The Act is one of a number of federal economic framework laws of general application. This, in turn, drives innovation and long-term economic growth. Generally sector-neutral and principles-based, the Act has not, for the most part, been updated in any fundamental respect in response to the digitization of the global economy. Allowing private parties to bring cases before the Competition Tribunal for abuse of dominance, so as to supplement public enforcement and better hold dominant firms accountable; Clarifying that "drip pricing," where unattainable prices are advertised without obligatory fees, is understood as a form of conduct that can be addressed under the Act's deceptive marketing provisions; Removing the maximum value of criminal penalties for cartel offences, and reformulating civil administrative monetary penalty maximums based on benefit derived, to better reflect the tremendous volumes of commerce that can be affected by anti-competitive or deceptive conduct, removing arbitrary caps; Adding new considerations for the Competition Tribunal when weighing applications for abuse of dominance, mergers, and competitor collaborations, to explicitly recognize emerging features of the digital economy such as non-price competition, including through consumer privacy, and barriers to entry such as network effects; Instituting an anti-avoidance provision for merger notification to respond to transactions structured so as to avoid mandatory notification; Ensuring consistency in the application of production orders to foreign corporations and affiliates; and. Government of Canada, Budget 2021: A Recovery Plan for Jobs, Growth, and Resilience, April19, 2021. In asking ourselves what works and what need improvement with the Competition Act, there are four key themes that emerge: The often narrow circumstances where the Competition Bureau can intervene; The constraints on what the Bureau can do once it does intervene; Economy to See Negative Impact After SCOTUS Strikes Down Student-Debt Introducing mandatory notification or a voluntary clearance process for certain potentially problematic types of agreement. If harmful competitive effects can be established from coordinated firm conduct whatever the origin (including via algorithms), the case can be made that the Bureau should have grounds to intervene to protect the marketplace. Competition policy's role in the economy can be simultaneously overstated and understated: although competition law itself seeks to address potentially anti-competitive instances of firm behaviour, a competitive economy depends on the contributions of numerous innovative and effective businesses, as well as appropriate business frameworks and regulations across a wide swath of domains. Howe Institute Competition Council, "Krane, Musgrove The Danger of Precautionary Principle Challenges to Nascent Mergers", Intelligence Memo, February24, 2021. The Competition Policy Review Panel made various recommendations in its landmark report of 2008,Footnote 1 which were largely brought into the law the following year. Statutory Review of the Copyright Act, Report of the Standing Committee on Industry, Science and Technology, June2019, at 82. Tervita Corp. v. Canada (Commissioner of Competition), note 39, at paras. See, e.g., Ralph Winter, "Tervita and the Efficiency Defence in Canadian Merger Law", Canadian Competition Law Review 28:2 (October2015): 133, versus Brian Facey and David Dueck, "Canada's Efficiency Defence: Why Ignoring Section 96Does More Harm Than Good for Economic Efficiency and Innovation", Canadian Competition Law Review 32:1 (May2019): 33. What is the Impact of Increased Business Competition?, WP/19/276 See also, Katherine DeClerq, "Billboard toting Apple's privacy policies is put up across the street from Sidewalk Labs", CTV News, July4, 2019. See Food, Health and Consumer Products of Canada, Priorities for healthy homes, healthy communities, and a healthy Canada, September2020. With the added importance of non-price competition in the digital economy, the burden of litigating an efficiencies claim is likely to become even more of a significant challenge for both firms and the Bureau, particularly with more abstract concepts such as privacy or innovation.Footnote 61. Better defining dominance or joint dominance to address situations of. See Federal Trade Commission, "FTC Sues Facebook for Illegal Monopolization", December9, 2020; Alexei Oreskovic, "Facebook says WhatsApp deal cleared by FTC," Reuters, April10, 2014; Federal Trade Commission, "FTC Closes its Investigation into Facebook's Proposed Acquisition of Instagram Photo Sharing Program", August22, 2012. 