Submissions: Consultation on the future of competition policy in Canada: Labour, consumer or public interest groups

Unilateral Conduct

Of concern to the Society for Canadians Studying Medicine Abroad is a dominance of the field of medicine by Canadian Medical Graduates (CMGs) and the deliberate marginalization and restriction of access to the field for International Medical Graduates (IMGs). The dominance by CMGs is supported by the various Canadian Faculties of Medicine as represented by the Association of Faculties of Medicine of Canada (AFMS). In 2006 the AFMC resolved "That all graduates of Canadian medical schools be assured access to a residency position in Canada to complete training necessary to enter practice." This resolution has resulted in an anti-competitive process whereby medical residency positions in the Canadian Residency Matching Service (CaRMS) for CMGs are protected from competition by IMGs. As a result of this anti-competitive process, IMGs are prohibited from applying to 90% of available Canadian medical residency positions, and from applying to a number of specific medical specialties.

In attempting to address these anti-competitive policies with CaRMS and the AFMC, SOCASMA has encountered a diffusion of responsibility whereby CaRMS says it is not responsible for this policy, only for running "The Match," AFMC claims that these policies are made in collaboration with provincial Ministries of Health and therefore they are not responsible, and the Ministries of Health claim that it is the faculties of medicine as represented by AFMC and the individual faculties that determine admission criteria.

Based on the above, defining dominance or joint dominance to address situations of de facto dominant behaviour, such as through the actions of firms that may not be unmistakably dominant on their own, but which together exert substantial anti-competitive influence on the market would be helpful in addressing the obfuscation SOCASMA has encountered from these various organizations. Legislation that recognizes the anti-competitive effects of several organization's joint policies and practices would make it easier to address these anti-competitive processes and develop appropriate solutions that provide access to the profession and to medical residency training for IMGS, all of whom must be Canadian citizens or permanent residents to apply to the CaRMS Match, and as such are entitled to equal treatment and access to the profession under the law.

Competitor Collaborations

AFMC and CaRMS have a written contract that defines their relationship. However the contracts or agreements between CaRMS, AFMC, and the provincial Ministries of Health are often not in writing, and therefore are not transparent. SOCASMA would support development of processes that deem or infer agreements and broaden and/or strengthening the Competition Act's civil competitor collaboration provisions to discourage more intentional forms of anti-competitive conduct, including through examining past conduct and introducing monetary penalties and making collaborations that harm competition civilly reviewable even if not made between direct competitors.

Deceptive Marketing

SOCASMA believes that additional enforcement tools would be a welcome addition to the competition act, specifically strengthening Tribunal's ability to make orders compelling those involved in anti-competetive practices to cease and desist from actions that harm competitors and to create more equitable processes.

Administration and Enforcement

SOCASMA supports these initiatives, in particular introducing new forms of civil enforcement and allowing private parties to seek compensation for damage suffered from civilly reviewable conduct under the Competition Act.

Comments and Suggestions

The Purpose of the Competition Act is "to maintain and encourage competition in Canada," and "to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy." Physician's who practice medicine in Canada may be viewed as small enterprises, and the current marginalization of IMGs in the CaRMS Match is clearly designed to restrict competition between CMGs and IMGs, and to protect CMGs from competition by IMGs for residency spaces. The public interest is clearly best served by selecting the best physicians to progress to post graduate medical education and to serve the health needs of the Canadian population. It is in the public interest that all CaRMS residency positions be fully open to competition between both CMGs and IMGs and that the best and most qualified candidate be chosen for medical residencies. Instead, CMGs are protected by anti-competition policies and weaker CMG candidates may progress to protected residency positions while strong IMG candidates are marginalized by anti-competitive policies. Since all CaRMS applicants must be Canadian citizens or permanent residents entitled to equal treatment and opportunities under Canada's laws and human rights codes, this anti-competitive process should be completely unacceptable. There is a need for the Competition Act to contemplate this type of anti-competitive practice and to have clear language that defines these anti-competitive practices and clear social and legal remedies to interrupt these practices. Further, we would note that the Government of Canada through its immigration policies is endeavoring to address the current health care crisis by attracting skilled immigrants including physicians and other health care professionals. The anti-competitive practices by AFMC, CaRMS, and provincial Ministries of Health that protect CMGs from competition at the expense of IMGs and at the expense of the Canadian population who are deprived of the services of the most capable candidates for medical residency is not acceptable nor in the public interest. These anti-competitive practices are also at odds with the recognition by the federal government of the value of international education experiences. It is time for these anti-competitive practices to be stopped, and a revised and strengthened Competition Act offers an avenue for addressing these inequities.

Merger Review

Communication with the public in a more open manner. The concern is the process to provide feedback is not transparent or easy to find ways to communicate. There needs to be an easy to use public format to write, present on topics discussed with the competition bureau.

Unilateral Conduct

Government needs to ensure fairness. It is much easier for businesses or lobby groups to participate. This needs to change. Provide ways to improve participation via updated Government websites.

Deceptive Marketing

Have improved whistle-blower protection, reports available. It appears as though the competition bureau is unable to ensure there's competition. We need ways to have better public services and a way for federal government to make reforms based on decisions.

Administration and Enforcement

Provide alternatives to private corporations that have a large amount of owned assets from purchasing similar businesses. Ensure protection for workers affected by acquisitions especially from foreign companies.

Merger Review

1. The revision of pre-merger notification rules to better capture mergers of interest.

The Council fully supports revising the pre-merger notification rules and closing the loopholes in pre-merger notification described in the Bureau's February submission, including:

1. Digital and other transactions that are below the merger thresholds, including the so-called killer acquisitions,[1] which eliminate emerging competitive threats, and therefore would substantially impede future competition and innovation, significantly reduce consumer choice, variety and access to higher quality and more innovative goods and services, and prevent dynamic competition in the longer-term future, through removing from the market a promising nascent digital or other competitor.
2. Mergers of interest that involve foreign businesses that can have negative effects on competition and consumers in Canada – in order to reduce the risk that the Bureau would not be able to assess sales into Canada, which are made by the target firm but are not generated from Canadian assets. Removing this loophole would be particularly important to consumers by better ensuring that potentially anticompetitive cross-border mergers, including digital mergers, are reviewed by the Bureau from a Canadian competition, consumer and marketplace perspective.
3. Revising the pre-merger notification rules to capture what the literature calls serial mergers of interest. These revisions would encompass the accumulated effects of two or more killer acquisitions, as described above, as well as other acquisitions by the same powerful conventional or digital firms and platforms. The revisions could also address other examples of the more general problem of serial and creeping acquisitions, when larger firms with market power make several acquisitions of small firms. For these serial mergers, each acquisition falls below merger review size thresholds; but nonetheless these smaller acquisitions have the aggregated effect of substantially lessening current competition, decreasing consumer welfare and choice, and most importantly preventing future competition and innovation. These serial mergers essentially generate market concentration and dominance through creep and stealth.[2]

2. The extension of the limitation period for non-notifiable mergers (e.g., three years), or tying it to a voluntary notification.

The Council fully agrees with extending the limitation period and tying the period to voluntary notification for the reasons described very well in the ISED November consultation document and in the earlier Bureau February submission. These reasons include convergence with trading partners, and the ongoing costs and challenges of continuously monitoring industry developments, and of identifying, collecting and assessing the required information on problematic individual and serial mergers of interest in rapidly evolving digital and other markets.

3. The easing of the conditions for interim relief when the Bureau is challenging a merger and seeking an injunction.

The Council agrees that easing the conditions for interim relief is needed given the expanding size, complexity, and information requirements of transactions, and the simultaneous need to protect competition and negatively affected consumers and smaller businesses on an interim basis. This proposed reform is particularly important in the digital space and for cross-border transactions in both digital and conventional markets – as described on page 24 of the ISED November consultation document. The international competition policy community has been arguing for some time that earlier interventions are needed by competition authorities before the 'dead small business bodies' accumulate in affected digital and other markets because of the long duration of many competition cases, and the many years before permanent remedies can be imposed and become effective in protecting smaller enterprises as well as competition and consumers.[3]

This proposed reform, as well as the first two merger review reforms discussed earlier, could be especially relevant to identifying and securing information on potentially problematic domestic and cross-border vertical and conglomerate mergers, with which Canada and many other often smaller competition law jurisdictions and authorities have limited experience to date. Expanding attention is now being given in the competition literature, conferences and webinars to vertical and conglomerate mergers and their potentially harmful effects on competition and consumer welfare.

For example, two cartel experts, Levenstein and Suslow (2022: Abstract) argue persuasively in their article on vertical mergers and coordinated effects that: "Vertical mergers can expand the scope for monitoring, coordination, punishment, and exclusion on the part of horizontally colluding firms. The very high horizontal concentration levels observed in markets with explicit collusion also suggests that the merger guidelines address such patterns of market dominance." Coordination effects can be especially important for vertical and conglomerate mergers in digital markets.[4]

The Council also agrees with the references to vertical mergers in the ISED November consultation document; and in Beck and Scott Morton (2022) on the imperative to:

• more fully evaluate the evidence on vertical mergers, which, for example;
• would lead to common ownership at different stages of national, multi-country region and global supply chains;
• and why their pro-competitive nature should not be presumed;
• and instead vertical transactions that previously were seen as benign should be examined individually and in detail on their merits and potential negative effects on market competition and consumer welfare and well-being.

[1] See for example, in the bibliography, Cunningham et al (2020) "Killer Acquisitions"; Massolo (2022) and Bary and Lecole (2022) on mergers and other antitrust cases in big tech and a review of EU and national case law; and Bester (2022) on a merger policy for a dynamic and digital Canadian economy, which was published in September 2022, covers many of the same merger issues as the Bureau's February 8 submission, and is referenced in the Bureau submission eight times.

[2] See Denise Hearn and Robin Shaban "The Hidden Trend Reshaping and Hurting the Economy: Serial Acquisitions. Mega-mergers get the ink, but Canada needs to evaluate its legislative and regulatory ability to deal with big companies swallowing small competitors," IRPP Policy Options, November 30, 2022 at https://policyoptions.irpp.org/magazines/november-2022/the-hidden-trend-reshaping-and-hurting-the-economy-serial-acquisitions/?utm_source=Policy+Options+Newsletter&utm_campaign=c68c5fd322-EMAIL_CAMPAIGN_2022_02_14_05_26_COPY_01&utm_medium=email&utm_term=0_26f66e24ce-c68c5fd322-104317983&mc_cid=c68c5fd322&mc_eid=9f5eb54878

[3] This has been a recurring theme in the studies, webinars and conferences over the past five years on competition law reform and the potential need for ex-ante regulation in the EU, UK, US and other jurisdictions – see for example Marsden and Podszun (2020) on restoring balance to digital competition, sensible rules, and effective enforcement.

[4] See for example Bourreau and de Streel (2019) on digital conglomerates, bundling and other strategies of envelopment that allow big tech platforms to envelop their smaller and often more efficient and innovative competitors in adjacent markets, raise entry barriers for innovating entrants, or soften competition by increasing product differentiation in an excessive manner.

QUESTIONS 4 AND 5 UNDER THIS TOPIC WILL BE SUBMITTED IN A SEPARATE FORMS SUBMISSION

4. Changes to the efficiencies defence, e.g. restricting its application to circumstances where consumers or suppliers would not be harmed by the merger.

Among the many possible changes to the efficiencies defence described in the Bureau and ISED documents and other merger review studies in the bibliography, the Council strongly believes that: (i) efficiencies should no longer be given primacy in merger review; (ii) the efficiencies defence should in fact be fully removed from the Act; and (iii) instead, efficiencies and potential innovation effects should be considered with other competitive effects and considerations under the Competition Act.

The consideration of potential efficiencies and innovation benefits by the Bureau should be based on strong quantitative and qualitative evidence from the merger proponents regarding how and why:

• the claimed and predicted efficiencies, synergies, and innovation effects will be achieved;
• and how and why the benefits from these efficiencies, synergies, related cost-savings, and innovation benefits would be shared with consumers and other purchasers and market participants in a manner that;
• results in lower product prices, higher quality and more innovative products, lower quality adjusted prices, and/or better consumer choice, access, and product and vendor variety.

Treating efficiencies and innovation benefits as only a factor, rather than a stand-alone defence, will especially improve the evaluation of mergers and acquisitions in the digital space where experience in Canada and many other jurisdictions is often limited and too often negative (see as well Ross 2022a:6-7 and 2022b:16-23). The Council would also argue that eliminating the efficiencies exception from the Act would need support from consumer-oriented changes to the purpose clause and other provisions of the Competition Act including the merger provisions, along the lines discussed later in this submission.[1]

Shifting efficiencies from an exception to a factor in competitive effects analysis is also more consistent with the merger review literature over the past three plus decades. Most of these studies have determined that: (i) the probability of competition authorities making a Type II false negative under-enforcement error of approving an anticompetitive merger that enjoys greater market power, higher prices and an easier competitive life after the transaction is completed is much greater than: (ii) the probability that the merged entity will actually achieve its promised and predicted efficiency, cost-savings, innovation, and synergy claims; (iii) which their proponents argue would lead in the long term to more competitively priced and higher quality and more socially and environmentally responsible goods and services for consumers and other purchasers. In short, predicted efficiencies are often not achieved; and when some efficiencies are achieved, they are often not sufficient to compensate for higher prices and other competition and consumer harms.[2]

One major theme across this merger literature is that the merging parties greatly under-estimate the post-merger integration problems, challenges and mistakes when attempting to bring two different firms together into a single well-functioning corporate entity. The excellent analysis in the Bureau's February Submission and the ISED November consultation document (pp 25-27) describes very well the problems with the efficiencies exception, and indicates that the Bureau's staff and advisors are very familiar with the same post-merger integration literature.[3]

The approach to merger efficiencies favoured by the Council is consistent with the broader structural presumption and reverse onus approach, which the Council prefers for merger review, abuse of dominance and other competition matters that involve the risk of highly concentrated markets, market dominance and tipping-to-monopoly in digital as well as more conventional markets.[4]

[1] The Council's perspectives are taking into account, as well, the arguments of pro-efficiencies defence proponents that in getting mergers done, the infamous efficiencies defence is way overrated. The Council concurs that the defence is badly overrated but for different reasons.

Counter arguments are that, yes, there are relatively few cases, but these cases are contested and provide weak precedents, case law and guidance to the Bureau, merger proponents, and other interested parties, and appeared to give the Tribunal major difficulties, such as for Superior Propane where the welfare analysis was questionable. The efficiencies defence is also out of line with virtually all other jurisdictions leading to potential inter-jurisdictional problems and conflicts regarding cross-border mergers where Canada would be the outlier and likely loser in these conflicts.

One implication from this research is that removing the defence will likely not involve throwing out good case law, learning and guidance from previous cases. And finally a competition law, which can benefit powerful companies and rich shareholders at the expense of less prosperous consumers, small businesses and other purchasers, is a hard sell to the general public and is clearly inconsistent with the Act's current purpose clause. Therefore, removing the efficiencies defence would be expected to increase public interest, understanding, approval and support for the reformed Competition Act.

Finally, in his article on antitrust balancing, the highly esteemed antitrust scholar Hovenkamp (2018) contends as follows. "In the rare event that balancing is necessary, courts should be aware that unless they have specific, quantifiable amounts to attach to competitive threats and offsetting gains, they are in hazardous territory. For that reason the courts should get out of the business of "balancing" abstractions, such as the impact on competition against the rights conferred by the patent system. Values such as these are impossible to balance, except when they are so lopsided that little more than a casual observation is needed to determine that one is more significant than the other.…

"Balancing requires values that can be cardinally measured and weighed against each other. The factors that are supposedly balanced in Sherman Act cases almost never fit this description. Even if the things requiring balancing did come in cardinal units, most times the courts would not have the tools necessary to make and apply the measurements. Instead, balancing approaches are usually binary rather than cardinal. They are more like off and on switches that go in one direction or the other" (Hovenkamp 2016).

These balancing challenges could be one reason why the efficiencies defence was not adopted by other jurisdictions; and other studies have suggested that the Tribunal faced similar problems when attempting to "balance" negative competitive effects against the efficiency, synergy, and innovation claims of merger proponents when the efficiencies defence was employed.

[2] Council members have personal experience with the merger integration challenge after the merger is completed. Two of many sources on the post-merger integration challenge and problem are Johannes Gerds, Freddy Strottmann and Pakshalika Jayaprakash (2010) "Post Merger Integration: Hard Data Hard Truths, Deloitte Review Issue 6; and Melissa E. Graebner, Koen H. Heimeriks, Quy Nguyen Huy and Eero Vaara (2017) "The Process of Postmerger Integration: A Review and Agenda for Future Research" Academy Of Management Annals, 2017, Vol. 11, No. 1, 1–32 at https://eprints.lancs.ac.uk/id/eprint/82813/1/Process_of_post_merger_integration_annals_2014.pdf

Furthermore, in the very recent CIGI study on merger policy for a dynamic and digital Canadian economy, Bester (2022) describes "a recent retrospective study of merger policy in the European Union from 1990 to 2018 … [which found that] the required efficiencies to offset estimated consumer harms from price increases were likely too large to be achievable through mergers (Affeldt et al. 2021)." These findings are fully consistent with previous US, EU etc. studies on the same subject.

[3] See as well Ross (2022a:3-4) who has a footnote on the following key source on this question: Ralph A. Winter "Tervita and the Efficiency Defence in Canadian Merger Law", 28 Canadian Competition Law Review 133 (2015) (offering "three general criticisms" of the Tervita standard) at http://blogs.ubc.ca/rawinter/files/2019/06/Tervita-CanCompLR_28-2_2015_02_Winter.pdf

And Chiasson and Johnson (2018) on the efficiencies and inefficiencies defence, and the potential for the economies of scale and scope and related efficiencies and innovation effects associated with large corporate size to become the X-inefficiencies of large and powerful firms of Leibenstein (1966).

[4] There are many excellent references to the structural and related presumptions in the Bureau February submission and the ISED November consultation document such as on how structural presumptions, applying the American approach to rebuttable structural presumptions, and shifting the burden of proof to merger proponents and other defendants, would simplify and expedite merger review (the Bureau submission). Furthermore, the later ISED document describes how "legislators are turning to the possibility of preventive rules or presumptions applied to dominant firms or platforms, with respect to both acquisitions and business practices such as self-preferencing and data use, rather than conducting extensive economic analyses in each case" (ISED document page 35 and Wolfe and Mhlanga 2022:18-19).

For example, structural and related rebuttable presumptions should be employed to simplify merger cases by shifting the burden of evidence and proof onto the merging parties to prove why a concentrative merger would not substantially lessen or prevent competition in a manner that significantly harms consumers, other market actors, as well as the competitive process.[1] You show us how your transactions will not harm competition, consumers and workers and how your predicted efficiencies and innovation benefits will be achieved and shared with final consumers, other purchasers, your employees, and other market participants – and not just benefit your senior executives and shareholders.

This merger review approach would have the advantage of adopting the U.S analytical approach. Interactions with our American colleagues over the years have indicated that convergence on this issue would be helpful to competition policymakers and agencies on both sides of the border. Furthermore, this approach would employ the structural presumption of upward pressure on post-merger prices once a merger is completed, due to an even more concentrated market. Therefore, as noted earlier, in response to that presumption, proponents would have to provide solid quantitative and qualitative evidence that cost savings, efficiencies, synergies and innovation benefits will greatly reduce the risk of material post-merger price increases and lower quantities supplied, and/or would be offset by higher quality and more innovative goods and services after the merger is completed.

Furthermore, for essential goods and services, the merger proponents should be asked to demonstrate that fewer firms, and a more concentrated market after the merger is completed, will not compromise consumer access, choice, and product and shopping experience variety, and harm the resilience and ability of the industry to respond to external shocks – as described in the following footnote.[2] Consumer access could be added to the new consumer privacy provisions. Limited consumer access, choice and variety greatly reduce consumer and other purchaser sovereignty, control, well-being, welfare, and power in markets. These consumer issues also raise questions regarding gender, ethnic and other forms of equity and discrimination; and are relevant in similar ways and for similar reasons to abuse of dominance and competitor collaborations.[3]

Applying the structural and related rebuttable presumptions, such as the cellophane fallacy, to concentrated markets, dominant firms, price and other predation by dominant firms, platform gatekeepers, and tipping to monopoly in digital and some conventional markets, is based on the premise that while big is not always bad, larger, more powerful and dominant firms operating in concentrated markets are often the major sources of competition, consumer protection, product safety, privacy, environmental, and other legal and regulatory misconduct, violations and harms (see as well Shapiro 2021, Baker and Shapiro 2008, Hovenkamp and Shapiro 1996, and Hemphill and Weiser 2018).

5. Revisiting the standard for a merger remedy, e.g. to better protect against prospective competitive harm, or to better account for effects on labour markets.

The Council fully concurs with both aspects of this proposed reform, and believes that the anticompetitive effects of a merger on labour markets should be considered in merger review, for the reasons described later in this submission on the interactions between consumer and worker harm as a consequence of: (i) anticompetitive mergers leading to more concentrated product, labour and other input markets, which (ii) can harm consumers through reduced quantities, higher prices and lower quality products, as well as through job losses from lower quantities produced as well as reduced wages, incomes and consumer purchasing power.[4]

[1] The Bureau's adventures with the Rogers-Shaw merger, which was approved by both the Competition Tribunal and most recently the Federal Court of Appeal, can be expected to strengthen the rationale and arguments in favour of employing the structural presumption and making other reforms discussed above to the merger review provisions of the Competition Act.

Issues raised by this merger relevant to merger review reform under the Act are that: (i) the merger would decrease the number of major national competitors in the Canadian telecom market from four to three; (ii) Canadian cellphone bills and wireless mobile prices are very high compared with most other more advanced OECD economies including Australia, which faces similar geographic and low population density challenges; and (iii) whether economies of scale and scope and related efficiencies and innovation benefits that may result from the merger will be shared with merged entity's customers in the form of lower prices, higher quality services, better and more reliable access, enhanced privacy protection, and so on, and better and more accessible service delivery to more vulnerable and disadvantaged consumers, customers and users including in rural areas and smaller communities.

These and other issues suggest that the cellophane fallacy discussed earlier in this sub-section of the submission could be relevant to this and other mergers and acquisitions in Canada's often highly concentrated goods and services markets. See:

Pete Evans' "Court rejects Competition Bureau's appeal to block Rogers' takeover of Shaw – Only thing standing in way of deal now is ministerial approval" CBC News January 24, 2023 at https://www.cbc.ca/news/business/rogers-shaw-appeal-court-1.6724045

Government of Canada "Statement from the Commissioner of Competition on the Federal Court of Appeal's decision regarding the Rogers-Shaw merger" From Competition Bureau Canada, January 24, 2023 at https://www.canada.ca/en/competition-bureau/news/2023/01/statement-from-the-commissioner-of-competition-on-the-federal-court-of-appeals-decision-regarding-the-rogers-shaw-merger.html which provides access to earlier associated Bureau links

Jennifer Quaid "Rogers-Shaw decision sets a worrying precedent for future takeovers" Special to The Globe and Mail, January 4, 2023 at https://www.theglobeandmail.com/business/commentary/article-rogers-shaw-decision-important/

Katie Pederson, Virginia Smart and David Common "Why are Canadians' cellphone bills higher than other countries?" CBC News Marketplace January 13, 2023 at https://www.cbc.ca/news/business/marketplace-high-cell-phone-bills-1.6711205

And the Andrew Coyne article on the same subjects reviewed in some detail in footnotes in section 4 of this submission on the "whole of government" approach to competition policy and law reform.

[2] See Samanth Subramanian "A Bad Formula: America's addiction to monopolies caused the baby food shortage" Quartz and Competition Policy International, May 18, 2020 at https://qz.com/2167097/americas-addiction-to-monopolies-caused-the-baby-food-shortage/

"The US' vast shortage in infant formula has one immediate cause: the suspension of operations in an Abbott Laboratories plant in Michigan earlier this year, after samples of a lethal bacteria were found in it. But beyond that lies a bigger structural problem plaguing the American economy: a tendency for many sectors to be controlled by a few companies, or even just one."

The Council anticipates that merger review in the US and elsewhere will give greater attention to industry resilience and consumer access to essential goods and services in the future. Canada should be ready to do the same. Other essential goods and services based on recent pandemic experience would include children medicines, and protective equipment for healthcare workers as well as for families.

[3] See for example Averitt and Lande (2007) on the "consumer choice" approach to antitrust law that goes beyond price and efficiency to encompass choice, variety, innovation, product quality, limited information and search costs, and other forms of non-price competition – which would require identification of specific industries and markets for which lower market concentration and greater choice and variety are especially important to consumers (page 191).

Moreover, the recent very strong expansion in the on-demand economy and other digital markets suggests that the consumer choice approach would also encompass convenience, immediacy, time savings, privacy and personal security, and greater consumer, independence, control and empowerment (Jackson and Ireland 2021). See as well Leotti et al (2010) on the interactions between choice and control, which illustrates how greater choice can increase consumer satisfaction, sovereignty, empowerment, and well-being.

[4] See Ireland (2018) especially Appendix C, and the many excellent references to labour market competition and anticompetitive activity in the ISED November consultation document. Council members also noted with interest the Bureau consultation process on seeking new guidance regarding the June 2022 amendments on wage fixing and non-poaching agreements, and are looking forward to the opportunity to review the findings from the process from the perspective of their implications for the well-being of consumers and workers, who as noted in the main text are typically the same person.

See Government of Canada "Competition Bureau seeks feedback on new guidance related to wage fixing and no-poaching agreements," Competition Bureau of Canada, January 18, 2023 at https://www.canada.ca/en/competition-bureau/news/2023/01/competition-bureau-seeks-feedback-on-new-guidance-related-to-wage-fixing-and-no-poaching-agreements.html

Unilateral Conduct

6. Better defining dominance or joint dominance to address situations of de facto dominant behaviour, such as through the actions of firms that may not be unmistakably dominant on their own, but which together exert substantial anti-competitive influence on the market.

The Council fully supports this and the other proposed reforms on unilateral conduct and abuse of dominance. The Council also proposes that the structural presumption and reverse onus, discussed above under question 4 for merger review, should be applied consistently to abuse of dominance and joint dominance cases and other forms of unilateral anti-competitive conduct. These two approaches are needed to better ensure that the unilateral conduct reform proposals become functional and effective, and better protect consumers, smaller businesses, and the competitive process.

The Council fully recognizes that, under the abuse of dominance concept in the Competition Act, firms and other regulated entities[1] are allowed to obtain market power and a dominant market position within relevant product, labour and other markets through superior competitive performance, the exit of a strong competitor, pro-competitive mergers as well as collaborations with competitors (see below), and/or good fortune. Nonetheless, regardless of how dominance is achieved, the Council believes that the emphasis in these investigations should be on the negative outcomes of market dominance for competition, consumers and other market participants. Therefore:

• once market power and dominance have been achieved and the economies of scale and scope, network effects, other externalities and other benefits of size and power are being enjoyed by the corporate entity;
• the firm or other regulated entity has a special responsibility to not abuse and exploit its dominance at the expense of: consumers, smaller businesses, farmers, other less powerful market participants, the competitive process, trust and confidence in democracy and the free market system, the common good and social welfare; and therefore;
• should be held fully accountable for any anticompetitive conduct and significant harms that are associated with their dominant market positions regardless of intent or circumstances such as "we are simply imitating and 'meeting' the anticompetitive competition and doing what all of our competitors are doing."

In sum, the reformed Competition Act should send a clear signal to the business community including digital firms and platforms, digital and conventional consumers, smaller businesses, other market participants and the general public that:

(i) abuse and exploitation of less powerful actors, and related corruption and white-collar crime by the powerful represent taboo, unethical, and anti-social behaviour; and,

(ii) powerful regulated entities are fully responsible for their anticompetitive behaviour and resulting anticompetitive outcomes and harm associated with their power and dominance.[2]

This interpretation of the abuse of dominance concept is fully consistent with and supportive of the structural presumption concept discussed earlier, and with other competition related presumptions in the competition economics literature such as the cellophane fallacy, which require for further study from a Canadian marketplace perspective.[3]

The structural presumption will be particularly helpful to addressing the 'unpleasant and at times unintentional anticompetitive surprises' including tipping-to-monopoly and excessive consumer and user dependence on certain digital platforms, which are associated with the rise of the digital economy and big tech over the past three decades; but should also be applied to market dominance and power in more conventional markets. This is because the traditional distinction between digital and conventional markets and firms is now eroding in many ways because of the global COVID-19 pandemic for example: 'What are Costco, Staples, and Walmart in 2023, conventional, digital or some novel mix and hybrid of the two?'

The structural presumption is equally relevant to the other questions discussed below on unilateral conduct, competitor collaborations and deceptive marketing practices and, therefore, will not be repeated under future questions on these issues except in passing.

[1] In this submission, the term regulated entities is defined broadly to encompass firms of all sizes and types: incorporated and unincorporated firms and smaller firms/micro-enterprises including firms in the informal sector; as well as industry, trade, professional and other associations; business and enterprise groups and networks including production networks, supply and value chains, and digital platforms and eco-systems; and for some regulatory regimes individuals acting on their own as final consumers, voters, taxpayers, workers, and so on.

[2] See for example Munyai (2019) on competition law and corporate social responsibility, and a review of the special responsibility of dominant firms in competition law – "with great power comes great responsibility." Social psychology research on power and the powerful illustrates that many powerful leaders and their organizations understand and accept this greater responsibility while many others do not – see Keltner (2017) on the power paradox and Ireland (2022b).

[3] See for example Church and Ware (2000:617-618) on antitrust markets, monopolization cases, and the cellophane fallacy also known as the cellophane fallacy or trap. This competition issue emerged from an American antitrust case of the 1950s regarding cellophane, a Dupont product, and other wrapping materials. The major lesson from the this Dupont case and subsequent economic studies on the cellophane fallacy, criticizing the court's decision in favour of Dupont, is that, for dominance, monopoly and merger cases, competition agencies, tribunals and courts should use competitive prices as the reference point for their analysis, not prevailing prices that can reflect the market power of one or more firms in the relevant market and their coordinated and other anticompetitive conduct.

As market concentration increases in digital and more conventional markets in Canada and elsewhere, the cellophane fallacy may become increasingly relevant to enforcement cases under competition laws and other regimes with competition responsibilities and effects. See as Philip Nelson (2007) "Monopoly Power, Market Definition and the Cellophane Fallacy," Economists Incorporated at https://www.justice.gov/sites/default/files/atr/legacy/2007/03/27/222008.pdf – "Avoiding the Cellophane Fallacy: Market definition must be based on substitution at competitive prices, not monopoly prices."

QUESTIONS 7-9 UNDER THIS TOPIC WILL BE SUBMITTED IN A SEPARATE FORMS SUBMISSION

7. Crafting a simpler test for a remedial order, including revisiting the relevance of intent and/or competitive effects.

Crafting a simpler test for a remedial order is supported by the Council based on the reasons described in the Bureau's February submission and the ISED November consultation document, such as greater consistency with international best practices and our major trading partners, better ensuring that merger, abuse of dominance, and other remedies more fully achieve their desired purpose, and better addressing the remedy challenges posed by:

• dynamic competition, innovation and the growth of digital markets and big data, when for example establishing firm intentions is very challenging when anticompetitive and other conduct is algorithmic or automated (how to address the 'algorithm made me do it' excuse);[1]
• remedying anticompetitive conduct that is widespread in a relevant market without a single 'easy to identify' party being responsible for the misconduct and harm,
• the need to address all forms of anticompetitive conduct (both horizontal and vertical) including past misconduct and potential misconduct in the future so that 'gaps' in the remedial order cannot encourage and incentivize anticompetitive behaviour and other non-compliance,[2]
• and other challenges posed by the digital economy and the rise of big tech and the increasingly interconnected and networked global economy of the post-COVID era as discussed in the Bureau's February submission, the ISED consultation document and many studies in the bibliography.

One example would be the anticipated growth in cross-border unilateral conduct and abuses of dominance by digital and more conventional firms, which harm competition, consumers and potential competitors in multi-country regions and the global economy and will at times involve privacy, personal information security and big data challenges that are unfamiliar to many competition agencies – see e.g. Wynne et al (2020), Marsden and Podszun (2020), and Bourreau and de Streel (2019) on envelopment, tipping-to-monopoly, and other digital competition challenges.

The Council especially places major importance on greater consistency with Canada's major trading partners in order to address the weaknesses on enforcement mechanisms described very well on pages 51-53 of the ISED November consultation document. The previous experience and research of Council members underlines that better alignment with our major trading partners, starting with the European Union, the United States and Australia, on remedial measures, information collection, and other enforcement mechanisms, is essential for information sharing and enforcement cooperation on such competition matters as cross-border cartels, mergers, abuse of dominance, other unilateral conduct, competitor collaboration, and other enforcement cases.

When feasible, functional and effective, simpler is always better than highly technical and complex remedial orders. Simpler remedial orders significantly increase the understanding and acceptance of proposed remedies by the affected businesses, the business community more generally, civil society groups and the general public. The 'make it simpler' criterion is likely relevant to and provides a useful benchmark, reference point and standard for many of the other proposed reforms that will emerge from this consultation process on the Competition Act.

As well, the Council fully supports revisiting and applying broader and more flexible interpretations to corporate intentions and competitive effects when dealing with dominance and related competition matters involving unilateral conduct as discussed on pages 30-39 of the ISED November consultation document. These reforms may be especially needed for the market power and dominance situations associated with digital firms, platforms and markets. However, as noted previously in this submission, so-called conventional firms, regulated entities and markets should also be covered since so many conventional firms have been going digital since the start of the COVID pandemic in 2020.

For this and other reasons, the Council is leery of different, distinctive, special and more restrictive and punitive competition rules being applied only to the digital economy (however defined). It is sufficient that the same dominance and related rules are applied more frequently and rigorously when required to the digital space. This economy-wide approach is the perspective of many competition lawyers and economists in the competition policy and law community particularly in North America,[3] and is fully consistent with the important role of the Competition Act as one of many federal economic framework laws of general application (see ISED November consultation document page 8).

8. Creating bright line rules or presumptions for dominant firms or platforms, with respect to behaviour or acquisitions, as potentially a more effective or necessary approach, particularly if aligned with international counterparts and tailored to avoid over-correction.

As noted earlier, the Council fully supports this proposed reform starting with the structural presumption and cellophane fallacy (see earlier footnotes); and looks forward to the opportunity to review in detail the bright line rules and presumptions for dominant firms and dominant platforms that are proposed in the future by the Bureau and ISED, such as on:

• questionable gatekeeping and self-preferencing practices and facilitating practices;
• envelopment strategies to eliminate smaller potential rivals often in adjacent markets;
• excessive product and brand proliferation and diversification to e.g. confuse consumers and other purchasers;
• new forms of predation and refusals to deal and below merger threshold serial mergers involving 'killer' and other acquisitions; and,
• misuse of big data and related privacy violations.

These and related violations by dominant platforms as well as by dominant conventional firms and regulated entities are now being addressed by the Digital Markets Acts and Digital Markets Units of the European Union and United Kingdom.[4]

[1] See page 33, 37 and 42, as well as footnote 86 on page 35, in the ISED November consultation document, and Ireland (2019) on the increasingly crowded, complex and dynamic digital marketplace, which has become even more crowded, complex, and dynamic during the COVID pandemic period.

[2] See ISED November consultation document pages 43-44 on the scope of civil enforcement. This section also addresses the challenges of detecting other forms of anticompetitive collaborations: "One notable area that the Bureau has highlighted for a number of years is that of patent litigation settlement agreements in the pharmaceutical industry, or so-called "pay for delay" arrangements between patent-holders and generic manufacturers." Reforms that address and remedy this and related forms of anticompetitive collaborations would also be supported by the Council and its members.

[3] Studies, conferences and webinars over the past three years have illustrated that North American competition policy and law practitioners are less enthusiastic about separate ex-ante/anticipatory and more prescriptive rules and regulations for digital platforms, firms and markets compared with their European counterparts (see for example Competition Policy Council 2021).

[4] For the EU's DMA proposal and legislation see https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-digital-age/digital-markets-act-ensuring-fair-and-open-digital-markets_en

And for a more recent primer on the Act and discussion of the enforcement challenges, see https://www.csis.org/analysis/european-unions-digital-markets-act-primer and https://www.bruegel.org/blog-post/insights-successful-enforcement-europes-digital-markets-act

Regarding the United Kingdom's competition regulatory regime for digital markets and the work of the UK's new Digital Markets Unit (DMU), an overview is provided by Aniko Adam and Shruti Hiremath at Clifford Chance on July 26 2022 in their article for Thomson Reuters Practical Law at https://www.cliffordchance.com/content/dam/cliffordchance/briefings/2022/07/uk_competition_regulatory_regime_digital_markets.pdf

See as well the draft consultation paper of the Competition Bureau of Canada (2017) on big data and innovation, and the implications for competition policy in Canada.

MORE TO COME IN SUBSEQUENT FORMS SUBMISSION

9. Condensing the various unilateral conduct provisions into a single, principles-based abuse of dominance or market power provision. Alternatively, the unilateral conduct provisions outside of abuse of dominance could be repositioned for different objectives of the Competition Act, such as fairness in the marketplace.

Consistent with the 'simpler when feasible' premise described earlier, the Council strongly supports condensing the various unilateral content provisions now under section 75-77, 79, and 81 of the Competition Act under a single abuse of dominance or market power provision, with fairness in the marketplace and fair and efficient competition as two of the major guiding principles within the provision.

The Council also believes that this provision, as well as similar provisions in the merger and competitor collaboration sections of the Act, could encompass and be applied to the following circumstances:

• Deceptive marketing practices, the 'phishing for phools' strategies described by two Nobel Laureate Economists Akerlof and Schiller (2015 and 2016), and privacy violations should be given much greater recognition, prominence, consideration and weight as significant abuses of dominance and market power. These abuses could be especially prominent in certain digital markets, but are also important and consequential in some more conventional markets and for dominant regulated entities now moving into the digital space.
• And the excellent additions to the merger, abuse of dominance and competitor collaboration provisions under the June 23, 2022 amendments to the Competition Act[1] should be expanded to more explicitly encompass a wider range of consumer concerns and interests including: consumer access to essential goods and services; and consumer preferences for high quality, innovative and safe goods and services, and for greater choice and variety of goods, services, vendors, service providers, and shopping experiences.

Consideration should also be given to capturing the concept of fair competition in these provisions as discussed elsewhere in this submission, including references to vulnerable and disadvantaged consumers and other market participants, addressing objectionable conduct as described in the consumer law of Australia, and the fair and equitable treatment of consumers[2] in their consumer purchases, transactions, and other interactions including complaint handling and resolution, with producers, vendors and service providers in both conventional and digital markets. Consumer research has indicated that fairness and equity concerns can be in many ways as important to the modern Canadian consumer as competitive prices and quantities.

Accordingly, the Council believes that the three new consumer privacy provisions added to the Competition Act in June 2022 represent a good starting point; but consideration should be given to expanding these provisions to include other consumer issues and concerns important to consumers and other purchasers, and their satisfaction, well-being and welfare. These measures should be supported as well through including additional consumer welfare and interest references and provisions elsewhere in the Act in order to counteract the impression of many that total efficiency is the only, and will continue to be the only 'functional' purpose of the Act.

Other possible locations for additional consumer references would be the new provision in the merger section where efficiencies are treated as a competitive factor rather than a defence (see question 4 above); and the reforms that result from responses to question 11 under competitor collaborations on broadening and/or strengthening these provisions. In addition, a more detailed discussion of this more general Council concern is provided in the final sub-section of section 4 of this submission.

After the consultation process and the reforms are completed, the Bureau should prepare and distribute widely a guidance document on how consumer privacy and these other consumer interest factors are and will be considered and interpreted in merger, abuse of dominance, other unilateral conduct, and competitor collaboration and conduct cases, and other Bureau functions, activities and strategies such as in its corporate compliance guidance documents.

The Council's understanding is that the single dominance and market power provisions would encompass five sections of the current Act. As listed on page 38 of the ISED November consultation document, these five sections are on refusal to deal (section 75 of the current Act), price maintenance (76), exclusive dealing, tied selling or market restriction (77), abuse of dominance (79),[3] and delivered pricing (section 80).

Furthermore, page 79 of the ISED consultation document notes that, in light of the "multi-faceted purpose clause, including the participation of small and medium enterprises in the economy, the Government believes it would be worth exploring whether these (or potentially other) provisions may be repositioned as 'fair competition' provisions with less focus on competitive effects, in the interests of maintaining a level playing field and checking gatekeepers with monopolistic or monopsonistic power … while some foreign competition authorities administer 'unfair competition' provisions, such as with respect to unconscionable conduct in Australia [noted above], or abuse of superior bargaining position in several jurisdictions."

The Council would be supportive of additional reform proposals along these lines, and looks forward to reviewing such proposals in the future.[4] A common theme across the Council's responses to the ISED document's 20 questions is that the interests and concerns of consumers, workers, and small businesses should be reflected in and resonate throughout the reformed Act. Being mentioned in the purposes clause and a few other provisions is not sufficient. The merger, abuse of dominance, competitor collaboration, and other guidelines prepared and distributed by the Bureau should adopt a similar approach and philosophy.

[1] See: Factors to be considered 4(b) page 110 under abuse of dominance "the effect of the practice on price or non-price competition, including quality, choice or consumer privacy" (b) Factors to be considered (g.3) page 119 under agreements or arrangements that prevent or lessen competition substantially "any effect of the agreement or arrangement on price or non-price competition, including quality, choice or consumer privacy" and (c) Factors to be considered for mergers (g.3) on page 124 which now reads "any effect of the merger or proposed merger on price or non-price competition, including quality, choice or consumer privacy."

[2] Including fair contracts and effective consumer complaint handling and consumer redress – see Consumers Council of Canada (2022) on a renewed more consumer-centred approach to telecommunications policy.

[3] The abuse of dominance section of the current Competition Act encompasses any anti-competitive act that is: "intended to have a predatory, exclusionary or disciplinary negative effect on a competitor, or to have an adverse effect on competition." The Council anticipates that, for most enforcement cases that involve these anti-competitive acts, the structural presumption would likely be highly relevant and helpful to the Bureau.

This perspective could be particularly true for price and other forms of predation where recoupment would be more likely and easier for dominant firms in an oligopoly market, which for example have already developed a strong reputation for price-cutting, winning price wars, and successful price predation in the past — see Hemphill and Weiser (2018) on the competition law challenges of predatory pricing.

[4] See as well Kovacic (2007) on competition policy, consumer protection, economic disadvantage, poverty reduction and the larger human dimension of competition policy and law.

Competitor Collaborations

10. 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 (artificial intelligence/machine learning).

The Council supports this reform proposal, but with the important qualification that:

• further research and attention is needed on defining and expanding on the negative effects of algorithmic activity on the health of markets and negative competition and consumer outcomes in the Canadian marketplace;
• the potential for algorithm-driven consumer frauds, malware threats, privacy violations, and deceptive marketing practices under the Competition Act;
• the implications for violations of other federal privacy, financial consumer, product safety, air passenger, and other federal consumer protection laws;
• as well as violations of provincial consumer protection, unfair trading, product misrepresentation, and product safety laws.

This qualification is consistent with the whole of government approach to algorithm-driven misbehaviour and resulting competition, consumer, small business, privacy and other harms in Canada; and could be the subject of a Bureau-led or joint-ministerial, even federal-provincial, market study. Market studies and investigations and the whole of government approach are further discussed later in this submission.

This qualification and perspective also results from the Council's broader concern that the reform proposals under competitor collaborations are fine, but are too technical and narrow in scope, and only touch the surface of the competition challenges, and in particular the consumer challenges and issues, which are now emerging and will emerge in the AI/ML, Internet of Things, and regulation-by-robot world we are now entering.[1]

Text 11

11. Broadening and/or strengthening the Competition Act's civil competitor collaboration provisions to discourage more intentional forms of anti-competitive conduct, including through examining past conduct and introducing monetary penalties.

The Council fully supports this reform proposal; and believes, as well, that broadening and strengthening the civil provisions on competitor collaborations should take account of how governments and their various ministries are now encouraging what would hopefully be pro-social competitor collaborations in order to allow the private sector to make greater contributions to addressing for example:

• climate change, sustainable development, biodiversity, alternative energy sources, and other environmental crises and challenges;
• supply chain and other disruptions resulting from pandemic, public health and other healthcare policy priorities, and other crises and shocks including national and global financial crises, and other public policy issues and wicked problems; and,
• public policies, programs and objectives and what could be called private/public partnerships (PPPs) that are intended and designed to support and accelerate innovation and technological change and development on disruptive and transformative and other technologies in Canada and our major trading partners.

The Council believes that, in many cases, these collaborations can make contributions to solving these and other public policy objectives, problems, crises and external shocks. Nonetheless, as discussed under question 9, such collaborations can carry significant short-term and longer-term risks for competition and consumer interests when, for example:

• pro-social collaboration is transformed into anti-social collusion and corruption during the crisis; and/or,
• after the crisis has come to an end, collaboration is no longer needed to serve the public interest, but collusion among competitors continues and can become a bad habit;
• with imitation and contagion effects for entire markets and industries and for even multiple product and geographic markets where the same competitors are prominent – see Bernheim and Whinston (1990) on multi-market contact and collusive behaviour and Wynne (2020).

Furthermore, there is growing evidence that both the civil and criminal provisions and the Bureau's enforcement of these provisions should go beyond the conventional cartel focus on uncompetitive prices and reduced quantities produced and supplied; and take account of how competitor collaborations can also be used and misused in a manner that results in poorer quality and less innovative products, and less innovation among cartel members and across a market and industry that would be consistent with the 'damaged and degraded good' concept of Deneckere and McAfee (1995).

In 2021, the Directorate General for Competition of the European Commission (called EU DG Comp in the literature) had their first successful cartel case that did not involve higher prices but instead poorer product quality and less innovative products. This cartel case involved five German motor vehicle firms: Daimler, Audi, Porsche, VW and BMW that colluded in order to limit the technology they use to control car emissions.

The collusion, therefore, held back the full potential of this technology, leading to less effective emissions reductions and pollution cleaning performance, and significantly reduced competition based on product quality. Daimler received full immunity for disclosing the cartel, while the other four were fined and benefitted from the settlement procedure. The European Commission has indicated that they will continue to address and sanction cartels and other forms of anticompetitive conduct that reduce product quality competition and innovation, and therefore essentially involve the production and marketing of intentionally damaged and degraded goods and services to increase corporate profits.[2]

To summarize, collaboration agreements between competitors became a major issue during the global pandemic from 2020 to 2022, and in recent years are becoming a major mechanism for addressing sustainability, climate change, other environmental issues, and technology and innovation challenges. The EU, Canadian and Dutch competition authorities prepared and distributed guidelines on these agreements during the pandemic.[3] The major competition concern is that competitor collaborations to address a financial, public health, environmental, innovation, or other crisis and/or public policy objective, will remain in place and cause substantial anticompetitive and consumer harm after the crisis is over or the objective has been achieved. A related challenge is the potential for the number of businesses planning to establish such agreements in Canada and elsewhere to increase greatly in the years ahead, in response to the corporate sector and/or public policy challenges of the post-COVID period.

Strengthening and broadening the still relatively new 2009 civil provisions on competitor collaborations, based on experience to date in Canada and other jurisdictions particularly during the global pandemic of 2020-2022, is clearly a priority for the Bureau and very important for competition, consumers, smaller businesses and other market participants in Canada.[4] In the increasingly interconnected and networked post COVID-world, these competitor collaboration agreements will often cross national borders, and some may even be global in scope and/or outcomes, requiring further improvements in the information sharing and enforcement cooperation agreements between competition law jurisdictions.

[1] See Ireland (2019) for a very preliminary and now out-of-date pre-pandemic review of the literature on what the increasingly crowded, complex and dynamic digital marketplace means for competition, consumers, and policy, legal and regulatory frameworks.

[2] See Kramer Levin "Car Emissions Case: First Sanction of an Anti-competitive Agreement on Technical Development by the European Commission." December 6, 2021 at https://www.jdsupra.com/legalnews/car-emissions-case-first-sanction-of-an-9421384/#:~:text=12%2C%202021%2C%20the%20European%20Commission,clean%20exhaust%20gases%20generated%20by

[3] See the EU Horizontal Cooperation Guidelines at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52011XC0114(04)&from=EN and https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/11886-Evaluation-of-EU-competition-rules-on-horizontal-agreements/public-consultation

The Dutch competition authority (ACM) produced a guidance document on sustainability, competition law, and sustainability agreements at https://www.acm.nl/sites/default/files/documents/2020-07/sustainability-agreements%5B1%5D.pdf

And the Competition Bureau's Competitor Collaboration Enforcement Guidelines of May 6, 2021 during the pandemic at https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04582.html

See as well Jones (2020) on cartels in the time of COVID; and Holmes (2022) on sustainability, competition policy and an overview of EU and national case law

[4] See Fasken Competition Chronicle Dec. 6, 2022 on "Competitor Collaborations – The Way Forward" at https://www.competitionchronicle.com/2022/12/competitor-collaborations-the-path-forward/

12. Making collaborations that harm competition civilly reviewable even if not made between direct competitors.

The Council fully supports this proposed reform, and believes more generally that, in the emerging digital age, the ISED consultation process and subsequent Competition Act reforms and amendments should focus on negative outcomes, and the risk of negative outcomes and harms, which are measurable and, where feasible, quantifiable, for competition, consumers, smaller businesses, other market participants, and the health of the marketplace.

Therefore, the Council strongly believes that, in the emerging digital age, the reformed Act, the Bureau and its enforcement and other functions should give priority to negative outcomes, not to the stated, apparent and predicted intentions of firms and not whether their relationships with other firms are horizontal, vertical or conglomerate in nature. Recent competition policy and industrial organization research has illustrated for example that vertical relationships established with good intentions by both firms can still lead to unanticipated and unintended consequences, which can substantially lessen competition and cause substantial harm for consumers, workers, smaller enterprises, other market participants and the economy. As described on page 41 of the ISED November consultation document: "As ways of doing business continue to evolve rapidly, so too must all forms of competition analysis, as some suggest that traditional approaches may need to be reconsidered or refocused on outcomes."

Accordingly, the competitor collaboration and other provisions should be functional, enforceable, and effective regardless of whether the relationships between firms are horizontal, vertical, close and long-standing, incidental, personal or digital (a few emails), and whether the collusion or joint dominance is explicit, tacit, incidental, unplanned or involves other less obvious forms of "working and cooperating together" such as facilitating practices.[1]

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13. Introducing mandatory notification or a voluntary clearance process for certain potentially problematic types of agreement.

