing by Shaban and Bednar as examples.

In a December article, lawyers from Blake, Cassels & Graydon LLP urged Canada not to follow the U.S. lead on competition policy, citing increased sector-based regulation here plus the need to protect our smaller economy.

Former University of Toronto law school dean Edward Iacobucci wrote a recent paper that was published to kick off a consultation launched by independent Senator, and former Competition Commissioner, Howard Wetston.

In it, Iacobucci considers but ultimately dismisses what he dubs the “all-things-matter approach” in favour of an even more singular focus on economic efficiency.

“There is a certain amount of paternalism exhibited toward those who challenge core economic concepts or classical assumptions … largely along the lines of ‘they don’t understand basic economics,’ ” Jennifer Quaid, a civil law professor and vice-dean of research at the University of Ottawa, wrote in response to the Iacobucci paper.

Quaid argues the desire for change in competition law is not just “uninformed populism directed at ‘economic power,’ ” but in fact a growing awareness that economic policy in general “must be in the service of the core values on which a society is built.”

“Growth and productivity that occur at the expense of considerations such as distributive fairness, equality, protection of human dignity and democratic freedom provide a weak foundation for a society,” Quaid said.

Despite Bay Street’s preference for the status quo, or something close to it, change to competition law may be coming. Parliamentary committees have repeatedly taken up the topic over the past two years and the Prime Minister’s December mandate letter to the federal Innovation Minister instructed him to review the legislation.

Subrata Bhattacharjee, a partner at Borden Ladner Gervais LLP, said in an interview it’s good to “have more voices and different voices” debate the topic.

He believes the federal government is trying to address the harms of big tech through changes to broadcasting and privacy legislation but he also welcomes a review of competition policy.

Still, he says, Ottawa shouldn’t “throw the whole thing out simply because there are particular trends going on in other jurisdictions.”

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