75-77 and 80-81. We revise the simulation of Van Sinderen and Kemp (Economist 156(4):365-385, 2008) who use a cut in . It may therefore be especially difficult to apply the law or distinguish predatory pricing from normal competition on the merits. Modelling the macroeconomic impact of competition policy The United Nations Guidelines for Consumer Protection, as stated in the secretariat's note on consumer protection and competition policy, do not provide a The Impact of Competition Policy: What are the Known Unknowns? Employment and Social Development Canada is responsible for federal labour policy, while direct regulation occurs primarily at the provincial and territorial level. Robust expost - evaluations of competition policy decisions allow demonstrating more convincingly the benefits of competition policy in terms of better functioning markets and an increase in wellbeing of - consumers. An additional concern is that a future-looking prohibition order may not easily be tailored to address all forms of coordination, such as an agreement among competitors to cease certain behaviour. Likewise, the manner, quantity or use of information collected could be circumscribed. Competition law does not seek to punish success or invalidate the benefits of a free and innovative marketplace, and recognizes that competitive markets can and do yield some barriers to entry such as intellectual property, commercial secrets and network effects. codes of conduct) to complement its antitrust approach.Footnote 128. Powers, Acting Assistant Attorney General of the Department of Justice, Antitrust Division, U.S. Department of Justice, Update on DOJ 'No-Poach' and 'Wage-Fixing' Criminal Antitrust Prosecutions, Criminalization of wage-fixing and no-poaching agreements, A Proposal for Protecting LowIncome Workers from Monopsony and Collusion, Discount car rental penalised for advertising unattainable prices, StubHub to pay $1.3 million penalty for advertising unattainable prices for event tickets, Minister of Innovation, Science and Industry Mandate Letter, Vestager revives dormant antitrust weapon against tech groups, A Brief Overview of the Federal Trade Commission's Investigative, Law Enforcement, and Rulemaking Authority, Guidelines for Authorisation of conduct (non-merger), App makers sue Apple and claim it uses 'monopoly power' to charge fees, Private Party Access to the Competition Tribunal: A Critical Evaluation of the Section 103.1 Experiment, submission of David Vaillancourt to the House of Commons Standing Committee on Industry, Science and Technology's study, "Competitiveness in Canada", Vigorous enforcement, not studies, are what Canada's competition laws need, Exclusive dealing, tied selling or market restriction, Prohibition order, or order to "restore or stimulate competition", Substantial or complete control of class or species of business, Substantially lessen or prevent competition, Prohibition order/prescriptive remedy (incl. What We Heard Report, Broadcasting and Telecommunications Legislative Review Panel, June2019. 73-81. There is thus a case for the expansion of s. 90.1 to encompass more than just direct competitor collaborations.Footnote 107. The World's Largest Technology Companies In 2021: Apple's Lead Widens as Coinbase, DoorDash Storm into Ranks, 2018 Roundup of Internet of Things Forecasts and Market Estimates, Big Tech is America's new 'railroad problem', Freeland says today's big tech firms are like the monopolies of a century ago, The Gap in Canadian Competition Law Following, Abuse of Joint Dominance in Canadian Competition Policy, Lawmakers unveil major bipartisan antitrust reforms that could reshape Amazon, Apple, Facebook and Google, Disfunction in Canadian grocery business 'needs attention,' government probe finds, Canada watching 'closely' after Google ordered to work out repayment to French news organizations, publishers, Amazon documents reveal company's secret strategy to dodge India's regulators, Artificial Intelligence & Collusion: When Computers Inhibit Competition, The Implications of Algorithmic Pricing for Coordinated Effects Analysis and Price Discrimination Markets in Antitrust Enforcement, Pricing Algorithms and Implications for Competition. The provision is targeted and there are clear exemptions and defences for legitimate agreements that arise from a collective bargaining process, or that are ancillary to a broader collaboration among employers. Alongside its benefits, however, AI raises new challenges for competition law. Competition policy responses to COVID-19 - OECD In certain other unilateral conduct provisions, for example, even the fact of conduct being "widespread in a market" without a solely responsible party is sufficient grounds for intervention. For some additional considerations, cf. Alternatively, selling one venture could ultimately fund subsequent start-up activity. See Lauren Feiner, "Lawmakers unveil major bipartisan antitrust reforms that could reshape Amazon, Apple, Facebook and Google", CNBC, June11, 2021. While competition policy, in today's economy especially, intersects with other areas of focus privacy, security