The Council supports this form of mandatory notification and looks forward to reviewing from a consumer-interest and well-being perspective the potentially problematic type agreements that are identified for mandatory notification by ISED and the Bureau.

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14. Reintroducing buy-side collusion – beyond only labour coordination – into the Competition Act's criminal conspiracy provision, or considering a civil per se approach to it.

As emphasized earlier, the Council fully supports reintroducing buy-side collusion that goes beyond labour market coordination, and believes that both criminal and civil per se approaches are needed to ensure that no buy-side collusion agreement falls between the cracks. The civil per se type approaches could also be supported by structural and related presumptions and bright lines as well as perhaps carefully crafted exemptions,[2] so that, for example, pro-social buy-side agreements of small retailers and other businesses and farm groups to better compete with the larger more powerful retailers, agribusinesses, and other players would not be subject to either the criminal or civil per se provisions.

This and the previous reform proposals under the competitor collaboration heading underline that, after the consultation and amendment processes are completed, the Bureau will need to prepare and distribute a revised and updated competitor collaboration guidance document designed to assist the business community as well as consumers, small business, farmer cooperative and other associations and other civil society groups. The guidance document would of course take full account of other reforms and amendments proposed in this submission, which take greater account of the consumer interest and harm and related issues as described throughout this document.

[1] See ISED November consultation document pages 34, 36, and 43.

[2] See ISED November consultation document page 46.

Deceptive Marketing

Deceptive Marketing

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15. Adopting additional enforcement tools suited for modern forms of commerce, given the nature and ubiquity of digital advertising. For example, further amendments to better define false or misleading conduct, such as the 2022 drip pricing amendments, could be considered.

The Council fully supports this proposed reform; and, as emphasized throughout this submission, among the highest priorities of the Council in this submission are the following:

• Expanding and strengthening the deceptive marketing provisions of the Competition Act that go beyond drip pricing (a very good June amendment) to cover additional forms of potentially deceptive conduct in both digital and conventional markets.
• As described on pages 47-48 of the ISED November consultation document and developed in greater detail in the earlier Bureau February submission, the development of proposals for reform in such areas as (i) sellers bearing the full burden of proving that discounts are genuine, which is consistent with the reverse onus approach discussed earlier; (ii) the need for greater flexibility when the Bureau is conducting deceptive marketing investigations; and (iii) the requirement for the Act to contain better remedies to address deceptive conduct both in digital and conventional markets, including increases in monetary penalties and strengthening other remedies.[1]
• More fully integrating these provisions and the other three consumer protection acts administered and enforced by the Bureau and Commissioner into the day-to-day functioning and decision making of the Bureau – see the discussion below in section 4 on the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.
• Based on these reforms and amendments, update and revise the Bureau's existing (and often highly dated) guidelines on deceptive marketing practices, and as required prepare and distribute new enforcement guidelines on the new forms of digital and other deceptive marketing practices that would be covered in the Act and given higher priority by the Bureau in the future once the consultation and amendment processes are completed.[2]

These initiatives are needed in order to take greater account of and give greater attention to the full range of consumer interests, concerns and harms in the 'globalized digital age' across all provisions of the Act and all functions of the Bureau.

The Council also agrees that the Act and Bureau would benefit greatly from competition and consumer protection research which: (i) identifies more fully the additional forms of deceptive conduct discussed in the ISED document; and as well (ii) identifies and assesses newer tools or conceptions of deceptive conduct altogether associated with the digital economy and the rise of the 'big tech titans'. The Council would appreciate the opportunity to participate in the required market studies and investigations.

As noted previously, the deceptive marketing practices and 'phishing for phools' strategies of digital, conventional, and 'hybrid' (both digital and conventional) businesses and other regulated entities can be expected to be more frequent and consequential for competition, consumer welfare and smaller businesses. As well, these deceptive practices will be increasingly relevant to merger, dominance, competitor collaboration and other competition matters of the Bureau and other competition authorities as national and global economies enter the increasingly interconnected, networked, complex, turbulent, chaotic and unpredictable post-COVID period.[3]

[1] The Council fully supported these proposed deceptive conduct reforms that were described in detail in the earlier Bureau February 2022 submission; and has questions about why these proposals were not incorporated explicitly into the ISED November consultation document. More generally, section six on deceptive marketing in the earlier Bureau submission has a more detailed and fulsome discussion of the competition and consumer harms from deceptive conduct compared with the much briefer two-page section on deceptive marketing in the later ISED consultation document.

The Council's expectation is that these earlier proposals, including on higher monetary penalties and other stronger remedies to address and mitigate deceptive conduct violations, will be incorporated into future research and policy analysis as the consultation and reform processes proceed to the amendment stage. As deceptive marketing practices go global in the digital age, weak remedies that represent a hand slap and a minor cost of doing business for large digital and conventional firms, platforms and other regulated entities, are clearly not sufficient. The Council will be pleased to contribute to further research and policy analysis on these deceptive marketing issues, based in part on the digital consumer insights offered by the Council's recent study, funded by the Office of Consumer Affairs in ISED, on the on-demand consumer and economy (Jackson and Ireland 2021).

[2] Information on the Bureau's website indicates that the following guidelines have been published and are now being applied by the Bureau with the date of publication in parentheses: Precious Metals Marking Act and Regulation (2006), Accuracy Requirements for Net Quantity Declarations (1999), Labelling of Textiles for Businesses (2007), Textile Labelling and Advertising (2003), Labelling of Stuffed etc. (2019), Telemarketing (2009), and Environmental Claims 2008 – information taken from

https://ised-isde.canada.ca/site/competition-bureau-canada/en/publications#wb-auto-4

The Council's major concern is that dated and no guidelines provide too much latitude to Bureau staff and legal interpretations regarding what constitutes deceptive practices when certain new deceptive marketing practices emerge, while the business community and other interested parties such as consumers associations are not being provided with sufficient information and guidance on these new 'red lines' on deceptive marketing practices.

[3] See Wynne (2020) and Ireland (2022a, 2022b, 2022c, and 2022e).

Administration and Enforcement

16. The Government is considering reforms in administration and enforcement, and would welcome input on making the administration of the law, and enforcement before the Competition Tribunal or courts, more efficient and responsive whether public or private, without unreasonably compromising procedural fairness.

In this regard, the Council proposes that the Bureau, ISED and government should carefully review all reform and amendment proposals from the perspective of their implications for the promotion of and possible impediments to:

• fair competition, interfirm rivalry, and consumer welfare, interests, empowerment, and sovereignty in all sectors of the Canadian economy (see Siciliani, Riefa and Gamper 2019);
• the Bureau's enforcement, deterrence, sanctioning, and corporate compliance functions, its competition policy and law outreach, education and advocacy programs to all interested parties, and other functions, activities, and strategies of the Bureau;
• with particular attention to ensuring that monetary penalties and other remedies are consistent across the Act's provisions and Bureau functions, are sufficient to demonstrably deter anticompetitive conduct and subsequent consumer, competition and other harms, and are proportionate to the resulting negative outcomes and harm – 'the punishment fits the crime' approach;
• the ability of the proposed reforms and amendments to be 'fit to purpose' for promoting fair competition and remedying competition, consumer, small business and related harms in the digital world (see for example Riefa and Clausen 2019);
• better protecting and promoting the interests of more vulnerable and disadvantaged consumers, other purchasers and other market participants including smaller businesses, micro-enterprises and farmers (see for example Riefa 2020b);[1] and,
• enhanced international competition policy and law enforcement cooperation and information sharing in order to: address cross-border mergers, acquisitions and other transactions and anticompetitive and deceptive conduct; mitigate the potential harms from multi-market contact in different product, geographic, digital, financial and other markets;[2] and provide best practices and models for other jurisdictions including developing and emerging market economies – the Council's proposal to fully eliminate the efficiencies defence meets this criterion (Ireland 2015).

Based on the previous research of the Council and its members, special attention should be given to how and why the reforms and amendments would make it much more costly and less profitable to not comply with the Competition Act and its standards and provisions, and much easier and more profitable to comply and contribute to the public good of fair and efficient competition and marketplaces in Canada.[3]

Furthermore, as noted in many parts of the ISED November consultation document (see e.g. pages 33-35 and 43-44), the Council fully concurs that every effort should be made to remove gaps and inconsistencies within the Competition Act that can incentivize anticompetitive behaviour. It is essential that violations of the Act, which cause similar negative outcomes and harm for competition, consumers, other purchasers, small businesses, and other market participants, should be treated, investigated, enforced and sanctioned in a similar manner, regardless of the section of the Act that explicitly addresses the misconduct and violation. Otherwise, wrongdoers will likely search Competition Act sections in order to identify and exploit gaps, inconsistencies, and loopholes.

Gap filling and greater consistency across sections and violations strengthen the arguments for higher monetary penalties and other more effective remedies in the reformed deceptive marketing section of the Act. Greater consistency across sections and violations would particularly increase consumer, political and public trust and confidence in the Competition Act and Bureau. The Council and many of its members have extensive personal experience with how well-intentioned reforms and amendments to competition, consumer protection, and other legal, policy, and regulatory frameworks, regimes and systems can have highly negative unanticipated and unintended consequences for competition, consumers and other market participants because of gaps, inconsistencies, and poor wording.

Furthermore, the institutional, cultural, and human resource challenges of administering and enforcing significantly modified and reformed competition and related statutes should not be discounted and ignored by the government, ISED and Bureau. Members of the Council also have personal experience with these challenges soon after the 1986 Competition Act began to be implemented, and somewhat later when Corporate and Consumer Affairs Canada was merged into Industry Canada (now ISED) in 1993.[4]

The Council also offers for consideration some administration and enforcement issues and concerns that are more specific to the deceptive marketing sections of the Act. The Council's view is that, with some exceptions, the Competition Act provisions on deceptive marketing are mainly concerned with regulatory or public welfare offences and not 'real' criminal offences; and Bureau enforcement actions, in particular with regard to the deceptive marketing practices provisions, have favoured more regulatory compliance approaches such as consent agreements, and issuance of Administrative Monetary Penalties as opposed to protracted and expensive criminal or civil prosecutions.

ISED and the Bureau may wish to give consideration to expanding section 24(1) to allow the Governor in Council to make regulations under the relevant prohibitions in section 52 and 74.01, in order to provide the Bureau with greater flexibility and agility to take more decisive action and to align with the regulatory powers already available to the Bureau with the other three regulatory statutes administered and enforced by the Competition Bureau.

The following offers the Council's input and perspectives on the four more specific questions on administration and enforcement in the ISED November consultation document.

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17. Giving the Bureau more leeway to act as a decision-maker, e.g. through simplified information-collection, or a first-instance ability to authorize or prevent forms of conduct.

The Council is broadly supportive of this reform proposal which would better align the Bureau's information collection and enforcement functions with those of Canada's major trading partners and other competition jurisdictions. However, as always, the devil will be in the 'information collection and enforcement' details and therefore we look forward to reviewing and commenting on these details from the consumer perspective when they become available during the enforcement process.

[1] For example, there is growing political and public interest in the United States regarding how competition/antitrust law can be deployed to better protect the interests and well-being of the American family farms and farmers. See the Carstensen references in the bibliography on buyer power, the problems that American farmers and ranchers are facing when marketing their products, and why monopsony is not simply the mirror image of monopoly, and buyer power is often more consequential and harmful.

See as well Max M. Miller (2020) "America Needs Farmers and Farmers Need Better Antitrust Law," CPI Antitrust Chronicle, Competition Policy International (CPI); Assistant Attorney General Office of the Iowa Attorney General, January 2020 at https://www.competitionpolicyinternational.com/wp-content/uploads/2020/01/CPI-Miller.pdf

[2] See Bernstein and Whinston (1990) on multi-market contact and collusive behaviour; Matsushima (2001) on multi-market contact, imperfect monitoring, and sustaining implicit collusion; and Klein et al (2019) on coopetition, multi-market contact, market entry, and how cooperation affects competitive dynamics between rivals in the airline industry.

One might expect that multi-market contact, coopetition/the mix of competitive and cooperative behaviour, and implicit, tacit, and more explicit collusion, joint dominance, and other forms of cooperative anticompetitive conduct, would be quite prominent and profitable in digital markets and economies. However, Google Scholar searches did not identify any academic and policy studies that explicitly assess multi-market contact and the risk of collusion in the digital space.

[3] See Ireland (2020) on the true and full opportunity costs of non-compliance for regulated entities.

[4] See as well Jones and Kovacic (2020) on American experience with similar competition policy and law regime institutional challenges, including; (i) judicial resistance to change and preferences for the status quo, (ii) designing effective remedies under a new enforcement strategy, (iii) political and public backlash and how opposition to legislative reforms can continue from some special interest groups even after the reformed and amended statute has been approved by the legislature and implementation has begun, and (iv) government failures to provide competition and other authorities with adequate additional human, financial, technical, and statutory responsibilities and powers – see as well pages 5, 51 and 54 of the ISED November consultation document, with similar references in the earlier Bureau February submission.

ADDITIONAL RESPONSES TO TOPIC WILL BE INCLUDED IN SEPARATE SUBMISSIONS

18. Introducing new forms of civil enforcement as alternatives to criminal prosecution for certain actions.

The Council has already indicated its support for this proposal, but, similar to the previous question, more detail and specifics on what, why, when and how are needed; and the Council looks forward to the opportunity to participate in this process.

One issue, with which Council members have personal experience, is the role that voluntary or mandatory codes of conduct can play in supporting civil enforcement of the Act. Codes of conduct are now among what other jurisdictions are calling the 'new competition tools' now being considered and/or employed by the EU, UK, Australian, and some other competition authorities to support and complement competition law enforcement.[1] It should be noted in this regard that these are not new tools for the Competition Bureau. In the late 1990s and early 2000s, the Bureau successfully collaborated with selected sectors such as diamond mining and retailing, retail grocery, and pet food manufacturing, and environmental products manufacturers to introduce guidelines and voluntary codes of conduct that are still in effect today.[2]

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19. Allowing private parties to seek compensation for damage suffered from civilly reviewable (non-merger) conduct under the Competition Act.

The Council is in full agreement with this proposal, and as discussed later believes that the potential for expanding private and collective non-government enforcement and compensation for damages before the Tribunal, including by non-business civil society groups, should be considered in greater detail during this consultation and reform process, as well as if and when needed in the future.

The ISED November consultation document provides an excellent discussion of private enforcement in its enforcement mechanisms section on pages 52 and 53;[3] and the earlier Bureau February submission has even more references and discussion relevant to private access and enforcement, such as expanding private access including private enforcement/litigation for abuse of dominance and competitor collaborations.

The references to private access and enforcement in both documents could provide the foundation for additional reform proposals along these lines, which the Council would be pleased to review and comment on from the consumer and civil society perspective later in the consultation and amendment process. When reviewing these proposals, the Council will want to ensure that greater opportunities for private litigation and enforcement will not be used and misused by the government, ISED and the Bureau as a rationale and excuse for reducing the Bureau's budget and other resources, and thereby diminishing its enforcement and other functions, activities and responsibilities under the Competition Act.

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20. And as well pursuing a reasonable path with respect to the collection of information outside of the enforcement context, such as for the purpose of market studies, taking both public value and private burden into account.

As noted elsewhere in this submission, the Council is a major supporter of increasing the Bureau's information collection/gathering and related powers to better facilitate conducting and completing market studies and other broader non-enforcement investigations including merger retrospectives/ex post merger reviews (see PIAC 2021:22-23).

In selecting the subjects for future market studies and non-enforcement investigations, special emphasis could be placed on the distinctive issues and challenges posed by globalization, and more specifically the globalization of the digital economy, for the Canadian economy, marketplace and society. As discussed in the following footnote, these issues and challenges can be very different from those in other countries and competition jurisdictions, where previous research and policy analysis, as cited in the ISED November consultation document, has been conducted.[4]

Enhanced information gathering and monitoring of market and industry developments and more frequent market studies and other non-enforcement investigations would as well be aligned with the expanding behavioural and competition literature on how strong and continual monitoring, surveillance and scrutiny can improve behaviour – which can be called the we are watching you concept. These literatures can support greater Bureau investigative resources for enhanced monitoring, surveillance and scrutiny of specific firms, and relevant digital and conventional markets, industries and supply chains as well as expanded resources and powers for market studies.

For example, in his study on the digital economy, tech dominance, and policemen at the elbow, Wu (2019) argues persuasively that monitoring, investigation and the threat of sanctions, such as restructuring and related structural remedies even when not applied, can alter the behaviour of big tech companies. This is because of their fear (even anticipated, perceived, imagined, or irrational fear) of drawing too much attention to themselves and their business activities, leading to greater scrutiny by competition and other authorities, civil society groups, the media, and subsequently politicians.

[1] See pages 49 and 51 of the ISED November consultation document and Webb (2004 and 2005).

[2] See for example https://www.canadiandiamondcodeofconduct.ca/EN-consumer-information.php

https://www.retailcouncil.org/scanner-price-accuracy-code/

https://ised-isde.canada.ca/site/competition-bureau-canada/en/how-we-foster-competition/education-and-outreach/publications/guide-labelling-and-advertising-pet-foods

https://ised-isde.canada.ca/site/competition-bureau-canada/en/how-we-foster-competition/education-and-outreach/publications/environmental-claims-guide-industry-and-advertisers

[3] The potential benefits and challenges from private enforcement are captured very well in a paragraph on page 53 of the ISED consultation document. "A more robust framework for private enforcement, encompassing both 'private access' to the Competition Tribunal and 'private action' to provincial and federal courts for damages, would complement resource-constrained public enforcement by the Bureau, clarify aspects of the law through the development of jurisprudence, and lead to quicker case resolutions.… It may also lessen the effect of any strategic litigation on public resources. At the same time, changes in this regard would have to be designed to avoid unmeritorious or strategic litigation, or an unmanageable number of actions for the Competition Tribunal or courts to process."

[4] See Jackson and Ireland (2021), footnote 21 on page 11 of the ISED document, and page 53 of the same document which states that "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."

More generally, the Canadian academic and policy communities have conducted many impressive studies and research programs on innovation and technological development in Canada, but limited research and policy analysis has been done from a Canadian perspective on the interactions between competition and innovation and the links between competition and innovation policies and other legal regimes such as intellectual property rights in this country.

An important exception from the distant past is the 1998 book edited by Robert Anderson and Nancy Gallini on competition policy and intellectual property rights in the knowledge-based economy. While more recent contributions from a Google search are provided by the Bureau's draft discussion paper for pubic consultation of 2017 on big data, innovation and the implications for competition policy in Canada; and Denise Hearn "Lack of competition blunts Canadian innovation" IRPP Policy Options February 24, 2022 at https://policyoptions.irpp.org/fr/magazines/february-2022/competition-hurts-innovation-canada/

For the most part, Canadian governments, the Competition Bureau, and the Canadian competition policy and law community have depended on the extensive research conducted elsewhere especially in the US and EU. See for example Shapiro (2012) on competition and innovation. Kenneth Arrow hit the bulls-eye about how competition policy can best promote innovation, comparing American studies on the apparently very different Arrow and Schumpeter perspectives on competition, market and monopoly power and innovation, which according to this article are not as different as generally believed – see as well Katz 2021, and Katz and Shelanski (2005 and 2007) which was cited quite often in the Shapiro (2012) paper.

Canadian authors are, therefore, often forced to tailor these insights from other jurisdictions to the realities of the Canadian marketplace, federal system, very different economic, social and political structures and environments, and 'incomplete' common market. Stronger information collection and market studies powers under the Competition Act would help the Bureau and the country's competition policy and law and innovation communities to fill this research and policy gap regarding competition and innovation in Canada in the digital age as we enter the increasingly interconnected and networked post-COVID period (Wynne 2020).

The expectation of the Council and its members is that the interactions between competition, innovation, and intellectual property rights, and the implications for consumers, smaller business and other market participants, are very different in Canada compared with for example much larger competition jurisdictions such as the US and EU.

Comments and Suggestions

Canada needs a 'whole of government' approach to achieve a modern, outcomes-based, competition and consumer policy for the 21st Century.

Text

Consumers Council of Canada greatly appreciates the opportunity provided by the ISED consultation document to address issues of a more general nature that are important to the future of competition policy in Canada. These more general issues in our case are associated with the integral role that consumer interests, perspectives and concerns can, should and will play in the design, administration and enforcement of competition policy and law in Canada in the coming years.

Utilize the Commissioner's Full Powers Against Anti-competitive Activity

After the integration of the Department of Consumer and Corporate Affairs into Industry Canada in 1993, three federal statutes that prescribe minimum standards of conduct and care for general merchandise and prohibit false and misleading representations: Consumer Packaging and Labelling Act, Textile Labelling Act, and the Precious Metals Marking Act, were transferred, with funding for administration and enforcement, to the Competition Commissioner's delegated authority. These three statutes became important additions to the Commissioner's legal arsenal to assist in efforts to combat anti-competitive activity and protect Canadian consumers. Subsection 7(1) of the Competition Act clearly states that the Commissioner of Competition is responsible for the administration and enforcement of these three Acts, in addition to the Competition Act.

These consumer protection statutes and their regulations prescribe minimum quality and marking standards for precious metal articles: jewellery and other articles containing gold, silver, platinum, and palladium; consumer textile articles: apparel and other consumer textile goods; and standards and procedures for verifying the accuracy of weights and measures and label representations for all non-food consumer prepackaged products sold in Canada. Similar legislation is administered and enforced by all of Canada's major trading partners in the G7, G20 and beyond.

At the time they were transferred, it was believed that these statutes would enhance the Commissioner's ability to address fairness and integrity in the Canadian marketplace. They give the Commissioner authority to carry out warrantless entry inspections and take immediate enforcement action on products in violation of the statutes, without engaging in protracted legal proceedings. Before and during the transfer period, data indicated low rates of compliance and a high number of incidents of fraud and misrepresentation in businesses that were subject to the legislation. These violations represented a cumulative annual social loss to consumers in the billions of dollars.

Unfortunately, successive Commissioners have chosen not to apply an adequate standard of care for these statutes, thereby effectively repealing them by means of non-enforcement and the failure to modernize the legislation and regulations as required by government regulatory policy and practiced by all other Canadian federal regulatory authorities.

As the centre of competition policy for Canada, ISED should decide on whether these statutes indeed have an impact on mitigating anti-competitive activity such as misrepresentation and fraud, and whether they should be enforced and modernized accordingly. ISED has also been encouraged by the Consumers Council of Canada to consider transferring responsibility for the administration and enforcement of these statutes to a regulatory authority such as Measurement Canada, which is housed within ISED and has the infrastructure (active inspectorate, technical expertise, regional and district offices across Canada) and a refined understanding and knowledge of how to administer and enforce regulatory standards and standards of identity found in consumer protection regulatory statutes.

The Bureau's attempts to effectively repeal these statutes through non-enforcement and lack of modernization: (i) invites fraud and misrepresentation, (ii) encourages foreign manufacturers and distributors to exploit weak to non-existent surveillance, thereby placing affected domestic industries at a competitive disadvantage, (iii) is counter to the objective of promoting the integrity of a competitive marketplace and consumer protection, (iv) is inconsistent with ISED's stated policy and commitment in this current review exercise to make "… changes that will help the Competition Bureau better protect consumers and the integrity of the marketplace" and to better address the challenges of big data and digital markets; and, (v) as noted above, ignores the high costs of violations to consumers and other purchasers, and how non-enforcement harms the Bureau's reputation.

The protections provided by these three acts as well as by the deceptive marketing provisions of the Competition Act are especially important to women who are responsible for doing the majority of day-to-day shopping in Canadian households and in most other countries. As a consequence, these protections support the current efforts of the Competition Bureau, the OECD and other countries to make competition statutes and the functions, activities and strategies of competition authorities more gender inclusive, as explored in some detail by Ireland (2022d) in his recent research paper on more gender inclusive competition, consumer protection, product safety, privacy and other policy, legal and regulatory regimes.

Improve Transparency Through Detailed Performance Measurement and Reporting

Apart from the Canadian Bar Association, academics, politicians, and those who administer and enforce the Competition Act, Canadians are unfamiliar with competition policy and its contribution to a fair, competitive marketplace. By design or unintentionally, the Competition Bureau has distanced itself from ordinary Canadians and civil society and has failed to provide, on a regular basis, adequate value for money analysis and reporting to the public.

By contrast, the Bureau's American counterpart, the Federal Trade Commission, provides public reporting in a publication that gives detailed annual performance plans with strategic goals, performance targets, and performance metrics, and a detailed annual performance report with quantitative and qualitative metrics.[1] Many of these metrics relate to the FTC's quite extensive consumer protection responsibilities, including one metric that measures the "rate of customer satisfaction with the FTC's customer response center".

Successive Competition Commissioners typically lament the lack of funding, yet fail to provide detailed evidence to the public that the existing funds they are allocated from ISED are used efficiently and how consumer welfare has been advanced through stronger competition and inter-firm rivalry in conventional and digital markets that are both efficient and fair. Rather than expending resources on marketing, public relations, and multi-media campaigns as is the case currently, the Commissioner needs to provide clearer evidence to the public of value for money through reporting on the measurable and meaningful deliverables for consumers and other market participants, using the FTC strategic planning and reporting model.

In addition to providing meaningful performance reporting, greater efforts should be made to establish relationships, coordination and collaboration with consumer organizations and other civil society groups as practiced in other advanced economies with competition and consumer protection agencies. This can only be done through experimentation and risk taking.[2] Some recommendations can be found in the free publication from the Consumers Council of Canada "Supercomplainers: Greater Public Inclusiveness in Government Consumer Complaint Handling."[3]

ISED may also wish to consider experimenting with establishing more formal methods to seek input on important competition policy and consumer protection matters and issues by carrying out hearings, and implementing an intervenor type model similar to CRTC hearings where balanced representation is encouraged and civil society groups including consumer organizations are invited to participate.

[1] Federal Trade Commission Annual Performance Report for Fiscal Year 2021 and Annual Performance Plan for Fiscal Years 2022 to 2023 at https://www.ftc.gov/system/files/ftc_gov/pdf/21apr_22-23app.pdf

[2] Recent media reports suggest that the current Commission of Competition in Canada is aware of the transparency and related concerns raised by the Council in this section and elsewhere in this submission.

See Joe Castaldo "Competition commissioner says reform needed to shake up Canada's 'concentrated economy,' oligopolies" The Globe and Mail, Published December 22, 2022 at https://www.theglobeandmail.com/business/article-competition-bureau-commissioner-matthew-boswell/

[3] See https://cccshop.consumerscouncil.com/ca/Consumer-Representation/c/3214/Super-Complainers-Greater-Public-Inclusiveness-in-Government-Consumer-Complaint-Handling-[EPUB]/p/139702

ONLY PARTIAL RESPONSE DUE TO FORM SUBMISSION CONSTRAINT – BALANCE WILL BE SUBMITTED IN SUBSEQUENT FORMS

The Competition Bureau is the competition law enforcement agency which is, of course, a key element in implementing competition policy. The Bureau and its officials are influencers of competition policy in part through the design and implementation of the investigative, enforcement, deterrence, compliance promotion, outreach, education, and related policies needed to administer and enforce the Competition Act.[1] However, the Competition Act does not have the ultimate decision-making powers to change and reform competition policy.

The Department of Industry, Science and Economic Development (ISED) allocates resources for the Competition Bureau's operations but has very limited capacity to address competition policy as part of its Departmental responsibilities to set industrial and marketplace strategic policy. Nonetheless, any amendments to the Competition Act must ultimately be presented to Cabinet via the Minister of ISED.

Free advice, research and analysis is to be found in abundance from the Canadian Bar Association, large legal firms that concentrate on competition law cases, former high-profile Competition Commissioners, academics, and the business media. Yet, competition policy is exercised by the federal and provincial governments to an extent that well exceeds the limited capacities of the Competition Act, Competition Bureau, ISED, and private sector influencers. Multiple departments, crown corporations and agencies influence the conditions of competition through their exercise of regulatory authority or through the procurement process. An excellent overview and example of the extent of the 'whole of government' influence on competition policy in a modern democracy can be found in the July 2021 U.S. Presidential executive order on promoting competition in the American economy.[2]

The development of modern, outcomes-based, competition and consumer policy is essential to move Canada into a 21st century economy and the digital era. This is so vital that the opportunity offered by this review should not be wasted by focusing solely on granular amendments to the Competition Act and machinery of government matters, without taking the opportunity to address the much greater impact a whole of government approach to competition policy can have for the Canadian marketplace, economy, consumers and other market participants.[3]

After the reform process is completed, the government and Bureau should support research on whether, why and how the administration and enforcement of the new Competition Act would benefit from allowing private litigation for certain provisions of the Act, in light of the expanding interest in and use of private antitrust litigation in the United States, European Union, and some other competition law jurisdictions. This research should carefully consider the potential risks, costs and benefits of private antitrust enforcement for competition, consumers and smaller enterprises, based on experience elsewhere appropriately modified for the Canadian marketplace and competition environment.[4]

[1] See for example Competition Bureau of Canada "Bulletin Corporate Compliance Programs" June 3, 2015 at https://ised-isde.canada.ca/site/competition-bureau-canada/en/how-we-foster-competition/education-and-outreach/publications/corporate-compliance-programs and https://ised-isde.canada.ca/site/competition-bureau-canada/sites/default/files/attachments/2022/cb-bulletin-corp-compliance-e.pdf for the PDF version.

[2] See https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/

Carrier (2023) on the right to repair, competition, and intellectual property, which was an important issue in the Presidential executive order of 2021.

Andrew Coyne "Corporate Canada has been protected from competition for too long. It's time to put consumers first," The Globe and Mail, January 20, 2023 at https://www.theglobeandmail.com/opinion/article-corporate-canada-has-been-protected-from-competition-for-too-long-its/

This article implicitly adopts a whole of government approach through emphasizing how public policies at the federal and provincial levels have impeded and continue to impede competition, innovation and consumer welfare in Canada. The article also discusses the role of inter-provincial trade barriers, which has often been addressed by the Bureau over the past nearly 40 years.

Previous research conducted by Council members illustrated how Canada has a much weaker and more incomplete common market than the European Union comprised of sovereign states. The article concludes by reminding readers that consumption is, as Adam Smith put it, "the sole end and purpose of all production," and that therefore "the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer."

[3] It should be noted that the Cartels and Deceptive Marketing Practices Branch and its predecessors within the Bureau have a long history of using a whole of government approach including for cross-border consumer frauds and scams.

See for example: Federal Trade Commission "U.S. and Canadian Authorities Strengthen Partnership To Combat Cross-Border Scams During National Consumer Protection Week" February 3, 2006 at https://www.ftc.gov/news-events/news/press-releases/2006/02/us-canadian-authorities-strengthen-partnership-combat-cross-border-scams-during-national-consumer for which the partners were the Federal Trade Commission, the United States Postal Inspection Service, and the Postal Service's Consumer Advocate, the Royal Canadian Mounted Police, PhoneBusters and Canada's Competition Bureau.

And Royal Canadian Mounted Police "Fraud Prevention Month raises awareness after a historic year for reported losses," February 28, 2022 at https://www.rcmp-grc.gc.ca/en/news/2022/fraud-prevention-month-raises-awareness-a-historic-year-reported-losses for which the partners are the Canadian Anti-Fraud Centre (CAFC), the RCMP and the Competition Bureau.

[4] See for example Crane (2019) on a realistic comparative assessment of private antitrust enforcement; and Lande and Davis (2017) on restoring the legitimacy of private antitrust enforcement.

MORE TO COME IN SUBSEQUENT FORM SUBMISSION

In most advanced economies, competition policy and consumer policy are seen as complementary to each other. This dual approach is espoused by the OECD and in practice by regulatory authorities such as the Australian Competition and Consumer Commission, the US Federal Trade Commission, and the UK's Competition and Market's Authority. It is not inconsequential that consumer and public confidence in competition and consumer regulators is much stronger where this is the case. Competition authorities that view the public and consumers as simply the recipients and potential beneficiaries of their actions, as opposed to being key stakeholders and collaborators, miss important opportunities to improve the effectiveness of their policies and improve the public's trust in their competition policy regimes and the fairness and effectiveness of the outcomes of competition in their marketplaces.

In 2019, the Ministers of Industry, Seniors, and Middle-Class Prosperity were mandated by the Prime Minster to create a Canadian Consumer Advocate to provide a single point of contact for consumers needing help with their complaints about federally regulated banking, telecom, or transportation-related sectors. This marked an important inflection point where the federal government acknowledged federal regulators may be losing touch with consumers and the public in carrying out their mandates to provide a fair, competitive marketplace, and would benefit from oversight by an independent agency with powers to ensure consumer and competition interests and expectations are being met.

An extended form of this mandate for improved consumer protection frameworks for all sectors of the economy was proposed by the Consumers Council of Canada and supported by Canadians from every province and territory of Canada in the form of a certified House of Commons petition (e-3150) just prior to the dissolution of Parliament in August 2021.[1] Correspondence obtained through an Access to Information request confirmed that ISED officials were active in following this extended mandate approach by creating an advisory panel of Assistant Deputy Ministers from a wide variety of federal Departments that administer and enforce consumer-facing legislation.

The mandate to create a Canadian Consumer Advocate did not appear in mandate letters following the 2021 election. During a follow up enquiry to ISED on next steps for the Canadian Consumer Advocate initiative, the Council was informed by a senior ISED official that the initiative had been dropped and that "consumer protection and consumer interests are not an ISED priority".

Canadians and Canadian consumer organizations continue to believe that federal government attention to protecting consumers has eroded over the past several decades and consumers' voices are absent when important policy, regulatory and legislative decisions are made.[2] The current patchwork approach to consumer protection is a failing strategy as Canadians navigate increasingly complex markets dominated by international factors, corporate players, and powerful special interests in both conventional and digital markets.

In addition, corporate capture of the regulatory process is evident in policies and strategies currently being pursued by the Treasury Board Secretariat. This scenario is not isolated to Canada. The United States Congress is currently reviewing legislation that would create an Office of the Public Advocate, which would become the voice of the public in the rule-making process and have the core mission to "reduce corporate capture by increasing the influence of the public".[3]

The Council continues to advocate that Canada's progress in meeting future economic and social challenges lies in the establishment of an independent federal advocate[4] with a sole function to argue for consumers, support their voice through civil society, and stress the relationship of their needs to the decision-making processes within agencies of government – including ISED and the Competition Bureau.

Furthermore, as indicated at the end of section 2, the Council believes that the government, ISED and the Bureau should develop a greater understanding of, and consider implementing, the recent emergence and success of combined competition and consumer agencies elsewhere in the global economy, and the opportunities they provide for an enhanced institutional representation of the consumer interest in Canada.

These models from other countries have significantly enhanced the competition and consumer protection investigative, enforcement and decision-making powers of such agencies as the Federal Trade Commission in the United States, the Australian Competition and Consumer Commission, the Competition and Markets Authority of the United Kingdom and, most recently, the Competition and Consumer Commission of Singapore, as well as the European Commission, which is very active on both competition and consumer issues albeit from separate directorates – see e.g. Jenkin and Ireland (2018), cited in the ISED November consultation document.

Council's Comments on the Role, Functioning and Purpose of the Competition Act

As described in the consultation scene setter (Government of Canada 2022c), the current purpose clause of the Competition Act seeks to: promote and preserve competition in order to foster economic dynamism and efficiency; support success of Canadian businesses in world markets; ensure a level playing field for small and medium-sized enterprises (SMEs); and provide consumers with competitive prices and product choices. The purpose clause of the Act has received considerable debate, discourse and contestation over the past nearly four decades and this debate will likely be amplified and become even more contentious during the consultation process. This final section will provide the Council's perspectives on this important question.

The February Bureau submission and the November ISED consultation document on page 12 contend that the Act's purpose clause should maintain its broad multi-objective outlook. The Council recognizes that statutes with multiple objectives can be more challenging to administer and enforce. Nonetheless, we also recognize that simple abstract objectives focused on 'total efficiency' and 'promoting the competitive process' may satisfy competition law economists and lawyers, but do not capture the complexity of the modern Canadian marketplace and the interests and concerns of Canadian consumers now and especially in the future.

In particular, focusing solely on efficiency is a non-starter for the Council. For example, a total efficiency and/or total welfare standard places too much weight on what are often dubious and spurious efficiency and innovation claims in mergers, horizontal collaboration agreements, unilateral conduct, abuse of dominant positions, and vertical matters, when there is strong evidence of higher prices, less quantity, lower quality products, more limited access, and other consumer, worker and small business harm.

Instead, the Council's concern is that total efficiency and the international competitiveness of Canadian firms and industries have been given too much emphasis in the administration and enforcement of the Act up to the present day, to the detriment of the other objectives in the purpose clause, especially those concerning the consumer interest and SMEs. As described in some detail in the Council's responses to questions 4, 9 and 11, and elsewhere in the previous section, these objectives should be given much greater attention throughout the major sections of the Act, as well as in the enforcement, deterrence, compliance promotion, education, outreach and other functions, activities and strategies of the Bureau. As well, the purpose clause and Bureau's interventions and other efforts to protect the consumer and enhance consumer welfare should better capture the many needs, interests and complexities of the modern Canadian consumer (Ireland 2021).

[1] See https://petitions.ourcommons.ca/en/Petition/Details?Petition=e-3150

[2] See for example Ireland and Webb (2007) and Jackson and Ireland (2021).

[3] See Mathew Kent and Amit Narang "How to end corporate capture of the regulatory process," The Hill, February 9, 2022 at https://thehill.com/blogs/congress-blog/politics/593594-how-to-end-corporate-capture-of-the-regulatory-process/

[4] See the Council document "Time for a Real Federal Consumer Advocate" at https://cccshop.consumerscouncil.com/ca/Consumer-Representation/c/3214/Time-For-A-Real-Federal-Consumer-Advocate-[PDF]/p/156609

MORE TO COME IN SUBSEQUENT FORMS SUBMISSION

Consumer welfare and the consumer interest should therefore be more central to the Act's overall provisions rather than a passing reference in the purpose clause. Further, it should illustrate that consumer welfare and the consumer interest go well beyond more quantity and lower, more competitive, prices, to include high quality, innovative, safer, ethical and environmentally responsible goods and services, and related transactional and contractual matters consistent with the concept of competition that is both fair and efficient. The Competition Act had only one reference to the consumer, in the purpose clause, up to the June 2022 amendments when, as noted earlier, consumer privacy was added to three sections of the Act.

In this regard, it is important to underline that promoting the consumer interest is not some sop to a special interest group. All Canadians are consumers in the marketplace and ensuring their interests are met is a powerful tool to use to ensure that competition and innovation happens in the Canadian marketplace. Put simply, the interests of consumers are competition and innovation enhancing.

The three new consumer privacy provisions, which increase the consumer references within the Act from 1 to 4, represent a good starting point and building block for the future, but consideration needs to be given to adding other consumer welfare and interest references elsewhere in the Act in order to counteract the impression of many that total efficiency is the only 'functional' purpose of the Act now and in the future.

As noted in the previous section, these additional sections and provisions would include:

• the efficiencies provision, especially if efficiencies become a competitive factor rather than a defence;
• bringing the consumer interest into the competitor collaboration provisions when these are widened and strengthened, as discussed under question 11; and
• making deceptive marketing practices and related deceptions, misleading advertising, production misrepresentation, and consumer frauds an explicit abuse of dominance and market power;
• such as in the new provision which condenses the various unilateral conduct provisions into a single, principles-based abuse of dominance or market power provision – as in question 9, which in the new Act would perhaps correspond to some degree with provision 78(1) on definition of anticompetitive acts in the current Act.

The Council also believes that protections for small businesses should remain in the purpose clause, protections for workers should be added, and additional references should be provided throughout the Act regarding how small business, worker and privacy issues should be addressed under different sections of the Act.[1]

Furthermore, as noted previously, the purpose clause, as well as other sections of the Act, should more fully recognize that stronger competition and inter-firm rivalry, and greater product and vendor choice, are essential for making Canadian markets more efficient as well as fairer and more equitable for all market participants.[2] The imperative for the Competition Bureau and the federal government more generally to promote fair and efficient markets has a long history in Canada.

The concept of fair competition is being discussed greatly in the international competition policy community; and the promotion of markets that are both efficient and fair was in the CCAC mission statement, and at the outset in the Department of Industry Act of 1995. It was regrettably removed in subsequent revisions to the Act and its successors for reasons that are less than clear.[3]

Without product and vendor variety, choice and access, and especially fair and equitable access to essential goods, services, vendors and service providers as well as to competition policy and law agencies and policy makers, consumer sovereignty and empowerment in the marketplace are highly limited and essentially an empty vessel. It is essential therefore that the Act and its administration and enforcement fully recognize the essential role of the well-informed, proactive and empowered consumer, with significant voice and exit opportunities, in promoting fair competition, efficient markets, innovation, and a stronger and more competitive and productive Canadian economy.[4]

The 'whole of government' approach described in the previous section requires multi-disciplinary research including market studies and non-enforcement investigations by the Bureau from a distinctive Canadian competition, consumer and marketplace perspective on: (i) the inter-relationships and interactions between the different components of the purpose clause of the amended Competition Act and other policy issues raised in the ISED consultation process; and (ii) the discourse in the international policy community on fair competition and fair and efficient digital and conventional markets. Some of the Council's suggestions regarding the issues and subject areas that require further study include the following.

Our first priority is discussed in the Council's response to question 20 including footnote 45. Based on previous research of the Council and its members – see for example Jackson and Ireland (2021) on the on-demand economy and consumer, we would give greatest priority to research on the distinctive issues and challenges posed by globalization, and more specifically the globalization of digital firms, platforms and markets, for the Canadian economy, marketplace, fair competition, innovation, and consumer well-being. As noted earlier, research on the interactions between competition, innovation and the digital markets from a Canadian perspective is very limited, and rarely focuses on the modern Canadian consumer.

Depending on research from other countries and jurisdictions when developing Canadian competition and innovation strategies, including the investigation, enforcement and deterrence strategies of the Bureau and other authorities in this country, is highly problematic. Research of the Council and from other sources have illustrated that Canadian consumers can be very different from consumers in our major trading partners and other countries; and the Canadian marketplace is also very different because of our federal system, very different economic, and social and political structures, environments and cultures, and Canada's 'incomplete' common market because of interprovincial trade and other barriers.

New Canadian research and studies should particularly focus on the essential role of the final consumer for promoting fair competition, innovation and a stronger and more competitive Canadian economy in a manner that provides significant and measurable benefits to final consumers, other purchasers, small businesses, workers, farmers, and other participants in conventional and digital markets.

[1] Similar arguments are made in PIAC (2021).

[2] See for example Huck et al (2012) and Flammer (2013) on how and why competition can foster trust and corporate social responsibility; and the expanding literature on the importance of consumer and purchaser trust to business success in digital markets.

[3] The departmental legislation for ISED continues to be the Department of Industry Act of 1995 which was last amended on June 17 2019. In the amended version, there are no references to fair and efficient markets, fair competition and fairness, and references to the consumer within the now ISED Act are limited largely to the transfers of powers, duties, functions and authorities from the previous Department of Consumer and Corporate Affairs, with one important exception: (i) "promote the interests and protection of consumers", which is the last objective under the Objectives section of the Act – see as well Ireland and Webb (2007) on consumer protection through free markets, small government and individual responsibility.

[4] See Averitt and Lande (2007); Inesi et al (2011 and 2012) who make very strong behaviorally informed arguments that, without choice and highly valued alternatives, individuals have no control and power in their market relationships, transactions and other interactions. No or limited consumer choice means the vendor or producer has essentially all the power. The importance of market fairness is recognized to some degree in the ISED November consultation document, which has one reference to fair competition and 18 references to fair or fairness.

See as well Hirschman (1970) on exit, voice, loyalty and how people respond to declining performance by firms, other organizations and nation states. Without opportunities for both exit and voice, consumers and other less powerful actors and groups have limited control, power and sovereignty.

MORE TO COME IN SUBSEQUENT FORMS SUBMISSION

The Council also believes that the government should adopt a forward agenda of multi-disciplinary research regarding how and why fair competition and consumer well-being in Canada would benefit from:

• How a more level playing field for small and medium sized enterprises provides final consumers and other purchasers with enhanced product and vendor variety, choice, access, control, empowerment, and consumer sovereignty.
• Greater understanding of the interactions in the Canadian marketplace between product, geographic, financial, digital, labour and other input markets, with emphasis on their implications for market definition, competitive effects, consumer and worker welfare/well-being, business entry, and other issues addressed in competition and consumer analysis including enforcement cases (Ireland 2018).
• And in-depth analysis on how the lack of competition in what the literature calls political markets, the excessive political influence of the more powerful and dominant corporate players, and regulatory capture, combined with the limited voice and influence of consumers and other civil society groups in policy making processes, can be translated into more concentrated markets and corporate power and dominance in product, geographic, financial, digital, labour and other economic markets in this country.[1]

The major lesson from recent research of Council members is that fair competition in product markets requires fair competition in all other markets including what the literature calls political markets where various corporations, civil society groups and other non-government actors compete for favourable and their preferred policies, laws, regulations and programs from government.[2]

The core issue for competition policy and law and the whole of government approach in Canada is to more fully recognize that the people and groups – which are disadvantaged by market concentration, corporate power and dominance, and anticompetitive and non-compliant conduct within product, financial, labour, and other markets – are the same less powerful people and groups acting in their different roles and in different contexts as consumers, workers, small business people, farmers, small retail investors, voters, and/or citizens.

The reform of the Competition Act should take full account of these hard realities on the interactive and cumulative negative effects of corporate power and dominance in different market contexts, as described in this submission as well as in many sections of the Bureau's February 2022 submission and the ISED November consultation document. Two other common themes throughout this submission based on the research of the Council and its members should also be taken into account.

On the one hand, Competition Act reform should fully recognize that the final consumer is the major victim of the misconduct of large Canadian corporations and other firms as well as the poorly designed and enforced policies, laws, and regulations of government. On the other, Competition Act reform should also fully recognize that the well-informed, demanding, empowered and 'sovereign' final consumer is the major driver of competition, innovation and competitive and socially responsible firms in Canadian conventional and digital markets.

In this regard, as discussed throughout this submission, the government, ISED, the Bureau, the business community and other stakeholders should take full account of the interactions between fair competition, fair, equitable, and efficient markets, and the priority of the Canadian and many other governments to promote enhanced gender, ethnic minority and other forms of inclusion by means of their competition, consumer protection, and other policy, legal and other regulatory regimes. In many ways, competition policies, laws and authorities, especially those that also have consumer protection and privacy responsibilities, are better positioned than other framework laws and policy, legal and regulatory regimes to foster fairer and more equitable markets and gender and related forms of inclusion.[3]

To conclude, the Council is highly supportive of this ISED consultation process to reform the Competition Act. Our support is based in part because of growing concerns that current high government spending and increases in fiscal deficits and national and provincial debt are unsustainable. As a consequence, the well-being of consumers and other market participants will need to depend more in the future on major improvements and reforms to Canada's economic framework laws and related legal and regulatory instruments, as well as enhanced public understanding of and support for these laws and regulations, as well as compliance with and enforcement of them.

The ability of taxpayers' dollars to solve competition, consumer, worker, small business, inequality and related social problems is becoming increasingly constrained as we enter the post-COVID period. Nonetheless, as proposed by the Council throughout this submission, it is essential, as well, to provide the responsible agencies and authorities with the required financial and other resources, powers and capabilities to administer and enforce laws and regulations in a proactive, aggressive, effective, fair and transparent manner.

[1] Research of Council members and other policy analysts underline the need for more open, inclusive, polycentric, shared accountability and sustainable competition and other policy, legal and regulatory regimes in Canada, which provide much stronger participation, influence, voice and empowerment for consumers associations and other non-business civil society groups – see the Coyne article earlier in this section and Ireland (2022a, 2022b and 2022e)

[2] See Ireland (2022b Appendix G); and the footnote reference earlier in this section to the very recent Andrew Coyne article on how government policies are major impediments to fair competition and consumer welfare in Canada. This article and many other sources suggest that the whole of government approach to promoting competition in Canada needs to include the negative and positive effects of other government policies at the federal, provincial and municipal levels, as discussed throughout this section.

[3] See for example PIAC (2021:12-13), which argues persuasively that prioritizing efficiency over other objectives within the purpose clause, design and enforcement of the Competition Act, and deferring, relying on, and in a sense out-sourcing other economic and social objectives to other policy, legal and regulatory instruments is totally unworkable and inconsistent with broader trends within the international competition policy and law community.

While as noted earlier in this submission, the OECD with significant support from the Competition Bureau and other competition authorities, are placing increasing emphasis on gender inclusion as well as related forms of inclusion and discrimination and gender-based analysis, when designing, administering and enforcing their competition and related policies, laws, regulation and rules.

See for example Ireland (2022d) which reviews the OECD and other research and related insights on gender inclusive competition, consumer protection, product safety, privacy and other policy, legal and regulatory regimes.

And the excellent OECD website on its gender inclusive competition policy project at https://www.oecd.org/competition/gender-inclusive-competition-policy.htm downloaded on January 12, 2023, which: (i) indicates that this "project has been launched with the support of the Canadian Government and in particular the Canadian Competition Bureau to develop guidance for competition agencies in this area"; (ii) indicates that a key activity from Q3 2021 onward is the development "of a toolkit or guidance for Canadian and any other interested competition authorities;" and (iii) provides easy access to the many state-of-the-art research studies and other deliverables from this very important international project.

Merger Review

Incorporate Non-Price Factors during Merger Reviews

CIPPIC recommends that the Competition Bureau incorporate relevant non-price factors when conducting merger reviews.

The substantive test to review merger transactions must be revised to account for the role of data as an intangible asset in the digital economy. Many technology companies utilize data to generate business value through big data analytics. Data broker companies, such as Cornerstone, built their business on compiling and selling consumer data to other companies. The recent surge in interest in AI technology has also heightened the importance of data as an intangible asset, as AI companies must utilize large datasets to train their AI program.

Additional factors such as network effects, changes to market structure, and potential barriers to entry due to the exclusivity of data pools should be considered when conducting merger reviews. Dominant firms have been active in conducting data-driven acquisitions to expand their data pools and build powerful, exclusive datasets on consumers to dissuade competitors from entering the market. The Competition Bureau must be cognizant that allowing two firms to amalgamate their data pools will create medium- to long-term synergies that may not be immediately evident.

