If the Competition Act isn’t broken, why fix it?

  • May 17, 2021

The CBA Competition Law and Foreign Investment Review Section urges MPs reviewing the Act to proceed with caution.

Canada has one of the most sophisticated competition law enforcement regimes in the world, says the Canadian Bar Association’s Competition Law and Foreign Investment Review Section. That’s why changes to the Competition Act must be made carefully, after proper deliberation and considering all the relevant evidence, to avoid significant unintended consequences.

In comments to the House of Commons Committee on Industry, Science and Technology as it studies competitiveness in Canada, the Section stresses how important it is not to rush into amendments and to maintain the Act’s focus on Canadian-specific economic factors and policy objectives. Here are a few of the issues on which the Section provides feedback.

Mergers and acquisitions, efficiencies

Mergers and acquisitions are carefully reviewed by the Competition Bureau, especially for complex mergers. “The Bureau typically compels production of tens of thousands of internal company documents and data going back several years, which are reviewed by a large team of case officers, economists and lawyers to assess whether a transaction should be blocked or approved, either conditionally or unconditionally,” the Section writes.

In addition, the Bureau has a long history of promoting competition in accordance with the Act’s objectives and a well-equipped toolbox for ensuring compliance, including “formal and informal investigation, seeking authorization from a court on an ex parte basis to compel document production and testimony, and even powers for search-and-seizure investigations on companies whose conduct may be in question.”

Moreover, the Section says, the 2021 federal budget “reinforces the regime by significantly increasing resources for the Bureau over the next five years. In our view, it would not be prudent to rush to amend Canada’s competition laws given the Bureau’s ongoing work and the recently increased resources.” We should give the Bureau time to use its new resources and wait until it had a chance to identify what enforcement issues remain before considering amendments.

The Section cautions against characterizing the efficiencies defence as being pro-business at the expense of consumers. The defence is “a balanced approach where certain agreements or mergers can be assessed on their own merits to determine if gains in productivity and innovation outweigh the potential costs from reduced competition,” it states, adding that efficiencies bring significant economic benefits to Canadians by generating economies of scale, higher productivity and enhanced innovation.

“Canada’s competition laws aim to prevent anti-competitive conduct rather than industry consolidation itself,” the Section says, and one of the core mandates of the Minister of Innovation, Science and Industry is to support innovative ecosystems and help businesses scale-up. Consolidations that do not erect insurmountable barriers to entry are not incompatible with vigorous competition.

Digital economy

There is no question our reliance on the internet is raising concerns over data collection and consumers’ privacy rights. But the Section does not believe it is the role of the Competition Bureau to tackle these challenges. “Concerns about the collection, use and dissemination of personal information and data by technology companies are being addressed in the proposed reforms to Canada’s privacy law in Bill C-11, the Digital Charter Implementation Act,” it says, adding they should be addressed carefully to avoid inadvertently hampering innovation and competitive behaviour.