and disinformation, among others the required government response to the challenges of the information age is multi-faceted, and happening across numerous areas. The Impact of Competition Policy Enforcement on the Functioning - SSRN See notes 24and 29; see also Prime Minister of Canada, "Minister of Innovation, Science and Industry Mandate Letter", December16, 2021. Herbert Hovenkamp, Competition Policy for Labour Markets, OECD Roundtable on Competition Issues in Labour Markets, June5, 2019. Both subjective intent and reasonably foreseeable consequences are relevant, and distinguish truly anti-competitive behaviour from justifiable business decisions that nevertheless may prejudice a competitor. Learn what competition in business is, why it's important and how you can devise strategies to manage competition to increase an organization's market share. Moreover, large digital firms' expansion into adjacent markets and vertical integration are allowing these players to participate directly in the markets in which they also serve as intermediaries or gatekeepers.Footnote 6, Even the nature of competition itself is changing as firms increasingly compete for consumers in dynamic ways and on features other than price, challenging some of the traditional methods of analysis.Footnote 7 Prominent examples come from two-sided, digital platforms, which often compete for consumers with free digital goods or services that they monetize in other ways, such as advertising, the leveraging of user data to sell products, or sale of the data outright.Footnote 8 Customer data can become akin to a currency, with consumers of a "free" service paying through rights to personal or behavioural data, making privacy safeguards themselves a dimension of competition.Footnote 9. "Footnote 88 While such structural and proactive approaches remain under consideration in Canada, the below discussion concerns the elements of the current abuse of dominance approach in s.79. See, No River too Wide, No Mountain too High: Enforcing and Promoting Competition in the Digital Age, Remarks by Commissioner of Competition Matthew Boswell, Canadian Bar Association Competition Law Spring Conference, May2019. (PDF) Competition policy and the impact of market structure on Five bills introduced in the U.S. in June2021 (see Kang, note 22) would restrict the types of business a dominant firm could own, outlaw discriminatory or self-preferencing behaviour by them, make their acquisitions rebuttably unlawful, and impose data portability standards upon them, among other things. The requirement for the Commissioner to prove that the anti-competitive practice is resulting in, or likely to cause, an SLPC may be unduly strict. For criminal matters, it leaves the fate of the matter to the discretion of prosecutors, who must balance it against a host of other priorities. Similarly, apps can be developed by small teams with limited overhead and made available to millions of users through mobile devices. The Act's s. 36allows a civil cause of action for damages suffered due to conduct that is subject to criminal prosecution, such as cartels or deceptive telemarketing, or the breach of an order. The high level objective of the Act to maintain and encourage competition in Canada remains uncontroversial, but the tools and processes in place to realize the end goal remain subject to competing views. Critics note its potential for adverse impact on consumers without necessarily generating any of the intended benefits in global markets. It is recognized that not all feedback may relate directly to the Competition Act or to competition enforcement policy, but will be valued for its contribution to Departmental and governmental priorities and undertakings, including other evolving areas of federal policy. Given the breadth of the Act's existing deceptive marketing provisions on which they were based, however, these amendments did not dramatically alter the legal landscape with respect to false and misleading representations.Footnote 120 The tackling of drip pricing in the BIA Amendments, similarly, largely enshrined the Bureau's existing approach,Footnote 121 helping to simplify enforcement by removing doubt about the misleading nature of the practice while otherwise maintaining the existing requirements of the provisions, such as materiality and consideration of the general impression given. See CASL, ss. All businesses are affected in some way by their competitors, and this may have an impact on the decisions businesses make. This can lead to evidentiary obstacles where AI has undertaken much of the process. This article reviews the role of competition policy in economic development and the experiences of developing countries such as Brazil and South Korea. Indeed, it has been suggested that the potential may exist for a pernicious cycle in which such power can be wielded at the policy level to gain further economic advantage.Footnote 77 Given the indispensability of the Internet as a medium for modern-day commerce, the situation has been likened to the early railroad oligopoly in the United States that led to the advent of antitrust law.Footnote 78. Bill C-18, An Act respecting online communications platforms that make news content available to persons in Canada. As long as firm actions are able to limit competition, a certain degree of influence in the marketplace is implied, and it may be fairly asked how laborious the dominance test need be.Footnote 90. 