Considering non-price factors will give the Bureau more leeway to block "killer acquisitions". These are acquisitions aimed at removing competitors from the market. By "killing off" competitors, the dominant firm will command greater market power and leverage its position to increase price, reduce quality, and stymy innovation. By considering non-price factors in merger reviews, the Competition Bureau can identify mergers where its primary purpose is to remove competitors from the market and protect small- and medium-sized businesses from these killer acquisitions.

Further, the substantive test to address and prevent harmful conduct by dominant businesses and/or mergers should be changed and aligned with the European Union's approach. The European Union's approach takes into account how data-driven mergers can affect competition by changing the structure of markets (see for example the EU Commission decision regarding Google's acquisition of Fitbit, which prohibited Google from combining its advertising data with Fitbit's biometric data from users in the European Economic Area). Given the extreme returns to scale that characterize many parts of the digital economy, it may be valuable to apply a public interest framework to mergers and anti-competitive behaviour in the digital realm, where firms can scale rapidly and where it may be best to err on the side of disallowing anti-competitive behaviour when doing so is in the public interest. Relatedly, it may be worth considering dropping the efficiencies defence and introducing a "balance of harm test."

Structural Separation and Line of Business Conditions

CIPPIC also recommends that the Competition Bureau implement anti-monopoly tools such as structural separation and line of business restrictions. The Bureau must be prepared to impose structural separation and line of business conditions on acquisitions that will have a medium to long-term effect of preventing or reducing competition. Studies have shown that dominant platforms operating across lines of business have an extraordinary advantage compared to other companies. For example, Amazon has abused its control of the data of third parties that rely on its platform to sell their goods and guide its Amazon Basic product line.

To prevent dominant firms from leveraging platform data to directly compete with companies that rely on their platforms, the Bureau can utilize tools such as structural separation or line of business restriction to protect small- and medium-sized businesses. There are two types of structural separation: 1) ownership separation, which requires the company to divest and separate its ownership in each business; and 2) functional separation, which allows the company to operate in multiple lines of business but prescribes a particular organizational structure to prevent conflict of interest and anti-competitive behavior. This can include conditions such as setting up a "data wall," where data from each line of business cannot be shared. Like ownership separation, line of business restrictions prohibit a firm from doing business in certain markets.

Unilateral Conduct

CIPPIC believes that the Government of Canada should update the purpose of the Competition Act to include broader public interest considerations. Under section 1.1, the purpose of the Act is to maintain and encourage competition, with the central goal of promoting the "efficiency and adaptability of the Canadian economy." We believe that this statement of purpose is too narrow, especially when it comes to the challenges of advancing competition at both ends of the technology stack—from infrastructure dominated by conglomerates that own telecommunications companies at the physical layer, to the enormous concentration of digital platforms at the application layer.

Canada could look to other jurisdictions, particularly the European Union, where promoting consumer well-being and preventing consumer harm have long been established as central goals of competition law. Consumer welfare should be a key public interest consideration for competition law. Correspondingly, we suggest that the Government of Canada adopt a broader, public interest lens to address accessibility and equity considerations, consumer and social protections, infrastructure development, and environmental considerations. Additionally, in digital markets, public interest issues may include third-party tracking and privacy concerns, as well as discrimination arising from the use of personal data and analytics.

Public interest considerations, including consumer welfare, should be supported by legislative definitions which capture consumers and their interests in the digital context. For example, the concept of consumer welfare may apply to multiple groups of users in digital markets, including producers, wholesalers, retailers, and final consumers. A price-centric approach to consumer welfare may not perform as well in digital markets as in other markets, where platforms offer zero-price services and products to consumers. As such, non-price factors, such as the digital dominance of a firm, will become important considerations as many variables which impact consumer welfare will not be easily quantifiable in the digital economy.

Revising the objectives of the Competition Act in favour of the public interest does not mean abandoning economic efficiency. We believe that economic efficiency, consumer welfare, and the public interest are intertwined. For example, in the context of the digital economy, competition law has a role to play in fostering innovation. By following the European Union's example and emphasizing the role of competition law in promoting consumer welfare and public interest, Canada has an opportunity to update its competition law to properly address the emerging issues in the current digital economy. This is also an opportunity for Canada to better position its competition law to meet emerging digital issues, including privacy and accessibility, while maintaining a framework that can be applied to the conglomerates that own telecommunications companies in Canada.

Beyond revising the Competition Act, we recommend that the Government of Canada implement additional regulatory oversight through legislation specifically focusing on digital zero-price platforms and services, like the EU's Digital Markets Act (DMA). Ex ante regulatory tools like the DMA can be valuable complements to competition law as regulations imposed under them can be introduced with speed and flexibility. This is valuable when regulating rapidly developing digital sectors.

The objective of the DMA is "to ensure a contestable and fair digital sector in general and core platform services in particular, with a view to promoting innovation, high quality of digital products and services, fair and competitive prices, as well as a high quality and choice for end users in the digital sector." Similar objectives are worth promoting through ex-ante regulations aimed at the Canadian digital sector. The DMA enables the European Commission to designate platform services as "gatekeepers" based on either quantitative metrics or through a "market investigation" procedure where qualitative metrics are considered.

Relatedly, we recommend that the new legislation empower the Competition Bureau to conduct "market investigations" or "market studies" which would allow them to impose competition and regulatory mechanisms not limited to quantitative financial criteria (for example in zero-cost markets or based on data ownership). Competition authorities in the U.S. similarly have the authority to conduct market studies, which are valuable in addressing possible deficits of information, understanding how mergers or anti-competitive behaviours may affect market structure, and may increase the regulatory authorities' predictive power in the rapidly evolving digital markets.

In the EU, regulators have determined that competition law can evolve to meet the digital "revolution" without re-evaluating its fundamental goals. The flexibility stems from the introduction of ex-ante regulations, and the central goal of consumer welfare may be worth replicating in Canada. As well, it may be worth committing to reviewing the Competition Act at regular intervals.

The Government of Canada should also consider the complementary role between privacy and competition laws. Data exacerbates pre-existing competition problems in the digital age, and many dominant technology companies control or have access to large amounts of consumer data. These consumer data are regulated under Canada's federal and provincial privacy legislation. To effectively modernize Canada's competition regime, privacy and competition legislation should be reviewed and updated in support of each other. For example, regarding data interoperability, Canada's privacy legislation should include the requirement to allow Canadian consumers to request access to their data. Competition law will also play a role by promoting innovation and competition to support the development of meaningful alternatives in the market.

Comments and Suggestions

Canadian competition policy is not up to the challenge of dealing with big technology companies that have achieved "digital dominance" in their respective markets. Companies such as Meta (Facebook), Google, and Amazon have obtained significant market scale in Canada. Canadians are facing a market with few alternatives to the services provided by these dominant companies. To address the growing issue of "digital dominance", we recommend implementing several sector-specific mechanisms to strengthen competition policy in Canada.

Implement Rules to Prevent Discrimination, Self-Preferencing, and Gatekeeping

We recommend inserting legislative language into the Competition Act to prohibit firms from engaging in discriminatory or self-preferencing activities. Dominant platforms such as Google and Amazon have been found to engage in discriminatory behaviors by giving preferential treatment to certain products or services that their subsidiaries own. For example, in a 2017 decision by the European Commission, Google was fined 2.42 billion euros for abusing its dominant position in the market by favoring its own comparison shopping service over competing services. The Commission found that Google displayed the results of product searches in a more eye-catching manner for its own shopping services, compared to third-party shopping services. Similarly, Amazon has been found to display Amazon Basic products (Amazon Basic is a private label owned by Amazon) more prominently in the search results to its users, compared to better-rated third-party products. Additionally, Amazon can also use data generated from its role as a marketplace to determine what Amazon Basic products to develop, which is an abuse of its power and data gained from its role in the digital economy.

These discriminatory and self-preferencing behaviors prevent other firms from competing with the dominant firm. This undermines the competitive dynamic of these markets. The rise in big data will exacerbate this problem by providing dominant firms with more sophisticated forms of self-preferencing.

Parliament should insert legislative language into the Competition Act to designate gatekeepers and provide a list of prohibited self-preferencing and discriminatory practices to promote fair and competitive markets for non-dominant firms. This will encourage innovation and ensure that small- and medium-sized firms have an opportunity to participate in the Canadian economy.

Platform Specific Legislation to Address Gatekeeping

Canada should follow the EU's lead in developing legislation to regulate gatekeeping by dominant digital platforms. Gatekeeping in the digital economy is where a dominant platform controls the access and behaviors of the internal ecosystem in which it operates. Mobile app stores are an example of digital gatekeepers. The app store operators have significant power in regulating the type of apps published on their platform. The policies and terms and conditions of dominant app store operators, such as Google and Apple, play an important role in the marketplace by banning dangerous apps, maintaining quality standards, and regulating content to protect the privacy and safety of its users. However, the dominant control over the app market also allows the dominant app store operators to reduce competition by limiting the payment options available to consumers, charging exorbitant fees to developers, and in extreme circumstances, removing apps from third parties that are offering a similar service to the app that the operator launched.

Many critics have expressed concerns over the monopolistic nature of Apple's App Store and Google's Play Store, where app developers have no other marketplace in which they can publish their apps and they are forced to accept the terms of these two dominant platforms. The EU has taken the lead by enacting the Digital Markets Act, which explicitly sets out a list of criteria to qualify an online digital platform as a "gatekeeper." Canada should follow suit and enact its own platform-specific legislation to better protect Canadian businesses from anti-competitive behaviours.

Interoperability and Data Portability Requirements

The Competition Act should empower Canadian competition authorities to mandate interoperability and data portability to promote innovation within the digital economy. These requirements are especially important in preventing anti-competitive behaviors in digital services characterized by strong network effects and high switching costs, such as social media, which often lead to these markets being dominated by a single firm. In Canada, 83% of Canadian adults have a Facebook account and 79% of daily social media users login to Facebook.

An interoperability requirement would allow other social networking platforms to interconnect with the dominant firm, thereby reducing switching costs and dampening network effects. A data portability requirement should also be implemented to complement the interoperability requirement. The data portability requirement would allow consumers to easily port or move their data from one firm to another. This would work in conjunction with the right to data portability in the newly introduced Bill C-27, and serve to promote both competition and privacy for Canadians.

Additionally, the Competition Act should consider including provisions that facilitates sharing certain technological standards, such as open APIs, to promote competition. An API, or application programming interface, allows programs to interact with external software or resources. An open API is a public application programming interface that allows access to proprietary software applications or web service by external parties. Many companies create services and products based on existing information and capabilities of established digital platforms. For example, Shopify's App Store contains over 7000 apps, most of which are developed by third-party developers. By restricting the ability of third parties to access APIs, digital platforms strangle innovation and competition, and prevent new companies from developing innovative products and services to consumers. Cooperative data access should be mandated when data bottlenecks impede competition and innovation.

These requirements would also promote innovation and competition in other markets. For example, in the smartphone market, consumers face high switching costs when switching between Android or Apple phones. By implementing the interoperability and data portability requirements, consumers can easily transfer their contacts, call history, photos, and other data from one phone to the other. This would reduce the effective switching cost and promote competition within the smartphone market.

Consumer Privacy and Competition

Competition policy must work in conjunction with privacy and data protection laws to effectively promote fair and competitive markets in Canada. The dominant digital platforms collect a large amount of data through their platforms and use the data to reinforce their dominance in the market through anti-competitive behaviours such as gatekeeping, self-preferencing, and data-driven mergers. Canada must develop robust privacy policies to protect consumer privacy and restrict the use of data that the dominant digital platforms collect from Canadian consumers. The EU has been the leader in updating its privacy protection legislation and competition policies thus far. Canada should look to the EU to reform its privacy and competition policies.

Foreign Ownership Requirements

Canada has some of the most restrictive foreign ownership rules in the world for telecommunications companies, according to the Organization of Economic Co-operation and Development (OECD). Under current foreign ownership restrictions under the Telecommunications Act, which apply to carriers with more than a 10 percent market share, the voting shares of a carrier must be 80 percent owned by Canadians, at least 80 percent of a carrier's board of directors must be Canadian, and a carrier must not be controlled in fact by non-Canadians. By contrast, the majority of OECD countries have no restrictions on foreign market entry, including the Netherlands, France, and Austria. In the massive U.S. market, foreign ownership is capped at 25 percent, although the Federal Communications Commission has allowed up to 100 percent foreign ownership in some cases.

Canada's protectionist approach creates barriers to competition, as the OECD reported in 2016. While other countries have opened up their markets, Canada's high ownership threshold reduces competition by making it harder for foreign entrants to come to Canada. As such, Canadians continue to pay the highest, or among the highest, phone plan prices in the world. Through a public interest framework, the Competition Bureau could align with Innovation, Science and Economic Development Canada's 2022 policy directive for the Canadian Radio-Television Telecommunications Commission, through a focus on promoting competition and affordability. We suggest introducing competition reforms which allow more permissive foreign telecommunications ownership. Further up the technology stack, it may be worth introducing reforms that make it easier for the Competition Bureau to work with international peers to introduce more competition between digital platforms.

Merger Review

Mergers

At least three aspects of the Bureau's tests for merger review have been called into question as leading to too low a standard:

• First, mergers are reviewable to ensure that they will not cause a substantial lessening or prevention of competition, not just a lessening. This means that an approved merger can still lessen competition; with the result that a series of mergers could substantially lessen it over time
• Second, the Competition Bureau must show, on balance of probabilities, that harm to competition is "likely" to happen within a "discernible" time frame, and that this harm would likely be "substantial"; and
• Third, under the efficiencies defence (s. 96) (arguably unique to Canada) a merger that lessens competition can still be approved if the result is demonstrable operating efficiencies – even if those efficiencies do not get passed on to the consumer.

The general policy argument in favour of allowing larger merged entities in Canada than would be permitted in other jurisdictions stems from a belief that Canadian entities need to have scale to compete with large foreign conglomerates. This questionable argument is familiar to FRIENDS as it has been used to justify mergers and acquisitions in the broadcasting space over the last three decades.

Increasingly, however, this view is being challenged, for at least three reasons:

• Canadian companies will never be able to compete with global entities on the basis of domestic scale. Even a broadcast monopoly serving all of Canada would still be far smaller than Netflix.
• Canadian companies, particularly in the telecom and broadcasting space, are not competing globally with global conglomerates. Competition is domestic, not international ¬– meaning there are other ways of addressing anti-competitive issues should they exist.
• There is little real-world evidence that scale ultimately leads to more efficient more effective companies

The Shaw-Rogers transaction is the most current example of this debate. Unfortunately, as already noted, that debate was almost exclusively on the telecom side; with scant attention being paid to the impacts on broadcasting.

FRIENDS accordingly supports a toughening of the tests for merger review.

Unilateral Conduct

Abuse of dominant position

As long as the Competition Act remains of general application, beefing up the Act to make it more effective in regard to Big Tech requires additional tools that, while not specific to Big Tech, have more relevance to such platforms. That naturally leads to a focus on such matters "self-preferencing", data, and algorithms.

As noted in the Discussion Paper:

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.

Unfortunately, "the market power and opacity of unregulated digital platforms" makes it difficult for the Competition Bureau, and regulators such as the CRTC, to understand exactly how data is used, let alone conclude that it is being used in an anti-competitive manner.

While C-11 will bring online broadcasting undertakings under the purview of the CRTC, it will not do the same for search (Google) and pure social media (Facebook, Twitter, Instagram etc.) platforms. Moreover, given the Commission's historic reluctance to probe here, as well as C-11 legislative debate and circumscriptions, it seems doubtful that the CRTC will require significant disclosure, particularly in respect of algorithms.

Thus, given its "platform neutral" approach, the Competition Bureau could be a far more effective body to look at abuses in use of data, including algorithms, than the CRTC.

Equally important, but not mentioned in the Discussion Paper, is the dominance of Big Tech platforms in the Canadian advertising market, particularly Google.

In 2007/8 when the Competition Act was last reviewed, Canadian media occupied 50% of Canadian internet advertising and fully 95% of the Canadian advertising market. As at 2021, Canadian media occupied only 8% of Canadian internet advertising and only 35% of the Canadian advertising market. Google and Facebook alone take over 80% of Canadian internet advertising and over 50% of total Canadian advertising, with Google having the far larger share.

While much of this can be attributed to a commensurate shift in media consumption patterns and the massive volume of targeted advertising inventory available online, there is increasing evidence that Google's dominance is also due to its vertical integration in all key aspects of the online ad market and hence its ability to abuse that position. This includes control of the platform publishers use to sell online ad inventory, the advertising tools marketers use to claim that inventory and the exchange that facilitates those transactions.

On the test for abuse of dominant position, as noted in a paper commissioned by ISED and cited in the Discussion Paper:

At present, the Commissioner is required to show, on a balance of probabilities, that the abusive conduct has led to specific negative outcomes (the consequentialist approach). The effects that are typically considered include higher prices, lower quality, or less innovation. However, the law in other jurisdictions, particularly the EU, requires that authorities show primarily that the conduct in question has taken place, and there is less emphasis on demonstrating that the conduct has caused certain harms (the deontological approach, or what some in Canada call a per se approach).

The Discussion Paper goes on to state:

Inspired by the European example, an alternative approach the Government intends to examine would involve showing only that conduct is capable of having anti-competitive effects, or has as its very object an anti-competitive outcome.

Without getting into specific language, FRIENDS would support such an approach. FRIENDS is also on record as supporting the renewal and revitalization of advertising tax deductibility measures to ensure Canadian media retain a healthier share of the online advertising market.

Finally, while, the Competition Bureau's powers to compel disclosure under the Competition Act are stronger and generally used with greater vigour than those of the CRTC, there have been suggestions for new provisions to allow greater sharing of information and cooperation between regulators, including the Competition Bureau, CRTC and the Privacy Commission. This is something FRIENDS would support.

Competitor Collaborations

Labour effects. Much of the "efficiencies" that come from mergers stem from labour rationalizations (i.e. reducing overlap through job cuts) – "even though workers may not be as easily redeployed as other inputs and come under obviously different, human pressures". The Discussion Paper states: "It is worth considering whether amendments to the Act could give labour a more central role in competition analyses." FRIENDS agrees that this is an area that should be examined. We take no position on outcome as it is not clear to us how this would be effectively done, or whether it really belongs in anti-trust legislation.

Deceptive Marketing

Deceptive marketing. The Discussion Paper specifically raises "the nature and ubiquity of digital advertising" here and asks whether there should be further amendments to better define false or misleading conduct. FRIENDS would support such an outcome. FRIENDS expects anticipated online arms legislation, to also potentially play an important, and much broader role, here. Thus, we are somewhat indifferent as to the extent to which the government determines that false or misleading digital advertising should be addressed in this review or in online harms legislation, as long as it is addressed.

Comments and Suggestions

FRIENDS is pleased to provide this written submission in response to the federal government's Competition Act Review, launched November 17, 2022.

FRIENDS is a non-partisan, people-powered movement that stands up for Canadian voices in public broadcasting, news media, and culture. FRIENDS is not funded by government money or donations from political parties or CRTC regulated entities.

FRIENDS is not an expert on Competition law and policy. However, we trust that given our subject matter expertise, we can provide useful insight on how a modernization of Canadian competition law can best support Canadian broadcasting, news media and culture.

Context – Limits of Competition Law

The last comprehensive review of the Competition Act occurred in 2007-08. This review is occurring at a time when the competitive environment appears vastly different. The most notable change being the rise of Big Tech, including huge global platforms whose services are often free to the consumer but whose currency is data., In addition, with concerns that current legislation is incapable of appropriately addressing major mergers such as Shaw-Rogers and anti-competitive behaviour such as abuse of dominant position, there is an increasing sense that Canada has fallen behind its peers in terms of antitrust legislation.

The limits of Canadian competition law are also increasingly apparent, as recognized in the Discussion Paper released commensurate with this review. By its nature and intent, competition law is of general application – a federal economic framework law whose purpose is to maintain and encourage competition in Canada – it is not intended to, and should not attempt to, fully encompass all circumstances, needs or sectors.

The Discussion Paper notes this tension between appropriate and inappropriate constraints on Canada's competition law regime thusly:

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.

The Discussion Paper also appropriately goes back to the current interrelated set of economic objectives set out in the Competition Act's purpose clause. These objectives are:

promoting the efficiency and adaptability of the Canadian economy; expanding opportunities for Canadians in world markets while recognizing the role of foreign competition in Canada; ensuring that small- and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy; and providing consumers with competitive prices and product choices.

In light of these objectives, the Competition Act plays a lesser role in areas of cultural and media policy which are typically of concern and interest to FRIENDS. Perhaps only the notion of "product choices" – or what we would label "diversity" – comes close to touching on the core cultural and media policy goal of serving Canadians as citizens, not just consumers.

As the Discussion Paper acknowledges in citing Bills C-11, C-18 and expected online harms legislation, more specific/targeted legislative approaches may be far more appropriate and relevant for cultural and media sector concerns.

That said, the Discussion Paper also makes it clear that one of the areas where it believes anti-trust reforms may be warranted includes:

ensuring the necessary elements are in place to remedy unilateral forms of anti-competitive conduct, such as abuse of a dominant position, notably with regard to large online platforms;

Indeed, the Discussion Paper specifically states "the rise of digital commerce has upended the way Canadians do business and consume products, leading to a new class of dominant gatekeepers and uneven growth".

FRIENDS agrees that competition law can clearly play a bigger role in protecting: (a) Canadians as consumers; and (b) Canadian media from the dominance and anti-competitive conduct of Big Tech. As further outlined below, we accordingly support amendments to the Competition Act to this end.

Nevertheless, we caution that by its nature and purpose, competition law remains ill equipped to look after the interests of Canadians as citizens. Accordingly, we should be under no illusion that a beefed-up Competition Act is any more than a small part of a broader strategy to support Canadians as citizens, and Canadian cultural and media industries, going forward.

Regulated Industries Doctrine

Much of FRIENDS' work relates to broadcasting and the CRTC. Historic legal recognition that regulation of industry sectors calls for a careful "coexistence" with Competition Law is what led to the emergence of regulated industries defence or doctrine (RCD) in common law.

When met, the RCD offers a form of immunity from enforcement under the Competition Act for legislatively authorized or mandated conduct. As such, the RCD can operate as a defence to anti-competitive activities that would otherwise be subject to the Act.

Various CRTC and Competition Bureau administrations have addressed their potential for overlap, and the RCD, in different ways. A 2001 document, CRTC/Competition Bureau Interface, outlines areas where the CRTC has authority, the Competition Bureau has authority and where both do (e.g. mergers and marketing practices).

In practice, while the Competition Bureau takes a great interest in telecommunications matters under the purview of the CRTC, it appears to take almost no interest in broadcast matters. In fact, in the Rogers-Shaw transaction, the Competition Bureau made no comment on the potential for anti-competitive behaviour of a combined Shaw-Rogers BDU, despite submissions made by independent broadcasters to the CRTC on likely negative effects.

This bifurcated oversight approach is particularly problematic when the corporate economic benefits of a transaction will rely on synergies (i.e. cost savings) that can be extracted from one aspect (e.g. broadcasting) in order to achieve required policy objectives in another (e.g. lower wireless prices). Given that the Commission has recently abandoned much of its ex-ante regulation of BDUs in favour of "an increased reliance on market forces", the lack of a corresponding increase in focus by the Competition Bureau, will leave independent broadcasters, and the diversity they bring to the system, unnecessarily vulnerable.

In issues of competition policy, we therefore urge the Competition Bureau to not, for historic or instinctive reasons, merely defer to the CRTC on broadcasting matters. Where such common jurisdiction exists, it exists intentionally. Particularly to the extent that the CRTC continues to rely more on market forces and less on regulation in the broadcast distribution sector, the Competition Bureau should be doing more to fill the void.

Scope and Objects of Competition Act

As a starting point and given the above, FRIENDS' does not support amendments to the Competition Act that would effect a change in purpose or significant expansion of scope.

Cultural interests are by their nature "niche" and effectively require an abandonment of pure reliance on market forces for their achievement. Subsidies, tax credits, regulation all "distort" the market for cultural goals. Maintaining the Competition Act as a law of general application, from which there can effectively be regulated/cultural industry exceptions, makes good sense.

Examen des fusions

L'acquisition par les géants de l'alimentation des épiciers indépendants est de plus en plus préoccupante sur le plan de la concurrence. En 2021, Loblaws, Sobeys et Metro auraient livré près de 75 % de tous les aliments vendus au Canada.

La disparition progressive des épiceries indépendantes entraîne des conséquences négatives sur l'économie, notamment avec des prix plus élevés et moins de choix pour les consommateurs. Or, à l'heure actuelle, la Loi ne permet pas au Commissaire de contrôler adéquatement les fusionnements, y compris les acquisitions qui nuisent à la concurrence. Le problème vient d'une exception prévue à la Loi qui fait en sorte que le tribunal ne peut empêcher un fusionnement (ou une acquisition) lorsque cela éliminerait les gains en efficience qui sont susceptibles de surpasser et de neutraliser le dommage concurrentiel causé par celui-ci. Autrement dit, la Loi permet les acquisitions anticoncurrentielles lorsque les avantages privés l'emportent sur le préjudice économique pour les consommateurs.

Comme le demande le Bureau de la concurrence, dans le mémoire qu'il a soumis le 8 février 2022 dans le cadre de l'examen de la Loi du Canada à l'ère numérique, l'exception prévue à la Loi relativement aux gains en efficience devrait être éliminée et ces derniers devraient plutôt être considérés comme un simple facteur lors de l'examen des effets d'un fusionnement.

De plus, la Loi actuelle empêche le tribunal de conclure qu'un fusionnement nuira vraisemblablement à la concurrence, en raison seulement de la concentration ou de la part du marché. Ainsi, même lorsqu'un fusionnement crée un monopole, c'est au Commissaire de prouver qu'il aura vraisemblablement pour effet d'empêcher ou de diminuer sensiblement la concurrence.

Une présomption devrait être introduite à la Loi pour déplacer, sur les parties fusionnantes, le fardeau de démontrer pourquoi un fusionnement n'aurait pas pour effet d'empêcher ou de diminuer la concurrence.

Le délai du Commissaire pour contester un fusionnement, qui est actuellement d'un an à partir du moment où la fusion est terminée, devrait être prolongé à trois ans. Ce délai lui permettrait de mieux comprendre les effets du fusionnement et de compléter une enquête sérieuse avant de soumettre le dossier au tribunal.

Collaborations entre concurrents

L'affaire Walmart que nous aborderons dans la présente section a démontré que certains comportements anticoncurrentiels ne peuvent être sanctionnés en vertu de la Loi actuelle.

Le 24 juillet 2020, Walmart a transmis une lettre à ses fournisseurs les informant de son intention de mettre en œuvre un « programme d'investissement des fournisseurs ». Pour cela, l'entreprise annonçait qu'à partir du 14 septembre 2020, elle leur imposerait des « frais de développement des infrastructures » correspondant à 1,25 % du coût des biens achetés par Walmart. Pour les produits vendus sur le site de Walmart.ca ou sur celui d'un de ses partenaires en ligne, des frais supplémentaires de 5 % pour le « développement du commerce électronique » seraient appliqués. Au total, les frais ainsi imposés aux fournisseurs de façon unilatérale par Walmart étaient exorbitants et pouvaient aller jusqu'à 6,25 %.

Le 29 juillet suivant, la centrale d'achats United Grocers inc. (UGI), qui représente 34 % du marché alimentaire du Canada (notamment Metro, Super C, Couche-Tard et Dollarama), a transmis une lettre semblable à ses fournisseurs, leur indiquant qu'elle avait été mise au courant des frais qui seraient imposés par son concurrent et qu'elle s'attendait à bénéficier du même avantage.

Le groupe Loblaw (notamment Maxi et Provigo) a emboîté le pas en octobre suivant, annonçant qu'en vertu d'un programme d'allocations stratégiques pour l'accélération, une réduction de 1,20 % sera appliquée sur les expéditions des fournisseurs à compter de janvier 2021, ajoutant que « toute expédition de produits effectuée le ou après le 3 janvier 2021 sera considérée comme une acceptation de ces changements […]* ».

Le 26 octobre 2020, M. Michael von Massow, économiste en alimentation à l'Université de Guelph, prédisait que toutes les grandes épiceries suivraient probablement ce mouvement pour rester concurrentielles.

Ces agissements des géants de l'alimentation ont provoqué une levée de boucliers dans l'industrie agroalimentaire et a fait réagir la classe politique, d'autant plus qu'ils s'inscrivaient dans un contexte où le secteur de la vente d'aliments au détail, toutes bannières confondues, est de plus en plus concentré et puissant (environ 80 % des achats alimentaires au Canada) et que ce secteur a vu ses profits augmenter en raison de la pandémie.

Le ministre de l'Agriculture, des Pêcheries et de l'Alimentation du Québec, M. André Lamontagne, s'est dit déçu d'une telle pratique et la cheffe de l'opposition officielle de l'époque, Mme Dominique Anglade, a demandé à Walmart de ne pas imposer ces frais.

Le 11 août 2020, le Bloc québécois demandait au ministre de l'Innovation, des Sciences et de l'Industrie, M. Navdeep Bains, de mandater le Tribunal de la concurrence afin qu'il fasse une enquête.

Par ailleurs, Sobeys et Rachelle Béry, qui exercent leurs activités principalement sous les enseignes d'IGA, n'ont pas imité leurs concurrents, affirmant même que la décision de certains détaillants d'imposer de tels frais aux fournisseurs donne l'impression aux entreprises du secteur des biens de consommation d'être intimidées, soutenant notamment que cette pratique n'était pas saine pour le Canada.

Devant cette situation, l'UPA a déposé une demande d'enquête au Commissaire de la concurrence le 17 septembre 2020 sur les agissements de Walmart et de ses concurrents en vertu de l'article 9 de la Loi. La demande d'enquête reposait sur les articles 45 et 90.1 de la Loi, les faits en cause pouvant démontrer qu'il existait un accord tacite entre des concurrents pour contrôler le prix des produits sur le marché et forcer une baisse simultanée des prix payés à leurs fournisseurs, en l'occurrence agricoles et alimentaires.

Il faut comprendre que lorsqu'une grande chaîne d'alimentation impose ce type de frais aux producteurs agricoles, ces derniers n'ont aucune marge de manœuvre pour négocier le prix de leurs produits. De tels frais peuvent exclure du marché un nombre important de petits fournisseurs, les forçant ainsi à cesser leurs activités, faute de profitabilité, réduisant de ce fait la concurrence sur le marché.

En réponse à cette demande d'enquête, l'UPA a reçu un accusé de réception le 28 septembre 2020 de la part du commissaire à la concurrence, M. Matthew Boswell. L'enquête du Bureau a débuté dans les semaines suivantes.

Pour effectuer son enquête, un agent du droit de la concurrence à la Direction générale des fusions et des pratiques monopolistiques a indiqué à l'UPA qu'il avait besoin des noms des producteurs concernés par la problématique avec le type de produits fournis, le nombre de producteurs membres de l'UPA produisant ce type de produits et une estimation de la proportion de la production totale que le producteur représente.

Plusieurs producteurs souhaitaient collaborer à l'enquête, mais craignaient, à juste titre, les mesures de représailles de la part des chaînes d'alimentation s'ils y participaient et que leurs noms devenaient publics. Aussi, avant de transmettre de l'information à l'agent du droit de la concurrence, ils souhaitaient connaître les règles de confidentialité du Bureau de la concurrence et obtenir une assurance que leurs noms ne seraient en aucun temps divulgués. Or, l'agent au dossier n'a pas pu donner cette assurance, car bien que la Loi, à l'article 29, prévoie la confidentialité des témoins ou dénonciateurs dans la phase d'enquête, une fois le dossier judiciarisé, l'identité des témoins ou dénonciateurs peut être dévoilée (voir Canada (Commissioner of Competition) c. Parrish & Heimbecker Limited, 2021 Comp Trib 2.).

Aussi, lorsque l'agent a informé l'UPA de cette situation, les producteurs agricoles concernés ont tous refusé de témoigner de peur d'être ciblés par les chaînes d'alimentation et de ne plus pouvoir vendre leurs produits.

Le 6 mai 2021, l'UPA recevait un avis de la part des Services juridiques du Bureau de la concurrence l'informant que l'enquête était discontinuée au motif que la preuve n'était pas suffisante. Au surplus, dans cette même correspondance, le Bureau mentionnait à l'UPA qu'il était d'avis que l'infraction prévue à l'article 45 de la Loi s'appliquait uniquement à la fourniture d'un produit et non à l'achat d'un produit.

Ce dénouement démontre plusieurs lacunes eu égard principalement à la rédaction de l'article 45 de la Loi, qui se lit comme suit:

« 45 (1) Commet une infraction quiconque, avec une personne qui est son concurrent à l'égard d'un produit, complote ou conclut un accord ou un arrangement :

a) soit pour fixer, maintenir, augmenter ou contrôler le prix de la fourniture du produit […]. »

Selon le Bureau, comme libellé, l'article 45 de la Loi serait donc trop limitatif pour sanctionner des comportements anticoncurrentiels, comme ceux adoptés par Walmart et ses concurrents en 2020. En fait, selon son interprétation, cet article s'appliquerait seulement lorsque des concurrents s'entendent pour fixer le prix de vente d'un produit sur le marché. Il n'empêcherait pas des concurrents de s'entendre pour fixer le prix des produits qu'ils achètent de leurs fournisseurs.

Par conséquent, l'UPA demande que l'article 45 de la Loi soit amendé afin de prévoir que l'infraction qui y est prévue s'applique « soit pour fixer, maintenir, augmenter ou contrôler le prix de la fourniture ou pour fixer, maintenir, diminuer ou contrôler le prix d'achat du produit ».

Par ailleurs, l'affaire Walmart nous a aussi appris qu'il est difficile de faire la preuve d'un complot, d'un accord ou d'un arrangement entre des personnes. En effet, le Bureau doit être en mesure de démontrer, par des éléments de preuve, que les concurrents ont eu des communications entre eux pour convenir d'appliquer les mêmes pratiques.

Or, dans les faits, il s'avère extrêmement difficile d'obtenir de tels éléments de preuve, principalement lorsque l'entente est verbale et d'autant plus que les pouvoirs d'inspection du Bureau de la concurrence sont inexistants et que les pouvoirs d'enquête sont limités. Au surplus, la jurisprudence actuelle considère que les indices de comportement parallèles (communément appelé « parallélisme conscient ») ne constituent pas à eux seuls une preuve suffisante de la réalité d'une entente, d'un complot ou d'un arrangement.

L'article 45 de la Loi devrait donc aussi être modifié afin de prévoir une présomption selon laquelle suivre une pratique d'un concurrent suffit pour démontrer qu'il y a un accord, un complot ou un arrangement. Considérant que la preuve de ces accords est difficile à faire, la présomption permettrait de mieux contrôler cette pratique en ce que le fardeau de la preuve serait renversé et qu'il incomberait alors aux personnes à démontrer qu'il n'y avait pas d'accord, de complot ou d'arrangement existant pour fixer, augmenter ou contrôler le prix.

Si la Loi n'est pas modifiée afin de prévoir ce type de présomption, ce genre de comportements anticoncurrentiels ne pourra être éradiqué. Pourtant, il s'agit nettement de comportements s'assimilant à de la collusion.

* Marie-Ève FOURNIER, « Au tour de Loblaw de faire pression sur ses fournisseurs », La Presse Plus, 23 octobre 2020.

Exécution et application de la Loi

L'UPA est d'avis que les pouvoirs d'inspection et d'enquête dont est investi le Bureau de la concurrence ne sont pas suffisants pour lui permettre de remplir sa mission. Plus particulièrement, l'UPA s'étonne du fait que la Loi ne prévoit aucun pouvoir d'inspection pour le Bureau, contrairement à certaines lois sous sa surveillance, dont la Loi sur l'emballage et l'étiquetage des produits de consommation, la Loi sur l'étiquetage des textiles, et la Loi sur le poinçonnage des métaux précieux.

En ce qui a trait aux pouvoirs d'enquête du Bureau, ils sont limités et subordonnés à des demandes d'ordonnance et de mandat de perquisition qui sont des recours devant les tribunaux longs et fastidieux. Dans les faits, le Bureau peut seulement obtenir des informations sur une base volontaire, par des demandes d'accès à l'information ou en s'adressant au tribunal afin d'obtenir des ordonnances. Il n'a aucun pouvoir de contrainte qui lui est dévolu par la Loi.

À titre d'exemple, l'article 11 de la Loi prévoit que le Bureau doit faire une demande ex parte devant un juge de la Cour supérieure tout en démontrant qu'il a des motifs raisonnables de croire qu'une infraction à la Loi a été commise, et donc d'obtenir l'autorisation du tribunal pour pouvoir procéder à des interrogatoires, exiger la production des documents ou exiger une déclaration sous serment d'une personne qui pourrait détenir des renseignements pertinents à l'enquête.

Outre des demandes d'ordonnances, le Bureau doit aussi s'adresser à un juge de la Cour supérieure afin qu'il délivre des mandats de perquisition. Dans ce cas, le Bureau doit démontrer qu'il a des motifs raisonnables de croire que la personne a contrevenu à une ordonnance rendue en vertu de la Loi, qu'il a des motifs justifiant que soit rendue une ordonnance ou qu'une infraction a été perpétrée ou est sur le point de l'être. Ce mandat l'autorisera à pénétrer dans un local et/ou à perquisitionner dans ce local un document ou une chose pour en faire un examen ou en obtenir des copies (Loi sur la concurrence, art. 15).

Ces demandes complexifient le processus d'enquêtes et allongent les délais de traitement, ce qui peut avoir des conséquences sur les condamnations subséquentes. Au surplus, ces pouvoirs ne sont pas équivalant à ceux octroyés à des organismes chargés de l'application d'autres lois au Canada et même de lois dont le Bureau de la concurrence assure l'application.

À cet égard, les articles 13 et suivants de la Loi sur l'emballage et l'étiquetage des produits de consommation, les articles 8 et suivants de la Loi sur l'étiquetage des textiles et les articles 6 et suivants de la Loi sur le poinçonnage des métaux précieux, qui sont sous la surveillance du Bureau, prévoient des pouvoirs d'inspection, comme pénétrer sur certains lieux lorsqu'il a des motifs raisonnables de croire qu'un produit préemballé appartenant à un fournisseur s'y trouve (Loi sur l'emballage et l'étiquetage des produits de consommation, art. 13), examiner tout produit préemballé, ouvrir et examiner tout emballage qui, à son avis, contient un produit préemballé et examiner tout document qui, à son avis, pourrait contenir des renseignements utiles à l'application de la Loi. Il a également le pouvoir de les reproduire en tout ou en partie, et ce, sans nécessiter l'obtention d'un mandat délivré par un juge de paix. L'article 15 de la Loi sur le poinçonnage des métaux précieux prévoit même que l'inspecteur peut procéder à des saisies sans qu'il soit nécessaire pour lui d'obtenir l'autorisation du tribunal.

D'autres lois québécoises prévoient des pouvoirs d'inspection et d'enquête très larges. Prenons par exemple la Loi sur la protection du consommateur qui prévoit que l'Office de la protection du consommateur peut accomplir les actes suivants sans avoir préalablement obtenu d'autorisation d'un quelconque tribunal ou sans avoir de motifs raisonnables de croire qu'une infraction à ladite loi a été commise :

1. Le droit de pénétrer, à toute heure raisonnable, dans l'établissement d'un commerçant, d'un fabricant ou d'un publicitaire et en faire l'inspection, notamment faire l'examen des registres, livres, comptes, pièces justificatives et autres documents et celui des biens mis en vente ou vendus et le prélèvement d'échantillons aux fins d'expertise (art. 306);
2. Le droit d'exiger toute information relative à l'application d'une loi ou d'un règlement dont l'Office doit surveiller l'application (art. 306.1);
3. Le droit d'exiger d'un commerçant un rapport sur ses activités et sur tout ce qui a trait à son compte de réserves et à tous comptes en fidéicommis aux époques et en la manière que le président détermine (art. 306.2);
4. La possibilité d'exiger qu'un commerçant, un fabricant ou un publicitaire lui communique le contenu de la publicité qu'il utilise (art. 311) et/ou qu'il lui démontre la véracité d'un message publicitaire (art. 312);
5. La possibilité d'exiger qu'un commerçant qui conclut des contrats de crédit visés par la Loi sur la protection du consommateur lui communique les renseignements relatifs aux taux de crédit que le commerçant exige des consommateurs et aux critères qui servent à l'établissement de ces taux et le pouvoir de rendre publics ces renseignements (art. 313).

Dans le même ordre d'idées, la Charte de la Ville de Montréal, métropole du Québec (Charte de la Ville de Montréal) assigne l'inspecteur général des larges pouvoirs suivants :

1. Le droit d'examiner tout livre, registre ou dossier ou d'obtenir tout renseignement pertinent à la réalisation de son mandat de plusieurs entités, notamment d'une personne morale qui est en relation contractuelle avec la ville ou avec une personne morale faisant partie du périmètre comptable défini dans les états financiers de la ville ou d'une entité dont la ville ou un mandataire de celle-ci nomme plus de 50 % des membres de son conseil d'administration ou d'une entité, dont la ville, ou un mandataire de celle-ci détient plus de 50 % de ses parts ou actions avec droit de vote en circulation;
2. Pour ce faire, il peut pénétrer à toute heure raisonnable dans un bâtiment ou sur un terrain pour y procéder. Il peut obliger le propriétaire ou l'occupant des lieux visités et toute autre personne se trouvant sur les lieux à lui prêter toute aide raisonnable (art. 57.1.9);
3. Le pouvoir d'annuler tout processus de passation d'un contrat et d'annuler ou de suspendre l'exécution d'un contrat de la ville des personnes qui lui sont liées dans certaines conditions (art. 57.1.10).

La Charte de la Ville de Montréal va plus loin pour faciliter le travail de l'inspecteur général dans sa recherche d'information. En effet, elle prévoit que toute personne peut lui communiquer tout renseignement pertinent à la réalisation de son mandat, et ce, malgré la Loi sur l'accès aux documents des organismes publics et sur la protection des renseignements personnels, la Loi sur la protection des renseignements personnels dans le secteur privé, toute autre restriction de communication prévue par d'autres lois du Québec et toute obligation de loyauté ou de confidentialité pouvant lier cette personne, notamment à l'égard de son employeur ou de son client (art. 57.1.13).

L'UPA est d'avis que, dans sa nouvelle mouture, la Loi devrait prévoir des pouvoirs d'inspection et d'enquête semblables à ceux qui sont prévus dans la Loi sur la protection du consommateur et la Charte de la Ville de Montréal. Cela permettra au Bureau de la concurrence de procéder à des recherches d'information plus exhaustive tout en réduisant substantiellement le temps alloué aux enquêtes, ce qui lui permettra de mener plus d'enquêtes et donc de lutter plus efficacement contre les entreprises qui ont des pratiques anticoncurrentielles et, enfin, de protéger la concurrence au Canada.

En somme, l'UPA estime que le Bureau de la concurrence ne jouit pas de pouvoirs suffisants en matière d'inspection et d'enquête pour réaliser l'objet de la Loi, soit de préserver et de favoriser la concurrence au Canada. Il doit jouir d'une plus grande autonomie, principalement en matière d'inspection où ses pouvoirs sont présentement majoritairement substitués à l'obtention d'ordonnance et de mandat.

Les études de marché se veulent des analyses globales de la situation du marché au Canada qui, entre autres, permettent au Bureau d'émettre des recommandations sur les éléments qui restreignent la concurrence à des organismes des trois paliers gouvernementaux canadiens. De telles études ont d'ailleurs permis dans d'autres législatures de guider, par exemple, la création d'un code de conduite de l'épicerie.

Or, comme le soulève le Bureau de la concurrence dans son mémoire de février 2022 intitulé « Examen de la Loi sur la concurrence à l'ère numérique », il n'a pas les bons outils pour mener à bien ces études ou en faciliter leur processus. Notamment, il n'a pas le pouvoir de contraindre la production d'information pertinente aux études de marché et les décideurs peuvent ne pas tenir compte des recommandations formulées par le Bureau.

À ce chapitre, la Loi devrait prévoir des outils de collecte d'information pour appuyer cet aspect important du travail du Bureau et, dans la mesure du possible, les organismes de réglementation ainsi que les autres organismes gouvernementaux concernés devraient être tenus de donner suite aux recommandations du Bureau.

D'ailleurs, l'UPA est d'accord avec les arguments soulevés par le Bureau de la concurrence dans son mémoire, voulant qu'il n'a pas actuellement le pouvoir de contraindre la production d'information pertinente aux études de marché et que les décideurs peuvent ne pas tenir compte des recommandations formulées par le Bureau dans le cadre de ses activités de promotion de la concurrence.

Le Bureau n'a effectivement pas le pouvoir de contraindre les entreprises à produire des informations, ce qui veut dire que les informations collectées sont celles qui sont publiques ou transmises sur une base volontaire. Cela fait en sorte que les données récoltées ne sont pas suffisantes, ce qui nuit à la capacité du Bureau de diagnostiquer les problèmes de concurrence et, par conséquent, limite ce dernier dans les conseils qu'il peut donner aux organismes de réglementation fédéraux, provinciaux et municipaux. Ainsi, l'UPA seconde le Bureau de la concurrence dans sa recommandation selon laquelle « La Loi devrait fournir des outils efficaces de collecte d'information pour appuyer cet aspect important du travail du Bureau ».

Commentaires et suggestions

L'affaire Walmart a démontré les lacunes de la Loi en matière de protection des dénonciateurs.

En effet, à la suite de la demande d'enquête déposée par l'UPA au Commissaire portant sur les agissements de Walmart et ses concurrents, le Bureau a exigé d'avoir les noms des producteurs touchés par ces agissements afin de pouvoir les interroger. Le Bureau devait avoir la preuve que des producteurs étaient affectés par l'accord ou l'arrangement et que les agissements allégués ont ou auraient vraisemblablement pour effet d'empêcher ou de diminuer sensiblement la concurrence dans le marché.

Toutefois, comme mentionné précédemment, plusieurs producteurs craignaient les mesures de représailles de la part des chaînes d'alimentation s'ils participaient à l'enquête et que leurs noms étaient rendus publics. Ils souhaitaient donc obtenir une garantie que leurs noms ne seraient pas divulgués avant de transmettre de l'information au Bureau, ce que l'agent au dossier n'a pas pu leur donner. Ainsi, lorsque les producteurs ont été informés de cette situation, ils se sont désistés de peur que les chaînes d'alimentation cessent d'acheter leurs produits. L'enquête a donc été interrompue par le Bureau, faute de preuve. Ce dernier en a informé l'UPA dans sa correspondance du 6 mai 2021 : « le Bureau n'a pas été en mesure d'obtenir de l'information convaincante établissant que des producteurs ont réduit ou cessé leurs activités, ou vont vraisemblablement le faire, en raison d'un accord ou d'un arrangement entre Walmart Canada et UGI ».

Il faut préciser que la Loi contient des dispositions traitant de la confidentialité des renseignements personnels et de l'identité des dénonciateurs.

Par exemple, l'article 10 (3) de la Loi exige que toutes les enquêtes soient conduites en privé. Aussi, l'article 29 de cette dernière protège les renseignements obtenus par le Bureau ou fournis à ce dernier, y compris l'identité des personnes les ayant fournis et toute information pouvant révéler leur identité. L'article 66.1 de la Loi indique que les dénonciateurs peuvent exiger l'anonymat et que le commissaire est tenu de garder confidentielle leur identité auquel l'assurance de l'anonymat a été donnée.

Cependant, cette protection est limitée uniquement dans la phase d'enquête. En effet, selon la jurisprudence, une fois le dossier judiciarisé, l'identité des témoins ou dénonciateurs peut être dévoilée (voir Canada (Commissioner of Competition) c. Parrish & Heimbecker Limited, 2021 Comp Trib 2). Cela est d'ailleurs conforme au principe de la publicité des débats judiciaires dans une société démocratique. Pour y faire exception et obtenir la confidentialité en phase judiciaire, il faut satisfaire les critères exigeants développés dans l'arrêt Sierra Club, soit, en résumé, un risque sérieux pour un intérêt public important.

Néanmoins, pour la sauvegarde de certains intérêts que le législateur estime supérieurs à l'intérêt de l'administration de la justice, certains faits bénéficient d'une immunité de divulgation en justice, dont notamment les faits qui doivent être tenus secrets en vertu d'une disposition législative.

Certaines lois fédérales et provinciales prévoient une telle immunité de divulgation. Par exemple, l'article 44 de la Loi sur la protection de la jeunesse prévoit que nul ne peut dévoiler ou être contraint de dévoiler l'identité d'une personne qui a fait un signalement. De même, l'article 146 de la Loi sur les normes du travail prescrit qu'aucune preuve n'est permise pour établir qu'une action ou poursuite prévue par cette dernière a été intentée à la suite d'une plainte d'un dénonciateur ou pour découvrir l'identité de ce dernier. D'autres lois, comme la Loi sur la statistique, la Loi sur les services de santé et les services sociaux et la Loi sur les banques décrètent aussi une immunité de divulgation en justice.

L'objectif de préserver et de favoriser une saine concurrence au Canada nous paraît suffisamment important pour justifier l'ajout d'une disposition prévoyant une immunité de divulgation judiciaire dans la Loi. Dans l'affaire Walmart, la présence d'une telle immunité aurait permis à l'enquête de se poursuivre, puisque les producteurs agricoles affectés par l'imposition des frais auraient assurément accepté de parler aux représentants du Bureau de la concurrence. L'UPA estime que cette immunité s'avère nécessaire pour soustraire les dénonciateurs de toutes mesures de représailles de la part des distributeurs.

Aussi, un article interdisant d'exercer des mesures de représailles contre une personne qui communique avec le Bureau de la concurrence ou encore de menacer une personne de mesures de représailles pour qu'elle s'abstienne de communiquer avec lui devrait être introduit à la Loi.

Une disposition similaire existe dans la Charte de la Ville de Montréal (art. 57.1.15) dans le cadre du mandat confié à l'inspecteur général. Dans la Loi, cette interdiction de représailles n'est prévue qu'entre employeur et employé (art. 66.2).

Dans le même ordre d'idées, actuellement, en vertu de l'article 9 de la Loi, seules les personnes physiques peuvent demander au Commissaire de procéder à une enquête. Plus précisément, selon cette disposition, il faut six personnes physiques résidant au Canada et âgées de 18 ans et plus pour demander une enquête. Les personnes morales devraient aussi avoir l'intérêt pour demander au Commissaire de procéder à une enquête. Sachant que les noms de ces personnes pourraient être divulgués devant le tribunal, il y aurait tout avantage à ce qu'une association puisse demander une enquête sans que des personnes physiques y soient associées comme signataires.