35, No. The Government is considering the following possible reforms and would welcome input: The digital economy has given rise to some of the largest corporations on the planet.Footnote 69 These companies have quickly come to populate the upper ranks of stock market capitalizations and command annual profits in the tens of billions of dollars.Footnote 70 Beyond their sheer size and global reach, large digital players are integrated into nearly every facet of our daily social and economic interactions, including how we access information and what information we access on nearly any topic. Digital innovation is transforming Canada's economy and improving Canadians' quality of life by enhancing productivity, diversifying the consumer experience, connecting people, and opening up new markets. To mitigate this problem, the Bureau has expanded its merger intelligence gathering activities. Another important consideration for effective enforcement stems from how cases are initiated, whether through private action or public enforcement by the Bureau. Similar anti-avoidance or "creeping acquisition" mechanisms can be found in both U.S. and EU law.Footnote 53 However, the formula for calculating notification thresholds themselves has not been altered since 2009, when the "size of transaction" threshold, based on the assets or revenues (from sales in or from Canada) of the parties being acquired, was indexed to growth in the gross domestic product and updated annually. Notably, apart from Canada's Anti-Spam Legislation (CASL),Footnote 5 it was not until 2022 that any amendment to the Act directly sought to address digitally-based challenges following the rise of the Internet. This report provides an update of the macro-model simulations of the impact of the competition policy interventions of the European Commission over the period 2012-2020. Some additional issues in the area of competitor collaboration are discussed below. Finally, the SLPC test is conducted similarly to other effects analyses in the Act, such as for mergers, comparing the level of competition with and without the alleged conduct. Finally, the role of countervailing worker power, including through unions and recruiters, must be considered.Footnote 66, While thought continues to evolve as to what methodology would be appropriate to evaluate labour effects in merger review,Footnote 67 there are at least two points in the Canadian system where a closer examination of labour effects could occur. Backgrounder: Government of Canada announces expert advisory group on online safety, Heritage Canada, March30, 2022. For example, in his recent book, The Curse of Bigness (Columbia Global Reports, 2018), Tim Wu (now advising the Biden administration) argued that increasing corporate concentration contributes to regulatory capture, the process by which private interests are able to unduly influence the direction of public policy. The issues surfacing in the interconnected, modern economy are global in scope, placing an emphasis on international coordination and convergence. The UK's digital competition expert panel recently expressed concern about three distinct forms of gatekeeping power that large digital platforms may have, namely "the ability to control access and charge high fees; the ability to manipulate rankings or prominence; and the ability to control reputations". Even without mergers, concentration can increase when businesses exit, or when some businesses gain share from others by offering better products and services, a natural and expected result of the competitive process. by Robin Shaban February 22, 2022. AI has the potential to foster innovation in virtually every industry. In February2022, Minister of Innovation, Science and Industry Franois-Philippe Champagne announced an intention to undertake a review of the Act, and explore more immediate improvements in certain areas where solutions were readily identifiable.Footnote 19 Informed by the Bureau's enforcement experience, international best practices, and a multitude of scholarship, articles and submissions to various public fora, including the consultation led by Senator Wetston, these and other areas were ultimately addressed in 2022 Budget legislation.Footnote 20 These amendments were designed to address concrete and well-recognized