Comportements unilatéraux

En limitant ou en refusant l'accès aux pièces, aux outils et aux informations nécessaires à la réparation à différents acteurs, les fabricants d'AEE peuvent exercer une influence anticoncurrentielle sensible sur le marché. Le manque de disponibilité des pièces de remplacement et leur coût trop élevé font partie des freins à la réparation identifiés par des réparateurs et réparatrices d'appareils électroménagers et électroniques interrogé(e)s dans le cadre d'entretiens effectués au Québec et d'un sondage mené en Colombie-Britannique (1).

En Colombie-Britannique, la majorité des spécialistes sondés a affirmé que les pièces détachées étaient « rarement » ou seulement « parfois » facilement accessibles. Or, la majorité de ces expertes et experts affirme également que la cause la plus fréquente d'une demande de réparation est due au bris d'une pièce. Ceci renforce l'importance de l'accès aux pièces afin d'éviter que la réparation soit difficile sur le plan technique et plus dispendieuse pour la clientèle. Un autre frein important est celui du manque d'accès à l'information (1). En effet, les fabricants ne fournissent pas toujours les manuels de réparation et les schémas d'assemblage des appareils aux entreprises de réparation indépendantes, limitant ces dernières dans l'exercice de leurs activités (2).

Le manque d'accès aux pièces, aux outils et aux informations peut être associé aux pratiques restrictives de commerce et avoir comme incidence des coûts de réparation plus élevés pour la population. Or, comme mentionné précédemment, les coûts liés à la réparation font partie des principaux freins mentionnés par la population canadienne sondée sur la question. (1)

Cet enjeu touche différents secteurs, incluant celui de l'automobile. L'Association de l'industrie automobile du Canada (AIA) estime d'ailleurs que 70 % des réparations post garantie sont faites par des services de réparation indépendants (3). À ce sujet, le projet de loi C-231 propose des amendements aux dispositions sur les pratiques restrictives du commerce afin de cibler spécifiquement les fournisseurs de services de réparation indépendants (4). Nous sommes d'avis que ces amendements devraient être remis à l'ordre du jour, en plus d'être appliqués aux appareils électroménagers et électroniques.

Recommandation : Modifier la Loi sur la concurrence pour définir clairement les pratiques restrictives du commerce liées au droit à la réparation, afin d'assurer un accès aux pièces, aux outils et aux informations aux réparateurs et réparatrices indépendant(e)s et aux propriétaires de biens.

Références

(1) Équiterre. (2022). Pour des appareils électroménagers et électroniques durables au Canada – Diagnostic, enjeux et solutions. https://cms.equiterre.org/uploads/Initiatives/150_Pour-des-objets-durables-et-r%C3%A9parables/EQT_rapport_reparation_final2.pdf

(2) Hoglund, S., Richter, J.L., Maitre-Ekern, E., Russell, J.D., Pihlajarinne, T. et Dalhammar, C. (2020). Barriers, Enablers and Market Governance: A Review of the Policy Landscape for Repair of Consumer Electronics in the EU and the US. https://doi.org/10.1016/j.jclepro.2020.125488

(3) Association des industries de l'automobile du Canada (AIA). (2023). Global Vehicle Right to Repair Position Statement. https://www.righttorepair.ca/news/global-vehicle-right-to-repair-position-statement/

(4) Chambre des communes du Canada. (2022). Projet de loi C-231 – Loi modifiant la Loi sur la concurrence (réparation de véhicules). https://www.parl.ca/DocumentViewer/fr/44-1/projet-loi/C-231/premiere-lecture

Exécution et application de la Loi

À la section 32(1) de la Loi, il est prévu que la Cour fédérale peut rendre une ou plusieurs ordonnance(s) si les droits exclusifs garantis par la propriété intellectuelle (ex. droits et privilèges conférés par un brevet ou par un droit d'auteur) ont été utilisés pour : « [...] empêcher, limiter ou réduire indûment la fabrication ou la production d'un tel article ou d'une telle denrée, ou en augmenter déraisonnablement le prix [...] ». Nous sommes d'avis que ce pouvoir devrait être étendu aux pratiques limitant l'accès à la réparation, notamment en empêchant, limitant ou réduisant indûment l'accès aux pièces, aux outils et aux informations permettant de réparer les biens mis en marché par les fabricants.

Recommandation : ajouter à l'article 32(1) une mention spécifique quant aux pratiques des fabricants qui visent à empêcher, limiter ou réduire indûment l'accès aux pièces, aux outils et aux informations destinés à la réparation.

En vertu de l'article 32(2), les procureurs fédéraux peuvent décider de faire une plainte, sur recommandation du Bureau de la concurrence, contre une entreprise qui a utilisé ses droits et privilèges exclusifs garantis par la propriété intellectuelle d'une manière définie à l'article 32(1). La tendance est que ce recours n'est entrepris que dans des circonstances limitées. (1,2 et 3)

L'accès à un recours visant à dénoncer une telle utilisation des droits et privilèges exclusifs garantis par la propriété intellectuelle au détriment de l'accès à la réparation des biens pourrait être facilité par le biais d'un recours administratif ou de droit privé d'accès à la Cour fédérale (4). Ainsi, les consommateurs et consommatrices auraient un meilleur accès à la justice.

Recommandation : définir dans la Loi des modalités d'accès à un recours administratif ou de droit privé afin de dénoncer l'utilisation des droits et privilèges exclusifs garantis par la propriété intellectuelle d'une manière définie à l'article 32(1) et visant à restreindre l'accès à la réparation.

Références

(1) Vass Bednar and Robin Shaban. (2021). Canada's Competition Act needs an overhaul https://www.theglobeandmail.com/business/commentary/article-canadas-competition-act-needs-an-overhaul/

(2) Rosborough, A. D. (2022). Toward a Canadian Right to Repair: Opportunities and Challenges. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4236843

(3) OCDE. (2017). Problèmes de concurrence sur les marchés de l'après-vente. https://one.oecd.org/document/DAF/COMP(2017)2/fr/pdf

(4) Julien Beaulieu (2023). Entrevue exploratoire.

Commentaires et suggestions

Équiterre a publié en octobre 2022 une étude pancanadienne sur l'accès à la réparation des appareils électroménagers et électroniques (AEE) (1), faisant suite à une étude publiée en 2018 sur l'obsolescence de ces appareils (2). Allonger la durée de vie des objets est une stratégie centrale de l'économie circulaire et offre de multiples bénéfices économiques et écologiques pour la population canadienne. Or, seulement 19 % des Canadiennes et Canadiens font réparer leurs AEE défectueux (1).

C'est dans ce contexte que des recommandations sont formulées dans le cadre de cette consultation, afin de contribuer à un meilleur accès à la réparation.

Cette consultation vise à explorer les pistes pour moderniser la Loi sur la concurrence afin de tenir compte de nouvelles réalités du marché. Or, parmi les nouvelles réalités et pratiques commerciales documentées, la mise en marché d'appareils qui sont moins durables et moins réparables que par le passé a une incidence négative sur l'efficience de l'économie canadienne. Selon un sondage mené auprès de la population canadienne en 2021, 63 % des répondantes et répondants ont fait face à au moins un bris d'appareil au courant des deux années précédentes et ce, en moyenne 2,6 années après l'acquisition de l'objet (1). La diminution de la durabilité et de la réparabilité des appareils génère d'importants impacts environnementaux, freinant l'atteinte des cibles de réduction des émissions de gaz à effet de serre (GES) du gouvernement du Canada.

Le droit à la réparation, qui est en émergence surtout en Europe et aux États-Unis, fait partie des éléments qui doivent être pris en considération dans le cadre de la modernisation de la Loi sur la concurrence, afin d'assurer aux consommateurs et consommatrices la possibilité de réparer leurs biens et ce, à un prix raisonnable. Il s'agit d'ailleurs d'un sujet qui interpelle le Bureau de la concurrence depuis plusieurs années. En effet, celui-ci a diffusé en janvier 2023 une série de capsules sur la question du droit à la réparation (3). Dans le cadre de sa participation aux consultations de l'Office de la protection du consommateur du Québec sur la durabilité et la réparabilité des biens en 2019, le Bureau de la concurrence soulignait l'importance d'une intervention législative pour « lever les barrières à l'exercice de l'activité de réparateur indépendant » afin, notamment, d'assurer une saine concurrence sur le marché, qui « pourrait bénéficier au consommateur par un plus vaste choix de services de réparation et des prix plus concurrentiels. » (4)

La Loi sur la concurrence a notamment comme objet d'assurer « [...] à la petite et à la moyenne entreprise une chance honnête de participer à l'économie canadienne, de même que [...] d'assurer aux consommateurs des prix compétitifs et un choix dans les produits. » (5)

Au Canada, la quasi-totalité des entreprises de réparation est des PME. En 2021, 61,8 % des 36 407 entreprises de réparation répertoriées étaient des microentreprises et 38 % étaient des petites entreprises (6). Le manque d'accès aux pièces et aux outils auxquels elles font parfois face limite indûment leur possibilité de participer à l'économie canadienne et d'offrir leurs services à des prix compétitifs, en plus de limiter le choix des consommateurs et consommatrices. Dans le sondage pancanadien mené auprès de la population en 2021 dans le cadre de notre étude, la mesure la plus populaire à mettre en place par les fabricants et/ou les détaillants est l'offre de prix de réparation plus bas (78 %), alors que les freins financiers constituent le deuxième obstacle à cette pratique, après la perception d'irréparabilité des AEE (1).

Un cadre juridique favorisant l'accès à la réparation permettrait de lever plusieurs freins identifiés par les différentes parties prenantes et recensés dans la littérature dans le cadre de notre étude sur l'accès à la réparation.

Recommandation : intégrer des mesures favorisant l'accès à la réparation dans la Loi sur la concurrence, notamment en assurant :

• L'accès à la réparation à un prix raisonnable, grâce à la libre concurrence entre les différents services de réparation, qu'ils soient affiliés aux fabricants ou indépendants;
• L'accès aux pièces, aux outils et aux informations permettant de réparer les appareils pendant un nombre d'années raisonnable à la suite de l'acquisition du bien;
• L'accès aux versions précédentes d'un logiciel d'exploitation afin de régler certains bogues ou d'utiliser efficacement un appareil moins performant pour les appareils ayant des composantes électroniques. Des mises à jour de sécurité devraient aussi être disponibles pour permettre l'utilisation sécuritaire des versions antérieures de logiciels;
• La possibilité de réparer soi-même certains appareils, en tenant compte des enjeux potentiels de sécurité.

Plusieurs entreprises ont été reconnues coupables de pratiques d'obsolescence programmée au courant des dernières années. À titre d'exemple, en 2018, Apple et Samsung ont incité leur clientèle à mettre à jour des logiciels, ralentissant délibérément le fonctionnement des appareils (7). Ces pratiques concomitantes laissent entrevoir la mise en œuvre de stratagèmes similaires par des entreprises d'un même secteur, visant à encourager le remplacement prématuré d'appareils électroniques. Certaines pratiques d'obsolescence programmée sont toutefois liées à une entreprise seule, sans collaboration avec des concurrents.

En France, l'obsolescence programmée est définie dans la Loi sur l'empreinte environnementale du numérique comme « le recours à des techniques, y compris logicielles, par lesquelles le responsable de la mise sur le marché d'un produit vise à en réduire délibérément la durée de vie » (8).

Les pratiques d'obsolescence programmée minent l'efficience du marché en ce sens qu'elles suscitent le renouvellement prématuré d'appareils et ce, dans un contexte de raréfaction des ressources naturelles et de pénuries anticipées de minerais critiques et stratégiques entrant dans la composition de ces biens. Le poids total des ressources nécessaires à la production d'un électroménager est 15 à 100 fois plus élevé que sa masse finale (9). Pour un appareil électronique, le poids de l'ensemble des ressources requises est 50 à 350 fois plus élevé que celui du produit final (10), sauf pour un téléphone intelligent qui requiert jusqu'à 600 fois son poids en ressources naturelles (11). Cette forte demande en matières premières pourrait vider les réserves de certains minéraux critiques et stratégiques contenus dans nos AEE d'ici 2050 (12). En réduisant délibérément la durée de vie des biens, les pratiques d'obsolescence programmée ont aussi une incidence sur la possibilité pour les consommateurs et consommatrices d'avoir accès à un prix compétitif.

Recommandation : ajouter un nouvel article dans la Loi sur la concurrence afin de définir et sanctionner les pratiques d'obsolescence programmée.

Références

(1) Équiterre (2022). Pour des appareils électroménagers et électroniques durables au Canada – Diagnostic, enjeux et solutions. https://www.equiterre.org/fr/ressources/rapport-pour-des-appareils-electromenagers-et-electroniques-reparables-au-canada

(2) Équiterre (2018). Obsolescence des appareils électroménagers et électroniques : quel rôle pour le consommateur? https://cms.equiterre.org/uploads/fr_rapportobsolescence_equiterremai2018_0.pdf

(3) Innovation, Sciences et Développement économique Canada (ISDE) (2023). Découvrez le droit à la réparation. https://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/education-sensibilisation/decouvrez-droit-reparation

(4) Innovation, Sciences et Développement économique Canada (ISDE). (2022). Résumé du mémoire présenté à l'Office de la protection du consommateur sur la durabilité et la réparabilité des biens. https://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/promotion-concurrence/conseils-interventions-bureau-concurrence-matiere-reglementation/resume-memoire-presente-loffice-protection-consommateur-durabilite-reparabilite-biens

(5) L.R.C. (1985), ch. C-34

(6) Gouvernement du Canada (2023). Entreprises – Statistiques relatives à l'industrie canadienne – Réparation et entretien – 811. https://ised-isde.canada.ca/app/ixb/cis/businesses-entreprises/811?lang=fre

(7) Courrier international (2018). Obsolescence programmée. Un jugement ''historique'' contre Apple et Samsung en Italie. https://www.courrierinternational.com/article/obsolescence-programmee-un-jugement-historique-contre-apple-et-samsung-en-italie

(8) Code de la consommation, Article L441-2. https://www.legifrance.gouv.fr/codes/article_lc/LEGIARTI000044330817

(9) ADEME, J. Lhotellier, E. Less, E. Bossanne et S. Pesnel. (2018). Modélisation et évaluation des impacts environnementaux de produits de consommation et biens d'équipement. https://librairie.ademe.fr/dechets-economie-circulaire/1189-modelisation-et-evaluation-desimpacts-environnementaux-de-produits-de-consommation-et-biens-d-equipement.htm

(10) ADEME (2019). Au quotidien: La face cachée du numérique – Réduire les impacts du numérique sur l'environnement. https://librairie.ademe.fr/cadic/2351/guide-pratique-facecachee-numerique.pdf?modal=false

(11) Schmidt-Bleek, Friedrich. (2015). Interview: Friedrich Schmidt-Bleek – Le lourd fardeau que représente l'utilisation irrationnelle des ressources. https://ec.europa.eu/environment/ecoap/about-eco-innovation/experts-interviews/friedrich-schmidtbleek_fr

(12) Halte à l'obsolescence programmée (HOP) (2020). Numérique et durabilité, frères ennemis? https://www.halteobsolescence.org/numerique-et-durabilite-freres-ennemis/

Merger Review

The Centre for Digital Rights (CDR) welcomes the November 17th call for a broad and inclusive consultation regarding what changes must be made to Canada's Competition Act and its enforcement framework, especially with respect to increasing the powers and resources of the Competition Bureau. We value the effort to protect Canadian consumers and the integrity of Canada's markets in the face of the serious risk of significant harms arising from today's digital and data-driven economy.

CDR's mandate is to bring greater public awareness of digital rights issues related to the data-driven economy. We aim to raise policymakers' understanding of advanced technology and its impact on civic values and individual rights, including consumer protection, privacy, and the intersection of the two.

This work is particularly critical in today's digital and data-driven economy whose structure features huge data asymmetries (especially with respect to personal information) alongside economies of scope, scale and network effects, and where every new data set makes all pre-existing data sets in the hands of the same few dominant firms more valuable. The structure of the contemporary data-driven economy disproportionately enhances the power of established and dominant firms which leads to negative outcomes for Canada and Canadians. Without the discipline and regulation of robust and intersecting competition and privacy laws, the structure of the digital and data-driven economy equally entrenches the market power of Canadian oligopolies in service sectors, such as telecommunications, banking, and grocery retail.

ISED has already received valuable input from expert scholars such as Jennifer Quaid, Vass Bednar, Robin Shaban and Ana Qarri. Each has highlighted the need to modernize Canada's competition law for today's economic realities. Commissioner of Competition Matthew Boswell has made several public statements urging the government to invest in the Competition Bureau's capacity, including increasing its budget and policy toolkit so it can properly address the significant market harms (to both consumers and competitors) arising from today's digital and data-driven economy. CDR is encouraged by these recommendations and is hopeful that ISED will incorporate them into its plans to modernize Canada's competition law and policy.

To this input from scholars and Commissioner Boswell, CDR would like to reiterate and expand on the important and complex issue of privacy and its intersection with competition. Specifically, concentrated control by certain firms over the personal information of Canadians enables such firms to become dominant. In turn, these firms abuse their dominance by controlling markets and erecting barriers to entry while the constant and insidious surveillance of Canadians allows these same firms to identify and thwart emerging competitive threats. Such anti-competitive behaviour does not contribute to the productive capacity of Canada's economy but instead allows dominant firms to set the market standard to which all other firms must conform just to survive. Monopoly and oligopoly power then enables companies to degrade privacy without ramifications, as shown recently in the Federal Trade Commission v. Facebook case.

Furthermore, in their paper, "Data-driven Envelopment with Privacy-Policy Tying", expert scholars Daniele Condorelli of University of Warwick's Department of Economics and Jorge Padilla show how a firm that has a dominant position in a market where personal information is key will use the profits from that market to enter secondary markets that are data rich and to engage in predatory pricing (often simply by offering products or services for free). In turn, the personal information from these secondary markets bolsters the firm's dominance in the primary market, leading to a vicious cycle of surveillance and market entrenchment. This market behaviour only works if the dominant firm is allowed – because of a country's lax competition and privacy laws and misguided public policy priorities – to exploit consumer's personal information extracted in one market in another.

Unfortunately, Canada's current federal competition and privacy laws give neither the Competition Bureau nor the Office of the Privacy Commissioner of Canada (OPC) sufficient tools to adequately protect against the insidious surveillance of Canadians. Also, these laws do not deal effectively with the anti-competitive effects arising from the broad sharing of personal information across different platforms. With the long overdue amendments to the Competition Act that came into force on June 23, 2022, "privacy" is at least now specifically listed as one of the non-exhaustive factors that must be considered when assessing the competitive impact of mergers, business practices and competitor collaborations. But there is still scant evidence in Canada that alleged privacy violations are being used to commence investigations under the Competition Act.

The federal government's most recent proposal for updating Canada's private sector privacy laws, the Digital Charter Implementation Act, 2022, has been widely criticized by the federal Privacy Commissioner, data governance experts, civil liberties associations, digital rights activists and consumer protection organizations. Moreover, Canada's Competition Bureau and the OPC are still unduly handcuffed in critically important areas of inter-agency collaboration and information sharing.

Canada's Competition Act must recognize and be able to address the serious risk of significant harm of surveillance capitalism and the platforms it has created both to the privacy rights of individual Canadians and to the integrity of Canadian markets. Canadians and Canada must have clear and strong protection from abuses of digital market power arising from the accumulation of personal information. For instance, the Competition Act should define and specifically prohibit "deceptive design patterns" (also called "dark patterns"), including deceptive "opt-out" mechanisms that extract more personal information from Canadians than they want to provide.

As so well put by Christina Caffarra and Johnny Ryan, with surveillance capitalism turbo-charging personal information as a source of significant market power, there is both a "market power" crisis and a "privacy" crisis with each compounding the other. Data-driven firms collect and cross-use personal information (often in defiance of Canadian privacy laws) to create huge market power and cascading monopolies that roll from market to market with significant anti-competitive effects. Canadian competition and privacy law regulators must be given the powers and resources to confront this daunting market power.

Accordingly, CDR recommends that ISED consider the following strategies to strengthen Canada's Competition Act and Competition Bureau:

• prohibit the business model based on personal advertising that incentivizes constant insidious consumer surveillance, resulting in the never-ending mass collection, aggregation and processing of personal information which creates not just privacy issues but data asymmetries that distort markets;
• modernize Canada's private sector privacy law, the Personal Information Protection and Electronic Documents Act (PIPEDA), with a privacy statute that states unequivocally that privacy is a fundamental or human right. For all the reasons set forth in CDR's October 28, 2022 Statement on Bill C-27, the government's current proposal to modernize PIPEDA is simply not fit for purpose; and
• strengthen inter-agency collaboration and information-sharing between the Competition Bureau and the OPC. Any modernization of the Competition Act and PIPEDA must allow for each agency to collaborate with the other. This is already in place in many of Canada's trading partners including the United Kingdom, Germany and France. It's not necessary in the United States because the Federal Trade Commission (FTC) mandate under the FTC Act already allows it alone to address deceptive or unfair practices in both the competition and privacy realms.

Finally, CDR has considered the Competition Bureau's recently published March 15th recommendations for strengthening the "deceptive marketing" provisions of the Competition Act and, with respect to the intersection of competition and privacy law, supports the Competition Bureau's call to:

• prescribe the appropriate standard for the average consumer/citizen to be the credulous (i.e., trusting, hurried and thus vulnerable) person, as opposed to the reasonable person. This is the same standard that could and should apply for section 16 of the proposed Consumer Privacy Protection Act (i.e., that if a firm obtains an individual's consent to collect, use or disclose their personal information by "deception" that consent is invalid) [Competition Bureau recommendation 4.1];
• give the Competition Bureau greater flexibility for deceptive marketing investigations (especially those relating to a firm's allegedly deceptive collection, use or disclosure of personal information) [Competition Bureau recommendation 4.3]; and
• give the Competition Act better remedies to address deceptive conduct (especially relating to a firm's allegedly deceptive collection, use or disclosure of personal information) [Competition Bureau recommendation 4.4].

Three years ago, the FTC's Chair said to Congress "policing data privacy and security is now a mainstay of the FTC's work". Canada's Commissioner of Competition should be able to say the same, even while OPC remains integral to protecting Canadian's privacy rights. There is wide recognition in the global public policy community that eroding consumer privacy has become a crucial aspect of anti-competitive behaviour. CDR trusts that Canada can join the advanced policy dialogue and develop competition law and policy truly fit for purpose for today's digital

Examen des fusions

Une surveillance plus étroite des fusions bénéficierait aux consommateurs canadiens en permettant de prévenir en amont des effets néfastes comme une augmentation des prix ou une baisse de l'innovation. Pour ce faire, nous proposons d'élargir les situations où un préavis de fusion est nécessaire, d'allonger le délai de prescription et de retirer la défense de gains en efficience.

Élargir l'obligation de préavis

Actuellement, le Bureau de la concurrence doit recevoir un préavis de fusion uniquement lorsque la taille de la transaction dépasse les 93 millions de dollars (1). Selon nous, ce critère se montre trop étroit, car une entreprise qui s'adonnerait à une série de petites acquisitions n'aurait pas l'obligation de fournir des préavis de fusion, même si cette série d'acquisitions aurait pour effet cumulatif d'empêcher ou de diminuer sensiblement la concurrence.

Cette lacune de la Loi est particulièrement préoccupante quant à l'acquisition de jeunes pousses, une pratique courante chez plusieurs géants du Web (2). En Australie, la Competition and Consumer Commission proposait d'ailleurs que les grandes plateformes numériques se soumettent à un protocole de préavis d'acquisitions susceptibles d'affecter la compétition (3).

Le Canada devrait considérer l'obligation de fournir un préavis de fusion au Bureau de la concurrence, même si le seuil de la transaction n'est pas atteint dans les marchés qui sont, dans les faits, contrôlés par un nombre limité d'entreprises. Nous songeons par exemple aux banques, aux entreprises de télécommunications, aux géants du Web ou encore aux compagnies aériennes. Une concentration accrue dans ces domaines pourrait engendrer une augmentation des prix pour les consommateurs canadiens, en plus de réduire considérablement la variété des services offerts. En 2021, le président de la Competition and Consumer Commission de l'Australie proposait d'ailleurs que la loi australienne reconnaisse que l'acquisition de concurrents par des entreprises ayant un pouvoir de marché important est plus susceptible d'entraîner des conséquences économiques négatives (4). Le Canada pourrait adopter une modification à la Loi en ce sens.

Allonger le délai de prescription

Si l'obligation de fournir des préavis de fusion est élargie, le Bureau de la concurrence devra examiner un nombre plus important de fusions potentielles. Outre la nécessité de lui fournir un financement et des effectifs accrus pour remplir sa mission, nous estimons qu'il sera nécessaire d'allonger les délais de prescription pour contester une fusion.

Depuis 2009, ce délai est d'un an. Dans son mémoire dans le cadre de la présente consultation, le Bureau de la concurrence soulevait les enjeux de ce court délai, autant dans les cas avec que sans préavis de fusion (5). Il nous rappelle également que le délai de prescription est de 3 ans en Australie alors que les États-Unis n'en ont pas (6).

Retirer la défense de gains en efficience

La défense de gains en efficience à l'article 96 de la Loi permet d'autoriser une fusion dont les gains surpasseraient ou neutraliseraient les effets négatifs sur la concurrence (7).

Ailleurs dans le monde, les gains en efficience sont un facteur considéré dans l'évaluation de fusions. Toutefois, il ne s'agit pas d'une défense en soi. Le document de la présente consultation le soulignait d'ailleurs (8).

Dans son mémoire de 2022, le Bureau de la concurrence expliquait que dans plusieurs juridictions, « les allégations de gains en efficience sont considérées comme un facteur déterminant pour déterminer si un fusionnement est anticoncurrentiel. Au Canada, les allégations de gains en efficience peuvent permettre qu'un fusionnement se fasse malgré le fait qu'il soit anticoncurrentiel. Cette situation fait en sorte que la politique canadienne en matière de fusionnement est une exception aux pratiques exemplaires internationales en matière de contrôle des fusionnements (9) ».

Conséquemment, et dans l'optique de mieux servir les objectifs de la Loi, la défense de gains en efficience devrait être abrogée et ce critère pourrait être intégré aux éléments à considérer dans l'évaluation des fusions prévus à l'article 93.

(1) https://www.canada.ca/fr/bureau-concurrence/nouvelles/2022/02/le-seuil-relatif-a-la-taille-des-transactions-devant-faire-lobjet-dun-preavis-de-fusion-restera-a-93millions-de-dollars-en2022.html

(2) https://www.washingtonpost.com/technology/interactive/2021/amazon-apple-facebook-google-acquisitions/

(3) https://www.accc.gov.au/system/files/Digital%20platforms%20inquiry%20-%20final%20report.pdf, p. 10.

(4) https://www.accc.gov.au/speech/protecting-and-promoting-competition-in-australia-keynote-speech ("we consider that the merger law should recognize that acquisitions of rivals made by firms with substantial market power in a market more likely result in economic 'harm'").

(5) https://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/promotion-concurrence/conseils-interventions-bureau-concurrence-matiere-reglementation/lavenir-politique-concurrence-canada, section 1.2.

(6) https://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/promotion-concurrence/conseils-interventions-bureau-concurrence-matiere-reglementation/lavenir-politique-concurrence-canada, section 1.2.

(7) Loi sur la concurrence, L.R.C. (1985), ch. C-34, art. 96 (1).

(8) https ://ised-isde.canada.ca/site/strategic-policy-sector/sites/default/files/attachments/2022/The-Future-of-Competition-Policy-fra.pdf, p. 30–31.

(9) https ://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/promotion-concurrence/conseils-interventions-bureau-concurrence-matiere-reglementation/examen-loi-concurrence-canada-lere-numerique#sec02_1

Comportements unilatéraux

Option consommateurs approuve les modifications de 2022 à l'article 78 (1) de la Loi. Ces modifications viennent préciser qu'un agissement anticoncurrentiel s'entend non seulement d'un agissement visant l'exclusion, l'éviction ou la mise au pas d'un concurrent, mais également de celui nuisant à la concurrence.

Nous soutenons également la proposition d'assouplir les critères de l'abus de position dominante prévus à l'article 79 (1) de la Loi. En effet, ces derniers peuvent être difficiles à démontrer. Une approche moins axée sur les conséquences des agissements ou sur l'intention derrière ceux-ci permettrait de mieux remplir les objectifs de la Loi « de préserver et de favoriser la concurrence au Canada (1) », de se rapprocher des pratiques d'autres juridictions et d'être mieux adaptés aux réalités du commerce à l'ère numérique.

Revoir les critères de l'abus de position dominante

L'abus de position dominante demande d'établir que 1) « une ou plusieurs personnes contrôlent sensiblement ou complètement une catégorie ou espèce d'entreprises à la grandeur du Canada ou d'une de ses régions »; 2) « cette personne ou ces personnes se livrent ou se sont livrées à une pratique d'agissements anti-concurrentiels »; et 3) « la pratique a, a eu ou aura vraisemblablement pour effet d'empêcher ou de diminuer sensiblement la concurrence dans un marché (2) ».

En premier lieu, prenons le second élément qui « requiert de déterminer si l'entreprise (ou les entreprises) en position dominante s'est livrée à une pratique d'agissements destinée à avoir un effet négatif intentionnel (3) ». Or, dans certains cas, l'intention derrière l'agissement peut être difficile à prouver.

Par exemple, certaines entreprises utilisent des algorithmes pour présenter des prix ou des offres personnalisées aux consommateurs (4). Ces algorithmes pourront prendre des décisions sans intervention humaine. Pour certains algorithmes, il peut même être très complexe de déterminer les variables utilisées dans le processus décisionnel (« black box models ») (5). Dans ces circonstances, la démonstration d'une intention devient improbable.

Au sein d'autres juridictions, comme l'Europe, les États-Unis et l'Australie, il n'est pas nécessaire de prouver l'intention afin d'établir un abus de position dominante. Il s'agit plutôt d'un critère parmi d'autres pouvant être considéré (6).

En deuxième lieu, il peut également être ardu de prouver le troisième critère selon lequel « la concurrence […] serait sensiblement plus importante dans un marché en l'absence du comportement anticoncurrentiel (7) ».

Dans son mémoire, le Bureau de la concurrence explique que « [s]elon le cas, cela pourrait nécessiter des preuves et des modélisations économiques complexes, ainsi qu'une bataille d'experts économiques pour déterminer si le comportement était finalement abusif (8) ».

À titre d'exemple, il peut être difficile de démontrer dans quelle mesure l'achat de jeunes pousses, une pratique adoptée par plusieurs géants du Web (9), affecte la concurrence, et encore plus, que ces achats affectent « sensiblement » la concurrence alors que ces entreprises en sont encore à leurs balbutiements (10). Une des solutions envisageables serait de prévoir des préavis de fusions pour les géants du Web procédant à des acquisitions susceptibles d'affecter la concurrence, comme discuté dans la section précédente sur l'examen des fusions.

De même, certaines pratiques d'entreprises dans l'environnement numérique peuvent s'avérer anticoncurrentielles, mais il est difficile de le prouver au regard des critères actuels de l'abus de position dominante. Certaines plateformes peuvent exiger des conditions économiquement avantageuses à leurs transporteurs en raison de leur importance sur le marché (11). Certaines amassent une quantité importante de renseignements personnels de leurs utilisateurs, ce qui peut entraver la possibilité pour ces derniers de migrer de plateforme en l'absence d'un droit à la portabilité des données. Enfin, d'autres peuvent s'adonner à de l'autoréférencement.

À ce sujet, la Commission européenne a conclu en 2017 que le géant Google avait enfreint l'article 102 du Traité sur le fonctionnement de l'Union européenne portant sur l'abus de position dominante. L'entreprise avait, « sur ses pages de résultats de recherche générale, [réservé] un placement et un affichage plus favorables à son propre service de comparaison de prix par rapport aux services de comparaison de prix concurrents (12) ».

D'ailleurs, l'Europe a récemment adopté un Règlement sur les marchés numériques interdisant notamment aux géants du Web d'accorder « en matière de classement ainsi que pour l'indexation et l'exploration qui y sont liées, un traitement plus favorable aux services et produits proposés par le contrôleur d'accès lui-même qu'aux services ou produits similaires d'un tiers (13) ».

Afin de mieux encadrer les activités des entreprises dans l'environnement numérique, le Canada pourrait établir des présomptions à l'égard de certaines pratiques telles que l'autoréférencement.

(1) Loi sur la concurrence, L.R.C. (1985), ch. C-34, art. 1.1.

(2) Loi sur la concurrence, L.R.C. (1985), ch. C-34, art. 79 (1).

(3) https://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/education-sensibilisation/publications/lignes-directrices-labus-position-dominante

(4) https://ised-isde.canada.ca/site/strategic-policy-sector/sites/default/files/attachments/2022/The-Future-of-Competition-Policy-fra.pdf, p. 41; Frédéric Marty, Plateformes de commerce en ligne et abus de position dominante : réflexions sur les possibilités d'abus d'exploitation et de dépendance économique, 53 RJTUM 73, 2019, p. 92; https://option-consommateurs.org/wp-content/uploads/2021/07/option-conso-ia-rapport-2021.pdf, p. 29-30.

(5) Nicholas Diakopoulos, Algorithmic Accountability Reporting: On the Investigation of Black Boxes, Tow Center for Digital Journalism Publications, 2014, DOI : 10.7916/D8ZK5TW2, p. 13–15; Cynthia Rudin et Joanna Radin, Why Are We Using Black Box Models in AI When We Don't Need To? A Lesson From an Explainable AI Competition, 1–2 Harvard Data Science Review, 2019, DOI : 10.1162/99608f92.5a8a3a3d.

(6) https://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/promotion-concurrence/conseils-interventions-bureau-concurrence-matiere-reglementation/lavenir-politique-concurrence-canada, section 2.1.

(7) https://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/education-sensibilisation/publications/lignes-directrices-labus-position-dominante

(8) https://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/promotion-concurrence/conseils-interventions-bureau-concurrence-matiere-reglementation/lavenir-politique-concurrence-canada, section 2.1.

(9) https://www.washingtonpost.com/technology/interactive/2021/amazon-apple-facebook-google-acquisitions/

(10) Edward M. Iacobucci, Examen de la Loi sur la concurrence au Canada à l'ère numérique, 27 septembre 2021, p. 54.

(11) Frédéric Marty, Plateformes de commerce en ligne et abus de position dominante : réflexions sur les possibilités d'abus d'exploitation et de dépendance économique, 53 RJTUM 73, 2019, p. 86.

(12) https://eur-lex.europa.eu/legal-content/FR/TXT/HTML/?uri=CELEX:52018XC0112 (01) & from=FR, para. 11.

(13) Règlement (UE) 2022/1925 du parlement européen et du conseil du 14 septembre 2022 relatif aux marchés contestables et équitables dans le secteur numérique et modifiant les directives (UE) 2019/1937 et (UE) 2020/1828 (règlement sur les marchés numériques), art. 6 (5).

Collaborations entre concurrents

Option consommateurs appuie les recommandations formulées par le Bureau de la concurrence au sujet de la collaboration entre concurrents. Ce dernier recommande entre autres de permettre un recours pour les accords et dommages passés, d'abroger la défense de gains en efficience, d'harmoniser les peines prévues pour les accords, arrangements et complots ainsi que d'élargir la portée de l'article 45 pour inclure les accords entre acheteurs (1).

Nous proposons également d'élargir la portée de l'article 90.1 de la Loi afin d'y inclure les accords verticaux et souhaitons que le cadre législatif soit en mesure de répondre aux nouvelles réalités technologiques telles que le potentiel de collusion algorithmique.

Élargir la portée de l'article 90.1 pour inclure les accords verticaux

L'article 90.1 de la Loi porte sur la collaboration impliquant des concurrents (accords horizontaux). Il exclut par le fait même les accords verticaux qui pourraient ultimement avoir des effets anticoncurrentiels. Ceux-ci devraient être inclus afin de mieux « préserver et favoriser la concurrence au Canada (2) ».

Dans l'Union européenne, aux États-Unis et en Australie, les accords visés ne doivent pas nécessairement impliquer des concurrents comme c'est le cas au Canada (3).

S'assurer d'avoir un cadre législatif en mesure de répondre aux nouvelles réalités technologiques

Option consommateurs est préoccupée par l'enjeu de la collusion algorithmique soulevé par le document de consultation.

En effet, les entreprises peuvent utiliser des algorithmes afin d'analyser les offres de leurs compétiteurs et fixer leurs propres prix en conséquence (4). Or, l'emploi de ces technologies pourrait avoir des effets négatifs sur la concurrence ou empêcher les consommateurs de comparer adéquatement les prix de biens ou de services. Par exemple, en 2015, le Département de la Justice des États-Unis a porté des accusations contre un commerçant en ligne qui avait coordonné ses prix avec d'autres commerçants par le biais d'un algorithme (5).

Pour les autorités chargées d'appliquer la Loi, il pourrait s'avérer complexe de démontrer la collusion résultante de l'utilisation d'algorithmes qui prennent des décisions autonomes dont les motifs restent souvent inconnus (6). À tout le moins, nous souhaitons que le cadre législatif puisse se montrer suffisamment neutre technologiquement afin d'être en mesure de s'appliquer pleinement à de telles pratiques commerciales.

(1) https://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/promotion-concurrence/conseils-interventions-bureau-concurrence-matiere-reglementation/lavenir-politique-concurrence-canada#sec-3

(2) Loi sur la concurrence, LRC 1985, c C-34, art. 1.1.

(3) Traité sur le fonctionnement de l'Union européenne (version consolidée), art. 101, en ligne : https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12012E/TXT:fr:PDF; 15 U.S.C. § 1, en ligne : https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section1&num=0&edition=prelim; Competition and Consumer Act 2010, art. 45, en ligne : https://www.legislation.gov.au/Details/C2011C00003.

(4) https://option-consommateurs.org/wp-content/uploads/2021/07/option-conso-ia-rapport-2021.pdf, p. 31.

(5) OECD, Algorithms and Collusion: Competition Policy in the Digital Age, 2017, p. 28, en ligne : https://www.oecd.org/daf/competition/Algorithms-and-colllusion-competition-policy-in-the-digital-age.pdf; https://www.justice.gov/atr/case-document/file/513586/download

(6) Nicholas Diakopoulos, Algorithmic Accountability Reporting: On the Investigation of Black Boxes, Tow Center for Digital Journalism Publications 2014, DOI : 10.7916/D8ZK5TW2, p. 13–15; Cynthia Rudin et Joanna Radin, Why Are We Using Black Box Models in AI When We Don't Need To? A Lesson From an Explainable AI Competition, 1–2 Harvard Data Science Review, 2019, DOI : 10.1162/99608f92.5a8a3a3d; voir aussi https://option-consommateurs.org/wp-content/uploads/2021/07/option-conso-ia-rapport-2021.pdf, p. 31.

Pratiques commerciales trompeuses

Au chapitre des pratiques commerciales trompeuses, Option consommateurs suggère quatre pistes de réforme : 1) les commerçants devraient porter le fardeau de démontrer la véracité d'un rabais; 2) le marketing d'influence devrait être mieux encadré; 3) la norme du consommateur moyen devrait être définie comme étant celle du consommateur crédule et inexpérimenté; et 4) des dispositions devraient être prévues sur les services d'abonnement à option négative (opt out).

Les commerçants devraient porter le fardeau de démontrer l'existence d'un rabais

Tout d'abord, Option consommateurs appuie les demandes du Bureau de la concurrence dans le cadre de la présente consultation à l'effet que le fardeau de la preuve quant à l'authenticité d'un rabais devrait incomber aux commerçants. Les articles 74.01 (2) et (3) mériteraient également d'être simplifiés (1).

La démonstration d'un faux rabais demande de surveiller de nombreux facteurs tels que le nombre d'articles achetés et le prix auquel ils ont été vendus pendant une certaine période et dans un espace géographique donné (2). Il s'agit là d'un fardeau lourd à remplir alors que le commerçant dispose vraisemblablement déjà des informations sur les ventes qu'il a effectuées.

En outre, les faux soldes défavorisent les consommateurs canadiens. Lorsqu'un article est affiché en solde, ces derniers risquent de moins comparer les prix avant d'effectuer leurs achats (3). Afin de mieux assurer les droits des consommateurs, l'article 74.01 de la Loi pourrait prévoir qu'un commerçant doive indiquer le prix habituel d'un article lorsqu'il est en solde.

Mieux encadrer le marketing d'influence

Les Canadiens consomment maintenant leur divertissement de sources variées. Pour plusieurs, consulter les réseaux sociaux fait partie de leurs activités quotidiennes. Sur ces plateformes, des personnalités, appelées des influenceurs, produisent du contenu créatif suivi par les consommateurs (4).

Ces influenceurs peuvent conclure des ententes avec des entreprises afin de promouvoir leurs services ou leurs produits à travers le contenu qu'ils produisent et mettent en ligne (5). Toutefois, cette publicité non traditionnelle peut se mêler au contenu habituel de l'influenceur (6). Un influenceur peut par exemple déballer un produit reçu gratuitement ou bien recommander un produit cosmétique dans le cadre d'un tutoriel de beauté. Le consommateur peut ainsi plus difficilement reconnaître qu'il est exposé à du contenu promotionnel (7).

Les enfants sont également exposés au marketing d'influence en ligne. Une étude menée par Option consommateurs avait d'ailleurs révélé que les jeunes exposés à ce type de marketing avaient parfois de la difficulté à reconnaître qu'il s'agissait de publicité (8).

La Loi encadre le contenu de messages promotionnels et interdit les indications fausses et trompeuses. Cette disposition s'applique au marketing d'influence (9). Selon le Bureau de la concurrence, les influenceurs doivent divulguer à leurs abonnées les liens qui les lient à une entreprise ainsi que la présence de publicité dans leur contenu, le cas échéant (10).

Cependant, afin de mieux encadrer le marketing d'influence, la Loi devrait explicitement prévoir des normes de divulgation de contenu publicitaire. Le Canada pourrait par exemple s'inspirer de la France où un contenu publicitaire en ligne doit être identifié comme tel (11). L'Allemagne, de son côté, fixe également les termes à utiliser afin de divulguer clairement la présence de contenu publicitaire (12).

De plus, considérant l'exposition des enfants au marketing d'influence ainsi que son efficacité à leur égard, le Canada devrait légiférer afin de mieux défendre leurs droits. Dans son observation générale no 25, le Comité des droits de l'enfant, une institution chargée de surveiller la mise en œuvre de la Convention relative aux droits de l'enfant, indiquait que « [l]e parrainage, le placement de produits et toutes les autres formes de contenus à caractère commercial doivent être clairement distingués de tout autre contenu (13) ».

Le Canada pourrait également interdire la publicité commerciale ciblant les enfants de moins de 13 ans. Le Québec l'a d'ailleurs déjà fait à travers la Loi sur la protection du consommateur (14). Dans son observation générale no 25, le Comité des droits de l'enfant écrivait que « [l]es États parties devraient interdire par la loi le profilage ou le ciblage d'enfants de tous âges à des fins commerciales fondés sur l'enregistrement numérique de leurs caractéristiques réelles ou déduites, y compris les données de groupe ou données collectives, le ciblage par association ou le profilage par affinités (15) ».

Adopter la norme du consommateur crédule et inexpérimenté

Option consommateurs appuie la proposition du Bureau de la concurrence suggérant d'adopter la norme du consommateur moyen prévue dans l'arrêt Richard c. Time (16).

Dans cet arrêt, la Cour suprême résumait que « [l]es qualificatifs "crédule et inexpérimenté" expriment […] la conception du consommateur moyen qu'adopte la [Loi sur la protection du consommateur]. Cette description du consommateur moyen respecte la volonté législative de protéger les personnes vulnérables contre les dangers de certaines méthodes publicitaires. Le terme "crédule" reconnaît que le consommateur moyen est disposé à faire confiance à un commerçant sur la base de l'impression générale que la publicité qu'il reçoit lui donne (17) ».

Bien que cet arrêt aborde les dispositions québécoises sur la publicité fausse ou trompeuse, nous croyons que les mêmes critères devraient être applicables au sens de la Loi. Celle-ci devrait offrir une protection adéquate à tous les consommateurs canadiens.

Abonnement à option négative

Plusieurs entreprises en ligne offrent maintenant des services sous forme d'abonnement. Pour attirer les consommateurs, certains offrent des périodes d'essai gratuit ou à prix réduit. À moins d'action positive de leur part pour se désabonner, les consommateurs seront ensuite facturés automatiquement au prix courant (contrat à option négative ou « opt out ») (18). Souvent, le mécanisme pour se désabonner du service est plus complexe que celui pour s'y abonner; par exemple, le consommateur peut s'abonner simplement via un formulaire Web, mais il doit téléphoner à l'entreprise pour se désabonner.

En 2018, Option consommateurs a réalisé une recherche sur le sujet. Dans l'analyse des contrats d'entreprises offrant des abonnements en ligne, nous avions constaté que plusieurs d'entre eux n'offraient pas toute l'information pertinente au consommateur, telle que la procédure de désabonnement ou encore les conditions ou les délais pour le faire (19). Parmi les gens sondés dans le cadre de cette étude, 77,8 % avaient été en mesure de se désabonner avant d'être facturés par l'entreprise et 44,4 % avaient reçu une communication leur rappelant la fin de la période d'essai (20).

La Loi ne prévoit pas de disposition spécifique sur l'abonnement par défaut. Le Règlement relatif à l'abonnement par défaut vise quant à lui les produits et services d'institutions financières (21).

En Californie, la loi prévoit qu'une entreprise qui offre une période d'essai doit informer clairement le consommateur du prix qui sera demandé après la fin de celle-ci (22). Elle ne peut facturer des frais sur la carte débit, la carte de crédit ou au compte du consommateur avec une tierce partie sans obtenir un consentement clair du consommateur (23). Elle doit en outre fournir un mécanisme de désabonnement facile d'utilisation (24).

Le Canada pourrait prévoir des mesures semblables. Il pourrait aussi prévoir une obligation de divulgation claire aux consommateurs, incluant l'envoi d'un avis les informant de la fin d'une période d'essai ou encore la communication d'information claire sur la façon de se désabonner.

(1) https://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/promotion-concurrence/conseils-interventions-bureau-concurrence-matiere-reglementation/lavenir-politique-concurrence-canada#sec-4-2

(2) https://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/education-sensibilisation/publications/indications-relatives-prix-habituel

(3) https://option-consommateurs.org/wp-content/uploads/2017/08/pratiques-commerciales-soldes-21-septembre-2011-1.pdf, p. iv.

(4) https://www.competitionbureau.gc.ca/eic/site/cb-bc.Nsf/fra/04372.html#sec01; https://option-consommateurs.org/wp-content/uploads/2021/10/option-consommateurs-814574-rapport-de-recherche-fr.pdf, p. 8.

(5) https://option-consommateurs.org/wp-content/uploads/2021/10/option-consommateurs-814574-rapport-de-recherche-fr.pdf, p. 8.

(6) https://option-consommateurs.org/wp-content/uploads/2021/10/option-consommateurs-814574-rapport-de-recherche-fr.pdf, p. 9.

(7) https://option-consommateurs.org/wp-content/uploads/2021/10/option-consommateurs-814574-rapport-de-recherche-fr.pdf, p. 9-10, 25.

(8) https://option-consommateurs.org/wp-content/uploads/2021/10/option-consommateurs-814574-rapport-de-recherche-fr.pdf, p. 61.

(9) https://www.competitionbureau.gc.ca/eic/site/cb-bc.Nsf/fra/04372.html#sec01

(10) https://www.competitionbureau.gc.ca/eic/site/cb-bc.Nsf/fra/04372.html#sec01

(11) Loi n° 2004-575 du 21 juin 2004 pour la confiance dans l'économie numérique, art. 20, en ligne : https://www.legifrance.gouv.fr/jorf/id/JORFTEXT000000801164

(12) https://option-consommateurs.org/wp-content/uploads/2021/10/option-consommateurs-814574-rapport-de-recherche-fr.pdf, p. 97.

(13) Comité des droits de l'enfant, Observation générale n° 25 (2021) sur les droits de l'enfant en relation avec l'environnement numérique, CRC/C/GC /25 (2 mars 2021), para. 41, en ligne : https://documents-dds-ny.un.org/doc/UNDOC/GEN/G21/053/44/PDF/G2105344.pdf. Le Canada est lié par la Convention relative aux droits de l'enfant (https://treaties.un.org/Pages/showDetails.aspx?objid=08000002800007fe&clang=_fr).

(14) Loi sur la protection du consommateur, RLRQ c P-40.1, art. 248-249; Règlement d'application de la Loi sur la protection du consommateur, RLRQ c P-40.1, r 3, art. 87 et s.

(15) Comité des droits de l'enfant, Observation générale n° 25 (2021) sur les droits de l'enfant en relation avec l'environnement numérique, CRC/C/GC /25 (2 mars 2021), para. 42, en ligne : https://documents-dds-ny.un.org/doc/UNDOC/GEN/G21/053/44/PDF/G2105344.pdf

(16) https://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/promotion-concurrence/conseils-interventions-bureau-concurrence-matiere-reglementation/lavenir-politique-concurrence-canada#sec-4-1

(17) Richard c. Time Inc., 2012 CSC 8, para. 72, en ligne : https://scc-csc.lexum.com/scc-csc/scc-csc/fr/item/7994/index.do

(18) https://option-consommateurs.org/wp-content/uploads/2019/04/option-opt-out-rapport.pdf, p. 9-10.

(19) https://option-consommateurs.org/wp-content/uploads/2019/04/option-opt-out-rapport.pdf, p. 48.

(20) https://option-consommateurs.org/wp-content/uploads/2019/04/option-opt-out-rapport.pdf, p. 65.

(21) DORS/2012-23, art. 2.

(22) California Code, Business and Professions Code – BPC § 17602, section 1 (a) (1), en ligne : https://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201720180SB313&showamends=false

(23) California Code, Business and Professions Code – BPC § 17,602, section 1 (a)(2), en ligne : https://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201720180SB313&showamends=false

(24) California Code, Business and Professions Code – BPC § 17602, section 1 (b), en ligne : https://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201720180SB313&showamends=false

Exécution et application de la Loi

Le meilleur cadre législatif qui soit ne saurait remplir ses promesses en l'absence d'outils et de mesures efficaces pour en assurer sa mise en œuvre. Cela devrait notamment inclure des sanctions suffisamment dissuasives, des recours civils permettant aux personnes lésées par les comportements fautifs de recouvrer des dommages ainsi qu'un cadre procédural et des ressources qui permettent au Bureau de la concurrence de remplir son rôle.

Prévoir des amendes ou des sanctions administratives pécuniaires plus dissuasives

Le non-respect des règles établies par la Loi peut non seulement nuire à l'équilibre du marché, mais il peut surtout permettre aux personnes contrevenantes d'engranger d'importants bénéfices injustifiés. Si les amendes ou sanctions administratives prévues à la Loi demeurent en deçà des profits générés par un comportement illégal, celles-ci seront considérées comme un frais d'exploitation, un peu comme un permis de contrevenir à la Loi.

Ainsi, Option consommateurs accueille favorablement les mesures adoptées en 2022 qui ont retiré le plafond de 25 millions de dollars des amendes pouvant être imposées en matière de cartel. De même, ces mesures permettent désormais que des sanctions administratives pécuniaires, en cas d'abus de position dominante ou de pratiques commerciales trompeuses, soient fixées en fonction des bénéfices tirés du comportement fautif.

Aussi, Option consommateurs suggère que des sanctions administratives pécuniaires élevées puissent être imposées à l'encontre de personnes ou entreprises ayant adopté des pratiques visées à la section VIII de la Loi.

Selon les principes reconnus en pénologie, ce n'est pas seulement la gravité de la peine qui doit être dissuasive, mais bien le caractère certain de l'imposition de la peine qui peut engendrer un changement de comportement. L'augmentation des sanctions imposables n'est donc pas le seul remède. Pour que des sanctions puissent être éventuellement imposées aux personnes et entreprises qui contreviendraient à la Loi, encore faut-il que des poursuites puissent être intentées.

Favoriser les recours civils privés

Option consommateurs est d'avis que la Loi devrait être modifiée de manière à permettre davantage de recours intentés par les parties civiles. Rappelons que les comportements contrevenant à la Loi sur la concurrence peuvent causer des dommages aux autres entreprises de l'industrie et que, bien souvent, ce sont ultimement les consommateurs qui en paient le prix. En conséquence, certains dossiers peuvent mener au dépôt de demandes en action collective, notamment en matière de cartel de fixation de prix.

Or, la Loi pose des entraves importantes à ces recours civils. Actuellement, il est possible pour une personne de demander des mesures correctives en vertu des articles 75, 76, 77 et 79, mais seulement avec l'autorisation du tribunal (art. 103.1 de la Loi). Quant à l'article 36 de la Loi, il permet à des personnes lésées de recouvrer des dommages, mais uniquement lors de comportements allant à l'encontre d'une disposition contenue à la partie VI de la Loi.

Obtenir l'autorisation du tribunal en vertu de l'article 103.1 de la Loi pour ensuite instituer une demande visant à obtenir des mesures correctives est une étape qui peut s'avérer coûteuse, sans même avoir la garantie d'obtenir les ordonnances visées dans une seconde étape judiciaire. Au mieux, une entreprise pourrait ainsi obtenir la cessation d'une pratique interdite afin d'en limiter les effets néfastes dans le futur. Dans les faits, peu d'entreprises voudront investir dans un tel processus, d'autant plus qu'il n'est pas possible pour elles d'être ensuite indemnisées. La Loi devrait être modifiée de manière à permettre également l'obtention de dommages-intérêts.

Par ailleurs, plusieurs pratiques allant à l'encontre de dispositions de la section VII.1 de la Loi peuvent causer un préjudice aux consommateurs. Aussi, Option consommateurs est d'avis que l'article 36 de la Loi devrait être modifié afin permettre à toute personne lésée de demander des dommages-intérêts. Le recours devrait également comprendre le recouvrement des frais engagés pour l'enquête et les procédures entreprises. Également, afin d'améliorer l'effet dissuasif de ces procédures, la Loi devrait prévoir la possibilité d'obtenir des dommages punitifs.

Permettre au Bureau de la concurrence de mieux jouer son rôle

Option consommateurs appuie les orientations proposées dans le document de consultation afin de donner au Bureau de la concurrence les coudées franches pour lui permettre de mieux remplir son mandat. De même, nous appuyons globalement les propositions faites par le Bureau dans son mémoire (1) déposé dans la cadre de la présente consultation, notamment celles visant à alléger le fardeau procédural du Bureau et à lui accorder des délais suffisants pour agir en temps utile. Également, Option consommateurs tient à souligner qu'il est aussi essentiel que le Bureau puisse bénéficier de ressources financières suffisantes pour mener à bien sa mission.

(1) https://ised-isde.canada.ca/site/bureau-concurrence-canada/fr/comment-nous-favorisons-concurrence/promotion-concurrence/conseils-interventions-bureau-concurrence-matiere-reglementation/lavenir-politique-concurrence-canada

Merger Review

The Canadian Federation of Agriculture (CFA) and its members, as well as the Fruit and Vegetable Growers of Canada (FVGC), support measures to improve competitiveness across the agriculture and agri-food sector, including in the railway sector, telecommunications sector, as well as across the grocery supply chain.

While commercial mergers can have a significant benefit for consumers in terms of creating efficiencies associated with economies of scale, they can also create negative conditions for Canadian producers who are generally price-takers in the marketplace.

For example, in Canada, five large retailers (including three traditional grocers and two general merchandisers) make up roughly 80 percent ($59.5 billion) of the grocery retail market. Another 7,000 independent food retailers across Canada make up the remaining 20 percent ($14.5 billion). The number of retail food stores has declined an average of 871 stores per year since the early 1990s, even as total sales have increased.

While the current retail grocery landscape may create a highly competitive marketplace for consumers, the highly consolidated and concentrated food retail system in Canada has also enabled large retailers to exert their market dominance over suppliers. Canadian food suppliers include the thousands of small and medium-sized agricultural producers who directly sell fruits and vegetables, certain cheeses and dairy products, as well as agricultural-derived food and beverage products. As a result of the market dominance of those retailers, producers have generally found themselves unable to meaningfully negotiate the terms and prices of supply agreements, while having experienced a history of non-transparent fines, fees, and a plethora of other practices that would not be possible were there meaningful competition for suppliers. These practices may not translate to added costs for consumers, but they do have adverse impacts on the resilience of Canada's food supply and food security due to the uncertainty and downward pressure faced by primary producers selling direct to retail, specifically for fruit and vegetable growers due to the highly perishable nature of their products.

While the grocery retail landscape provides a clear example where efficiency-driven consolidation has the potential to adversely affect Canadian food production, similar cases of market dominance exist throughout the agri-food sector in rail transportation as well as in up and downstream markets. The end result is that primary producers are often left as price-takers in both the sales of their products and the purchases of their inputs and services.

The CFA and FVGC strongly believe that Canada's Competition Bureau must be provided the legislative authority and resources to review proposed mergers and acquisitions to prevent business practices that would lessen competition across the agriculture and agri-food supply chain, including measures to protect the resilience and diversity of Canada's food supply. For example, stressors in the grocery supply chain, when added to already challenging labour shortages, have driven some producers of fresh fruits and vegetables to change production to forms of production less exposed to these pressures, such as grains and oilseeds. There are long-term implications associated with these trends for the diversity of Canadian food production and Canada's food security.

As such, the CFA and FVGC support proposed changes to the merger review process including, for example, broadening the scope of pre-merger notification rules and extending the limitation period for non-notifiable mergers. However, when considering efficiencies that may benefit consumers, we also recommend that the Bureau consider focusing potential legislative amendments on supply chain dynamics to ensure that practices are in line with the intended objectives of the Act and do not undermine the resilience of Canada's food supply chain.

Unilateral Conduct

The CFA and FVGC are supportive of possible reforms to the Competition Act that would better define dominance and unilateral conduct to help mitigate the influence of anti-competitive activities in the marketplace, particularly with respect to its impact on suppliers.

For example, our members have identified several practices by large retail grocery chains that include the imposition of unilateral fees, penalties, or rebates charged by the retailer, without prior notice or approval from the supplier, being directly and automatically deducted from the supplier's payment. The supplier has no control over these imposed fees and risks being removed from the retailer's list if they refuse to pay them. Suppliers have also been put in a position where they are required to participate in retailer loyalty programs and provide discounts on their products.

As a result, agricultural producers that directly supply retailers are facing severe consequences due to the increasing costs associated with retail demands. It is important to note that these agricultural suppliers are often small and medium-sized enterprises that have limited financial resources and cannot easily pass these costs on to their customers. As a result, they face significant financial vulnerability.

One of the ways in which the interests of small- and medium-sized enterprises could be protected, would be amending the Competition Act to expressly consider purchaser power that larger firms may exert over small- and medium-sized enterprises that supply products and services to them, including, for example, unilateral conduct related to the imposition of fees, contract terms and conditions, etc.

The Grocery Industry Code of Conduct is a set of guidelines that govern the relationship between grocers and their suppliers in the Canadian food industry. It is designed to create a fair and transparent business environment and ensure that all stakeholders benefit from their transactions. The Code is particularly significant for Canadian fruit and vegetable growers, who have faced numerous challenges in recent years.

One advantage of the Code is that it provides growers with greater negotiating power. In the past, growers have often had to accept unfavorable terms from grocers, as they had limited leverage in negotiations. However, the code gives growers the ability to push for more favorable terms, such as longer payment periods or higher prices, knowing that grocers are required to follow the guidelines set out in the document. This enables growers to secure better deals for their produce and strengthen their position in the market.

Administration and Enforcement

Canada's Competition Bureau must be provided the legislative authority and resources to review proposed mergers and acquisitions to prevent business practices that would lessen competition in the agriculture input industry.

Specifically, our members have expressed concerns around the resource allocation to the bureau and the size of a merger that would be needed to trigger an investigation, particularly in rural and remote communities where even small mergers can have significant affects on concentration and competitiveness.

As a result, we support giving the Bureau more leeway to act as a decision-maker including, for example, a first-instance ability to authorize or prevent forms of conduct.

Comments and Suggestions

The CFA and FVGC are of the view that reforms of the Competition Act must give specific attention to the challenges faced by primary producers and suppliers across Canada who lack market power. These imbalances of power pose significant challenges, and changes are needed to encourage suppliers and retailers to engage in more equitable and balanced relationships that promote the development of the entire supply chain.

The practices highlighted in this submission in the retail food chain sector ultimately led to Federal, Provincial, and Territorial (FPT) ministers calling for an industry-led process in 2021 to improve transparency, predictability, and respect for the principles of fair dealing within the grocery supplier/retailer relationship. A Steering Committee comprised of individuals from ten key stakeholder groups, including both CFA and FVGC, was formed to facilitate development an industry-led Grocery Sector Code of Conduct.

The objective of the Code of Conduct is to enable a thriving industry; promote trust, fair dealing, and collaboration throughout the value chain; increase commercial certainty; and, develop an effective and equitable dispute resolution process.

While the Code, once implemented, will help improve supply chain dynamics, particularly where one link in the supply chain is unduly shouldering the costs and risks of inflationary pressures, it can only go so far.

The grocers code of conduct provides a range of benefits to Canadian fruit and vegetable growers. By establishing clear rules around payment and pricing, providing greater negotiating power, and promoting transparency and accountability, it helps to create a more fair and sustainable business environment for growers. As such, it is an important tool for supporting the growth and development of the Canadian agriculture sector.

When the time comes to implement the Grocery Code of Conduct, we hope that the Government of Canada will be a strong supporter.

Sincerely
Keith Currie
President, Canadian Federation of Agriculture

Jan VanderHout
President, The Fruit and Vegetable Growers of Canada

Merger Review

CAMP's full submission to ISED's consultation on the Competition Act can be found at

https://www.antimonopoly.ca/competition-act-consultation-submission

Blocking and deterring harmful mergers

Mergers are a common avenue for firms to achieve and maintain dominance in the markets on which Canadians depend. Despite the potential for mergers to generate harm, Canada's merger law is largely permissive, accepting the vast majority of mergers as benign or beneficial. Key to an effective competition law going forward is a realignment of the existing system towards a modern understanding of the harms arising from mergers. A more sceptical view of mergers that is easy to adjudicate will better allow Canada's competition law to not only protect Canadians but also encourage organic growth via fierce and fair competition.

Modernise the substantive test for mergers

A common refrain in the competition policy space is that Canada is a low enforcement activity jurisdiction. One reason for this lack of activity is that the Competition Act's provisions regulating mergers and acquisitions are too narrowly

targeted and miss a wide range of transactions. The requirement within the law on identifying "substantial" effects of a merger narrows the law's focus and allows for otherwise anticompetitive acquisitions to occur. When cases are brought, an improper focus on quantitative over qualitative evidence results in judges leaning heavily on biased economic prediction exercises and ignoring the very real but qualitative consequences of harmful acquisitions. The recent Rogers-Shaw case serves as a prime example of the consequences of favouring a substantial effects focus over valuing the competitive process. In a market where Canadians already pay some of the highest prices in the world, the merger was allowed to proceed even though the Competition Tribunal conceded hundreds of thousands of Canadians would face price increases.

The weaknesses within our law manifests in Canada's enforcement record. Since the Competition Act was first enacted in 1986, the Competition Bureau has only filed 18 challenges and 81 consent agreements. In the past six years, less than one percent of mergers involving Canadian firms resulted in a consent agreement or were abandoned by the parties because of a challenge from the Bureau.

The government should introduce brightline market share rules like those considered in the 1981 consultation that led up to the 1986 Competition Act. Brightline rules would reverse the existing presumption that even mergers proposed by dominant firms are likely benign, focusing those firms instead on achieving organic growth through investment and fierce competition. This brightline approach should intensify according to the level of dominance of a given firm, and ban mergers outright for firms with a commanding share of a market.

Consolidation is a one-way street. Today, the Bureau has a single opportunity to intervene in potentially harmful mergers and should be accordingly sceptical of mergers by incumbent players. Canada's already highly concentrated markets justify strict rules that deter harmful mergers from being proposed in the first place, and instead encourage organic growth through fierce competition.

To remedy Canada's current permissive merger enforcement, brightline rules should be introduced in the following form:

• Mergers resulting in a combined market share of 30% or more are presumed to be illegal, but still possible if the parties can show clear procompetitive outcomes; and
• Mergers resulting in a combined market share of 60% or more should be banned outright, with no exception made for allegedly procompetitive mergers.

Expand the existing pre-merger notification system

Canada's current merger pre-notification system is ill-suited for a modern economy, with the Bureau noting that of the hundreds of Big Tech acquisitions over the past decade, it was only notified of five. The system uses a Canada-centric view of revenue and asset size to determine whether a merger qualifies for notification. This means that Canada's notification threshold misses pre-revenue and low-asset companies, increasingly common in a digital economy, and the value of intangible assets such as high value data holdings. This is particularly the case if the acquirer has a significant presence outside of Canada, causing even acquisitions by major global firms to be missed.

Canada should incorporate transaction value into its notification threshold, adopting a similar approach to the FTC in the United States, as well as recent reforms in Germany and Austria. Unlike the current asset and revenue thresholds, the

transaction value threshold should not be indexed to GDP, potentially missing a greater portion of transactions as the economy grows. Not indexing the transaction value thresholds would bring Canada in alignment with the systems implemented in Germany and Austria.

Bring in open-ended merger review to protect long-term competition

Although the Bureau can in theory challenge any merger, not just those that are notified, this power is time limited, expiring one year after the close of the merger transaction. Merger challenges are complex, requiring large volumes of information from merging parties and the time and resources to conduct economic and legal analysis that will hold up in court. Outside of formally notified transactions, the relatively narrow window of time, parties are incentivized not to cooperate with the Bureau and instead "run out of the clock" until the Bureau's jurisdiction lapses.

Moving away from the constraining one year window for merger review, the Government should introduce open-ended merger review, avoiding creating an artificial barrier to addressing harmful transactions. An open-ended window for the

retrospective evaluation of mergers is a more appropriate response to the dynamic characteristics of digital markets, and would align Canada with the United States, which recently put this power to use conducting ex post assessments of past

mergers by major digital firms. It would also remove the incentive for firms to game the system with otherwise anticompetitive transactions.

This opening should also be paired with a streamlining of the Bureau's merger clearance system. Currently, Canada has two types of clearance programs for mergers that are unlikely to generate competitive harms, No-Action Letters (NAL) or

Advance Ruling Certificates (ARC). This system adds an additional burden to the Bureau, requiring staff to scrutinize likely unproblematic mergers to determine whether they require an ARC over a NAL. This analysis ties up valuable resources to

the exclusive benefit of providing additional certainty to the merging parties. There is no ARC-like clearance for mergers in the US system. Removing the ARC option would allow the Bureau to focus more resources on identifying and addressing anticompetitive mergers.

Modify merger provisions to capture "roll-ups" and "creeping acquisitions"

"Serial" or "creeping" acquisitions are cases where, through a series of small mergers, a major company rolls up an otherwise fragmented market. These transactions are problematic because they can lead to significant concentration within an industry without triggering notification to the Bureau. These transactions allow companies to aggregate market power, leading to higher prices while going unnoticed by regulators. Private equity firms are well positioned to roll up markets, and 2021 saw the highest private-equity deal count on record in Canada, with 84% of all deals

falling under $25 million.

The government should add a provision to the Competition Act that enables the Bureau to consider the collective anticompetitive harm of all acquisitions made by an acquirer in a given time period. Learning from the UK, Canada should require special notification rules for sectors vulnerable to serial acquisitions, requiring large players or private equity firms in those sectors to notify the Bureau of any acquisitions, no matter their size.

These amendments should be part of a broader reorienting of Canada's competition law towards an incipiency standard akin to Section 7 of the US Clayton Act. Of a kind with the proposed broader shift away from an effects-focused approach to competition law, a focus on incipiency seeks to prevent the harms of monopoly before they manifest in a market. Once economic harm has occurred, when businesses have had to exit the market or have been substantially weakened, it can often be too late to truly remedy the situation. Like concentration, the prevention or lessening of competition is often a one-way street, particularly in an environment where investigations and resolution of cases are a multi-year affair. Learning from our partners in the U.S., a focus on addressing monopoly in its incipiency is more likely to effectively protect competition rather than a remedial approach that waits for substantial harms to occur.

Remove the harmful, misguided and outdated efficiencies defence

Sections 96(1) and 90.1(4) of the Competition Act, the so-called "efficiencies defence", permits mergers and competitor collaborations that are harmful to competition if they create sufficiently large efficiencies, including layoffs. The provision permits mergers that decrease competition and undermine the economic welfare of consumers and workers, while enhancing the wealth and income of business owners. The nature of the trade-off aside, empirical evidence increasingly finds that merger efficiencies are not realized, or cannot fully offset competitive harms.

Some proponents of the defence argue that it enhances the efficiency of the economy by permitting mergers that provide "innovation and productivity improvements through dynamic efficiencies, increased economies of scale, and greater incentives to develop new products and services" They argue that critics of the defence overlook the importance of dynamic efficiencies whereby mergers allow the most productive competitors to grow to dominate markets, replacing less productive firms. In this view greater market concentration provides favorable conditions for innovation by reducing the duplication of R&D efforts. Further, greater market power that comes from being dominant in a market can increase the returns to innovations and allow firms to accumulate wealth from consumers to fund more innovation.

However, looking at the firms that have made use of the defence to acquire competitors, it is far from obvious that these companies have delivered many of the benefits claimed by proponents of the defence, save economies of scale. Since the introduction of the Competition Act in 1986, there have been six instances when the defence has been successfully evoked, based on publicly available information.

1. Superior Propane's acquisition of ICG in 1998.

2. Superior Plus Corp.'s proposed acquisition of Canexus Corporation in 2016, which was subsequently challenged by the US Federal Trade Commission.

3. Superior Plus LP's acquisition of Canwest Propane in 2017, which created further concentration in the retail sale of propane for ten communities.

4. Tervita's acquisition of a landfill permit from Babkirk Land Services 2010, resolved in the Supreme Court in 2015 (Tervita Corp. v. Canada (Commissioner of Competition), 2015).

5. The merger between First Air and Calm Air in 2015, which are airlines that both serve the North.

6. Canadian National Railway Company's acquisition of H&R Transport Limited in 2019, which caused increased concentration in the market for refrigerated transportation services

Of all mergers that have been permitted through the efficiencies defence, most involved firms that operate large distribution networks essential to Canadians. The efficiencies defence was likely successful in these cases because it allowed these businesses to cut redundant networks, reducing both duplication and consumer choice. While duplication of critical distribution and transportation networks may not be "efficient," it may be prudent for national security and economic resiliency reasons. For example, if Canadian National Railway Company's acquisition of H&R Transport Limited were not permitted, Canada would have had greater capacity to distribute vaccines in the early days of the 2020 pandemic.

The government should remove the efficiencies defence and instead focus the Competition Act on preventing anticompetitive behaviour, incentivizing merging parties to recognize efficiencies through organic growth and procompetitive means. Other jurisdictions such as the US and EU have some bounded form of efficiency

defence, requiring that efficiencies translate into benefits for consumers. However, evidence from the US and EU show that despite laws and guidelines that require efficiency gains to translate to consumer benefit, enforcers of the law have generally not been successful at implementing these laws and guidelines, and harmful mergers have been allowed. Removing the efficiencies defence altogether would align with this evidence and would make Canada's law more advanced relative to international peers.

Protect growing competitors in dynamic markets

As a result of the Supreme Court's decision in the Tervita case, the Competition Act has a high bar for proving that a transaction prevents future competition. Clearing this bar requires the Bureau to not only identify firms the merger would prevent from entering the market, but also show that without the merger those firms would be able to have a substantial effect on competition in a discernible time frame. This makes it extremely difficult for the Bureau to prove a prevention case, and focuses attention on attempting to predict the future rather than preserving potential competition. In digital markets where smaller players can have an outsized effect on competition, it is unclear whether it is possible for the Bureau to bring such a case.

In alignment with the Bureau's proposal, Canada should reform the test for finding a substantial prevention of competition and focus the Bureau on protecting emerging competitors in dynamic markets. The Act should be revised to lower the threshold for intervention away from a likely substantial prevention of competition, and enact a similar to that proposed in the United Kingdom, focusing on the "realistic prospect" of preventing competition. Reforms that increase the flexibility of enforcement against prevention of future competition would reorient the Bureau away from fruitlessly attempting to predict the future and instead valuing the potential competitive force small but growing can exert.

Create a preference for simple and effective remedies

Even once a harmful merger has been identified and the Bureau has intervened to stop it, Canadian competition law includes a preference for complex and risky remedies that do not fully address the competitive harms brought about by the merger. The standard for remedies in Canada is not restoring competition to pre-merger levels but the removal of the "substantial" from a substantial lessening or prevention of competition. Competition law jurisprudence also guides the Bureau and Tribunal to pursue the least intrusive method of addressing competitive harms. This means our law prefers overly complicated remedies that still reduce competition over outright blocks of mergers. No such remedy has ever been ordered despite requests from the Bureau.

Reform of Canada's competition law should override the Southam jurisprudence that shapes the current approach to remedies and instruct the Competition Tribunal to favour straightforward and effective remedies that generate minimal

administrative burden. The law should create an explicit preference for outright blocks of harmful mergers, and rarely allow for narrower structural remedies. By reversing the current preference for complex remedies that allow otherwise harmful transactions to go ahead, merging parties will be deterred from proposing harmful mergers in the first place.

Require the Bureau to conduct routine merger retrospectives

Today, the Bureau has no way of knowing whether or not remedies ordered by the Tribunal have been effective in addressing competitive harms, or whether the decision not to intervene in a merger was correct. Because of the limitations on the Bureau's information gathering powers, the Bureau cannot compel industry data outside of an investigation. Though the Bureau could include data sharing as a requirement in a consent agreement, there is no way for other industry participant not involved in the consent agreement to show data because these agreements are only binding on the parties to a merger, robbing the Bureau of an industry-wide view.

Reflecting the evolving nature of markets in our economy, the Bureau should have the tools and information to learn from past action or inaction and adapt its approach accordingly. A key use of streamlined and expanded information

gathering powers should be conducting retrospective studies of the effectiveness of merger remedies.

At a set date following the enactment of a consent agreement, the Bureau should be required to conduct a retrospective study of the remedy and report back those findings to Parliament and the Canadian public. Beyond merger remedies enacted, the Bureau should also be required to conduct studies of select mergers which met the revised pre-notification threshold but on which it did not pursue a section 92 challenge. For example, the Bureau could adopt a merger review program like that of the US Federal Trade Commission's Merger Retrospective Program. These reviews should focus on material transactions and mergers in dynamic and critical markets.

Unilateral Conduct

CAMP's full submission to ISED's consultation on the Competition Act can be found at https://www.antimonopoly.ca/competition-act-consultation-submission

Preventing corporations from abusing their dominance

Though strong merger law is a requirement for halting further consolidation in Canada, we must still grapple with the monopoly power already existing in many markets. To address monopoly power that has been allowed to take root, Canada needs a flexible and effective abuse of dominance framework that protects Canadians and promotes fair competition.

Modernise the substantive test for abusive conduct

Like the Act's merger provisions, the requirement to show "substantial" effects of the conduct being investigated under the abuse of dominance provisions contributes to Canada's low enforcement activity. This requirement narrows the focus of our law and allows anticompetitive conduct to flourish in the Canadian economy. In contrast to the flood of competition law activity in other jurisdictions, the Competition Bureau has not brought an abuse of dominance case since 2016.

Canada's current approach to abuse of dominance is fundamentally remedial, and misaligned with the nature of the economic harm caused by abuses of corporate dominance. Requiring not just anticompetitive conduct on the part of dominant firms, but a showing of substantial effects as well creates room for anticompetitive conduct or the threat of that conduct to weaken the potential of competitors to dominant firms. This is made worse by the limited injunctive powers of the Act, unable to stop otherwise irreparable harm from occurring while a case is investigated and litigated. A competition law enforcement framework that routinely takes years to resolve cases means harms can continue to occur even in the rare case where the Bureau decides to challenge conduct.

Canada's approach also runs counter to the incipiency focus of US antitrust law, which aims to address the harms of monopoly before they can cause substantial harm to the economy. Once businesses have been substantially weakened or forced to exit the market as a result of anticompetitive conduct, there is often no going back. The substantial effects test, in conjunction with limited injunctive powers to stop conduct while it is being investigated, and the prolonged nature of competition law investigations and litigation results in a system ill-equipped to actually protect competition.

To remedy this situation, the government should remove the effects test, while preserving the existing two part tests for dominance and anticompetitive conduct An abuse of dominance provision refocused on protecting fair competition would reverse the existing devaluation of the role of emerging and potential competitors in Canada's concentrated markets, often the only hope for revitalising stagnant markets. By maintaining an openness to arguments that investigated conduct is legitimately procompetitive, this approach would encourage dominant firms to compete on the merits, rather than attempting to skirt the line of substantiality with their anticompetitive conduct.

Put a stop to exploitative conduct

Other jurisdictions, most notably the EU, have laws that allow businesses to be fined for abusing their dominant position to exploit purchasers or sellers. These abuses could include setting unfair prices. For example, the European Commission pursued action against Aspen, a pharmaceutical company that increased the price of off-patent cancer medicines by several hundred per cent.

Canada has no equivalent exploitation doctrine. As a result, dominant firms in Canada can leverage their market power to earn excess profits, exploit consumers or even exploit workers. In our current high-inflation environment where there are concerns that firms are using inflation as cover for setting higher prices and exploiting consumers, the Competition Bureau does not have the tools to tackle excessive pricing head-on once a corporation has established market power.

Canada, a country with higher levels of market concentration than peer jurisdictions, should have the power to rein in exploitative conduct. The government should integrate an exploitation doctrine into Canada's abuse of dominance framework, aligned with the current approach taken in the EU. Just as Canada's competition law should shift away from a focus on effects towards addressing anticompetitive conduct, that focus should be broadened to include exploitation by dominant corporations.

Remove the business justification loophole

Canada's abuse of dominance jurisprudence has created a precedent for considering "business justifications" when evaluating problematic conduct, effectively a business justification defence. These justifications can include "reducing the firm's costs of production or operation, or improvements in technology or production processes that result in innovative new products or improvements in product quality or service." The business justification defence means that corporations can pursue harmful business practices if they can effectively claim that they improve efficiency. This shadow efficiency defence narrows the kind of harmful conduct that the Bureau can intervene against, similar to its equivalent in Canada's merger law.

As part of the broader shift away from the focus on efficiency in Canada's competition law, Government should override the abuse of dominance jurisprudence to make clear that business justifications should not be able to excuse otherwise anticompetitive conduct. The goal of Canada's abuse of dominance law should be the deterrence of anticompetitive conduct and the promotion of legitimately procompetitive conduct, not the creation of exceptions to fair competition.

Streamline the Bureau's ability to gather information

The foundation of an effective competition law is the ability of competition law enforcers to quickly and comprehensively collect the information needed to understand dynamic and often opaque markets. The Bureau's primary tool for gathering information in an investigation are court orders requiring a judge to compel the production of testimony and the information of a business. This process can set an investigation back by months, and differs from jurisdictions like the US, EU and Australia where the enforcer itself is able to compel the production of information.

Following the recommendation suggested by the Bureau itself, the Government should streamline the Bureau's ability to gather information in a competition law investigation without judicial approval. Examples of preferable models can be drawn internationally or from other domestic agencies, such as the Ontario Securities Commission. Streamlining information gathering will reduce the average length of an investigation and allow the Bureau to better understand dynamic markets and respond quickly to emerging forms of problematic conduct.

Strengthen the ability to tackle arrangements or agreements that lessen competition

Section 90.1, arrangements or agreements that prevent or lessen competition, only applies to current or proposed competitor collaborations, and provides no options for penalties. This means that the Bureau is unable to seek recourse for any harmful agreements that existed in the past. It also allows for situations where "parties to an agreement could merely terminate any agreement that draws the Commissioner's scrutiny, and then reinstate it at a future time."

Section 90.1 should be revised to include past competitor collaborations, even if the harm from these collaborations has ceased, and allow for the Bureau to apply for an order from the Tribunal for monetary or structural penalties. This proposal aligns with that put forward by the Competition Bureau.

Administration and Enforcement

Enhancing the administration and enforcement of the Competition Act

The effectiveness of the Competition Act is a function of the organisations and mechanisms tasked with enforcing it. Canadians need not only a well-resourced enforcer, but also one with the tools to learn and adapt with the changing nature of the Canadian economy. When cases are brought, they should be adjudicated fairly and efficiently, particularly if Canada is to depart from its historically low levels of enforcement activity and make competition a focus of its economic policy strategy.

Increase funding to the Competition Bureau

Although Budget 2021 allocated an additional $96M in funding to the Competition Bureau over the next five years, more funding is required to empower the Bureau to adequately address competitive concerns within the Canadian economy. The recent Rogers-Shaw merger hearings are just the latest example of the imbalance between the Competition Bureau and industry players, with the merging parties and Vidéotron spending tens of millions of dollars on multiple top-tier litigation firm to push through the harmful merger in comparison to the Bureau's $11M cost award request for the case.

Enforcement of Canada's competition law delivers value to Canadians, and we should be investing in it. Competitive markets reduce the costs of goods and services, and competitive labour markets allow Canadians to earn the wages they deserve. Following any amendments to the Competition Act the Government should commit additional resources to the Bureau, with a focus on injections of funding for investigations of mega-mergers, which the most recent funding increase is not earmarked to support.

Canada's merger filing fee system should be updated to reflect the actual cost of regulating and litigating mergers, particularly mega-mergers like Rogers-Shaw. A new filing fee system should be adopted akin to the new system enacted for the Federal Trade Commission (FTC) for 2023. Under the new system, filing fees are set based on the size of the transaction, with smaller transactions paying smaller fees. This would more closely align resources with the costs associated with investing and litigating mega-mergers, rather than the current system where large mergers are effectively subsidised by less significant mergers. For comparison, if Canada were to have implemented a system like the FTC's to the Roger-Shaw, the parties would have paid a filing fee of $2.25M. In reality the fee they paid was approximately $75,000. This fee represents less than 1% of the cost of litigating the case.

Increase funding towards research on the consequences of monopoly

There is a severe lack of in-depth research on the state of competition and corporate power in Canada, as well as the effectiveness of enforcement decisions by the Bureau. This lack of insight hinders the ability of policy makers, law enforcement, and courts to make evidence-based decisions on competition policy. It also makes Canada reliant on research done by private consultancies and authorities in other jurisdictions, which may not fully reflect the economic realities of the Canadian context.

Canada requires a robust research program that is publicly funded and provides publicly accessible research on issues related to competition, corporate power, and the effectiveness of our competition law and its enforcement. Our understanding of monopoly cannot be dependent on research undertaken by private actors who benefit from the status quo. Statistics Canada, ISED, the Bank of Canada, and other departments within the Government have undertaken important research reports on the topic of competition within Canada, and dedicated funding should be increased to enhance their capacity to provide rigorous and timely analysis.

Give the Competition Bureau full market study powers

The inability for the Competition Bureau to compel information from businesses when undertaking market studies is an embarrassing deficiency in our legislation, and as the Bureau points out, long out of step with other jurisdictions. This inability severely limits the ability of the Bureau to understand new and emerging markets and the effectiveness of its own enforcement decisions.

The Government should allow the Bureau to compel information from private parties without a corresponding enforcement action. Market studies should be publicly announced, require routine public updates on progress, and require the Bureau to accept comments from the broader public. A potential legislative model is the revisions proposed in Bill C-452, introduced in 2009 to allow for inquiries within sectors but never enacted. Balancing concerns about overreaching studies, the Competition Act can adopt a model similar to the Competition and Markets Authority (CMA) in the UK, with bounded timelines and scope of market studies.

Increase the Bureau's level of transparency with the public

Corresponding with this increase in funding should be an increase in the level of transparency between the Bureau and Canadians. Canadians have no consistent way of knowing the number or nature of ongoing investigations, and whether the Bureau is aware of or reviewing a given merger. Though Section 29 of the Competition Act suggests a high degree of secrecy, recent but modest steps towards transparency suggest flexibility on the part of the Bureau. Some examples of this transparency include the Bureau's submission to the consultation Examining the Canadian Competition Act in the Digital Era, its public request for input for it's investigation into Amazon, and its public announcement of its intention to review the proposed acquisition of HSBC Bank Canada by the Royal Bank of Canada. But this flexibility is left to the discretion of the Commissioner of Competition. A lack of consistent transparency erodes trust with the public, and raises concerns about accountability within Canada's competition law framework.

Transparency requirements should be codified into the legislation, and Bureau funding and personnel should be dedicated to meet these legal requirements on a routine and timely basis. Canadians should be able to see what investigations and litigation the Bureau is currently engaged in, and be provided a view of their progress. The Government can look to international partners, particularly the CMA in the UK, which maintains a public record of ongoing investigations, with routine updates as they progress, as a potential model to emulate.

Reform the Competition Tribunal

If Canada is going to depart from its current low activity approach to competition law and make vigorous enforcement a priority going forward, it will need an adjudicative system that can handle this increased volume of cases. With an existing system appearing to strain under the current status quo, something must change if Canada chooses to centre competition policy in its economic strategy.

Part of the rationale for the Competition Tribunal's current structure was the belief that there needed to be a specialised body to hear competition cases given their complexity. But this specialisation has come at the cost of concentrating the decision makers in Canada's competition law, with Rosenthal and Rosner noting that two judges have effectively made all Tribunal decisions in the past decade. This limited set of voices creates a bottleneck in the adjudication of competition law and stifles the evolution of jurisprudence.

Rather than surrendering to the idea that competition law cases are necessarily complicated, the Government should aim to simplify the application of the law such that a wider body of adjudicators can participate in generating a rich and effective body of case law that reflects Canada's evolving economy.

Though a proposed model is outside the scope of this submission, CAMP encourages the Government to consider models implemented in other jurisdictions to expand the capability of Canada's competition law system to effectively and efficiently adjudicate cases and ensure that it is informed by a diversity of viewpoints.

Comments and Suggestions

Emboldening the Competition Act's purpose clause

Canada's competition law is having an identity crisis. Although the law was intended to meet multiple purposes, a narrow vision of efficiency has come to dominate the administration and enforcement of the law. This vision has shrunk the scope of conduct that the law applies to, and paved the way for harmful mega-mergers like the recently concluded Rogers-Shaw transaction.

Corporate interests and the competition law and economic community are working to further narrow the Competition Act's purpose clause to focus on efficiency, removing its other current goals and foreclosing the addition of other economic policy goals.

The narrow focus on efficiency is detrimental to Canadians and the Canadian economy. This obsession with efficiency above all other considerations justifies harmful provisions in the Act, most notably the efficiencies defence for mergers

which permits mergers that sacrifice competition and make consumers and workers worse off for the sake of corporate profits.

Not only does this efficiency-centric approach justify unfairness within the law, but it is also out of step with modern thinking on economic growth and the prosperity of society. It ignores the role of fairness and the wellbeing of individuals in fostering greater levels of productivity and wealth in our society. An efficiency-centric view also runs counter to the goal of promoting inclusive economic growth – growth that enhances living standards for all people in Canada.

CAMP's vision for Canada's competition law is one that does not trade off harms to Canadians for alleged efficiencies, and instead seeks to curb abuses of corporate power, encourage fair competition, and promote prosperity in the Canadian economy.

Rather than a single goal, the purpose of the Competition Act should reflect the wide range of benefits fair competition, competition on the merits rather than the basis of power, brings to an economy. As the Competition Bureau states in its submission to Senator Wetston's consultation Examining the Canadian Competition Act in the Digital Era, the government should maintain the multifaceted nature of the Competition Act's purpose. We propose that the purpose

statement should re-orient around broader goals for the Canadian economy, including promoting fair competition, opportunity, inclusion and prosperity. In particular, a focus on fair competition would better align Canada's competition law developments in partner jurisdictions, most prominently the Federal Trade Commission's (FTC) revival of its jurisdiction over unfair methods of competition.

Merger Review

The Government of Canada should use the U.S. Department of Justice's 1968 Merger Guidelines as a template, or as an inspiration, when amending the Competition Act. The Act should announce bright-line rules of illegality tied to market shares. For instance, the U.S. Supreme Court announced in a landmark 1963 decision that a merger between rivals would be presumptively illegal if they had a joint market share greater than 30% in a relevant market. Further, the efficiency defence should not be allowed to redeem an otherwise illegal merger. We submit two documents that our staff previously wrote on this topic for the Government of Canada to review (note: all of the documents referenced below are available online):

• Comment to Federal Trade Commission: The Urgent Need for Strong Vertical Merger Guidelines. OMI submitted this Comment to the Federal Trade Commission (FTC) "to underscore the need for new agency guidelines on vertical mergers and explain that the Department of Justice's 1968 Merger Guidelines are a template" that competition authorities should use when revising their merger guidelines. When developing new vertical merger guidelines, the Government should keep two things in mind: (1) "a merger that threatens to reduce competition should not be allowed on efficiency grounds," and (2) "the market shares of firms involved in a vertical merger are critical to analyzing the competitive significance of the merger." Additionally, the new guidelines should allow enforcers to block acquisitions when a dominant platform seeks to acquire a seemingly small or marginal firm if it is apparent that the acquisition may be part of a monopoly protection strategy. (The Urgent Need for Strong Vertical Merger Guidelines (last visited March 28, 2023) https://static1.squarespace.com/static/5e449c8c3ef68d752f3e70dc/t/5ebf627052b19833a8b37854/1589600886031/OMI-Comment-to-FTC-re-Vertical-Merger-Guidelines.pdf).
• Curbing Merger Mania. In this article, we explain that the competition authorities should adopt "a robust anti-merger policy [that] could foster inclusive, broadly shared, growth and prosperity" and they would be wise to use the 1968 Merger Guidelines as inspiration. The recent wave of mergers and acquisitions threatens to further concentrate markets and industries and inflict myriad harms on the public. Multiple studies have shown that the consolidations after the 1980s have failed to result in the synergies and efficiencies which were promised by corporate executives. Instead, they led to higher markups. In the 1980s, the U.S. amended its merger policy and enforcers took a much more permissive position toward consolidations. Before this sea change, strong anti-merger policy encouraged firms to grow by expanding their productive capacity and instituting new methods of production, in lieu of acquiring existing business assets and firms. (Brian Callaci, Curbing Merger Mania, Project Syndicate (March 1, 2023) https://www.project-syndicate.org/commentary/recent-court-ruling-on-meta-within-merger-new-era-of-strict-antitrust-enforcement-by-brian-callaci-2023-03).

Unilateral Conduct

Exclusive Dealing. The Competition Act should be amended to adopt a bright-line rule that prohibits dominant firms from using exclusive dealing to foreclose rivals. We submit three documents that our staff previously wrote on this topic for the Government of Canada to review (note: all of the documents referenced below are available online):

• Petition to the Federal Trade Commission for Rulemaking to Prohibit Exclusionary Contracts: OMI was joined by thirty organizations and five scholars in submitting this petition to the FTC asking it to initiate a rulemaking process to prohibit dominant firms from using exclusionary contracts (including exclusive dealing, exclusionary payments, and other similar practices) "that substantially foreclose rivals from customers, distributors, or suppliers of critical inputs." Exclusionary contracts create unfairly marginalize competitors to dominant firms, perpetuate the dominant firms' market power at the expense of their trading partners, and have dubious justifications. (Petition for Rulemaking to Prohibit Exclusionary Contracts (last visited March 28, 2023) https://static1.squarespace.com/static/5e449c8c3ef68d752f3e70dc/t/5f1729603e615a270b537c3d/1595353441408/Petition+for+Rulemaking+to+Prohibit+Exclusionary+Contracts.pdf).
• American History Provides a Valuable Lesson on How Monopolists Use Exclusive Deals to Fortify Their Market Power: This article explains how dominant firms have historically used exclusive deals as a tool to obtain and maintain control over a market. While these deals have been used by monopolists since the dawn of America's industrial age, they continue to be used by dominant firms today (including Google, Apple, and Mylan—the maker of EpiPens). These dominant firms "use exclusive deals to entrench their market position, supplant competition, and coerce smaller firms into working exclusively with them." In addition to unfairly excluding rivals, these contracts harm customers, distributors, and suppliers. As such, competition laws should prohibit dominant firms from using exclusive deals because it is a business practice that fortifies a monopoly's dominance and prevents smaller firms from competing fairly. (Daniel A. Hanley, American History Provides a Valuable Lesson on How Monopolists Use Exclusive Deals to Fortify Their Market Power, PROMARKET.ORG (July 4, 2021) https://www.promarket.org/2021/07/04/history-exclusive-deals-monopolists-market-power/).
• The Morality of Monopolization Law. In this law review article, we argue that the competition authority should "specifically restrict firms' abilities to use exclusive dealing and below-cost pricing and ban the use of generally prohibited practices as unfair methods of competition." Conduct that the courts have condemned as "anticompetitive" under the Sherman Act typically involved the abuse of market power, use of financial advantages, or the violation of public policy as competitive methods to acquire or maintain monopoly power. (Sandeep Vaheesan, The Morality of Monopolization Law, 63 William & Mary Law Review Online, Article 8 (2002) https://scholarship.law.wm.edu/wmlronline/vol63/iss1/8/).

Vertical Restraints. The Competition Act should be amended to adopt a bright-line rule that prohibits dominant firms from using vertical restraints to control and dominate their independent trading partners. We submit two articles that our staff previously wrote on this topic for the Government of Canada to review (note: all of the documents referenced below are available online):

• Antitrust Remedies for Fissured Work. This law review article examines whether a firms should be allowed to control their independent trading partners through contracts—otherwise known as vertical restraints. Vertical restraints are commonly used in (1) franchise agreements to control franchisees and turn independent business owners into glorified employees, (2) the poultry industry where processors control everything about the farmers' operations, (3) the e-commerce industry where dominant firms such as Amazon use contracts to control independent trucking companies and third-party sellers, and (4) the gig economy where companies like Uber and Lyft control drivers (who are falsely classified as independent contractors) by prescribing fares and driver pay. It argues that competition authorities should prohibit or limit vertical restraints as an unfair method of competition. Through such use of vertical restraints, powerful firms acquire employment-like control over trading partners without assuming the legal duties and responsibilities of employers, such as paying workers a minimum wage and overtime. Restricting the use of vertical restraints would give these trading partners more independence because it would restrict corporate domination and coercion. (Brian Callaci & Sandeep Vaheesan, Antitrust Remedies for Fissured Work, 108 Cornell Law Review Online 27 (March 14, 2023) https://www.cornelllawreview.org/2023/03/14/antitrust-remedies-for-fissured-work/).
• The Shadow Empire That Fuels Amazon's Dominance. This article does a deep dive into Amazon's empire and explains how it uses vertical restraints—contracts and surveillance methods—to control businesses and workers that are outside of its corporate boundaries. It argues that breaking up Amazon is insufficient to counter the harms that Amazon has inflicted on independent trucking companies, independent drivers (flex drivers), and third-party sellers. Rather, competition authorities must target the methods of dominance that Amazon uses to control independent contractors and third-party sellers by limiting or prohibiting its ability to dominate "independent" actors through vertical restraints. (Sandeep Vaheesan, The Shadow Empire That Fuels Amazon's Dominance, THE SOAPBOX (Feb. 28, 2023) https://newrepublic.com/article/170708/contracts-surveillance-amazon-anti-trust).

Merger Review

Please find the National Farmers Union submission, The Competition Act as a Tool for Democracy – Fairness for Farmers, online at https://www.nfu.ca/policy/the-competition-act-as-a-tool-for-democracy-fairness-for-farmers/ in HTML format, and in a downloadable PDF document at https://www.nfu.ca/wp-content/uploads/2023/03/2023-03-31-NFU-brief-on-Future-of-Competition-Policy-in-Canada.pdf

The National Farmers Union (NFU) is pleased to provide input to the federal government's public consultation on the future of competition policy in Canada. The consultation touches on the Competition Act, the roles of the Competition Bureau and of the Competition Tribunal.

The NFU, established in 1969, is Canada's largest voluntary direct membership farm organization, and represents family farmers and farm workers from across the country in all sectors of agriculture. We work to promote a food system that is built on a foundation of financially viable family farms that produce high quality, healthy, safe food. We encourage environmentally-sensitive practices that will protect our soil, water, biodiversity and other natural resources, and promote social and economic justice for food producers and all people living in Canada. We promote the betterment of farmers in the attainment of their economic and social goals, and seek to increase the economic benefits of farming. Our public policy positions are developed through a democratic process of debate, initiated by grassroots members and grounded in their experience as producers.

Throughout our history, the NFU has been concerned with power imbalances between the large-scale corporations farmers deal with and the individual farmer. A Competition policy that has the tools needed to prevent excess concentration and promote effective competition would have a positive impact on many of the policy challenges faced by farmers and our food/agriculture system.

The NFU has called for Competition Bureau intervention many times throughout our history, yet we have not seen our concerns resolved. Competition has lessened, concentration has increased, and important institutions such as the Canadian Wheat Board, the Ontario Wheat Board, and the provincial hog marketing single desk agencies, which countered the market power of global agribusiness corporations, have been dismantled. While farmers produce larger quantities and higher value products than ever, the vast majority of the wealth created on our farms is being captured by highly concentrated input, farm machinery, financial, food processing and commodity trading corporations that have so far not been restrained by Canada's competition policy. The gap between the value farmers create and the value we receive from the marketplace amounts to billions of dollars every year, some of which is compensated for by Business Risk Management and other government support program payments. The need for a strong, effective Competition Bureau is clear, and changes are long overdue.

The Competition Act can be a powerful tool for balancing the Canadian economy by tempering the positive feedback loops that lead to ever larger, more powerful corporations concentrating wealth and shaping ever larger parts of the economy through their ability to set the terms of commerce as a result of their dominance within the market. The Competition Act needs to be designed as a tool for democracy, to ensure Canadians have a diversity of meaningful and accessible ways to participate in society as producers, workers, and small business owners.

Unilateral Conduct

The role and function of the Competition Act

Competition that is fair delivers a wide range of benefits to a society. While efficiency is one value, it cannot be the only, or primary measure for competition policy. While the term "efficiency" is not defined in the Act, it appears to be interpreted to mean reducing the cost of production and/or the potential to deliver consumer products at lower prices. Yet, a narrow view of efficiency can decrease efficiency in other ways if it offloads costs onto others, idles workers and plants, squeezes out small businesses, increases socio-economic inequality, and creates an increasingly brittle economy that lacks the redundancy needed to recover from shocks.

The Competition Act's purpose clause should be focused on public interest values that promote fair competition to support societal goals of economic fairness, opportunity, inclusion and prosperity. The purpose should support fair prices and product choice for small and medium-sized enterprises along the value chain, and not solely for consumers. As farmers, we are acutely aware of our choices being limited and our costs rising as a result of unbalanced market power. As input buyers, farmers' suppliers are dominated by a few large firms; as sellers we are also forced to deal with a handful of large, often global, corporations, except where it is possible to supply local small and medium enterprises or sell direct to the consumer – and even then, prices are highly influenced by the market conditions shaped by large players.

The Competition Act's purpose must recognize the multifunctionality of economic activities: that it is possible for the framework of society's production and consumption to be more or less aligned with social and environmental values that contribute to a political stability and inter-generational justice. A diversity of types and sizes of enterprises will contribute to resilience – and even regeneration — in the face of the multiple, emerging crises we can expect as the impacts of climate change intensify.

A properly designed Competition Act will help Canada avoid unsustainable inequality that threatens social stability and well-being for all, whether rich or poor. Research by The Equality Trust shows that less equal societies have less stable economies, and that high levels of income inequality are linked to economic instability, financial crisis, debt and inflation. (https://equalitytrust.org.uk/about-inequality/impacts). A Competition Policy that works prevent excess concentration in the economy will promote stability, fairness and social cohesion.

Managing the tension between competition and competitiveness

A central challenge for competition policy is to recognize the difference between competition and competitiveness, and to manage their dynamics in the public interest.

The word "competitive" is often used in contradictory ways: it can be used to describe an auction barn with 50 aggressive bidders, and also to describe a large corporation, such as Microsoft, that holds a virtual monopoly on sales of its product. It is critical to recognize that the "competitiveness" of a market and the "competitiveness" of an individual firm represent different phenomena, and over time, the success of a few competitors can eliminate effective competition from their market.