challenges in the legislation and to reinforce the Bureau's enforcement capacity following its 2021 budgetary increase. PDF The role of competition policy in promoting economic recovery - OECD See Ralph Winter, "The Gap in Canadian Competition Law Following Canada Pipe", Canadian Competition Law Review 27:2 (Fall 2014). Competition Bureau statement on the application of the Competition Act to no-poaching, wage-fixing and other buy-side agreements, November27, 2020; Latifi v. The TDL Group Corp., 2021 BCSC 2183; Mohr v. National Hockey League, 2021 FC 488. See Ariel Ezrachi and Maurice E. Stucke, "Artificial Intelligence & Collusion: When Computers Inhibit Competition", University of Illinois Law Review (March2017): 1775. The role for competition policy in economic development: the South Some have made the case that the overwhelming focus on product markets in antitrust analysis is unprincipled or the product of outdated assumptions.Footnote 64 As concentration in labour markets has been blamed for the failure for wages to keep pace with economic growth following the Great Recession, there have been calls for a more holistic analysis of merger reviews, whether within the existing framework or through new tools.Footnote 65, In a paper commissioned by Innovation, Science and Economic Development Canada, economist Marcel Boyer notes various challenges and pitfalls of applying competition law to labour markets. The former s. 45still required the establishment of undue harm to competition, and beyond a reasonable doubt moreover. See Unlocking digital competition, note 21, at p. 41. Impact of competition on business decision making - Competitive - BBC Minister Champagne maintains the Competition Act's merger notification threshold to support a dynamic, fair and resilient economy, Innovation, Science and Economic Development Canada, February7, 2022. However, the likelihood that such acquisitions will fall below pre-merger notification thresholds, or otherwise avoid sufficient scrutiny, is particularly acute in this realm.Footnote 37 A nascent digital competitor may not yet have significant Canadian assets or sales at the time of acquisition but nevertheless be a promising future competitor. This may include the publication of price lists, or the use of price-matching guarantees or most-favoured-nation clauses. For instance, a company that controls a platform may also compete on it, and may push users towards purchasing its own products and services, rather than those offered by rivals. Contingency plan examples: A step-by-step guide to help your business Charley Connor, "CMA responds to Furman report", Global Competition Review, March22, 2019. In considering how merger review law could be modified, expanded or updated to ensure its ongoing relevance in the modern context, care will need to be taken to avoid business uncertainty or the discouragement of investment. ", Innovation, Science and Economic Development Canada, VIII. See Marcel Boyer, Comments on Competition Policy and Labour Markets, CIRANO, July26, 2022, pp. There is no equivalent to s. 36for civilly reviewable conduct, however, and the fact that such conduct is not actually deemed unlawful under the Act (merely subject to a remedial order upon review) prevents civil recovery in tort for losses suffered. Competition law has been thrust into the centre of Canadian policy debate as concerns mount about affordability, market concentration and the enormous influence of new economic giants. Competition policy aims to ensure Emilio Calvano, Giacomo Calzolari, Vincenzo Denicol, Sergio Pastorello, "Algorithmic Pricing: What Implications for Competition Policy? Where harmful competitive effects do not become apparent within the first year after completion, an increasingly likely scenario in the dynamic markets that typify the digital economy, the only means to address the consequences of the concentration would arise under the Act's anti-competitive conduct provisions, such as abuse of dominance.Footnote 40 Some have argued that the difficulty of predicting future events necessitates that this be the solution.Footnote 41 Note, however, that this approach cannot remedy consequences of concentration, such as higher prices, that are not themselves an abuse. While mergers are reviewed by the Bureau on a case-by-case basis and competitive threats addressed, lawful concentration can continue to occur in the economy.Footnote 35 There may be several reasons for this through merger activity, including the cumulative effect of acquisitions that do not surpass the SLPC test on their own, mitigating factors at the time of merger such as market-wide change or potential new entrants, or the operation of the Act's efficiencies defence. Competition policy | government | Britannica 10 See EU, D. (2022), Modelling the macroeconomic impact of competition policy: 2021 update and further development, . See