Through competition, firms seek to increase their own market share, whether by producing and selling more or by increasing capacity through merger and acquisitions. As firms compete for market share, they become larger and even more competitive, while many of the smaller companies go out of business or are absorbed into larger companies. This dynamic eventually leads to just a few companies dominating, resulting in a loss of actual competition within the market due to concentration. The companies that dominate can use anti-competitive (monopolistic) practices to consolidate their position and increase their profitability. Increases in efficiency due to economies of scale do not necessarily occur, and if there are such efficiencies, it is more likely that gains will be used to further advance the companies' goals for expansion and/or increased profits than to pass on cost reductions to others in the value chain or consumers.

The CR-4 ratio – four-firm concentration ratio – refers to the market share of the four largest firms in a market. If the CR-4 is less than 40%, a market sector is considered to be competitive; if CR-4 is above that, anti-competitive behaviour can be expected. Efficiency gains from economies of scale are not shared with customers, but captured as profits and used to further accelerate consolidation.

Canada's Competition Act has not prevented CR-4 in key agriculture and food sectors from rising well above 40%. In ammonia fertilizer, the CR-4 is 95% - and in urea fertilizer it is 100%: the entire market is held by Nutrien, CF Industries, Koch Fertilizer, and Yara. (Nutrien Ltd., Nutrien Fact Book 2022, pp 17, 18.). In retail, Loblaw, Sobeys, Metro, Walmart, and Costco comprise 80% of the market. Meat processing for beef has just two corporations, Cargill and JBS with 99% of the federally inspected beef slaughter capacity in the Canadian market, while Canada's CR-4 ratio for pork processing is 71% and is dominated by two companies, Maple Leaf (approximately 40%) and Olymel (approximately 10%) nationally.

Competitor Collaborations

The Competition Act should broaden the role of the Competition Bureau as an enforcement agency

The Competition Act needs better tools to prevent harmful mergers, and should outlaw mergers that result in any company having more that 20% of market share in any sector.

Beef packing

In 2005, when Lakeside (Tyson) and Cargill together controlled 90% of Alberta's beef packing market, the NFU called on the Competition Bureau to stop Cargill (then Canada's second-largest beef packer) from buying up Better Beef Ltd of Ontario, Canada's fourth-largest beef packer (https://www.nfu.ca/policy/submission-to-the-federal-competition-bureau-regarding-the-proposed-takeover-of-better-beef-ltd-by-cargill/). NFU opposed this acquisition because of the clear harm it would cause farmers by eliminating Better Beef, which supported competition by providing another option for farmers selling cattle. The NFU documented the harm caused by the two big packers using captive supply (cattle they owned, or could buy from feedlots they owned) to depress prices to farmers. The NFU also demonstrated that Cargill, the largest company, could use its influence on banks to prevent smaller, independent, farmer-owned slaughter plants from getting financing. The Competition Bureau approved this acquisition anyways, claiming the relevant competition in the beef sector was global, and that the price of beef paid by consumers would not be affected by concentration in the slaughter and processing sectors in Ontario. The harm to farmers was not considered relevant. Farmers, and by extension their communities, were harmed by the loss of choice and resulting lower beef prices. The CR-4 in beef processing in Canada is now approaching 100%. Meanwhile, there is a crisis in access to local and regional abattoirs – small and medium enterprises which are the only alternative to Cargill and JBS, but which face many barriers, resulting in them not having the capacity to serve farmers and consumers who want to use their services. As beef prices paid by consumers increased faster than the inflation rate, consumers, as well as farmers and local businesses and communities continue to experience harm as a result of the Competition Bureau's approval of Cargill's acquisition of Better Beef nearly two decades ago.

The NFU supports amending the Competition Act to provide the Competition Bureau with the authority to restrain meat packers' power by reversing concentration and decoupling vertically integrated packers, reversing harm caused by excessive concentration by creating conditions to ensure local abattoirs that serve markets can succeed in every region; and by enabling collective cattle marketing agencies that will ensure an efficient, fair and transparent market for both buyers and sellers.

Seed and agro-chemicals

In March, 2018 the NFU gave input to the Competition Bureau supporting our opposition Bayer's acquisition of Monsanto. (https://www.nfu.ca/farmers-lose-with-usas-canadas-approval-of-bayer-acquisition-of-monsanto-says-nfu/) We provided information about concentration of the canola market in Canada to illustrate how Bayer and Monsanto have expanded their market share and increased seed prices to farmers in ways that appear more collaborative than competitive. We noted that there is no incentive for companies to use innovation to improve products when they already fully control the market. Instead, they use tools such as GMO patents to extract higher rents in the form of seed prices, technology use fees, and data mining.

We recommended that Bayer and Monsanto should not be permitted to merge even with the condition that Bayer had to sell its seed and chemical business to BASF, as this did not change the dynamics of this highly concentrated market significantly. We urged the Competition Bureau to use their decision-making power as an opportunity to reduce the dominance of these few companies by requiring Bayer and Monsanto's seed and agro-chemical divisions to be broken up into smaller entities. However, Bayer was allowed to acquire Monsanto, and today, farmers still lack choice and pay excessively high prices for seed and other inputs sold by these globally dominant corporations.

The graph (see https://www.nfu.ca/policy/the-competition-act-as-a-tool-for-democracy-fairness-for-farmers/) shows per-acre seed prices in Alberta from 1994 until 2022. Canola prices began rising above wheat and barley prices soon after the introduction of patented, genetically modified (GM) canola varieties. Following Bayer's acquisition of Monsanto, the price of GM Roundup Ready canola seed increased rapidly, and both it and GM Liberty Link canola seed prices continue rise faster than other seed costs. This indicates an abuse of dominance, which the NFU predicted, but the Competition Bureau was unable to prevent, and is unable to remedy after the fact.

The Competition Act should also prevent companies from using intellectual property rights to support uncompetitive behaviour. A combination of market dominance and the use of patent rights to prevent farmers from saving and planting seed from the crops they grow on their own farms has forced them into buying seed and paying royalties to Bayer and BASF if they want to grow canola.

Fertilizer

The Competition Bureau has also failed to prevent anti-competitive behaviour resulting from fertilizer industry consolidation. The Potash Corporation of Saskatchewan and Agrium merged in 2018 to form Nutrien which now has 44% of Canada's ammonia market and 46% of the urea market. In 2022 farmers fertilizer costs increased by 80% (https://www.statcan.gc.ca/o1/en/plus/2413-growing-and-raising-costs-farmers) and while companies blamed supply chain issues due to the war in Ukraine and Covid 19, these same companies are making huge windfall profits. In their 2021 annual report, Nutrien, notes "record financial results" and reports fourth quarter net earnings nearly four times higher than a year ago. (https://nutrien-prod-asset.s3.us-east-2.amazonaws.com/s3fs-public/2022-02/Nutrien%20Q4%202021%20Presentation%202022-02-16%20FINAL_2.pdf) CF Industries, Canada's second largest producer, reports fourth quarter net earnings nearly eight times higher than a year ago. (https://cfindustries.q4ir.com/news-market-information/press-releases/news-details/2022/CF-Industries-Holdings-Inc.-Reports-Full-Year-2021-Net-Earnings-of-917-Million-Adjusted-EBITDA-of-2.74-Billion/default.aspx) Yara International, also with significant Canadian capacity, reports that for its operations in the Americas, "EBITDA [Earnings before interest, taxes, depreciation and amortization] excluding special items was 160% higher than a year earlier, as increased nitrogen prices more than offset higher energy costs…" (https://ml-eu.globenewswire.com/Resource/Download/9d271a64-fb0a-46c1-8729-7ec5f3bc88f0) In many cases, the companies posted these higher net returns on lower production and sales volumes. These facts point to anti-competitive behaviour and abuse of dominance. The Competition Bureau has not been able to address these negative consequences of the concentration in the fertilizer sector that has happened under its watch.

We would like to see the Competition Act amended to require evaluation of outcomes of past decisions such as these beef packing, seed and agro-chemical and fertilizer merger decisions. Where decisions have proven harmful, the Competition Bureau must have the authority to order effective remedies.

Deceptive Marketing

Addressing challenges of data and digital markets

The Competition Bureau needs to be equipped to deal with the impacts of big data on competition. Big Data is an emerging concern for farmers. As new technologies are developed, such as precision farming equipment and smart phone marketing apps, farmers are providing huge quantities of data without knowing who has access to it or how it is used. An individual farmer's ability to deny access to their data has little impact on the market power big companies can gain from these tools. Companies that have access to aggregate data can use the information in ways that increase the power imbalance between them and the individual farmer. There is little to no information about the impacts or implications of data mining on competition. The Competition Bureau needs authority to compel information that will allow it to investigate how these data applications are used. The Act also needs to include authority to order measures that create clear limits on how data is collected and used, as well as the tools to enforce these measures.

Greater research capacity and stronger investigation and enforcement authorities needed

The Competition Bureau needs strong and effective investigation and enforcement authorities, including the ability to compel information from companies, along with the obligation and capacity to undertake and publish research on the impacts of corporate concentration and competition.

Corporate consolidation is being accomplished in emerging ways that are more difficult to detect than measuring the CR-4 ratio in sectors. Increasingly, corporations are building complex architectures of inter-connection through technology licensing and data sharing agreements. Their ability to exert control in the marketplace may stem from these arrangements, rather than from outright ownership of companies. This could be considered a form of "three-dimensional" integration that is less visible, but more powerful, than the vertical and horizontal integration we are more familiar with. Authority to compel information for purposes of investigation and research is needed to understand their implications for competition. Companies using such arrangements may never seek to formally merge, but their ability to avoid competition and collude with other firms in the same economic space will be experienced by the economy.

The current Competition Policy review highlights the outsized impact that small digital companies can have on competition, which is relevant here as well. Purchasing a popular app from a digital ag start-up company may not increase a large firms ownership footprint, but could substantially increase its capacity to abuse its dominance. The NFU is pleased that the impacts of the digital technology space it being examined in this review.

The Competition Bureau needs to have the tools, authority and capacity to investigate the impacts of these arrangements.

Administration and Enforcement

Loss of competition through third-party investor influence

The Competition Bureau also needs to have the power to research, investigate and address the role of asset management firms that invest in multiple key players in a sector. The table below, from Food Barons 2022, Crisis Profiteering, Digitalization and Shifting Power, by ETC Group (https://www.etcgroup.org/files/files/food-barons-2022-full_sectors-final_16_sept.pdf) indicates the potential for these investors to simultaneously influence, or even drive, strategic decisions by major corporations in the food and agriculture space. The Competition Bureau needs to include these dynamics in its assessments of anti-competitive behaviour and abuse of dominance.

The Competition Tribunal

Canada's competition policy needs to restructure the Competition Tribunal to ensure it can properly adjudicate a higher number of cases resulting from putting these recommendations into effect. The tribunal is a quasi-judicial body that specializes in hearing competition cases. This body must be equipped to operate in the public interest, to ensure that the range of perspectives brought to bear on decisions reflects the interests of those affected by potential harms.

Fees and funding

As a public interest body serving Canadians, it is necessary for the Competition Bureau to have the resources it needs to do its job properly. Public funding allocations should be adequate to ensure the Competition Bureau can take on research and investigation, particularly in horizon scanning for emerging issues and in developing strategies to prevent and redress harms from excess concentration.

The companies involved in the kinds of large-scale mergers that are of greatest concern are very wealthy, and are strongly motivated to spend money on advancing their private interests. The Canadian taxpayer should not have an inordinate burden for paying the costs of examining and dealing with the implications of mergers and acquisition decisions that are made by and for private companies. The fees paid by companies seeking approvals must reflect their fair share of the costs.

Transparency and Accountability

Few Canadians are aware of the work of the Competition Bureau, even though its decisions have a profound effect on their lives as individuals and collectively. The Competition Act should be amended to require an annual report to Parliament of its work, presented in enough detail and with clarity to ensure it is accountable to Canadians. A public registry of decisions that is easily searchable, as well as a mechanism for Canadians to provide information and raise concerns to assist the Competition Bureau in its work, should be established.

Comments and Suggestions

The Competition Act needs to be amended to ensure that it

• Advances public interest values that promote fair competition to support societal goals of economic fairness, inclusion and prosperity.
• Prevents harmful mergers, including by outlawing mergers that result in any company having more that 20% of market share in any sector and by removing the "efficiencies defence".
• Prevents companies from using their dominance to exploit smaller players.
• Prevent companies from using intellectual property rights and data mining to support uncompetitive and/or exploitive behaviour.
• Provides the Competition Bureau with strong and effective investigation and enforcement authorities, including the ability to compel information from companies.
• Requires the Competition Bureau to evaluate and publish outcomes of past decisions.
• Adds the obligation and capacity to undertake and publish research on the impacts of corporate concentration and competition.
• Restructures the Competition Tribunal to ensure it can properly adjudicate a higher number of cases resulting from putting these recommendations into effect.
• Includes a fee structure that requires corporations seeking merger permission to pay their fair share of costs.
• Provides transparency and accountability to Canadians about the Competition Bureau's work.

In addition, Canada's Competition Policy must include adequate funding to the Competition Bureau so it has the capacity to properly serve the public interest.

Please also see the National Farmers Union entire submission, The Competition Act as a Tool for Democracy – Fairness for Farmers which is posted at https://www.nfu.ca/policy/the-competition-act-as-a-tool-for-democracy-fairness-for-farmers/ in HTML and at https://www.nfu.ca/wp-content/uploads/2023/03/2023-03-31-NFU-brief-on-Future-of-Competition-Policy-in-Canada.pdf in PDF format.

Comments and Suggestions

On behalf of the Public Interest Advocacy Centre, I am providing a URL to the public posting of our submission, which we just posted on the PIAC website: https://www.piac.ca/2023/03/31/competition-law-is-dead-piac-submission-to-consultation-on-the-future-of-competition-policy-in-canada/

Unilateral Conduct

While this consultation appears pitched towards legal and subject matter experts, all Canadian residents, every day, face the consequences of weak anti-trust provisions and market concentration in almost every facet of our lives, and it is important to give voice the these experiences. Our organization deals with the consequences of what we see as unchecked anti-competitive behaviour in the ride-hailing space, and we offer examples of both missed opportunities and future opportunities to address the consequences of market concentration.

In this industry, the actions of the Competition Bureau perversely served to protect market dominating companies from consumers, rather than the other way around.

Uber and Lyft, both multinational technology platforms, now dominate the ground transportation industry of major Canadian cities, having effectively decimated the dozens of companies and tens of thousands of individual owner-operators that made up the taxi and limousine industry. They reached this position of market dominance through a series of problematic practices:

• Regulatory capture and arbitrage – Uber began operating in Toronto illegally and in defiance of city cease and desist orders, then ran an aggressive public relations campaign to overwhelm political resistance to deregulating the taxi incumbent industry in a manner that would guarantee the dominance of its company and its business model. These actions have been extensively documented by the Toronto Star in the wake of the #UberFiles leaks.
• The Competition Bureau wholeheartedly urged governments to deregulate taxi laws to allow one company and one business model to dominate (see for example https://financialpost.com/transportation/competition-bureau-says-digital-taxi-services-like-uber-benefit-consumers), in ways that undermined road safety, emissions standards, congestion, public transit and the economic security of both taxi and ride-hailing drivers.
• Consumers appeared to benefit from deregulation at first. In order to grow its transportation network, Uber's early investors artificially subsidized operations, so the company could artificially offer lower-priced rides for several years, and flood the streets with drivers so as to offer low wait times. After its 2019 IPO, the steep net losses these practices required were no longer feasible, but Uber had achieved sufficient market power to command higher prices without paying higher rates of compensation to drivers (see https://doctorow.medium.com/the-big-lie-that-keeps-the-uber-bezzle-alive-8d6e8c0ccde7)
• Consumers now complain about being held hostage to Uber/Lyft's surge pricing in times of need, an outcome that should have been entirely foreseeable by our competition watchdog. The taxi industry, which does not permit such predatory pricing practices, has been decimated by deregulation, and cannot fill consumers' needs at these times.
• Members of our coalition consulted a competition lawyer to explore potential remedies for consumers, ride-hail drivers and small competitors; however we concluded that this avenue would be expensive, lengthy and unlikely to result in concrete remedies.
• There are concerns that Lyft has begun to explore strategic alternatives, including a merger/sale. Further market concentration would likely worsen the impacts on consumers, workers and competitors.

We support the recommendations of the Canadian Anti-Monopoly Project's (CAMP) which contend "competition law needs an effective and flexible tool to tackle abuses of corporate power in ever-evolving markets. By protecting fair competition, strong abuse of dominance laws can deter unfair methods of competition based on corporate power rather than competition through pricing, quality, and innovation, creating opportunities for independent competitors to flourish. Government can accomplish this by:

• Incorporating the protection and promotion of fair competition as a goal within the purpose clause of the Competition Act
• Expanding the scope of abuse of dominance by removing the effects test and instead focusing on preventing unfair methods of competition
• Creating a provision to protect Canadians from exploitative conduct where dominant firms have entrenched and durable market power."

Competitor Collaborations

We support these provisions.

Deceptive Marketing

Dominant ride-hailing players like Uber and Lyft routinely engage in deceptive marketing practices in Canada that would not be possible in the United States. For example, Uber spokespeople have repeatedly told our paper of record that drivers routinely earn over $30 per hour worked. This figure omits crucial information, namely that time spent waiting for customers and driving en route to customers is excluded, as are all expenses downloaded to drivers. Our campaign estimates that when these factors are included, drivers earn below minimum wage hourly rates. As a result, tens of thousands of Torontonians invest time, money and forgo other opportunities to become ride-hailing drivers, only to cancel their licenses within the year when the promised money fails to materialize.

By contrast, in 2017, the US FTC fined the company $20 million for misleading claims regarding driver income (https://www.ftc.gov/news-events/news/press-releases/2017/01/uber-agrees-pay-20-million-settle-ftc-charges-it-recruited-prospective-drivers-exaggerated-earnings), while in Australia the company had to pay A$21 million in fines for misleading consumers: https://www.lexology.com/library/detail.aspx?g=dc09072d-9fb2-44e7-9dc6-909ecd8cf4bc.

Administration and Enforcement

We particularly support private right of action for damage suffered from non-merger conduct under the Competition Act, and recommend thought be given to making fair and efficient remedies broadly accessible and affordable to the public (through, for example, an agency like the Consumer Financial Protection Bureau).

We agree with CAMP that Canada's Competition Bureau needs both the powers to understand the harms caused by monopolies in Canada and the resources to go toe-to-toe with the largest corporations not just in Canada, but on earth. In return for these powers and resources, Canadians deserve a transparent and public enforcer, not just a black box. Government can accomplish this by:

• Giving the Competition Bureau the ability to study markets proactively and assess the effectiveness of previous action and inaction
• Enacting consistent budget increases to the Competition Bureau that reflect the cost of investigating and bringing cases against multinational corporations
• Requiring the Competition Bureau to publicly announce and track the progress of investigations and litigation, with routine updates to the public and Parliamentarians

Comments and Suggestions

Canadians deal with the consequences of market concentration in every facet of our increasingly unaffordable lives. In the ride-hailing industry, two US companies have in less than a decade managed to achieve market dominance and rewrite Canadian regulations in ways that have wreaked havoc on businesses, workers and customers. They have used their market position to eliminate hundreds of thousands of small businesses, undermine long-standing labour standards (such as the eight hour day and minimum wage), underfund public benefits such as employment insurance the Canadian Pension Plan, reverse public transit ridership growth, undermine progress to reduce greenhouse gasses and car dependency and weaken road safety protections.

Reforms to Canada's Competition Act are a sorely needed line of defence, and should both prevent such market abuses in the future and give stakeholders the tools to undo past harms expeditiously.

Comments and Suggestions

Save Small Business (SSB) is a loose grassroots coalition of small businesses across Canada. It was founded in March 2020 at the start of the COVID-19 economic crisis to advocate on behalf of small and medium-sized businesses.

With over 33,000 business owners, SSB's coalition represents a very important lens into the state of play of the Canadian small business community. While we wound down COVID-19 emergency measure advocacy work in September 2020 and have been largely dormant since, the news of ISED's impending consultation on the Competition Act felt incredibly relevant to our coalition.

We gauged interest from the coalition, and they overwhelmingly confirmed that this was an issue that needed our voices to be represented.

This review will no doubt receive many submissions from academics, lawyers, public policy experts and associations representing big business. In contrast, what we offer is a picture of how Canada's existing competition policy regime has been impacting small and medium-sized businesses.

Small business is often name-checked without a clear understanding of their actual concerns and needs. Our hope is that the government will take the plight of these businesses to heart in your deliberations, and that their challenges will embolden your efforts to ensure a fair and level marketplace in this country.

Our full submission to the consultation on the future of competition policy in Canada can be found on our website: https://www.socialcapitalpartners.ca/competition-policy-save-small-business-survey. What follows below is an executive summary of our submission.

Our submission is based on a survey of the Save Small Business community — over 33,000 small and medium-sized businesses throughout Canada — on the state of fair competition in this country.

One of the objectives of the Competition Act is "ensuring that small- and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy." Our community is united in its view that the Act is failing in this objective. The current marketplace we compete in is unfair, and getting more and more unfair every day.

The key findings from our survey are:

• Small businesses are increasingly dealing and competing with larger companies;
• The increasing size of companies is making it harder for small businesses to compete;
• Small business is increasingly affected by concentrated industries;
• Small business owners see mergers and acquisitions as a driver of these issues; and
• Small businesses want more active government engagement to ensure they can compete in a fair marketplace

Small businesses don't view more aggressive competition policy as 'red tape'. We believe a fair marketplace is vital to the success of our businesses, and that the government is currently failing us. Encapsulating the results in one question, our community was most in agreement on this statement: I feel that my business is being squeezed by larger businesses (competitors, suppliers or customers), and it gets harder every year. Small business — the lifeblood of the economy — is in trouble.

We would like to see the government conclude its review by taking aggressive action to live up to objectives of the Competition Act and give small businesses a fair chance to compete in this country.

Comportements unilatéraux

L'Association québécoise des pharmaciens propriétaires (AQPP) est heureuse de participer à cette consultation afin de vous faire part de situations de concentration de marché résultant de stratégies commerciales de tiers auxquelles nos membres font face.

Nous avons pensé qu'il serait bon de partager avec vous certaines observations qui, selon nous, seront d'intérêt pour vos travaux, plus particulièrement en lien avec les agissements d'entreprises qui ne sont pas individuellement en position de domination, mais qui exercent ensemble une influence anticoncurrentielle sensible sur le marché.

Nous vous remercions d'accorder votre attention aux enjeux que nous souhaitons porter à votre attention.

À propos de l'AQPP

À titre informatif, l'Association québécoise des pharmaciens propriétaires (ci-après l'« AQPP ») est constituée en vertu de la Loi sur les syndicats professionnels, RLRQ c. S-40. Elle est la seule association qui représente les pharmaciens propriétaires du Québec auprès des organismes officiels et du gouvernement. Ainsi, elle regroupe 2036 pharmaciens propriétaires de près de 1912 pharmacies de la province, affiliées ou non à une chaîne ou à une bannière commerciale. C'est dans cette perspective que nous soumettons nos commentaires aujourd'hui.

Particularités québécoises en lien avec la distribution et la vente de médicaments

Loi sur l'assurance médicaments :

L'adoption du projet de loi n° 92 le 6 décembre 2016 a modifié la loi sur l'assurance médicaments du Québec. Ainsi, nous pouvons dorénavant y retrouver un chapitre sur les pratiques commerciales interdites. Il est à noter que cette loi s'applique pour tout produit inscrit à la liste de la Régie de l'assurance maladie du Québec (RAMQ).

Voici certains extraits :

80.1. Il est interdit à un fabricant reconnu de conclure avec un grossiste reconnu ou un intermédiaire une entente d'exclusivité pour l'approvisionnement en pharmacie d'un médicament ou d'une fourniture inscrite à la liste des médicaments.

80.2. Il est interdit à un fabricant ou un grossiste reconnu ou à un intermédiaire :

2° à moins d'un avis de conformité avec conditions émis par Santé Canada à l'effet contraire, de limiter l'approvisionnement en médicaments ou en fournitures inscrits à la liste des médicaments à un nombre restreint de pharmaciens propriétaires;

3° de requérir d'un pharmacien propriétaire qu'il s'approvisionne auprès de lui de manière exclusive en médicaments ou en fournitures inscrites à la liste des médicaments;

Code de déontologie des pharmaciens :

De plus, il est à noter que la profession de pharmacien est soumise à des standards de pratique et à un code de déontologie obligatoire. L'Ordre des pharmaciens du Québec, dont le mandat est la protection du public, est responsable du respect des normes entourant la pratique de la profession. Ainsi, le syndic de l'Ordre des pharmaciens peut faire enquête et le conseil de discipline peut émettre des amendes si le code de déontologie n'est pas respecté. Des sanctions ont d'ailleurs été données à des pharmaciens propriétaires en lien avec des violations des articles suivants du code de déontologie, à la suite de leur participation à certaines initiatives de manufacturiers :

27. Le pharmacien doit reconnaître le droit du patient de choisir son pharmacien; il doit également respecter le droit du patient de consulter un autre pharmacien, un autre professionnel ou une autre personne compétente. Il ne peut prendre aucune entente ayant pour effet de porter atteinte à ces droits.

50. Le pharmacien ne doit accepter aucun avantage relatif à l'exercice de la pharmacie, en plus de la rémunération à laquelle il a droit. Il peut toutefois accepter un remerciement d'usage ou un cadeau de valeur modeste.

De même, il ne doit verser, offrir de verser ou s'engager à verser à quiconque tout avantage relatif à l'exercice de sa profession.

77. (…) les actes suivants sont dérogatoires à la dignité de la profession :

(…)

4° obtenir de la clientèle par l'entremise d'un intermédiaire ou s'entendre à cette fin avec un tel intermédiaire.

Plans de gestion des risques

Avec la mise en contexte précédente, nous croyons pertinent d'attirer votre attention sur les problèmes qui surviennent actuellement avec la mise en place de plans de gestion de risques (ci-après « PGR ») lorsque ceux-ci sont requis pour l'homologation de produits par Santé Canada.

Lorsque les manufacturiers doivent répondre aux exigences de Santé Canada, plusieurs mettent en place des PGR comportant des restrictions sur le plan de la distribution et de l'offre en pharmacie. À cet effet, l'option privilégiée semble être de mettre en place un circuit de distribution du médicament dans des canaux spécialisés restreints, limitant ainsi l'approvisionnement de ce médicament à un nombre restreint de pharmaciens propriétaires. Or, cette pratique va à l'encontre du droit du patient de choisir son professionnel de la santé, règle qui est d'ailleurs d'ordre public au Québec1.

Afin de fournir un exemple précis, certains PGR exigent des formations spécifiques pour les professionnels de la santé qui utiliseraient certains médicaments ou instruments médicaux. Les professionnels ont accès uniquement aux médicaments après avoir suivi la formation fournie par le fabricant. Il existe pourtant plusieurs façons de gérer le risque en toute conformité avec les lois et les pratiques professionnelles décrites plus haut. Les pharmaciennes et les pharmaciens sont formés afin de faire les suivis cliniques requis et d'assurer le bon usage des médicaments. Il s'agit d'un rôle crucial pour la sécurité des patients. La réglementation de la pratique professionnelle relève des ordres professionnels comme l'Ordre des pharmaciens du Québec. Le Code de déontologie des pharmaciens, RLRQ c. P-10, r. 7, prévoit déjà que le pharmacien doit exercer la pharmacie avec compétence et le fabricant d'un médicament ne peut juger de cette compétence.

Donner un contrôle trop important aux fabricants sur les critères de distribution des médicaments et l'éligibilité des professionnels de la santé dans leur capacité à prescrire ou à distribuer un produit donné en raison d'un PGR présente un risque important pour les patients en plus de rendre leur droit de choisir leur professionnel de la santé factice. L'AQPP s'oppose à ces pratiques puisqu'elles servent de moyen supplémentaire pour contrôler la distribution d'un médicament et gagner un avantage concurrentiel. Il est donc primordial de s'assurer que de telles mesures dans des PGR soient proscrites.

Il est aussi intéressant de noter qu'au moment de la perte d'un brevet, les exigences des PGR mis de l'avant par les compagnies novatrices peuvent être un frein à la commercialisation de produits biosimilaires ou génériques. Les PGR mis en place sont souvent complexes et onéreux à soutenir pour un traitement subséquent qui ne présente pas la même marge de profits. De plus, certains manufacturiers désirent mettre en place des PGR qui respectent les exigences professionnelles, mais se voient imposer de reproduire les composantes problématiques des PGR du produit original. Ainsi, le tout provoque une redondance de PGR pour des molécules identiques commercialisées par différents manufacturiers. Il faudrait donc s'assurer que les fabricants de ces produits puissent élaborer des PGR qui répondent aux exigences de Santé Canada sans restreindre l'accès d'autres manufacturiers au marché.

Programmes de soutien aux patients

Par ailleurs, depuis l'arrivée sur le marché de thérapies coûteuses ou plus complexes, plusieurs fabricants mettent en place des programmes de soutien aux patients afin d'aider les patients à accéder à leur médicament dans l'attente d'une autorisation de remboursement d'un payeur ou encore afin d'octroyer des services particuliers aux patients.

Plusieurs situations nous sont rapportées dans lesquelles les patients inscrits à de tels programmes se font diriger vers une pharmacie partenaire ou exclusivement associée à un programme de soutien aux patients. Que ce soit pour un service payant ou pour obtenir des doses de compassion, ceci ne respecte pas le droit des patients de choisir leur professionnel de la santé tel que détaillé dans la Loi sur l'assurance maladie. En effet, dès que le choix d'une pharmacie est subordonné notamment à des conditions d'ordre financier, ce libre choix, dont doit bénéficier le patient, s'en trouve dès lors vicié et il en résulte du dirigisme. L'AQPP a accès aux informations de ses membres pour ce qui est des services de médicaments et nous sommes en mesure de constater de façon claire et non équivoque ce dirigisme à même les statistiques transactionnelles pour plusieurs produits.

De plus, nous avons été mis au courant de plusieurs situations où les pharmaciens doivent s'approvisionner auprès d'un seul grossiste ou encore de situations où les pharmaciens se voient dans l'impossibilité de commander des produits, même si les produits sont inscrits à la liste des médicaments de la RAMQ.

Nous constatons à certaines occasions que les relations commerciales de certains fabricants, fournisseurs de PSP et distributeurs dictent quelles pharmacies ont accès aux produits ou non et par le fait même quelles pharmacies peuvent servir le patient. Selon nous, il s'agit ici de pratiques anticoncurrentielles qui découlent de ces partenariats commerciaux.

Autres stratégies commerciales problématiques

Enfin, lorsqu'un produit, soit de santé animale ou destiné aux humains, est homologué par Santé Canada, nous remarquons que certains manufacturiers le rendent accessible de façon inéquitable aux différents intermédiaires. Au Québec, tel que nous l'avons précisé plus tôt, une disposition dans la Loi sur l'assurance médicament précise que les manufacturiers ne peuvent limiter l'approvisionnement en médicaments ou en fournitures inscrits à la liste des médicaments à un nombre restreint de pharmaciens propriétaires lorsque les produits sont inscrits à la liste de médicaments de la RAMQ2. Cependant, rien n'empêche un manufacturier de ne pas rendre disponible aux pharmacies des produits qui ne sont pas inscrits à la liste des médicaments de la RAMQ. Citons en exemple de récents problèmes rencontrés par nos membres qui ne sont pas en mesure de se procurer aux fins de revente des produits vétérinaires ou encore des gouttes ophtalmiques pour lesquels les manufacturiers limitent la revente soit aux cliniques vétérinaires ou aux cliniques de soins ophtalmiques. Ceci limite le choix des citoyens ainsi que la concurrence entre les différents fournisseurs de soins.

En espérant que ces pistes de réflexion sauront vous être utiles, nous vous assurons notre entière collaboration et disponibilité pour échanger davantage à ce sujet.

Références :

1. Loi sur l'assurance maladie, RLRQ, c. A-29, art. 2 et 104.1.

2. Loi sur l'assurance médicaments, art 80.2.

Merger Review

3. Merger Review

While much is made of reducing regulatory red tape to encourage procompetitive benefits, large firms increasingly act as de facto private regulators which set the terms of markets in undemocratic ways. Studies estimate that Canada could realise a 4-5% boost in productivity through pro-competitive regulatory reform and reduced barriers to entry.

In this way, improved competition is not simply about the reduction or elimination of 'red tape,' but rather, ensuring that coherent and fair guardrails are in place to guide the market and firms. Merger review is the important first line of defence against undemocratic concentrations of economic and financial power which threaten Canada's dynamism, efficiency, and global competitiveness.

3a. Blocking market power in its incipiency

Current US agency leadership have stated a desire to revive the "incipiency standard" of the Clayton Act, meaning that concentration should be arrested in its incipiency before demonstrable harms from concentration have materialized. This translates to a bias towards action when a merger may lessen competition.

This is in alignment with a plain-text reading of the statutes and is closer to what Congress intended when drafting and instituting the laws. As the U.S. Supreme Court had interpreted the standard, it "requires not merely an appraisal of the immediate impact of the merger upon competition, but a prediction of its impact upon competitive conditions in the future; this is what is meant when it is said that the amended § 7 was intended to arrest anticompetitive tendencies in their 'incipiency.'"

Doha Mekki, the current Deputy Assistant Attorney General of the Antitrust Division, DOJ, recently said:

"Congress says what it means and means what it says. We need to enforce the statute as Congress wrote it. Decades of Supreme Court precedent speak to the need to arrest concentration and trends towards concentration in their incipiency. In many cases… agencies and courts accurately identified a risk to competition, but did not act because they weren't sufficiently certain the harm would come to pass. But that is not the standard. Congress wrote a statute that applies whenever a merger "may" substantially lessen competition. It's an incipiency statute. Congress was concerned that, if we wait until the harm has actually come about, it would be too late. We cannot wait for evidence that harm is sure to exist. …Congress did not write a statute asking whether a substantial lessening of competition was "certain" or the "most likely" outcome. As long as that harm "may" occur, the merger violates the law and should be enjoined."

The significance of this is that the agencies desire to revive a structural presumption against mergers which lessen competition because, "It is easier to measure competition than to predict competitive effects in a dynamic world, and that is more consistent with the framework that Congress set forth," as also stated by Mekki.

Canada would do well to emulate this approach because, as the Competition Bureau has stated, "merger review is the first line of defence in protecting competition in the Canadian economy." Blocking market power in its incipiency aligns with the Bureau's call to shift the burden of proof to merging parties when there may be a substantial lessening of competition, and a closer alignment with US enforcement policy on structural presumptions when certain conditions are met.

3b. Address roll-ups and serial / creeping acquisitions

Roll-ups or creeping acquisitions – the intentional consolidation of fragmented industries through many small acquisitions – are increasingly common in Canada.

Many businesses that Canadians think are independent, are being acquired by both public and private companies in industries as diverse as funeral homes, insurance companies, third-party Amazon sellers, manufacturing firms, automotive parts and supply businesses, retirement homes, or veterinary and dental practices.

Creeping acquisitions can not only aggregate a significant amount of market power without requiring any notification to the Bureau, but also can potentially stifle nascent competitors. The Bureau noted this in their 2022 submission to Senator Wetston by acknowledging that "The system does not require pre-merger notification for related transactions between the same or affiliated parties where each transaction is below threshold (such as a strategy of engaging in a "creeping acquisition"). Related acquisitions should be treated as one transaction under the pre-merger notification regime."

As Jeffrey M. Wilder, Acting Deputy Attorney General, Antitrust Division, U.S. Department of Justice said in 2019:

"Consider the case of the serial acquirer, a firm that slowly grows its share through a series of small acquisitions until it accounts for a sizable share of the market. It is exceptionally hard to establish that any individual acquisition leads to a substantial lessening of competition under the Clayton Act. Yet when we step back and look at the totality of the evidence, it is clear that a focus on individual transactions makes for a very blurry snapshot of what is happening in the market… In [the] context [of serial acquisitions], with many acquisitions involving targets with market shares of 5-10%, we tend to miss what is happening in the market when we look at each transaction in isolation. We also struggle to identify which single transaction leads to a substantial reduction in competition. That same logic applies to the acquisition of start-ups operating outside a platform's core market."

Harms from creeping acquisitions can include lower workers' wages, higher consumer prices, increased foreign ownership of Canadian businesses (instead of independent local ownership); potential negative effects on supply chain resiliency; and the lost competitiveness of small businesses. We provide recommendations on amended notification requirements below to address this growing trend.

3c. Remove restrictive time periods

In many cases, a roll-up strategy is a multi-year intentional strategy to consolidate market power which can, in some cases, bear immediate rewards for acquiring firms, but in many other instances, is a long-term strategy which materializes benefits over time.

For this reason, the Act should remove the one year time period following non-notifiable mergers for anti-competitive conduct to materialize. Additionally, given the record number of mergers and acquisitions in Canada in recent years, the Bureau should be given more than 30 days to review filed mergers.

3d. Consider the role of debt in merger analysis

The increased availability and high levels of debt financing for mergers, and serial acquisitions in particular, merits further investigation. Through acquisition facilities for serial acquirers and similar lending products, debt markets are not just enabling consolidation but preferencing scale. This is because the availability of these facilities, with less pressure on high leverage levels, enables serial acquirers to offer higher prices for acquisitions and to close transactions faster. This, in turn, provides a competitive advantage over other more local acquirers or independent entrepreneurs.

In addition, it is possible that the high levels of debt and the corresponding cost of interest payments put greater pressure on serial acquirers to raise prices or cut costs, especially in a rising interest rate environment. Depending on the market in question, past a certain level of debt, acquirers can only hope to recover their investment through anticompetitive price increases or wage suppression. As a result, it's important that ISED consider how debt in general, and specifically the use of acquisition facilities, magnifies the potential for anti-competitive abuses.

3e. Amend notification requirements

The Bureau has recommended changes to pre-merger notification rules, and we are in broad agreement with these recommendations. In particular, we agree that pre-merger notification loopholes should be closed, and that "notification should be required for the acquisition of more than 20% (for public companies), 35% (for private companies) or 50% of any class of voting shares if the other thresholds are met. This would address the definition of "voting share" in subsection 108(1) that leaves room for the acquisition of up to 100% of important share classes without notification. That definition should also include any share to which votes may attach in the ordinary course of business."

3e.1 Notification requirements for serial acquirers / creeping acquisitions

In addition, we recommend that a new notification threshold – by number of transactions – be instituted. This would help provide transparency for regulators into the most rapidly acquisitive firms, regardless of the acquiring firm's current size or the size of the acquired firms. Therefore, we recommend that firms who make more than six acquisitions in one calendar year—which equates to roughly one acquisition every other month—within the same sector or labour market, and in cases where the acquisition grants the acquiring firm a controlling interest, are required to report these acquisitions to the Bureau on an annual basis.

However, enforcers should determine the appropriate number based on further review of Canadian-specific market analysis.

3f. Include non-price effects in merger analysis

As the Bureau has also recommended, "standards for evaluating a substantial lessening or prevention of competition should be recalibrated to focus on harm to the competitive process." This more closely aligns with US enforcers, who have championed a "Competitive Process Test" for evaluating competitive harms. This would also emulate other similar proposals like the Effective Competition Standard.

Under these provisions, many simultaneous goals of competition policy can be accommodated, such as:

• Preserving competitive markets
• Protecting individual consumers, producers, and workers
• Preserving opportunities for competitors
• Promoting fundamental autonomy and wellbeing
• Dispersing private power which promotes a healthy democracy

This contrasts with an unnecessary narrowing of competition policy's scope on efficiencies or price, which has been overly restrictive and sometimes out of step with market realities like digital platforms offering "free" products to consumers while aggregating previously unseen levels of market power.

Price effects are still very important, as increasingly companies use market power to raise consumer prices and also to extract price concessions from labour or smaller suppliers. Bu tin addition to price effects, enforcers should focus on harms such as monopsony effects on labour, quality of products and services, new firm exit and entry rates, effects on innovation, and abuses of dominance like unfair or coercive contract terms with counterparties.

In addition, moving away from market-share analysis tools such as the Herfindahl-Hirschman Index (HHI) or others is important, especially in cases of creeping acquisitions. Often roll-up strategies concentrate regional or local markets, or similar labour pools. Creeping acquisitions present a threat to competition that is not effectively captured by the structural presumptions of concentration measures, like HHI. These measures do not incorporate an analysis of the explicit business strategy of companies, which is often an intentional effort to consolidate disaggregated industries and aggregate market power.

We recommend that the law be accommodative of non-price effect analysis in merger review (and also in unilateral conduct cases).

3g. Remove the efficiencies defence

Economic efficiency is unsuitable as a north star for competition policy interpretation and enforcement, and the efficiencies defence exemptions to Mergers (96.1) and Agreements or Arrangements that Prevent or Lessen Competition Substantially (90.4) should be immediately overturned and removed from the Act.

The Bureau has laid out an extensive case for its removal, and other groups have also advocated for this change. The C.D. Howe's Competition Council agrees that the efficiencies defence should be revisited. Previous Competition Commissioner John Pecman has stated, "the efficiencies defence is bad for business and bad for consumers. It is also out of line with the approach being taken by many of our country's major trading partners."

The efficiencies defence provisions, added to the Act in 1986, are no longer fit for purpose in today's market realities. "Efficiency gains" can sometimes come at the expense of employment, where jobs are made redundant following an acquisition. In particular, smaller companies, affected by roll-ups and addons, can expect 4.4% of jobs to disappear within the first two years of a leveraged buyout transaction. And, moreover, efficiency gains that were supposed to lead to lower prices for consumers have often failed to materialise. John Kwoka, a US economist and antitrust expert, analysed over 3000 US mergers and found that in mergers that led to six or fewer significant competitors, prices rose in nearly 95% of cases. And on average, post-merger prices increased 4.3%. While similar analysis has not been done in Canada, it is likely to be a shared cross-border trend.

Not only is it necessary to remove the efficiencies defence from the Act, but it is incumbent upon enforcers and the competition policy establishment to move beyond economic efficiency – as interpreted through price theory alone – as the highest aim of the law. It should be one of many factors considered. Canada's law and enforcement regime should instead focus on the abuse of dominance by incumbent players to preserve the ability for market participants to compete on the merits, on fair terms.

Unilateral Conduct

There are many detailed recommendations being discussed in this consultation that we have not covered in our submitted letter, including the substantially important unilateral conduct and abuse of dominance revisions. Omission of these – or additional elements – does not signify that we view other areas as any less important.

Competitor Collaborations

The issue of how to view competitor collaborations is increasingly important. A growing movement, dubbed 'green antitrust' seeks to allow competitor collaborations which restrict competition, in some cases even in instances of coordinated price movements, output restrictions, or otherwise typically per se illegal behaviour. The rationale is to make competition policy more accommodative to national and global green goals like net zero and staying below 1.5 C degrees of warming under the Paris Agreement.

While these are lofty goals, and competition policy does have real-world effects on the environment, competition authorities should treat calls for legal exemptions or safe harbors with some skepticism. The Bureau's updated Competitor Collaboration guidelines helpfully clarified what kinds of collaborations are permissible under the law without any specific mention of sustainability-related carve-outs.

In our view, better ways of incorporating sustainability concerns into the administration of competition law are:

1. Including green considerations as part of innovation and product quality concerns during merger analysis;
2. Considering the role of "green killer acquisitions" which delay more sustainable products or services from reaching the market or becoming viable competitors against incumbents.
3. Enforcing against illegal restraints of trade or cartel behavior which may stifle the adoption of greener products.
4. Ensuring key industries related to transition, including agriculture, energy provision, urban retrofitting, transportation, mining, and others operate on fair and competitive terms.

European competition authorities have moved swiftly in the last two years, to produce more accommodative policies. One of the most significant legislative changes was the Austrian Cartel Act, which was amended in 2021 to include a sustainability-related exemption to protect "cooperation for the purpose of an eco-sustainable or climate-neutral economy from the cartel prohibition." And recently the UK's Competition and Markets Authority, released some of the most aggressive draft guidelines for sustainability agreements of any jurisdiction.

These include guidelines on collaborations which restrict competition but will be exempted from legal action if the sustainability benefits outweigh the anti-competitive harms. The CMA has taken the most permissive approach to climate change-related agreements, specifically, and it has also shifted its posture to create an 'open door' policy so that firms can bring their proposed agreements forward and receive additional advice or guidance from the agency. In these instances, the agency will not issue fines for agreements that were discussed with them ahead of time, and which did not raise competition concerns. In our view, this is too permissive and leaves enforcers hamstrung in instances of illegal conduct.

Some want the UK's guidance to go even further, by issuing block exemptions for sustainability agreements altogether, or to provide similar exemptions for biodiversity agreements. And some have raised the possibility of amending the law to specifically mention sustainability agreements. Given that more than one-third (702) of the world's largest publicly traded companies now have net zero targets, theoretically, sustainability-related agreements could encompass the entirety of a firm's business strategy.

While sustainability-related competitor collaborations are worthy of further debate and investigation, Canada's competition policy should more carefully consider the potential tension points and drawbacks of the European approach.

For example, one tension point arises where the use of the collective buyer power of dominant firms to exert sustainability pressure throughout the supply chain (such as using less toxic material inputs or reducing slave labor) could have real benefits to the environment and society. However, if this buyer power is used as a way to externalize sustainability costs onto smaller suppliers without adequately compensating them, it may be a way of squeezing the margins of suppliers to produce higher margins for dominant firms.

Increasingly, dominant firms act as gatekeepers between producers and consumers, charging high tolls. This can be especially true with digital 'platforms.' For example: the majority of Amazon's revenue now comes from fees it imposes on its 3rd party sellers, not from AWS or any other business line. And Amazon instituted a 5% "fuel and inflation" surcharge on suppliers during the pandemic and is unlikely to rescind it once macroeconomic conditions change.

Dominant retailers can also exert price pressure on suppliers, forcing wholesalers and manufacturers to give them preferential pricing that is lower than what smaller, independent retailers have to pay – even in instances where there are no cost savings in distribution or production from large volumes.

Dominant retailers can use their buyer power to give special treatment to other large suppliers in the way of loyalty discounts, rebates, bundled discounts, and exclusive dealing agreements. These kinds of contract terms can make it more difficult for smaller producers to gain a foothold. Competition policy generally sees these as procompetitive, but if a dominant firm abuses their market position to the detriment of consumers and suppliers, they can be held liable. Some have argued that small, atomistic sellers – including small businesses, farmers, ranchers, fishermen, professionals, and athletes – are more vulnerable to buyer power abuses than consumers.

Buyer power can be a double-edged sword, as retailers – in theory – could exert demands on suppliers to engage in more sustainable processes, or only stock more sustainable products. Indeed, not only unilateral buyer power but group purchasing by competitor firms is one of the oft-cited examples of how companies want to contribute to more sustainable supply chains.

Another example is price fixing. Firms are asking for exemptions for collusion on price, if agreements are in the interest of sustainability. They claim they are subject to first mover disadvantages when instituting new products or when investing in new technologies or processes that are more expensive, and when there is no consumer willingness to pay. While competition policy may need to evolve to allow for new discussions on how to pay for long-ignored market externalities, it must hold this in tension with the potential that firms may continue to try and externalize these costs onto the public or smaller market actors.

The first-mover disadvantage arguments also fail to take market power into consideration. It is possible in industries that are already highly concentrated, that dominant firms are unlikely to experience first mover disadvantages, as they already have a high degree of pricing power and can exercise close price coordination among rival firms (aka: price following or "conscious parallelism").

For these reasons, competitor collaborations exemptions – even for purported sustainability benefits – should be viewed with some skepticism. In a similar vein, some European academics have raised concerns about "cartel greenwashing" and the head of the French competition authority has warned of "sustainability-driven market concentration."

For these reasons, we are in favor of:

• Making collaborations that harm competition civilly reviewable even if not made between direct competitors.
• Introducing mandatory notification or a voluntary clearance process for certain potentially problematic types of agreement.
• Treating buy-side cartels the same as supply-side cartels under the Act.
• Removing the efficiencies defence for competitor collaborations from Section 90.1.
• Putting the burden of proof on companies to justify any purported sustainability gains from restrictions of competition and ensuring that claimed benefits do not become an evolution of the 'efficiencies defence.'

Administration and Enforcement

5. Administration and Enforcement

5a. Market studies and the power to compel information

The Bureau should be granted formal market study powers and the ability to compel information from businesses under the revised law. This would allow the Bureau to investigate critical market shifts, such as historic, coordinated price rises in certain industries, and to also understand changing market dynamics as Canada seeks to meet its Paris Agreement net zero targets.

For example, global agencies are using their market power studies to investigate new, critical industries for the energy transition. In the US, the FTC can use its capabilities under section 6(b) of the FTC Act to conduct studies on critical new markets related to the transition to ensure they operate on competitive terms. More than 200 rooftop solar companies and advocacy organizations requested that the FTC use their market study powers to investigate utilities companies which they claimed were stymying commercial and residential retrofitting attempts.

In the UK, Sarah Cardell, the Competition and Markets Authority's Chief Executive, said the following in a January 2023 speech referring to the EV charging industry: "How will this market develop? Strong competition and the right regulatory framework will be required, and that's why we conducted a market study into EV charging, which led to a set of recommendations on how governments can enable the market to work more effectively, now and in the future. That's not a diversion from the work of a competition authority. It's a core part of doing our job." The French competition authority has also recently opened market studies on EV charging infrastructure and land passenger travel.

The Bureau should be regularly conducting horizon-scanning exercises to anticipate anti-competitive concerns in critical industries related to energy transition and sustainability (deep sea mining for rare earth minerals, heat pumps, EV charging stations, and others). The Bureau critically needs the ability to conduct formal market studies, to compel information, and to make their findings public by releasing reports when areas of interest to the preservation of competitive markets and to long-term Canadian interests are identified.

Comments and Suggestions

1. Introduction

I, Denise Hearn, a Senior Fellow at the American Economic Liberties Project – and a Canadian – write in response to the request for submissions by the Government of Canada's consultation and discussion paper on the Future of Competition Policy in Canada. We applaud the Ministry of Innovation, Science and Economic Development Canada (ISED) for conducting this comprehensive and wholesale review of the Competition Act, and for providing an opportunity for public engagement.

For additional context, the American Economic Liberties Project (AELP) works to ensure America's system of commerce is structured to advance economic liberty, fair commerce, and a secure, inclusive democracy. AELP believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.

As I have previously written, this legislative review and consultation process is welcomed as:

1. Many of Canada's markets are highly concentrated, and Canada has been falling in global rankings on competitiveness and innovation;
2. There is a global movement to revisit competition policy's role in the organization of the political economy, and Canada is well positioned to update its competition policy regime to better serve the interests of Canadians; and
3. New market realities – such as digital platforms and the financialization of firms – necessitate updated approaches to competition law and enforcement.

A general note: While reforms to the Act are absolutely welcomed and crucial, they are insufficient alone to establish a comprehensive competition policy regime in Canada. Canada needs an all-of-government approach, similar to what has been undertaken in the United States under President Biden's Executive Order on Promoting Competition in the American Economy. The order established a historic whole-of-government approach to competition policy, recognizing the wide-sweeping problem of consolidation across industries in the US, and established a White House Competition Council which includes the heads of many government agencies. The Order catalyzed 72 initiatives by more than a dozen federal agencies, including a requirement for some agencies to report on how competition issues affect their industry. Canada should follow suit to institutionalize competition concerns across our federal policy agenda.

Additionally, a more significant role for provinces in aiding this all-of-government approach would be welcome, as Vass Bednar and I have previously written. The US and Europe have a federated approach to competition policy – the US states have co-jurisdiction to enforce the antitrust laws, and in Europe the European Commission at the EU shares enforcement with National Competition Authorities at EU member states.

Canada takes a federalist approach to many policy priorities, whereby both the provinces and the federal government have a role to play in a particular domain, such as health or privacy. But competition regulation is distinctly federal. A role for the provinces, to complement the Competition Bureau's priority areas, has not been well-articulated, despite provinces having primary oversight of consumer protection and labour issues; issues that are complementary to competition concerns.

Additionally, competition policy intersects with many other areas of law and policy such as: privacy, data mobility, digital markets, consumer protection, labour, and monetary policy, to list a few. Reforms to the Competition Act are critical to ensure Canada's competition law is ready to meet 21st century challenges, but they cannot be relied upon alone to ensure Canada's economic dynamism, sustainability, and the future prospects for varied stakeholders. Our hope is that this welcomed consultation is part of a larger suite of reforms that the federal government helps catalyse on competition policy.

We would also like to make an epistemological point. Although competition policy has sought – under the consumer welfare standard – to make its enforcement 'scientific' and 'objective,' competition policy has always had allocative effects across the economy. Despite efforts to often portray this body of law and its enforcement as a primarily economic or even mathematical exercise, its application has never been neutral. The Act's purpose statement considers a range of objectives for stakeholder groups which, at times, may be at odds with one another. In this way, enforcers must always grapple with the way in which the application of the law benefits some stakeholder groups over others and take into account – at times – competing priorities.

For example, a more permissive merger review regime has – in some cases – led to economies of scale and scope which have benefited consumers. However, it has also produced other harms to stakeholders and economic dynamism. It is now well documented that concentrated industries lead to higher consumer prices, lower worker's wages, and harms to economic democracy. In Canada, concentrated industries have led to falling and below OECD average entrepreneurship rates, low business dynamism, and stifled innovation.

This conflict is not to be shied away from; in fact, many other bodies of law do not designate a single, overarching goal that must unify its enforcement. Brightline rules about permissible or non-permissible conduct can allow for better enforcement, than when the Bureau must justify the law's enforcement against theorized harms and benefits to one stakeholder group.

In that spirit, calls to go slowly on reform efforts– or to retain a philosophical, rather than rules-based approach to competition – should be assessed against the many real-world consequences and harms of our existing enforcement regime.

2. Purpose Statement of the Act

The purpose of competition policy has always been contested, and evermore so today in the context of our complex and changing market realities. However, Canada's Competition Act contains within it, the recognition that multiple objectives can be accomplished under the mandate of the law, including the success of small and medium sized enterprises, the adaptiveness of the Canadian economy, and ensuring that consumers are provided with low prices as well as competitive product choices. These additional elements of the Act's mandate need to be re-emphasized and reinvigorated in its application and enforcement.

Other elements of the Act, such as the efficiencies defence and the business justification rule, supersede this multi-polity purpose statement by preferencing efficiency over other public goods. While the language of the Purpose Statement may need updating – and we defer to Canadian law experts here – in principle any new language should aim to ensure that:

1. Markets are fair and competitive (and challenges significant concentrations of economic and financial power);
2. Markets allow the best ideas, products, and services to flourish, instead of rewarding abuses of market power or market gatekeeping; and that
3. Markets create widespread prosperity and opportunity for all Canadians.

Merger Review

EXECUTIVE SUMMARY

Today's formal submission has been authored by OpenMedia and is endorsed by fellow civil society organization Ekō.

Recommendations for the Competition Act:

1. Eliminate Section 96, a clause that serves to greenlight mergers in spite of harms to competition and consumers.
   Make it possible for the Competition Bureau to consider labour-related harms to workers (e.g. cutting decent jobs) as negative outcomes to prevent under its mandate.
2. Set bright line rules that ban acquisitions for the most dominant firms in the market.
3. Remove any mandated timelines placed on the Competition Bureau's review process, opening up the Bureau's authority to examine past mergers.
4. Put the burden of proof on monopolies to demonstrate how their actions do not harm competition or consumers — not the other way around.
5. Provide broad information-seeking powers for the Competition Bureau when studying deals and markets.
6. Enhance the powers of the Bureau to study and take action against problematic markets, not only concerning buyouts.
7. Provide a private right of action with damage compensation against dominant market behaviour, so private entities can support and supplement Bureau enforcement activity.
8. Tell Canada what you heard — and what you plan to do about it. Release a public summary of the recommendations received through this consultation, along with all original submissions and a clear and time-bound plan for next steps.

INTRODUCTION

The Competition Act is failing Canadians. Charged by its purpose clause with "maintaining and encouraging competition", in practice the Act has enabled an accelerating decline in competition and consolidation of markets across multiple industries and sectors.

Canada's grocery, banking, telecom and media sectors are amongst the most concentrated amongst OECD countries, ranging in severity from the top 5 retailers controlling an estimated 76% of the market (groceries) to the top 3 companies controlling near 90% (telecom). Canadians also depend on increasingly-concentrated foreign digital services run by platform gatekeepers, including digital search with 92% of the market held by Google, mobile app stores dominated by Apple and Google; and digital ads distribution markets dominated by Meta, Amazon, and Google. (1-5)

Concentrated and persistent market power is increasingly endemic in Canada, and causes many more harms than simply inflated consumer prices; it slows industry innovation, weakens Canada's economic competitiveness vis-a-vis our global peers, and distorts the regulatory environment itself.

Some commentators and participants in this consultation will argue the Act is fundamentally fit to purpose, with only minor procedural improvements needed. OpenMedia and Ekō fundamentally disagree. As pointed out by both the OECD and ISED's own analysis, Canada's competition laws provide amongst the weakest protections of any developed economy against the encroachment of dominant market power. That's increasingly out of step with the times. Countries around the world are heavily updating their competition laws to reflect the widespread realisation that a minimalist, laissez-faire approach to antitrust focused on price measures alone has failed to prevent concentrated market power across many industries that negatively impact consumers, competitors, and even governance and regulation of their sectors. Starting from a weaker position than our peers, competition law in Canada must be more drastically reformed and reoriented to catch up to this urgent global moment. (6-8)

Today Canadians are defended by a competition authority that is structurally barred from: looking backwards to assess, learn from, or change the results of its own decisions, looking forwards to predictable, foreseeable but not immediately-quantified harms, and even looking outward across many Canadian markets that almost certainly have large competition harms within them. The odds of being caught or punished for quiet anti-competitive conduct in Canada are low, while opportunities to engage in it are numerous. That has built a Canadian economy characterised by disproportionately low investment, low entrepreneurialism, ageing and unusually concentrated firms, identifiably supra-normal profit rates for firms and their shareholders — and surely not unrelatedly, the lowest forecast future growth of any OECD country. (9-11)

People in Canada deserve much better. In total, members of the OpenMedia community and Ekō community have taken action over 23,800 times calling on our government to reform the Competition Act, to prevent the formation of further industry monopolies and oligopolies in our country and break up the sclerotic dominant players that have emerged. A properly reformed Act must recognize that persistent and/or growing market dominance is problematic, and worthy of study and regulatory measures in all circumstances. It must equip a strengthened Bureau and people in Canada with a full toolkit to contest the holders of market power.

Today's formal submission has been authored by OpenMedia and is endorsed by fellow civil society organization Ekō. This submission expands on the principles of OpenMedia's Anti-Monopoly Charter — a set of core statements demanding a competitive, fair, and affordable Canada — and describes how the Act can be reformed to serve all Canadians, not the narrow commercial interests of the shareholders of our largest businesses. This submission was delivered alongside an external document to ISED containing over 400 unique comments from members of the OpenMedia community, and 10,081 and 13,325 petition signatures from the OpenMedia and Ekō communities, respectively. Each community's list of petition signers as well as all comments are attached in full as appendices at the end of the external PDF that was shared. A random subsample of comments have been included at the end of this form submission.

"It's been apparent for years (decades?) that there is no competition amongst the big three telecoms. Their pricing and offerings are aligned, so there is no choice for consumers. Worse still, they create the illusion of choice with their myriad of flanker brands. Consequently, we are forced to pay significantly higher costs, relative to most developed countries, for essential telecom services. All Canadians are subject to the pricing whims of our telecom oligopoly due to outdated competition legislation and lax government oversight/enforcement." - Jean-Marc L., Ontario

"I'm unable to shop at places owned by Loblaws, such as Real Canadian Superstore for example. The prices of the food that I want to purchase at that place in question is far too expensive & the prices continue to rise to the point where continuing to shop at the places in question will be financially out of reach. Monopolies have hurt me & so many other low income individuals like me for far too long & that really needs to change. Monopolies have no place in today's society & therefore must be stopped at all costs." - Mike M., British Columbia

CITATIONS:

1 U.S. Department of Agriculture, Foreign Agricultural Service. (2022, July 14). Retail Foods Country: Canada. Global Agricultural Information Network. https://gain.fas.usda.gov.

2 Winseck, D. (2022). Media and Internet Concentration in Canada, 1984-2021. Global Media and Internet Concentration Project, Carleton University. https://doi.org/10.22215/gmicp/2022.02

3 Statista. (2022, December 1). Canada search engine market share 2021. Tiago Bianchi. https://www.statista.com/statistics/canada-search-engine-market-share.

4 Statista. (2023, March). Apps – Canada. https://www.statista.com/outlook/dmo/app/canada#downloads.

5 Statista (2023, January 6). Google & Facebook advertising market share in Canada 2020. Valentina Dencheva. https://www.statista.com/statistics/806895/canada-google-facebook-ad-market-share/

6 Innovation, Science and Economic Development Canada. (2022). The future of competition policy in Canada (p. 26). https://ised-isde.canada.ca/site/strategic-policy-sector/en/marketplace-framework-policy/competition-policy/future-competition-policy-canada

7 OECD. (2017). Policies for stronger and more inclusive growth in Canada (Better Policies Series). Organisation for Economic Co-operation and Development. https://www.oecd.org/canada/Policies-for-stronger-and-more-inclusive-growth-in-Canada.pdf

8 UK Competition and Markets Authority. (2022). 2022 Compendium of approaches to improving competition in digital markets. https://www.gov.uk/government/publications/2022-compendium-of-approaches-to-improving-competition-in-digital-markets

9 Bednar, V., & Moffat, G. (2021, December 16). Opinion: Canada already has big companies—it needs young, dynamic ones too. The Hub. https://www.thehub.ca/2021-12-16/opinion-canada-already-has-big-companies-it-needs-young-dynamic-ones-too/

10 Pelletier, M. (2018, July 30). Our nation of oligopolies not good for consumers, but great for investors. Financial Post. https://financialpost.com/investing/investing-pro/our-nation-of-oligopolies-not-good-for-consumers-but-great-for-investors

11 Guillemette, Y. and D. Turner (2021), "The long game: Fiscal outlooks to 2060 underline need for structural reform", OECD Economic Policy Papers, No. 29, OECD Publishing, Paris, https://doi.org/10.1787/a112307e-en.

Unilateral Conduct

I. Monopolies are taking over Canada.

Monopoly rule in Canada is intensifying — and it's harming ordinary people, deepening our cost of living crisis, and breaking our economy.

Extremely uncompetitive markets like telecom, grocery, and online marketplaces ensure monopolies get away with doing harm to the Canadian public. Price alone is simply not an adequate measure. There are dozens, if not hundreds of ways in which companies with too large a hold on their market create harm for the public interest — from creating walled gardens around their customers, failing to pursue innovation, holding excessive lobbying power, stealing and selling people's sensitive personal data, crushing new and independent businesses, and directly threatening service withdrawal.

Food retail. To illustrate, consider the Canadian grocery sector. According to food policy experts at York University, our country's food system is one of the most concentrated globally. Analysis by the USDA supports that assertion, reporting that a mere five retailers — Loblaws, Sobeys, Metro, Costco, and Walmart — control the vast majority of the Canadian grocery market. This lack of competition has allegedly enabled tacit collusion such as price fixing, to the financial detriment of ordinary people in Canada and the financial gain of grocery giants. Companies such as Loblaws and Metro have also recently reported record profits while customers continue to pay exorbitant prices to meet their basic needs, with no apparent end in sight. (12-16)

Sports and entertainment. A similar story has plagued the ticket sales and distribution sector for many years. The largest player in entertainment ticketing in North America, Ticketmaster, has come under fire in recent months for using its market dominance to exploit customers and harm competition. A pending U.S. class-action lawsuit alleges Ticketmaster engaged in pricing discrimination and price fixing during ticket sales for Taylor Swift's 2023 Eras Tour. Ticketmaster's anti-consumer behaviour is well documented in Canada; in 2019, a Competition Bureau investigation into misleading prices led to Ticketmaster paying $4.5 million in fines. While that amount would be mind-boggling to the average person, such penalties amount to nothing more than a slap on the wrist for giants that rake in billions in profits each year. In the time since receiving this penalty, Ticketmaster has maintained its monopolistic hold on the market and continues to bully and exploit Canadian customers. (17, 18)

Telecommunications. In our telecom sector, the deeply concentrated market and free reign of oligopolistic firms has led to Canadians paying some of the highest prices in the world for cell phone and Internet services. The presence of independent players in the market as challengers to the incumbents is a fundamental requirement for the existence of competitive pricing and innovation; however, the dominance of only a handful of giants in the Canadian telecom market has proven devastating for the ability of independent competitors to remain afloat. In the last year alone, telecom giants' market power has grown at an unprecedented rate; excluding the now approved Rogers-Shaw deal, more than six independent providers have been bought out by bigger telecom companies. (19-21)

Monopolies do not just benefit from these unfair systems — they build them. Monopolies cajole and bully regulators and policymakers into policies and practices that favour their large corporate interests over ordinary people. The widely perceived sympathy of former CRTC chair Ian Scott to the interests of Bell, Telus and Rogers — culminating in his controversial photographed meeting alone with Bell's CEO Mirko Bibic at an Ottawa pub just shortly after Bell filed its appeal of the CRTC's 2019 wholesale rates decision — was accompanied by years of regulatory paralysis, as promised decisions languished unacted upon, and declining competition was ignored. ISED's new policy direction to the CRTC arguably implicitly recognizes this failure with its insistence on faster and more effective rule-making. Google's lobbying tactics and perceived use of its market dominance to make threats have also come under growing scrutiny and critique. These are merely a few examples of many that illustrate the undue influence monopolies hold over regulation and policymaking in Canada — a power used to crush competition and enforce unfairly high pricing. (22-27)

The inherent relationship between competition and affordability cannot be overstated. Now more than ever, it's critical that we ensure every person in this country can access high-quality, affordable Internet. As stated by the Government of Canada in its 2019 Connectivity Strategy: "It is not enough for a service to be available, for if the cost is out of reach, Canadians cannot take advantage of it." Those who have limited access to high-speed Internet, or cannot access it at all, are increasingly restricted from full and equal participation in our society and economy. (28)

Survey results from recent years suggest that a lack of affordable options for home Internet has a direct impact on digital adoption for many households. According to a 2020 report by the Leadership Lab and the Brookfield Institute, nearly 2 out of 5 households in Toronto do not have Internet at home that meets the CRTC's download speed target of 50 Mbps; of this group, the top reported reason was monthly cost of service (49%). The same study also found that worries about affording home Internet bills affected approximately 1/3 of Toronto households surveyed — especially low-income households, single-parent families, newcomers, and communities of colour. WhistleOut's 2021 survey supports these findings, with 40% of respondents saying that a 5% increase in their monthly Internet bill would be untenable. The same survey also found that 91% of respondents are concerned about Canada's Internet prices continuing to get more expensive, with 3 out of 4 saying they are "moderately to extremely worried about it". (29, 30)

The burden of our unaffordable Internet falls especially heavily on some of Canada's most vulnerable populations, such as seniors, those with health conditions, those living in overcrowded housing, and people with lower incomes. For seniors, changes in income directly impact their Internet utilization rates. Only 54% of seniors with incomes under $20,000 use the Internet, compared with 73% and 79% for seniors with household incomes of $60,000-$79,999 and >$100,000, respectively. (31)

"Monopolies inevitably lead to egregiously expensive prices that prevent many Canadians from accessing products and services they need." - Morgan D., Nova Scotia

"...One of the main issues I have faced due to monopolies is the lack of choice in the marketplace. For instance, with Bell, Rogers, and Telus dominating the telecommunications industry, I have found it difficult to find alternative providers offering competitive pricing and better services. This limited choice has forced me to accept substandard services and pay inflated prices for basic amenities such as internet, mobile, and cable services. Moreover, I have been negatively impacted by the practices of Loblaws in the retail sector. With their dominating presence and control over supply chains, it has led to a lack of competition in the market, which I believe has resulted in higher prices and reduced product variety for consumers like myself. The inability to access affordable and diverse products has put a financial strain on my household, making it harder to meet our daily needs…" - Oral G., Ontario

CITATIONS:

12 Food Policy for Canada (n.d.). Corporate concentration. York University. https://foodpolicyforcanada.info.yorku.ca/backgrounder/problems/corporate-concentration/

13 Delibashi, A., & Babcock, T. (2022, July 14). Retail Foods. United States Department of Agriculture. https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Retail%20Foods_Ottawa_Canada_CA2022-0018.pdf

14 Parramore, L., & Singer, H. (2022, October 19). How Corporations "Get Away With Murder" to Inflate Prices on Rent, Food, and Electricity. Institute for New Economic Thinking. https://www.ineteconomics.org/perspectives/blog/how-corporations-get-away-with-murder-to-inflate-prices-on-rent-food-and-electricity

15 Harris, S. (2023, January 22). It's been 5 years since the bread price-fixing probe started. We still don't have any answers. CBC News. https://www.cbc.ca/news/business/bread-price-fixing-loblaw-1.6719884

16 Moran, P. (2022, October 26). Soaring food prices, record profits prompt questions about Canada's 'cosy oligopoly'. CBC News. https://www.cbc.ca/radio/thecurrent/canada-food-price-profits-1.6629854

17 Treisman, R. (2022, December 6). Dozens of Taylor Swift fans sue Ticketmaster in the wake of its ticket sale fiasco. NPR. https://www.npr.org/2022/12/06/1140968805/taylor-swift-fans-ticketmaster-lawsuit

18 The Canadian Press. (2019, June 27). Ticketmaster to pay $4.5M in misleading price investigation. The Star. https://www.thestar.com/business/2019/06/27/ticketmaster-to-pay-45-million-in-misleading-price-investigation.html

19 Wall Communications Inc. (2022). Price Comparisons of Wireline, Wireless and Internet Services in Canada and with Foreign Jurisdictions: 2021 Edition. Innovation, Science and Economic Development Canada. https://ised-isde.canada.ca/site/strategic-policy-sector/en/telecommunications-policy/price-comparisons-wireline-wireless-and-internet-services-canada-and-foreign-jurisdictions-2021#s0

20 The state of 4G and 5G pricing, 1H2023 – Inflation edition. (2023, March). Rewheel. https://research.rewheel.fi/downloads/The_state_of_4G_5G_pricing_18_release_1H2023_PUBLIC_VERSION.pdf

CITATIONS (CONT'D)

21 Addario, R. (2023, February 25). Canada's small internet providers — and choice — are dying at the hands of Ottawa and the CRTC. https://www.thestar.com/business/opinion/2023/02/25/canadas-small-internet-providers-and-choice-are-dying-at-the-hands-of-ottawa-and-the-crtc.html

22 Government of Canada. (2023, March 6). Policy direction to the CRTC for competition, affordability, consumer rights and universal access. Innovation, Science and Economic Development Canada. https://www.canada.ca/en/innovation-science-economic-development/programs/more-affordable-telecom-services.html

23 Editorial Board. (2022, September 15). Justin Trudeau, Google and Canada's loophole-filled lobbying rules. The Globe and Mail. https://www.theglobeandmail.com/opinion/editorials/article-justin-trudeau-google-and-canadas-loophole-filled-lobbying-rules/

24 Djuric, M. (2023, March 10). Google says it will stop blocking Canadian news links next week following test. The Canadian Press. Retrieved from https://www.cp24.com/news/google-says-it-will-stop-blocking-canadian-news-links-next-week-following-test-1.5808771

25 Karadeglija, A. (2021, June 15). CRTC chairman under fire over one-on-one meetings with big telecom lobbyists. National Post. https://nationalpost.com/news/politics/crtc-chairman-under-fire-over-one-on-one-meetings-with-big-telecom-lobbyists

26 Telecom Decision CRTC 2021-181: Telecom Order 2019-288. (2021, May 27). Canadian Radio-television and Telecommunications Commission. https://crtc.gc.ca/eng/archive/2021/2021-181.htm

27 Andy Kaplan-Myrth on Twitter – https://twitter.com/kaplanmyrth/status/1403797186144608266

28 High-Speed Access for All: Canada's Connectivity Strategy. (2019). Innovation, Science and Economic Development Canada. https://ised-isde.canada.ca/site/high-speed-internet-canada/en/canadas-connectivity-strategy/high-speed-access-all-canadas-connectivity-strategy

29 Andrey, S., Masoodi, M., Malli, N., & Dorkenoo, S. (2021). Mapping Toronto's Digital Divide. The Leadership Lab. https://www.ryersonleadlab.com/digital-divide

30 Clark, S. (2021, July 21). Study Finds Internet Prices Rose 6% in Canada Last Year, Sparking Concerns About Affordability. WhistleOut. https://www.whistleout.ca/Internet/News/internet-prices-study

31 Study: Evolving Internet Use Among Canadian Seniors. (2019, July 10). Statistics Canada. https://www150.statcan.gc.ca/n1/daily-quotidien/190710/dq190710d-eng.htm

Competitor Collaborations

II. Our laws should protect people, not corporate giants.

In a system where overwhelming imbalances still tilt results heavily towards powerful interests, only a tilt against power can produce something close to justice. The Competition Act has wholly lost track of that dynamic. Rather than stand up to monopolies, this complicated and ineffective piece of legislation has long helped dominant firms consolidate power to the detriment of the public.

In the telecommunications sector, Bell's 2017 acquisition of Manitoba Telecom Services (MTS) was a case that caught the attention of the Canadian public — and illustrates the ways in which the Competition Act routinely enables business interests in spite of known consumer harm. After the acquisition, Bell's market share grew to more dominant levels in Manitoba, and telecom bills increased for Manitobans. MTS was a long-established regional telecommunications provider in Manitoba that offered wireless, broadband, and IPTV services to both retail and business customers. When Bell moved to purchase MTS to grow its market share in the province, the Competition Bureau opted not to challenge the buyout; the Bureau had insufficient ability to prove that Bell-MTS would lead to a substantial lessening of, or harm to, competition in a manner that would satisfy the Competition Act's limited scope — even though such a threat credibly existed. (32-26)

The outcome of Bell-MTS was a feature, not a fluke, of our competition laws. Only six years later, history has repeated itself with Canada's disturbing failure to block the Rogers-Shaw deal — our most recent and comprehensive test of the Act and the Competition Bureau's authority. Under functional legislation, the Bureau should have had no difficulty whatsoever in successfully blocking Rogers, a dominant firm, from significantly growing its market power by acquiring mid-size competitor Shaw. To anyone with the ability to observe the facts, Rogers-Shaw presented a clear loss of competition, and a threat to affordability and jobs. But despite abundant evidence, the Competition Bureau was not able to meet the burden of proof required by the Competition Act to justify blocking the deal in the eyes of the Competition Tribunal. (37-39)

If this pattern holds, the next major buyout in Canada will push us past the point of no return. We cannot let that happen. Our Competition Act must be swiftly reformed to prioritize the public interest instead of tipping the scales in favour of giants.

Eliminate Section 96, a clause that serves to greenlight mergers in spite of harms to competition and consumers. It is crucial that the government eliminate loopholes in the Act that unfairly stand to benefit giant firms in the merger review process. In Canada, monopolies wield a legal trump card: Section 96, the "efficiencies defense" is a clause which currently allows giants to merge or complete an acquisition even if it could result in less competition. Put simply, companies can argue that the merger will enable them to be more efficient in the way they operate — even if the deal will cause demonstrable harm to competition. Presently, the Competition Bureau is forced to heavily weigh these proposed efficiency gains when evaluating whether a merger or buyout should be allowed, resulting in the Bureau tolerating deals they otherwise wouldn't. This is unacceptable for a number of reasons. (40-41)

Firstly, a focus on efficiencies deprioritizes the protection of consumers, small businesses, and vulnerable groups. The resources of the private sector far exceed that of civil society, the Bureau, and public institutions to produce data required to meet the burden of proof establishing that "efficiencies" exist; this all but guarantees that companies seeking to merge can easily present arguments that claim to show benefits outweighing the harms. Even if such harms abundantly exist, the burden of proof is so high on under-resourced groups that it becomes impossible to prove. In addition, Section 96 is out of step with international standards. Elsewhere, such as the U.K. and Australia, efficiencies are only a component in deciding if a merger will harm competition — not a defence in itself, as is the case in Canada. Under Canada's Competition Act, the efficiencies defence can also permit a merger in spite of the harm it will do to competition due to the methods used to measure said efficiencies. With Canada also dragging behind our international peers in metrics such as telecom affordability, it stands to reason that we have strayed off course in our policy approach to competition. (42)

The best solution is to strike Section 96 from the Competition Act entirely. From the perspective of ordinary people, the efficiencies loophole boils down to this: it doesn't matter if a corporate buyout will hurt you, so long as the companies involved will benefit. This clause has no place in a system that the Canadian government claims supports competition, affordability, and the consumer interest.

Harms to workers arising from mergers must be considered. The revised Act should also make it possible for the Competition Bureau to weigh labour-related harms to workers in their decisions — the flip side of corporate efficiencies. Such harms to workers are well-documented; for example, in the U.S., T-Mobile promised its massive buyout of Sprint would create new jobs. But in fact, the Wall Street Journal reported that the company actually cut jobs after the acquisition. If the Bureau must consider how companies can save money by consolidating, they should be required to weigh the worst-case scenario for harm to workers as a result of that consolidation. Cutting decent jobs and setting unlivable wages must be treated as mandatory outcomes to prevent under Canada's competition legislation and grounds to challenge a merger. (43, 44)

"As a small business owner, I see time and time again governments bowing to large corporations. They [sic] the governments change or don't enforce laws to protect the consumer/small business owners. These large monopolies have far too much power over governments." - Nigel P., British Columbia

"Where do I even begin, from price gouging on bread (where we got back 25 bucks after years of overpaying), to several hundred dollar lawn tickets at concerts due to dynamic pricing, to arguing with Rogers every year to get another discount for my ridiculously priced internet which I don't even get the speed advertised……why? What is the government doing to support us? If they are working on this, what aren't they making the public more aware? This is just the small stuff, where is the support on housing, healthcare, support for education etc? These issues affect us all with monopolies in literally every facet of Canadian life. Please help us." - Geoff F., Ontario

CITATIONS:

32 MacLean, C. (2017, September 29). Bell MTS customers see prices rise for most services. CBC News. https://www.cbc.ca/news/canada/manitoba/bell-mts-price-increase-1.4314116

33 MTS sale to Bell has some Manitobans worried about price hikes. (2016, May 2). CBC News. https://www.cbc.ca/news/canada/manitoba/manitoba-bce-mts-bell-deal-1.3562070

34 Bonifacic, I. (2017, September 29). Bell MTS increases price of home phone, TV and internet services. MobileSyrup. https://mobilesyrup.com/2017/09/29/bell-mts-home-phone-internet-tv-price-hike/

35 Coubrough, J. (2017, May 9). Bell MTS to shed up to 85 jobs in Manitoba. CBC News. https://www.cbc.ca/news/canada/manitoba/bell-mts-jobs-manitoba-1.4105520

36 Tencer, D. (2016, May 2). Bell's Buyout Of MTS 'Will Likely Mean Sharply Increased Prices'. The Huffington Post Canada. https://www.huffpost.com/archive/ca/entry/bells-buyout-of-mts-will-likely-mean-sharply-increased-prices_n_9821928

37 Statement from Minister Champagne concerning competition in the telecommunication sector (2023, March 31). Innovation, Science and Economic Development Canada. https://www.canada.ca/en/innovation-science-economic-development/news/2023/03/statement-from-minister-champagne-concerning-competition-in-the-telecommunication-sector.html

38 Competition Bureau seeks full block of Rogers' proposed acquisition of Shaw (2022, May 9). Competition Bureau Canada. https://www.canada.ca/en/competition-bureau/news/2022/05/competition-bureau-seeks-full-block-of-rogers-proposed-acquisition-of-shaw.html

39 Karadeglija, A. (2022, May 9). Consumer groups and opposition parties support move to block Rogers-Shaw merger. National Post. https://nationalpost.com/news/politics/consumer-groups-and-opposition-parties-support-move-to-block-rogers-shaw-merger

40 Bester, K. (2021, December 15). Canada's Competition Law: Is It Really Up to the Task? Centre for International Governance Innovation. https://www.cigionline.org/articles/canadas-competition-law-is-it-really-up-to-the-task/

41 Examining the Canadian Competition Act in the Digital Era. (2022, February 8). Competition Bureau Canada. https://ised-isde.canada.ca/site/competition-bureau-canada/en/how-we-foster-competition/promotion-and-advocacy/regulatory-adviceinterventions-competition-bureau/examining-canadian-competition-act-digital-era

42 The Future of Competition Policy in Canada. (2022, November 22). Innovation, Science and Economic Development Canada. https://ised-isde.canada.ca/site/strategic-policy-sector/sites/default/files/attachments/2022/The-Future-of-Competition-Policy-eng_0.pdf

Deceptive Marketing

III. We need real ways to hold monopolies accountable and prevent them from getting any bigger.

Weak in construction and flimsy in practice, today's Competition Act is not cut out for the job of curbing further market consolidation. The Act provides neither adequate mandate nor resources for the Bureau to proactively investigate and remedy competition problems or dysfunction. The Bureau has a limited window in which it can make an impact on competition problems in a market. Even for a highly concentrated sector like telecom, this window is generally only open when a dominant player attempts to buy out a smaller player. As such, there is little to no opportunity to meaningfully improve market competition — only narrow attempts to stop it from getting worse, which are prone to failure for reasons outlined above.

While the Bureau's human and informational resources are limited, the ability of ordinary Canadians to express or defend their interests when it comes to competition is near non-existent. Meanwhile, Canada's most powerful companies face tremendous opportunity for increased profits by successfully defending their interests against our weak system, and largely succeed in doing so. The volume of market data processed daily is increasing exponentially, and as more and more transactions are managed in micro-seconds by inscrutable algorithmic processes, the opportunities for undetected abusive conduct are also exploding.

Redressing this growing imbalance will be a multi-step correction that must draw on several sources of proactive correction, including:

Put the burden of proof on the giants. If a company wishes to buy out another, it should be their responsibility under the Competition Act to demonstrate why their merger won't hurt competition, rather than the other way around. A responsibility on merging parties to quantitatively demonstrate net benefit to consumers, as exists in several European countries, would be better.

Set bright line rules that ban acquisitions for the most dominant firms. The Act should outright prevent already-dominant companies in the market from buying other companies, with particularly tight restrictions on telecom monopolies.

Remove any mandated timelines placed on the Competition Bureau's review process. The Competition Bureau should be allowed to re-evaluate a merger or buyout at any time, even if it's already happened. At present the Bureau cannot retroactively look at a deal's impact on the market — even if it has since caused harm to competition and affordability, and even if the conditions the Bureau hoped would prevent harm have clearly been circumvented. It sets the Bureau up as nothing more than a speed bump to a potentially-harmful merger; once cleared, the deal is home-free.

Broad information-seeking power for the Bureau is necessary. The Act must arm the Bureau with the ability to solicit any information reasonably required from dominant market players to assess their position. This is needed both during potential mergers and acquisitions, and for proactive market studies the Bureau conducts to evaluate potentially problematic industries.

Proactive market study and action are both needed. The Bureau must be equipped to conduct exploratory studies of the market concentration and dominance features of Canadian industries, and apply remedies, penalties or even require divestment as needed if there are serious, persistent or growing problems, as comparable agencies in other jurisdictions can and do. This power must include the ability to revisit its past decisions and determine if remedies have proven effective for preventing harm or concentration, and apply new conditions if they have not. It should include the ability to detect and act against so-called "creeping rollups", in which many small competitors are acquired over time to a level that has plainly anti-competitive outcomes, but does not trigger current size-based merger review provisions of the Act.

The Bureau must set the timeline tempo. The Rogers-Shaw buyout showcased to Canadians how the Competition Tribunal hastily cut off its own consideration timeline to meet artificial financial deadlines set by Rogers and Shaw, that were then easily extended by several months when more powerful government agencies spoke up. Both institutions charged with thoughtful, apolitical evaluation of such deals must in the future be allowed to set their own timeline for appropriately evaluating a given deal. In the event that mandated timelines are still included in the Act, they should at very least start only once the Bureau becomes aware of a pending deal, to prevent gamesmanship by companies who conceal their activity to run out the clock.

A private right of action that pays compensation is needed. People deserve to be heard, and the difficulty and uncertainty for them of mounting a case chronicling harms they may be suffering due to market power use must be compensated. Under the next version of the Act, private citizens should have the right to bring forward cases and complaints of companies' anti-competitive behaviour to the Bureau, and receive damages if they do so successfully. Further, formal mechanisms should be developed to solicit and duly consider qualitative and quantitative testimony from everyday people and civil society representatives in proceedings that evaluate corporate mergers and dominant behaviour that impact our lives.

"I truely [sic] despise the high prices and poor service caused by the lack of competition in major industries such as telecom, grocery and banking within Canada! The government of Canada does not appear to be making any attempt whatsoever to break up these huge monopolistic giants that charge high prices to make record profits off the backs of Canadian citizens that have no choice but to use their services and buy their products. My monthly budget is super tight and my wife and I are barely squeaking by as a result of the price gouging by businesses such as Loblaws, Bell and Scotiabank to name just a few of these evil mega corporations. A reasonable profit is never enough for these companies. They always need more they will do what ever it takes to continue making record profits. We have three options to stop this attack on Canadian Citizens: 1. Break up these giant corporations and allow more competition to enter the market or 2. Nationalize these basic services that everyone relies on and 3. A combination of both methods. Unfortunately, politicians that work for the Government of Canada work for and are much more interested in serving the needs of Canada's corporate giants. Corporate welfare is very much alive and well in Canada." - Tyson M., Alberta

"The only power that an individual has against any company that you are unsatisfied with is to take your business elsewhere. However, in Canada in many cases there is NO ELSEWHERE to go! Bell and Rogers control almsot [sic] all the options, frankly they are interchangeable in terms of how they treat customers and we have no other viable options…When there is no healthy competition in the market then there is little pressure to improve. This also applies to Ticketmaster which has an obscene amount of control of the market and to a lesser extent Loblaws too is the HUGE player in their sector (and getting bigger all the time). What happened to anti-trust legislation, anti monopoly policy. Rogers and Shaw shouldn't be allowed to unite for this very reason. We need more choice, more options in all areas of our economy. The government should ensure that we get it." - Sheila H., Ontario

Administration and Enforcement

IV. Monopolies threaten democracy and a fair society.

Every persistent monopoly or oligopoly in Canada is a policy failure. Temporary monopolies and abnormal profits may be a reasonable short-term reward for innovative new products and services, but where this concentration and outsized profit persists year after year – particularly with little sign of notable innovations – action must be taken against them.

The pressing need to disrupt our growing monopolies is not solely about cheaper prices, or even just where we can spend our money; it is also about preserving an equitable distribution of power in Canadian society. Despite claims that competition legislation should not consider supposedly 'non-economic' features, that concern was plainly understood at the birth of the antitrust movement. For the last 40 years, Canada has experimented with a purely quantitative price-based understanding of competition law, and the result has been a failure on every level, including ensuring the economic price and innovation dividend that lax attitude was supposed to deliver. As US Antitrust Assistant Attorney General Jonah Kanter says, "freedom in the workplace, the marketplace, and the polling place go hand in hand". Media monopolies and effective online information monopolies may be particularly concerning as they can uniquely influence what information is investigated by journalists, distributed to citizens, and used to inform our collective decision-making. There is a pressing need to ensure a long-term diversity of sources and perspectives for our information diet, online and off, which competition policy alone can support but not fully provide. (46)

Nonetheless, the more powerful and centralized Canadian industries become, the more the wants of a small set of private stakeholders are incorrectly read as representing the needs of a healthy market system. Google's recent threats to withdraw news from Canadian search results highlights the poverty of a purely price-based understanding of our collective welfare; power matters, and only a widely distributed, easily substitutable network of delivery for all our core services will keep Canadians safe from future ethically suspect attempts to veto public policy objectives by owners of monopolised services.

"It seems that Canadian "democracy" has installed a government that bends more to the wishes of lobbyists for large corporations than to the electorate at large. This "corporatocrisy" [sic] clearly focuses more on profits than taking an overall view of the benefits to the country with regard to quality of life and environmental sustainment. There seems to be a constant flow of price increases from the large corporations which the government is unable to, or uninterested in dealing with. This on-going corporate gouging encourages and promotes price increases in smaller businesses also, as, it may be that the thought is "if they can get away with it why can't we?". Corporations should be able to make reasonable profits without public subsidy (carbon fuel companies and telecoms), and if they can't then maybe they don't need/deserve to continue following their line of business." - Richard S., Ontario

"My bad personal experience with Bell is hardly worth mentioning: you'll see thousands of similar complaints from Canadians. The real issue is our system that encourages national monopsony through acquisition, and actual monopoly in particular regions. That policy not only has us paying higher prices but makes Internet access and healthy diet unaffordable for low-income Canadians; it has also severely constrained access to trustworthy news and analysis which would inform us that the federal government can and must act to correct the abusive practices of too-powerful corporate lobbies. Surely now is the time to act for the public good and tell these corporations they do not have an unlimited licence to exploit Canadians to maximize profits." - Judyth M., Quebec

CITATIONS

46 U.S. Department of Justice. (2023, March 2). Assistant Attorney General Jonathan Kanter of the Antitrust Division delivers remarks at the Keystone Conference on Antitrust, Regulation & the Political Economy. https://www.justice.gov/opa/speech/assistant-attorney-general-jonathan-kanter

CONCLUSION

Ordinary people in Canada care deeply about the outcomes of this consultation process. Despite a common belief that the Competition Act may be too "technical" to grab the attention of the average person, Canadians are well aware of the fact that this legislation has a direct impact on their daily lives — and are becoming more informed by the day. At present, more and more politicians are leveraging this understanding; they are amassing support by focusing the conversation on the lack of fairness in our economy, and rightly so. The longer these problems go unchecked, the more extreme the political solutions are going to be when they do come home to roost.

Swift and immediate action is not only in the best interest of the federal government, but a responsibility. In his 2021 mandate letter, Prime Minister Justin Trudeau instructed the Minister of Innovation, Science and Industry to: "...enhance consumer protection and ensure a level playing field for all businesses, undertake a broad review of the current legislative and structural elements that may restrict or hinder competition. This includes directly reviewing the mandate of the Commissioner of Competition, and in so doing, ensuring that Canadians are protected from anti-consumer practices in critical sectors, including in the oil and gas, telecommunications and financial services sectors." ISED and Minister Champagne have an obligation to fulfil this mandate to the ends described: protecting people in Canada from the anti-consumer and anti-competitive practices of giants in some of our most concentrated — and critical — sectors. (47)

In undertaking this consultation on the future of competition policy, ISED has opened up a highly welcome dialogue with people in Canada. A dialogue, however, cannot be one-sided. By asking ordinary individuals to share their views on their experiences with monopolies and necessary changes they want made to the Competition Act, your department bears a clear responsibility to share back what you heard, what recommendations were made, and importantly — what our government plans to do with this information. Specifically, OpenMedia and Ekō urge ISED to release a report summarizing what you heard from this consultation, to be shared alongside the original consultation submissions and a timeline for legislative change the government plans to table.

People in Canada cannot wait any longer for action. Our cost of living crisis will not fix itself; without government action to challenge, break up, and prevent monopolies, millions of people will continue to struggle to meet their fundamentally basic needs while giants like Rogers, Bell, and Loblaws enrich themselves and their shareholders. The path to lowering our intolerably-high telecom prices and grocery bills is to make Canada inhospitable to anti-competitive behaviour — and it begins with our government immediately tabling pro-consumer legislative changes to competition policy.

As supported by over 23,800 actions taken by OpenMedia and Ekō community members, we are calling on the federal government to reform Canada's Competition Act to put ordinary people — not monopolies — first.

CITATIONS

47 Prime Minister of Canada Justin Trudeau. (2021, December 16). Minister of Innovation, Science and Industry Mandate Letter. Office of the Prime Minister. https://pm.gc.ca/en/mandate-letters/2021/12/16/minister-innovation-science-and-industry-mandate-letter

Comments and Suggestions

The following represents a random subsample of the community comments OpenMedia received as part of this consultation. Please refer to OpenMedia's external submission to ISED for full list of 400+ comments.

Format: First Name, Last Initial, Province, Community Comment

Tyson M AB I truely despise the high prices and poor service caused by the lack of competition in major industries such as telecom, grocery and banking within Canada! The government of Canada does not appear to be making any attempt whatsoever to break up these huge monopolistic giants that charge high prices to make record profits off the backs of Canadian citizens that have no choice but to use their services and buy their products. My monthly budget is super tight and my wife and I are barely squeaking by as a result of the price gouging by businesses such as Loblaws, Bell and Scotiabank to name just a few of these evil mega corporations. A reasonable profit is never enough for these companies. They always need more they will do what ever it takes to continue making record profits. We have three options to stop this attack on Canadian Citizens: 1. Break up these giant corporations and allow more competition to enter the market or 2. Nationalize these basic services that everyone relies on and 3. A combination of both methods. Unfortunately, politicians that work for the Government of Canada work for and are much more interested in serving the needs of Canada's corporate giants. Corporate welfare is very much alive and well in Canada.

Nikki D ON "Jacking up catfood over 103% is NOT inflation, it's greed! Selling poor quality meat not fit for human consumption at equal prices to meat aimed for people. Do they think we are stupid?

Jacking up fuel over 1000% is NOT inflation, it's evil. Punishing people is not the way to switch to greener energy.

Price gouging is rampant. Misleading food serving and nutrition information, decreasing food portions and selling rotten delivery food making customers feel they cannot return it is terrible, it is theft.

Welcome to Canada: predatory utilities, rapacious rents and overpriced food with substandard oils like Crisco cottonseed that's DENIM JEAN OIL not fit for human consumption

Rent café, Coinamatic (smelly moldy,, broken washers that repeatedly flood our entire laundry room, water over 2 feet high!!!!!!! July 1st 2020 And stop transferring fees to customers, it is an abuse of the power of impersonal businesses.

But the worst is giving up our cat because of ridiculous cat litter more than doubled!

Paving over gardens of townhouses by insensitive landlords so we cannot grow food, how inhumane!

And non-dairy milk not subsidized, and watered down, overpriced and out of stock! The gourmet barista Silk milk was worse! No spices, add extra ingredients at your own cost and WATERY!

And Bell never gave back my deposit, refused to look up my file and took advantage of my severe depression, ripped this poor woman off 250$ in the 1990s. Bell can go to hell.

Ticket master will never see any business from me, I choose to make my own music. Rogers, quit charging us ridiculous amounts. Canada invented the phone, why are we paying so much?

No reason for Last Month Rent in Ontario, it's illegal in Québec. Deposit, credit card is enough to deal with issues.

Clothing stores have to stop selling cheaply made disposable fashion. Top polluting industry is fashion.

The harms are so long, I am writing a BOOK about all this.

myra e ON As a customer of Telus and Bell, I have been subjected to price increases without justification, breaking my contract in doing so. Even when using Telus for home security emergencies, they take forever to respond and I left holding the phone for over 1/2 hour. I have gotten threatening letters from Telus that my system will be suspended for non payment of a bill I didn't know I had. Then I can't get through to them. I am fed up with the cavalier treatment by all the monopolies. No customer service, high prices and going up all the time and impossibility of getting through their "gatekeepers"

Leslea H AB "Seriously? You need yet ANOTHER one of the tens of millions of people screwed by price gouging, blatant price fixing that YOU GUYS won't deal with, companies taking over other smaller companies with ALWAYS results in lower quality and higher costs? YOU REALLY NEED people to clue you the hell in why monopolies are bad? Grow the hell up. STOP ALLOWING MONOPOLIES!"

Roy L BC Monopolies hold ordinary people hostage with their wildly high prices, exploit our lack of choice, and use their massive pull to undermine democracy. But right now, I am speaking out against monopolies controlling an industry. We need innovation a freedom offering the best competitive prices for the public.

Geoff F ON It is disgusting how greedy this corporations are. Do all those at the helm know that when they die they will only the same size hole everyone else. 6 x6 x4? nothing more. They may not be aware that their wealth only prevents them from being more spiritual and moves them further from our Father.

John H AB To get out of cell phone contract fron Rogers, I recall having to pay around $600 outright to cancel my contract. That's free money for doing absolutely nothing. Never again.

Antonio F ON Monopoliestend to charge what ever they want which is not benificial to all people.

John T NS "It's because they can do things unilateral or in collusion. Every Big Telco has the same rates, same deals, same offerings and deal with complaints equally. Bad service? Try going to a competitor and they are doing the same thing. Customer support gives out olive branches and a few months later, you are back to square one as the offer is rescinded. Has there been any major tech changes? Yet rates keep going up to support new technologies. By all the players. Don't they have innovations of their own over their competitors to one-up their competitors? They don't care as they know customers don't have too many options to go elsewhere. A new popup company shows up and offers better rates. A new months later they are absorbed by the big players. Without competition, there is no innovation and no supply-demand check and balance. Just control and power held by the few. The gov't facilitates their actions as the big players contribute immensely to the gov't pockets as proof of the good intentions of these oligarchs and the gov't buries this under doing things for the public good."

sandi s BC "Monopoloies take away my voice and my right to have a choice between competing products and services. Telus and Shaw are companies that have repeatedly not lived up to their contract with me. They have repeatedly not provided the service I have paid them for and have never been accountable for it. They also will not let me out of the contracts I have signed with them, even though they have not lived up to their obligation in the contract. Complaints go nowhere, they continue to charge me full price, and when I break the contract they have the right to penalize me.

Hagi E AB "The prices for internet fromTelus and Shaw (in Alberta) are outragoues. I have had to rely on the ""independent"" internet providers, who's service is so so, and is always at the mercy of Telus and Shaw (and Shaw is soon going to merge with Rogers! Wonderful...) Having two giant telecoms own all the internet access is the reason why they get away with such outrageous prices! Please, you must regulate them more, so that other companies can compete with them, on their government subsidised lines no less!"

Robert D SK I am on permanent disability. The feds decided during the pandemic that everyone needed $2000 per month to survive, an amount almost double what disability pays. Now prices are rising, our basic cell service just went up $10 a month. Gas is higher home heating is higher electricity is higher cell plans are higher groceries are higher, yet there is no more money. Even those working are struggling as all these costs go up but the wages do not. Most of these cost increases can be firmly proven to stem from our federal governments love of large companies (and giving themselves raises tied to these increases) and the total disregard they have for the average Canadian. I just want to be able to afford to live while our government is determined to pocket as much as they can for themselves and their friends who run the monopolies on our essential services and products.

Evert v MB "Large companies always start off by saying they want to make things better for the consumers but once they have a monopoly they all jack prices higher and never are competitive, they don't have to be, no one challenges them. Every organization that has a monopoly or is large enough can raise prices to what ever they want. Banks, grocery stores, lumber companies and drug companies ALL profited from the pandemic at our cost. Billions of dollars of our money was soaked from our pockets whether we noticed it or not. Why should the average consumer/tax payer be exploited when the large corps make record profits?? STOP LARGE COMPANIES FROM OWNING MONOPOLIES AND CHARGING WHAT EVER THEY FEEL LIKE CHARGING. Compatition keeps everyone in line including Rogers, Bell, Royal bank, Home depot and many others.

Kelly E AB "Monopolies keep prices far too high. This applies to all of them, be they grocery or telecom. Canadians pay at or near the highest rates for cell phone usage in the world. This, in a so-called democratic country where we have an abundance of everything if you can afford them. Healthy competition would greatly reduce the costs and provide better service. With respect to grocery prices, we've seen costs go through the roof and nobody is saying anything or doing anything about it. In recent chats with our grocery monopolies, they cried about ever increasing costs to them so they HAVE to pass on the costs, all the while their profits continue to rise. How can this be.

Merger Review

1. Introduction

"In what is the most significant economic transformation since the Industrial Revolution, our friends and partners around the world — chief among them the United States — are investing heavily to build clean economies and the net-zero industries of tomorrow. Today, and in the years to come, Canada must either meet this historic moment — this remarkable opportunity before us — or we will be left behind as the world's democracies build the clean economy of the 21st century." - Finance Minister Chrystia Freeland.

The conventional wisdom in competition circles over the past 20 years was that competition should be insulated from environmental concerns. In the last decade, however, there has been a sea-change as competition agencies around the world have realized that competition law has an important role to play in the transition to a clean, low-carbon economy.

As currently drafted, the Competition Act ("Act") does not effectively support Canada's participation in this transition. Our competition regime does not incorporate sustainability goals. It does not encourage green innovation or green consumption, and it fails to address market failures related to pollution. This reform offers a timely and important opportunity to ensure that our competition regime contributes towards a Canadian economy that is resource-efficient, low pollution, and net-zero, while also remaining competitive and fair.

While Canada needs to act to improve a number of areas of competition policy, including merger control and cooperative agreements, as described below, addressing deceptive green claims is ground zero. Greenwashing – deceptive claims about environmental benefits and impacts – represents a particularly significant barrier to the transition to a sustainable economy.