Stigler Committee on Digital Platforms Final Report, note 21, at p. 98. Consider, for example, s. 1of the Sherman Act in the U.S., article 101of the Treaty on the Functioning of the European Union, or s. 45of Australia's Competition and Consumer Act 2010. The result is that parties to non-notifiable transactions need only wait for one year after completion much of which may be spent reorganizing the new company in any event before reaping the benefits of diminished competition, such as by raising prices. Deeming or inferring agreements more easily for certain forms of civilly reviewable conduct, such as through algorithmic activity, especially given the difficulty of applying concepts like "agreement" and "intent" in the age of AI. As noted above, the Act contains other provisions that address specific forms of conduct that may constitute restraints of trade or harm competition, in ss. Following the COVID-19 pandemic, an increasing cost of living threatens to worsen inequalities and has Canadians worried about their bottom line and the security of supply chains. See also OECD,Algorithms and Collusion: Competition Policy in the Digital Age, June2017. subscription traps; free trial offers; deception for the purpose of collecting consumer data). For example, the absence of public information on the conduct of digital platforms and the functioning of digital markets is a challenge for effective advocacy as much as enforcement, where grounds for an inquiry may not easily arise in the absence of critical information voluntarily provided by a source in possession of it. If enforcement moves too slowly in dynamic digital markets, in particular, the harm resulting from the conduct may be irreversible. Competition Tribunal, Practice Direction Regarding an Expedited Proceeding Process Before the Tribunal, January2019. House of Commons Standing Committee on Industry, Science and Technology, Competitiveness in Canada, April13-22, 2021. There is no shortage of international practice to draw from in this regard. However, the bottom line is that the increased complexity of mergers has made it challenging or impossible to review all of the new information, prepare court filings, obtain a hearing date, and complete the hearing all within the 30days, with the result that parties can still close and potentially harm the market irreversibly before the opportunity for interim relief even arises. The importance of taking remedial action in advance of a transaction cannot be understated, not only because of the inherent difficulties in unwinding a consummated merger, but also because of the one-year limitation period established by the 2009 amendments. The purest forms of supply-side collusion, i.e. Some considerations that have stoked debate in recent years are outlined below. The Act's merger review regime dates from 1986, with the most substantial recent reform related to the process for notifiable mergers, a key part of the 2009 amendments that followed recommendations of the Competition Policy Review Panel.Footnote 34 While all mergers are reviewable by the Bureau to ensure that they will not cause a substantial lessening or prevention of competition (SLPC), only those that surpass a $400-million threshold for the size of parties, and an annually-indexed threshold for the size of the transaction ($93 million in 2022), are required to provide advance notification to the Bureau and delay closing until the lapse of statutory waiting periods. Competition law enforcement, in most cases conducted ex post facto and dependent on a plethora of economic evidence, does not generally provide a rapid response to urgent marketplace issues. Paul Fletcher MP, Minister for Communications, Cyber Safety and the Arts, April20, 2020; In Canada, compliance with federal privacy law was raised as a potential justification for anti-competitive conduct in a prominent competition law case, The Commissioner of Competition v. The Toronto Real Estate Board, 2016 Comp. As novel practices and new realities shape business and markets in ways that could not have been foreseen when the Act was crafted, it is necessary to ensure that the Act remains well equipped for the future. With digital economic activities in Canada growing roughly 30% faster than the economy as a whole, this trend shows no sign of slowing.Footnote 71 The COVID-19 pandemic, in particular, has highlighted the extent to which digital commerce and platforms have been integrated into the mainstream economy and are heavily relied upon to conduct business and procure goods and services. Last updated 22 Mar 2021 Share : The main aims of competition policy are to promote competition; make markets work better and contribute towards improved efficiency in individual markets and enhanced competitiveness of UK businesses within the European Union (EU) single market.
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