Indeed, greenwashing is rife and systemic. Recent studies from Europe and Australia find that a majority of claims (53.3% and 57%, respectively) about products provide vague, misleading, or unfounded information on their environmental characteristics. These numbers appear no better in North America. In a poll of 1,491 top-level executives, 58% of global respondents admitted that their organization is guilty of greenwashing, with this number rising to 72% for North American respondents.

When environmental claims are fair and accurate, consumers can make informed decisions and choose products that are genuinely better for the environment. An Ipsos study in 2021 found that, over the past few years, 56% of Canadians have made changes to the products and services they buy or use out of concern about climate change. Given increasing consumer preference for sustainable products, this results in investment and innovation towards environmentally sustainable products with better outcomes for the environment, the climate, and our health.

Conversely, if greenwashing is allowed to proliferate, consumers will not be able to distinguish the good from the bad, thereby reducing the competitiveness of genuinely sustainable businesses and disincentivizing green innovation. Already, a majority of Canadians are suspicious of sustainability claims made by companies and it is important to establish consumer confidence in such claims so that genuinely sustainable businesses can benefit from their efforts. Unchecked greenwashing can also undermine environmental action by our governments, by making them believe the private sector is tackling the problem effectively.

If systemic greenwashing is not addressed, investments in strengthening Canada's competitiveness in the clean economy will not lead to the desired results and we will be throwing good money after bad. The Competition Act must be made fit for purpose so it helps improve social welfare by delivering sustainable outcomes and reducing environmental market failures. Such market failures include cost externalities, where the negative externalities on the environment of production and distribution are not integrated into the product price. They also include consumer biases, where revealed market preferences do not reflect actual consumer welfare, and other linked supply-side market failures, such as coordination issues, which discourage green innovation.

Environmental regulations and the internalization of externalities through mechanisms like carbon taxes are not, and have not been, able to move the needle sufficiently to achieve environmental and climate goals on their own, and are often slow and expensive to implement. The state-market dichotomy is increasingly outdated; there is a broad realization that private actors have a key role to play in addressing environmental and climate goals. And, further, that competition policy can meaningfully address the market failures and coordination challenges of the transition, complementing the more traditionally envisioned state environmental regulation. If there are not adequate market incentives for innovation, businesses may fail to meet the future needs of consumers and simply meet the current regulatory demands.

In the following sections, we make a number of recommendations based on best practices from around the world to better enable the Competition Act, and the competition regime generally, to support Canada's transition to a low-carbon economy.

We start with the purpose clause (recommendations 1.1 and 1.2) before discussing our key recommendations on how the Act must be expanded to address green deceptive marketing as an expansion of the current general prohibitions already in the Act. The deceptive marketing recommendations include:

• Amending the Act to designate certain representations as false and misleading in a material respect (Recommendation 2.1);
• Prescribing certain representations as misleading in all circumstances (Recommendation 2.2);
• Publishing guidance for environmental and climate claims (Recommendation 3.1);
• Defining business interests (Recommendation 4.1);
• Requiring environmental, climate, health and social impacts of a product to be based on adequate and proper testing (Recommendation 5.1);
• Making representations about the environment presumptively material (Recommendation 6.1); and,
• Expanding access to the Tribunal to any person for environmental deceptive marketing and expanding remedies available (Recommendations 7.1 to 7.7).

We then recommend establishing a sustainability taskforce at the Competition Bureau (the "Bureau") and formal market study powers (Recommendations 8.1 and 8.2). Finally we make recommendations to increase transparency related to deceptive marketing enforcement and to introduce sustainability considerations into cooperation agreements and mergers (Recommendations 9.1 to 11.4).

The time to act is now. We must pull every available lever to avoid the worst impacts of anthropogenic climate change – competition reform is one of those levers. The impacts of climate change on the environment and on our health are already being experienced through higher temperatures, shifting rainfall patterns, and extreme weather events which we have seen lead to devastating heat domes, wildfires, flooding, landslides, and hurricanes. Canada has committed, under both international law and domestic legislation, to climate action. Other regulators and government bodies responsible for market and financial oversight are moving to address the risk of climate change in their respective areas. Competition must do the same. We can no longer wait.

2. Amend the Purpose Clause to Recognize Sustainability and Important Environmental and Social Objectives

The purpose of competition law is not to promote competition for the sake of competition, but to promote a functional and fair marketplace that advances important social and economic objectives for the benefit of Canadians. The purpose clause of the Competition Act should be revised to reflect this reality.

The protection of the environment, addressing climate change, as well as protecting and advancing human rights are objectives that the Competition Act is able to advance. As acknowledged by EU National Competition Authorities, a narrow price-centric view of consumer welfare is no longer justified in the approach to competition. Rather, out-of-market costs and benefits (including environmental impacts) can be meaningfully integrated into competition analysis. For example, Greece has recommended that competition authorities take a broader perspective of their aims and objectives embracing externalities and intergenerational effects, in addition to monetarily assessments. Austrian antitrust law allows out-of-market efficiencies; environmental benefits do not need to be for relevant market consumers, but can benefit the broader society.

Economic and non-economic environmental effects can be integrated into competitive assessments, including within the consumer welfare perspective. While this balancing of (potentially conflicting) interests is not easy, our courts and competition authorities already do this and are well equipped to handle this balancing act and assess qualitative and quantitative evidence to this end.

The Act should advance environmental, climate, and social objectives because they are important in their own right, but also because consumers care about them and because they help companies participate in and benefit from the transition to a sustainable economy. Companies of all sizes around the world are taking action to advance such objectives, which means that Canadian companies must also integrate sustainability to remain competitive in domestic and global economies. These may be considered new objectives for competition law, however, as noted by the legal scholar Giorgio Monti:

"to-date no competition authority has deployed competition law in accordance with one unchanging set of aims – the goals of antitrust vary over time; even at the same time, the law can be pursuing different, even mutually contradictory, goals."

Therefore, the purpose clause should be amended to ensure the Act promotes sustainability and advances environmental, health, climate, and social objectives. These objectives can be effectively captured by reference to Canada's commitments in respect of the environment, health, climate change, and human rights (including Indigenous rights). These commitments include both those made domestically (in legislation or policy), as well as internationally (by treaty or other form of agreement).

Recommendations

1.1 Amend s. 1.1 of the Competition Act to state: The purpose of this Act is to maintain and encourage competition in Canada in order to promote the efficiency, sustainability, and adaptability of the Canadian economy…in order to achieve Canada's commitments in respect of the environment, health, climate change and human rights.

1.2 Amend s. 2(1) to define the 'environment' and 'sustainability' as those terms are defined in the Impact Assessment Act:

"environment" means the components of the Earth, and includes:

1. land, water and air, including all layers of the atmosphere;
2. all organic and inorganic matter and living organisms; and
3. the interacting natural systems that include components referred to in paragraphs (a) and (b).

"sustainability" means the ability to protect the environment, contribute to the social and economic well-being of the people of Canada, and preserve their health in a manner that benefits present and future generations.

3. Strengthen the Deceptive Marketing Regime to Address Systemic Greenwashing

Greenwashing is a market distortion that is not sufficiently addressed in Canadian competition law. It can seriously distort the effective expression of consumer and social concerns about environmental issues. While consumers can drive change through their purchasing and spending power, they can only do so if clear and accurate environmental information is made freely available to them. Businesses need standards and guidance on environmental deceptive marketing so they are not left in murky waters about what types of claims they can make, face legal challenges or regulatory enforcement, or lose out to competitors whose greenwashing claims pervert the market.

Jurisdictions worldwide are clamping down on greenwashing, because deceptive environmental claims are both more damaging and insidious than other forms of deceptive marketing for many reasons including those related to economic and competition policy and those related to environmental and social policy.

Economic and competition policy reasons to address greenwashing include:

1. Unfair competition. Unchecked greenwashing forces legitimate green businesses to compete on an unfair basis with firms that have not borne the upfront cost of becoming more sustainable. This penalizes green businesses and can drive them out of business.
2. Information asymmetry. Unlike claims about product characteristics that consumers experience from interacting with the product, consumers have no ability to independently validate claims about the environmental and social impacts of a product because these are not experienced directly by the consumer. Impacts to health may be experienced directly but may be difficult to identify or may manifest over a long period. These are credence claims — consumers have to rely on the information provided by businesses, who are better placed to identify the impacts of their own products.
3. Support consumer decision-making. Consumers will not pay more for greener products unless they feel they can trust the claims and meaningfully compare the environmental quality with other products. Greenwashing confuses and ultimately discourages consumers from buying green products and services, which seriously undermines and threatens consumer confidence in green claims, greener production practices and a net-zero economy.
4. Stifles green innovation. If companies can get away with greenwashing, there is no incentive to innovate and invest in truly green products and services. Developing new green products already faces disadvantages in trying to establish new markets or displace existing products.
5. Exploits and magnifies consumer biases. The shift towards more sustainable production and consumption practices is already hindered by consumer biases which lead to a mismatch between what consumers want and what they buy. These biases are magnified by greenwashing which discourages informed decisions.
6. Economic welfare impact. False environmental claims cause increased pollution and environmental degradation with consequent welfare losses beyond the consumer of the product. These costs are distributed amongst potential consumers in the relevant market, those outside, as well as future generations.
7. Global competition. Other countries, including Canada's key trading partners in the UK, EU, and USA, are adapting their competition law to incorporate sustainability considerations and support the transition to a low-carbon economy. If Canada fails to act, we will lose competitive advantage in the global market.

Environmental and social policy reasons to address greenwashing include:

1. Undermines government regulation. If our governments are falsely led to believe that the market is effectively addressing climate change, then they will be less inclined to undertake climate action (via legislation, regulation, or policy) as necessary and may direct public resources towards supporting ineffective climate initiatives.
2. Impacts on consumers' health. False environmental claims lead to undisclosed health impacts on consumers, for example cosmetic products often contain harmful chemicals that consumers are unknowingly exposed through greenwash. Consumer awareness would contribute to phasing out such toxic ingredients altogether.
3. Impacts workers' health. Workers in green industries have reduced environmental exposures leading to increased health.
4. Promotes environmental disinformation. Greenwashing has other non-market effects, such as promoting disinformation regarding the causes and solutions to environmental crises such as climate change, which stifles public support for necessary action.
5. Environmental, social, and cultural impacts. False environmental claims cause increased pollution and environmental degradation, biodiversity loss, and profound cultural and social impacts. Not all of the impacts can be meaningfully calculated in economic terms, even when using best practices for social and environmental accounting. Everyone is impacted, but these costs are unevenly distributed and disproportionately impact Indigenous communities, as well as racialized and poor communities.

Following the best practices from jurisdictions around the world, the Competition Act should be amended to strengthen the deceptive marketing regime to better address greenwashing. This includes prohibiting specific types of greenwashing, making environmental claims presumptively material, ensuring environmental and social impacts are included as attributes of product quality, and enhancing the ability of individuals to advance legal challenges. Alongside these amendments, the Competition Bureau should issue new and modernized guidance on environmental claims for industry and advertisers.

3.1 Clear prohibitions against specific forms of greenwashing

Businesses and advertisers need clear direction about what types of environmental and climate related claims they can and cannot make without running afoul of the law. The most effective way of providing this direction – and signaling its importance – is to legislate the specific types of claims that can be made and to clearly lay out prohibited deceptive practices.

Legal prohibitions on specific types of greenwashing are necessary as:

1. The extent of greenwashing in the marketplace demonstrates that the current prohibitions in the Act against deceptive marketing are not effectively addressing greenwashing. The severity of the climate and environmental crises are significant enough to warrant strengthening the Act by providing a specific focus on greenwashing.
2. Statutory investigations into alleged misrepresentations are based on consumer applications and tax the limited capacity of the Bureau. This results in an enforcement regime that is reactive and slow – a piecemeal response to a systemic problem.
3. Complainants face the hurdle of making the case that a certain representation meets the legal test required by s. 52 and s. 74.01, and the Bureau must also undertake this analysis itself. Removing this step could make it easier for both complainants and the Bureau to address misrepresentations.
4. Guidance serves a complementary function to prohibitions by educating companies and consumers but, by itself, it is not sufficient to address this issue because it is not legally binding and does not convey the same degree of seriousness as a legal prohibition.
5. Greater certainty about what types of greenwashing are prohibited serves both as an enabler of legitimate claims (encourages genuinely green production and marketing) and a deterrent for false claims and makes enforcement more effective.

The European Union ("EU") provides a useful example of how the Act might incorporate prohibitions against greenwashing. The EU's Unfair Commercial Practices Directive ("UCPD") includes general prohibitions against certain types of "unfair commercial practices" that materially distort the economic behaviour of a consumer. These practices include: misleading actions, misleading omissions, aggressive commercial practices, or the use of harassment, coercion and undue influence.

Unilateral Conduct

However, the UCPD goes beyond providing a general prohibition and provides greater certainty by listing 31 specific practices that it regards as unfair in all circumstances. In 2022, due to the extent of greenwashing in the marketplace, the EU decided to strengthen the rules to facilitate enforcement in this area and proposes to add 10 more commercial practices that specifically relate to sustainability.

Below, the EU's proposed 10 sustainability-related practices (with a few suggested modifications in italics) are set out, as we believe that they provide a good model for addressing greenwashing here in Canada and should be adopted here. We have also proposed additional practices that address issues that the EU's proposals do not address. A rationale is included for each.

These prohibitions seek to address anti-competitive behaviour and explicitly articulate practices that – if brought to the attention of the Bureau via a complaint under s. 9 of the Act – would be captured by the existing prohibition against misrepresentations. As such, they fall within federal jurisdiction and do not impair provincial constitutional authority; the only difference is that our recommendations offer a more targeted and effective approach than the Act currently offers.

Such specificity is not new to the Act. A previous amendment introduced provisions under s.52(1.3) to better tackle another deceptive practice – drip pricing – in which the government recognized that additional specificity was required to address a systemic problem. Further, s.78(1) provides a list of "anti-competitive acts", while the Regulations Respecting Anti-Competitive Acts of Persons Operating a Domestic Service provide additional examples of prohibited "anti-competitive acts" in the specific context of domestic services. The specificity provided by these provisions make it much easier to identify and address the impugned behaviour.

To avoid excessive detail within the Act itself and to allow the Minister greater flexibility in keeping the Act up-to-date and responsive to new forms of greenwashing, the prohibitions should be included in regulation.

Recommendations

2.1 Insert a provision in s. 52 of the Act that states: "For greater certainty, in this section and in sections 52.01, 52.1, 74.01 and 74.011, representations that are considered to be false and misleading in a material respect in all circumstances may be prescribed by regulations."

2.2 Establish a regulation under s. 128(1) of the Act and include the following representations that are misleading in all circumstances:

Proposed prohibitions (with rationale)

1. Displaying a sustainability label in relation to a product, service, or company which is not based on a certification scheme or not established by public authorities.

Rationale: Sustainability labels are effective ways for companies to represent their sustainability-related attributes and distinguish themselves from competitors. However, consumers are often faced with labels that are not always transparent or credible, including "self-certification" schemes. The EU has proposed a "Green Claims Directive" to ensure the quality of environmental labels (a type of sustainability labels). The Minister should review the Green Claims Directive, particularly the requirements for environmental labels in Articles 7 and 8, and include similar requirements in a new regulation under the amended Act.

2. Making a generic environmental claim in relation to a product, service, or company for which the trader is not able to demonstrate recognised excellent environmental performance relevant to the claim.

Rationale: Consumers are often faced with unclear or poorly substantiated environmental claims. The term "generic environmental claim" should be defined in the regulation. Examples of such claims can be provided in the regulation and explained further in accompanying guidance. The regulation should specify that "excellent environmental performance" can be demonstrated by compliance with regulation, recognized eco-labelling schemes, or applicable laws.

3. Making an environmental claim about the entire product, service, or company when it actually concerns only a certain aspect of the product, service, or company.

Rationale: A product may have a variety of environmental impacts, some positive and some negative. Companies often produce several types of goods and services, some of which are better for the environment than others. However, it is misleading to cherry-pick a positive environmental claim and use it to represent the entire impact of a product, service, or business while not disclosing significant negative environmental impacts.

4.a) Presenting requirements imposed by law on all products, services or businesses in the relevant product category on the Union market as a distinctive feature of the trader's offer.

4.b) A commercial practice shall also be regarded as misleading if…it involves: advertising benefits for consumers that are considered as a common practice in the relevant market.

Rationale: A requirement that is imposed by law (or is a common practice) and, therefore, applies to all similar products, services, or businesses, is not a feature that companies should be able to use to distinguish themselves or their products or services. Stopping this practice will encourage companies to innovate and go beyond the requirements of the law, distinguish themselves by this extra effort, and be rewarded by consumers as appropriate.

5. Omitting to inform the consumer that a software update will negatively impact the use of goods with digital elements or certain features of those goods even if the software update improves the function of other features. Rationale: Practices that cause the early obsolescence of goods negatively impacts the consumer (e.g. replacement costs) and the environment (e.g. increased material waste).

6. Omitting to inform the consumer about the existence of a feature of a good introduced to limit its durability. Rationale: Practices that cause the early obsolescence of goods negatively impacts the consumer (e.g. replacement costs) and the environment (e.g. increased material waste).

7. Claiming that a good has a certain durability in terms of usage time or intensity when it does not.

Rationale: Providing better information on products' durability or lifespan has been identified as an important option to empower consumers in the green transition.

8. Presenting products as allowing repair when they do not or omitting to inform the consumer that goods do not allow repair in accordance with legal requirements.

Rationale: The repairability of a product is an attractive feature to consumers and helps promote the circular economy. It is important, therefore, that consumers receive reliable information about the repairability of a good.

9. Inducing the consumer into replacing the consumables of a good earlier than for technical reasons is necessary.

Rationale: Such practices mislead the consumer into believing that the goods will no longer function unless their consumables are replaced, thus leading them to purchase more consumables than necessary. (An example of a "consumable" is an ink cartridge for a printer.)

10. Omitting to inform that a good is designed to limit its functionality when using consumables, spare parts or accessories that are not provided by the original producer.

Rationale: This could lead to unnecessary repair costs, waste streams or additional costs due to the obligation to use the original producer's consumables which the consumer could not foresee at the time of purchase.

11. Making an environmental claim related to future environmental performance without clear, objective and verifiable commitments and targets and an independent monitoring system.

Rationale: Pledges to achieve targets in the future are greenwashing unless they are accompanied by credible, independently verified implementation plans. For a claim like "net-zero by 2050" this means a fully-costed plan that covers all Scope 1, 2, and 3 emissions, is based on existing and viable technology, and is accompanied by accountability mechanisms (e.g. interim targets and annual reporting). Several reputable assurance standards exist for net-zero claims and a United Nations expert group has released recommendations for net-zero claims by businesses and financial institutions.

To this list, we would also add the following deceptive practices:

12. Environmental claims about fossil fuel products and fossil fuel transport and environmental claims about the businesses which produce them.

Rationale: It is impossible to claim anything environmentally positive about fossil fuel products (e.g. coal, oil, and gas) or fossil fuel transport (e.g. internal combustion vehicles, boats, and planes) without misleading people. For example, this would prohibit a car company from making green adverts about gasoline cars and their business while they make gasoline cars, but it could still make a green advert about their electric cars (which are not fossil fuel transport).

13. Claiming that buying carbon credits will offset emissions associated with a product, service, or company. A carbon credit is a payment to the costs of a carbon credit project that stores carbon dioxide or reduces emissions from deforestation/land use change (e.g. planting trees or protecting forests). This carbon credit is then used by the payor to say it has 'offset' or compensated a certain quantity of its GHG emissions (usually 1 tonne per credit).

Carbon credits cannot compensate for GHG emissions for two reasons:

1. Drastic emissions reductions are required to address climate change and there are far more emissions than natural sinks (e.g. forests) and artificial means (carbon capture and storage). Achieving our climate goals requires both urgently reducing emissions and enhancing natural sinks, so relying on one in place of the other does not work; and
2. One tonne of carbon offset is not equivalent to one tonne of emissions because offsets suffer from issues with "additionality" (which is whether the emissions savings would have happened without the credit) and "permanence" (which is whether the storage of carbon will last as long as is necessary to help address climate change). Further, carbon credits offer a means to "green" a high-carbon product/activity, which promotes their continued use and associated emissions. It also acts as a barrier to green innovation and societal transformation.

3.2 Guidance on the use of green terms for industry and advertisers

To support compliance with the prohibitions against greenwashing in the Act, the Bureau should provide consumers, advertisers, and businesses with guidance on environmental claims. This would serve as a practical, user-friendly resource that outlines the Bureau's interpretation of the Act with examples of the types of claims that can – and cannot – be made. This is particularly important for consumers and small and medium-sized businesses who may lack the legal expertise to interpret and apply the legislation themselves.

The Bureau last published environmental claims guidance for industry and advertisers in 2008 and archived the guidance in November 2021. Since 2008, the science and understanding around environmental claims has evolved and new terms (e.g. "net-zero") have emerged that are very popular, hard to understand, and are being frequently misused in advertising. Updated guidance is required.

Several jurisdictions provide guidance on the use of sustainability-related claims that outline key principles or rules to follow and examples of claims that are (and are not) allowed. There are a number of similarities between the examples.

The UK Competition and Markets Authority ("CMA") has published a Green Claims Code that sets out six principles to give businesses greater clarity about how the CMA thinks the law translates into practice and what this means for businesses making environmental claims. Claims must:

1. Be truthful and accurate
2. Clear and unambiguous
3. Not omit or hide important relevant information
4. Be fair and meaningful
5. Consider the full lifecycle of the product or service; and
6. Must be substantiated.

The Dutch Autoriteit Consument & Markt and the New Zealand Commerce Commission have both published guidelines for businesses making sustainability and environmental claims and include similar principles as the UK.

The US Federal Trade Commission ("FTC") is currently seeking public comment on potential updates to its Green Guides, which were last updated in 2012. These guides help marketers ensure that the claims they make about the environmental attributes of their products are truthful and non-deceptive under the Federal Trade Commission Act. The FTC is seeking input on issues that we believe are also relevant to Canadian consumers, including carbon offsets and climate change.

Given the existential nature of the climate crisis, net-zero claims deserve particular scrutiny and guidance. The United Nations High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities ("UN Expert Group") has recently released clear and robust guidance on net-zero commitments by non-state entities (i.e. businesses, financial institutions, cities, and regions). Chaired by Catherine McKenna, former federal Minister of the Environment, the UN Expert Group noted the important role of non-state entities in addressing climate change, stating that:

"Non-state actors – industry, financial institutions, cities and regions – play a critical role in getting the world to net zero no later than 2050. They will either help scale the ambition and action we need to ensure a sustainable planet or else they strongly increase the likelihood of failure. The planet cannot afford delays, excuses, or more greenwashing."

The UN Expert Group's guidance is based on credible existing initiatives like the Science Based Targets initiative and the UN's Race to Zero and makes 10 practical recommendations to bring integrity, transparency and accountability to net zero by establishing clear standards and criteria. These recommendations should inform the Bureau's updated guidance.

A recent report by Ecojustice, Shift:Action, and Environmental Defence also notes the importance of financial institutions and large corporations in Canada developing "credible climate plans" and describes the essential elements of such plans:

1. Target: set targets that align the financial institution's activities with limiting [global] warming to 1.5°C;
2. Plan: implement programs and policies to deliver on targets; and
3. Report: report to regulators annually on progress against targets.

Recommendation

3.1 The Competition Bureau should draft and publish new guidance for environmental and climate claims.

3.3 Scope of prohibitions against misrepresentations

Sections 52 and 74.01(1)(a) of the Competition Act address false or misleading representations and deceptive marketing practices in the promotion of the supply or use of a product or any business interest. These prohibitions form the central measures that the Act uses to address misrepresentations, and are relied on by the Bureau and complainants to address greenwashing.

As currently drafted, these provisions fail to adequately address greenwashing because they employ a narrow interpretation of key terms and omit environmental, social, and health impacts as relevant product qualities. Further, enforcement of these provisions relies largely on an application process to an under-resourced Bureau that takes several years to complete and lacks transparency.

3.3.1 Ensure that the prohibition against false and misleading representations captures all relevant business interests

To be prohibited under s. 52 and s. 74.01(1)(a), representations must be false and misleading "in a material respect" and for the purpose of promoting "the supply or use of a product or service" or "any business interest."

Whether a representation is misleading in a "material respect" has been interpreted by the courts to focus on the extent of influence of the representation on purchasing decisions of consumers. The problem is that this is just one type of business interest that a company may seek to promote, therefore, enforcement that focuses solely on consumer transactions could make it difficult to address environmental representations that unfairly promote other business interests that also lead to market distortions.

For example, a company might make a representation about its environmental reputation or company-wide impact on the climate in order to obtain social license to operate, influence political and regulator decisions that affect its operations, or attract potential financing and other business support to enable its operations. These are all business interests, the advancement of which could improve the position of a company within the marketplace.

Fortunately, the plain language meaning of the term "material respect" may not be the problem as it does not tie the term to consumer transactions or any particular type of business interest. Further, the courts have stated that the term "business interest" be given wide meaning. It may be the case that all cases to-date about representations have dealt with consumer transactions and, as a result, the term "material respect" has only been defined to-date in connection with purchasing decisions.

Nevertheless, we believe that it is necessary to resolve this ambiguity by defining "business interest" in the Act to make it clear to companies and consumers that the prohibitions in s. 52 and s. 74.01(1)(a) apply to all types of business interests.

Recommendation

4.1 Amend the definitions in s. 2 to include:

"business interests" means, but is not limited to, consumer transactions, corporate reputation, financial and other support, and political and regulatory decisions.

3.3.2 Require adequate and proper tests for environmental, climate, health and social impact claims

The prohibition in s. 74.01(1)(b) against representations that are not based on adequate and proper tests are focused on specific characteristics that the consumer will experience themselves: performance, efficacy, or length of life of a product. The prohibition omits key product characteristics that consumers care about but have to rely on the company for information: environmental, climate, health, and social impacts.

The characteristics currently listed in the s. 74.01(1)(b) are those that consumers will experience themselves as they use the product. It will be relatively apparent to them whether the product performs as advertised, creates the advertised result, or lasts as long as advertised. However, the environmental, climate, health and social impacts of a product are not impacts that consumers will necessarily experience themselves or be able to establish a direct link to their use of the product.

For example, consumers will – most likely – be unable to determine the regional environmental issues or impacts where the product is manufactured. They will not be able to measure the carbon emissions from the manufacture, transport, use, or disposal of the product. They will not be able to assess the health and safety conditions of labourers. And it can be hard to identify link health effects experienced by the consumer directly to the use of a product.

To understand these impacts, the consumer has to rely on the representations of the company and the tests that the company has undertaken to measure these impacts. There is a significant information asymmetry that exists between the company and the consumer with respect to an understanding of environmental, climate, health and social impacts and this gap is larger than with other types of product characteristics.

Competitor Collaborations

It is important, therefore, that companies are required to ensure that any representations they make about environmental, climate, health and social impacts of the products and services are based on adequate and proper tests. And further, that they can be penalized under the Act for failing to do so.

The EU is considering taking similar steps to ensure that companies do not deceive consumers about the environmental and social impacts of products. The EU's UCPD currently lists a number of product characteristics about which a trader should not deceive a consumer. The EU proposes to amend this list by adding "environmental and social impact", "durability", and "repairability".

Recommendation

5.1 Amend s.74.01 to read:

(1) A person engages in reviewable conduct who, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever,

…

(b) makes a representation to the public in the form of a statement, warranty or guarantee of the performance, efficacy, or length of life, or environmental, climate, health, or social impact of a product that is not based on an adequate and proper test thereof, the proof of which lies on the person making the representation; …

3.3.3 Specify that representations about the environment, climate, and health are material

Given the serious and widespread nature of greenwashing and the broad societal costs associated with its practice, it is important to signal as clearly as possible that greenwashing is prohibited. The more clear that this is stated in the Competition Act, the more likely that companies will avoid running afoul of the legislation and the more straightforward it will be for complaints to file greenwashing complaints and/or the Bureau to respond to complaints or prosecute greenwashing itself. Confirming in the Act that representations about health, the environment, and climate change are always "material" is an effective way to signal that greenwashing is prohibited.

As currently understood, a misrepresentation is material if it is so important, pertinent, germane, or essential that it could affect the decision of a consumer to purchase the product. In Canada (Commissioner of Competition) v Sears Canada Inc, the court considered three factors to determine the materiality of misrepresentations:

1. the evidence that consumers consider the subject of the representations when making purchasing decisions;
2. the magnitude of the misrepresentations; and
3. the limited ability of the consumer to assess the accuracy of the representations.

As we note above, consumers do care about the environment and climate change when making decisions. Regarding magnitude, the serious nature of the climate crisis and other environmental issues (such as biodiversity loss) means that any misrepresentation that even slightly exacerbates these crises is de facto of high magnitude. Finally, the information asymmetry between companies and consumers about the environmental and social impacts of products and services mean that it is very difficult for consumers to assess the accuracy of environmental claims.

The US FTC considers some types of representations presumptively material and thus unlawful. For example, claims that "significantly involve health, safety, or other areas with which the reasonable consumer would be concerned" are presumptively material. A presumption of materiality also applies to express claims for which the seller knew (or should have known) that an ordinary consumer would need omitted information to adequately evaluate the product or service, and that the omission would mislead a consumer. Similarly, under certain conditions the Commission can infer materiality from implied claims.

Therefore, it would be beneficial to clarify in the Act that representations about the environment, climate, and health should automatically be considered "material".

Recommendation

6.1 Insert a provision in s.74.01(1) that states: "For greater certainty, representations about the environment, including the climate or greenhouse gas emissions, and health are material".

3.4 Expand the public's ability to challenge greenwashing

There must be meaningful ways for consumers to challenge greenwashing, but currently the civil recourse and investigatory processes are cumbersome and present barriers. The Act should expand access to private redress to increase mechanisms for enforcement by expanding the avenues to challenge greenwashing of products and businesses.

Section 36 of the Competition Act provides access to civil litigation for false or misleading claims under s. 52. To be successful, the consumer must prove that the representations were made knowingly or recklessly, which is a higher standard in law. The consumer must also prove they suffered damages by obtaining less value than expected based on the representations, and as such suffered damage causally connected to the misrepresentation. The requirement to prove damages for false and misleading statements related to alleged environmental benefits can be challenging, which presents a barrier for many greenwashing claims. It is difficult for a consumer to demonstrate that they acquired less value than expected, particularly for general or vague greenwash claims about a product (i.e., 'eco-friendly') or corporate greenwash claims (i.e., 'Paris-aligned'), as these statements are not tied to the performance of a product.

Private greenwashing litigation is important as not only does the Bureau have limited capacity to investigate complaints and undertake court actions itself, but also as its investigatory and complaint process is opaque and largely excludes the complainant. For an issue as globally important and market impactful as greenwashing, there must be transparent and viable mechanisms for individuals to challenge false and misleading environmental practices in a public forum. Similar to the legal principle applicable to courts, justice must be done and must also be seen to be done. Therefore, not only must there be laws against deceptive marketing, but there must be credible and public avenues of enforcement to uphold these laws.

The Competition Act should allow individuals to advance litigation for deceptive environmental marketing to a court, including the Tribunal, without needing to prove causation and damages and without having to prove knowing or reckless behaviour. Allowing individuals to bring deceptive environmental marketing claims before the Tribunal is an extension of current provisions that already allow individuals access to the Tribunal for other competition matters, and that already allow the Tribunal to make determinations on deceptive marketing claims. The provisions of the Act should be expanded to allow any person to apply to the Tribunal for leave to bring claims for environmental deceptive marketing practices, as long as the matter is not already the subject of an inquiry or has been settled.

An example of legislation that grants a broad private right of action is the British Columbia Business Practices and Consumer Protection Act, which allows any person, whether or not they have purchased a company's product or services or suffered harm from those products or service, to advance a proceeding against that company. The Competition Act needs a similar mechanism, and one that allows the court to grant the same remedies as it would in a proceeding by the Commissioner.

The available relief should also be expanded to ensure the enforcement is able to provide, to the fullest extent possible, an adequate remedy and deter future deceptive marketing. The Act should allow courts to order a payment of redress in the collective interest when there is wider environmental harm from the deceptive marketing practice, like when products are sold using misleading environmental claims. This remedy was a mechanism recommended by the UK CMA.

If deceptive marketing causes harms to particularly sensitive components of the environment, such as protected species at risk, higher awards should be granted. We would recommend considering giving the court discretion to award the person advancing the claim to recover damages. The Tribunal should also be permitted to order contracts annulled and restitution to be available for deceptive practices.

Recommendations

7.1 Add s. 103.1.1 that "Any person may apply to the Tribunal for leave to make an application under section 74.1(1) for matters related to environmental, including climate, deceptive marketing practices."

7.2 Add s. 103.1(7.2) on granting leave such that "The Tribunal may grant leave to make an application under section 74.1 if the matter

(a) is not subject to an inquiry by the Commissioner, and

(b) was not the subject of an inquiry that has been discontinued because of a settlement between the Commissioner and the person against whom the order is sought.."

7.3 Amend s. 74.1(1) and s. 74.1(9) to add "...on application by the Commissioner or a person granted leave under section 103.1.1…".

7.4 Remove the limitation in s. 74.1(1)(d) that restitution is only available for conduct reviewable under s. 74.01(1)(a), so that it is available for all deceptive marketing practices, such as making unsubstantiated performance claims about a product.

7.5 Add s. 74.1(1)(e) to allow a court, having determined that there has been reviewable conduct, to order a payment of redress in the collective interests when there is broader environmental harm associated with the reviewable conduct.

7.6 Add s.74.1(1)(f) to allow a court, having determined that there has been reviewable conduct, to order damages payable.

7.7 Add s.74.1(1)(g) to allow a court, having determined that there has been reviewable conduct, to cancel contracts.

4. Administration and Enforcement

4.1 Increase Powers and Capacity

To be effective, businesses and consumers must have confidence that competition law, policies and standards are supported by strong regulatory action. To increase the strength of, and confidence in, the enforcement and administration of green competition issues, the Bureau's powers and capacity must be enhanced. The six-applicant inquiry process is a key tool in the public interest that appears to instigate the vast majority, if not all of the Bureau's green deceptive marketing inquiries. This process should not be removed or weakened.

The Bureau should establish a sustainability taskforce to ensure Canada is a leader and not a laggard on green competition issues and help combat the skepticism and confusion related to unregulated sustainability claims. The creation of branches with expertise in emerging issues is not new to the Bureau. In the UK, the CMA established a cross-organizational sustainability taskforce to be a focal point for policy issues relating to sustainability. Their taskforce leads engagement, develops internal thinking and maintains a network of experts, as well as providing advice to its government and drafting guidance. We recommend doing the same.

Canada's competition regime would also benefit from the Bureau having market studies powers and increased capacity enjoyed by competition authorities in other jurisdictions, allowing proactive investigation and assessment of green issues. Although the Bureau says it takes environmental claims seriously and will take action on the laws under its purview, its approach to enforcement appears merely reactive to consumer complaints and its guidance for industry environmental claims is outdated and archived. In our experience, it takes 2-3 years for an application for inquiry to be resolved, all while the greenwash continues. In contrast, the Australian competition regulator announced in March 2023 it would be investigating firms after a sweep of the internet showed that over half of businesses were making concerning environmental or sustainability claims.

Recommendations

8.1 Establish a sustainability taskforce in the Competition Bureau.

8.2 Empower the Commissioner of Competition to formally carry out market studies.

4.2 Increase Transparency

There is a lack of transparency related to Bureau applications and the outcomes of inquiries. It is unclear how many applications for inquiry under s.9 of the Act are filed, how many applications trigger an investigation and the outcomes of all of those inquiries. For 2022, only one deceptive marketing inquiry case outcome is listed on the Bureau's website. Similarly, there is no information on the number or results of complaints the Bureau receives on deceptive marketing.

Due to the public interest nature of environmental claims the Bureau should publish the outcomes – with reasons – of all deceptive marketing environmental applications received under s.9 as well as other complaints, regardless of the result. Repealing the requirement under s.10(3) of the Act that inquiries must be conducted in private would also increase transparency as the Bureau could provide information to the public related to the nature and progress of investigations, while maintaining confidentiality under s.29 of the Act.

Recommendations

9.1 On the Bureau's website, publish all s.9 applications received by the Bureau, provide notice of whether an inquiry has commenced, and publish the outcomes and related reasons.

9.2 On the Bureau's website, publish summaries of complaints made outside of the s.9 process and make public the outcomes of such complaints.

9.3 Repeal s.10(3) of the Act.

5. Competitor Collaborations

Exemptions to allow sustainability agreements

The private sector has a crucial role in accelerating and enabling shifts towards sustainability and climate resilient development. Cooperation agreements can help reach sustainability goals faster, in a more cost-efficient way and in a manner that overcomes demand-side market failures. In some cases, it may be advantageous for competitors to collaborate in undertaking environmental action, such as phasing out environmentally damaging products, services, and processes. Development of new innovation can be costly and time consuming particularly for emerging or small businesses. Absent cooperation, the first mover disadvantages may stifle green innovation, particularly when unchecked greenwashing distorts the market. The Act should be amended, and the Bureau should issue guidance, to ensure that competition law does not impede collaboration between private actors that is necessary to further environmental protection and sustainability.

Currently, the Act chills sustainable collaboration by:

1. making it an offence under s.45(1) to conspire, agree or make arrangements with respect to price and the production or supply of products, and

2. empowering the Tribunal under s.90.1(1) to constrain agreements that substantially lessen competition.

These provisions, particularly without guidance, can impede cooperation to phase out environmentally damaging products or processes. It discourages agreements aimed at establishing environmental standards, coordination to reduce environmentally harmful substances, and sharing the costs of environmental protection measures. For example, it has been reported that concerns about such antitrust rules hindered the Net Zero Insurance Alliance from adopting commitments to exit coal insurance. The Bureau has not provided guidance to businesses on sustainability agreements, and its Competitor Collaboration Guidelines are silent on sustainability and the environment.

Canada should reintroduce the environmental defence to conspiracy claims. It should also follow the lead of other jurisdictions and amend the Act to allow agreements that are in the public benefit for environmental and sustainability progress, even if there is a lessening of competition.

For example, UK competition law allows agreements that lessen competition when there is a benefit related to production, distribution, and technical or economic progress. The UK CMA recently published draft guidance on sustainability agreements for consultation. The draft guidance states that the benefits of sustainability agreements can include:

• eliminating or reducing harmful effects from production or consumption that the market has not addressed (like reducing greenhouse gas emissions),
• creating new products with reduced environmental impact, and
• creating economies of scale for environmentally sustainable products.

The draft guidance also includes specific direction on climate change agreements "where a more permissive approach is adopted" that would take account of the benefits to all UK consumers (instead of only the consumers of the product or service in question) when balancing the harm to competition against the benefits that result from the agreement.

The UK CMA's draft guidance also flags that the CMA will help provide clarity to businesses, provide informal advice (which, if followed, militate against fines), and that it "will not take enforcement action against environmental sustainability agreements, including climate change agreements, that clearly correspond" to the examples and principles in the sustainability agreements guidance. Businesses are expected to evaluate the environmental benefits/negative effects as well as effects on competition to demonstrate the benefits are substantial enough to offset any harm caused. By operating from a view that it is important not to impede legitimate collaboration between businesses to promote or protect environmental sustainability, the UK competition regulator is supporting a resilient economy that can grow sustainably.

The Bureau should also issue guidelines to businesses to provide clear guidance on the application and scope of cooperation. The European Commission has published guidelines on the application of existing rules on horizontal agreements and includes a chapter on agreements that "genuinely pursues one or more sustainability objectives." There is a specific exemption in the EU applicable to the agricultural sector which allows competitors to collaborate in ways they might not otherwise be allowed when certain sustainability objectives are being pursued. Other horizontal sustainability agreements are not exempt, however; the EU guidance describes situations when such sustainability agreements would not raise competition concerns. It details how typically sustainable standardization agreements are unlikely to produce appreciable negative effects on competition. Under the legal framework sustainability agreements that have anti-competitive impacts can still be justified under the general rules applicable to all horizontal agreements.

Recommendations

The Act should remove the barriers to legitimate sustainable cooperation, which could be accomplished through the following.

10.1 Amend the Competition Act to insert an environmental defence to conspiracy claims under s. 45. The defence that existed in earlier versions of the Act could be used, i.e., "Subject to subsection (4), in a prosecution under subsection (1), the court shall not convict the accused if the conspiracy, combination, agreement or arrangement relates only to measures to protect the environment."

10.2 Add s. 90.1(2)(i) to the Act to allow the Tribunal to have regard to "any effect of the agreement or arrangement on the environment, including whether the agreement supports Canada's goals on the environment, including climate, and sustainability".

Deceptive Marketing

10.4 The Bureau should issue guidance on environmental sustainability agreements, including climate change agreements, providing further information to businesses, including on their approach to enforcement.

6. Mergers

The environment as a public benefit or detriment should be considered in mergers

To ensure mergers in our marketplace align, and do not hinder, our national environmental, climate, and human rights goals, the Act should be amended to empower the Tribunal to consider and impose conditions on mergers for the broader public benefit.

A recent example of a merger that raised public benefit concerns related to climate change is the bid by the Royal Bank of Canada ("RBC") to purchase HSBC's Canadian unit. Both RBC and HSBC have been found or accused of misleading consumers by making false promises about their climate action while financing the primary driver of climate change, fossil fuels. Allowing this acquisition without consideration of, and imposition of conditions to address, the greenwashing impact of the merger undermines efforts to stamp out greenwashing and address climate change. As these are financial entities, the Act allows the Minister of Finance to consider the public interest in assessing the merger; however, the Act currently provides no such public benefit consideration to the Tribunal or Commissioner.

Canada's competition law should follow the lead of other countries and incorporate the public benefit into its assessment of notifiable transactions and mergers. This can further innovation, such as in Germany where the public interest in the energy transition and the environment justified overriding concerns around a merger's anti-competitive impacts on the supply of bearings as there was a potential to develop key technologies for wind energy generation. In New Zealand, the competition authority may permit restrictive trade practices and can grant mergers and agreements that substantially lessen competition if it finds sufficient public benefit outweighing the harm. The "public benefit" includes anything of value to the community generally and any contribution to the aims pursued by the society, including benefits or detriments related to the environment, health, and social welfare. Canada's competition law should incorporate similar public interest matters on environmental protection, and the consideration of human rights, health impacts, and Indigenous reconciliation must also form part of this assessment.

When making competition decisions regarding mergers, the Tribunal should systematically assess the environmental and social impact as part of its consumer welfare analysis, and whether a reduction or increase of competition will likely increase or reduce the environmental burden on consumers. To aid in this, businesses should be required to provide information on public benefit of notifiable transactions to the Commission, which should include data such as the emissions impact of the merger, as well as known issues or concerns related to environmental harm, allegations of deceptive marketing, and potential impact on Indigenous rights.

Recommendations

Incorporate public benefit considerations into the merger analysis and provide the Tribunal the ability to impose conditions to remedy concerns for the public benefit. This could be accomplished as follows:

11.1 Add a provision to the Act that includes public benefit considerations as a supplement to the efficiency defence. For example, a new s. 96.1 might state:

"The Tribunal shall not make an order under s. 92(1) if it finds that the agreement or arrangement has brought about or is likely to bring about a net public benefit that outweighs the potential harm."

11.2 Require the Tribunal to consider and make orders for the public benefit in assessing mergers by adding s. 92(1)(g), which may read:

"The Tribunal

(i) shall consider whether it is necessary to make orders requiring any party to the proposed or completed merger or any other person to take or restrain from taking certain action to ameliorate any negative impacts to, or protect, the public benefit arising from the proposed or completed merger; and,

(ii) may order any party to the merger or proposed merger or any other person to take or restrain from taking action to ameliorate negative impacts to, or protect, the public benefit from the proposed or completed merger.")

11.3 Add s. 91.1 to the Act to define "public benefit" as including "environmental protection, including progress towards, and not hindrance of, Canada's environmental and climate commitments and the furtherance of human rights, including Indigenous rights and reconciliation."

11.4 Amend the Notifiable Transaction Regulation, SOR/87-348, s.16(1) to include a new provision as subsection (e) to require each party and affiliates to provide information on matters that positively or negatively impact the public benefit, including impact of the merger on greenhouse gas emissions, as well as complaints, legal and regulatory proceedings, and known issues or concerns related to environmental harm, allegations of deceptive marketing, and any foreseen impact on human rights, including Indigenous rights.

11.4 Amend the Notifiable Transaction Regulation, SOR/87-348, s.16(1) to include a new provision as subsection (e) to require each party and affiliates to provide information on matters that positively or negatively impact the public benefit, including impact of the merger on greenhouse gas emissions, as well as complaints, legal and regulatory proceedings, and known issues or concerns related to environmental harm, allegations of deceptive marketing, and any foreseen impact on human rights, including Indigenous rights.

Merger Review

Teamsters Canada is a labour organization with more than 125,000 members across Canada. We represent workers in all areas of transport, air, rail, roads, ports, and in other sectors. We are the largest private logistics and transportation union in Canada. Teamsters Canada is committed to advocating for fair competition in the Canadian economy. The Competition Act of Canada has a significant impact on how companies operate and compete in the market. As the economy evolves, it is necessary to modernize the Competition Act to protect good union jobs.

As a union that operates mostly in the private sector, our members can be deeply impacted by monopolistic tendencies in an economy and abuse of power that results from market control being concentrated into the hands of a single or handful of companies. Teamsters Canada is concerned about the power of corporate monopolies in Canada and its negative impact on consumers and fair economic opportunities for workers. We believe that the Competition Act and the Competition Bureau, which are responsible for enforcing the law, are insufficient in protecting consumers and workers.

It is well understood how monopolies undermine consumer choice often leading to higher prices for consumer goods as well engendering less choice and innovation. Average working Canadians are today widely impacted by monopolies. For instance, despite the almost indispensable use of cellular phones by most workers, Canada continues to have the highest cellular phone rates in the world(https://www.cbc.ca/news/business/marketplace-high-cell-phone-bills-1.6711205) which is widely considered to be due to the high concentration of market power amongst a few companies. These high costs for a virtual necessity squeeze Canadians financially leading to high profits for cell phone companies and higher cost of living for everyone else.

Less often discussed is the impact of monopolies on jobs and on workers. A fairer market ensures that companies strive to offer competitive wages and working conditions to retain their workers. Competition for workers also typically allows for unions to make a stronger case in collective bargaining and achieve better working conditions. It also gives incentive to companies to improve wages if they wish to remain attractive to workers. This effect is to the benefit not only to the members of a union, but to society at large as good-paying jobs ensure better sharing of the wealth generated in an economy and lower levels of income inequality.

A high concentration of market power can lead to monopsony power for corporations which suppresses wages. In some cases when very powerful companies can still be organized by labour unions, these companies may still exercise monopsony power over workers making it more difficult for unions to bargain better working conditions. Companies may also use their corporate power to engage in wage suppression and anti worker policies. They may conspire with others to either keep wages low or make agreements preventing workers from obtaining work from rival companies. The coordination of pandemic pay and its removal by grocers in Canada has led to the federal parliamentary industry committee to recommend that the law be modified to "prohibit cartel-like practices related to the purchase of goods and services, including wage-fixing agreements between competitors" (https://www.ourcommons.ca/Content/Committee/432/INDU/Reports/RP11435180/indurp06/indurp06-e.pdf).

We are pleased that the government of Canada has passed wage-fixing and no poaching laws to target these anti-worker practices.

Teamsters Canada represents thousands of workers in the parcel delivery industry, and we too watched the meteoric growth of Amazon accelerate during the global pandemic. Amazon has become a dominant force in the Canadian economy. Amazon has been accused of anti-competitive practices in the United States, such as using their market power to drive out competitors and setting prices at levels that are not sustainable. Many of these investigations are ongoing. Unchecked corporate power can give companies large resources to skirt labour standards and prevent their workers from joining unions. Amazon has deployed a large number of resources to prevent unionization of its workers (https://pressprogress.ca/amazons-anti-union-tactics-around-the-world-show-what-canadian-warehouse-workers-are-up-against/) and according to documents obtained by the Toronto Star (https://www.thestar.com/news/gta/2020/12/10/amazon-warehouse-workers-saw-injury-rates-double-then-covid-hit-inside-a-hidden-safety-crisis.html) : "Amazon aggressively disputes, challenges or undermines the severity of its workers' injuries — a strategy that can reduce companies' accident costs, along with the benefits injured workers ultimately receive." We believe that this practice warrant investigation by an agency is equipped to deal with abuse of corporate power.

Our overall impression is that anti-trust laws in the United States are much more robust than in Canada and mergers and corporate practices that are harmful to consumers have successfully been blocked. There have also been successful efforts to use the legislation to return wages which have been suppressed by companies through anti-competitive schemes (https://www.nytimes.com/2022/04/14/business/economy/wages-antitrust-law-us.html).

In our view, the current legislation in Canada and its enforcement are insufficient. The recent approval Shaw Rogers deal amidst the highest mobile phone rates in the world underscores this very clearly. Furthermore, with the advent of large technology companies and others such as Amazon, the balance between the power of labour and industry has never been as slanted.

Teamsters Canada shall be following the efforts to modernize the legislation and the Bureau closely. We shall be looking for the following improvements:

1. An effective law that considers the impact of monopolies on workers and consumers: The current purpose clause of the Act centres around the concept of economic efficiency and this must be improved. It must also extend to provide protection to the economic wellbeing of employees and gig workers.
2. A well resourced and effective Competition Bureau: The Bureau must have the resources to conduct extensive research, compel information from corporations and retroactively review mergers and acquisitions as well as abuse of dominance corporate practices used against consumers and workers.
3. The ability of unions to file complaints: There must be mechanisms for Labour unions to file complaints and receive judgments promptly through a reasonable burden of proof. Adequate penalties must also be employed to deter companies from anti-worker practices.

Omar Burgan
Director of Research and Policy Development

Merger Review

3. Abolish the Efficiencies Defence

Sections 96 (1) and 90.1(4) permit mergers and collaborations that are harmful to competition if they create larger efficiencies for the company than they do harms to the economy – these efficiencies include cost savings resulting from layoffs and job loss. In effect, this means that anti-competitive mergers can be justified under the Competition Act where the justification is, in part, that a merger will result in efficiencies that lead to layoffs and job losses. The cost savings of these efficiencies are often directed into the pockets of already wealthy individuals while both workers and Canada's economy bear the cost. Prioritizing corporate profits over jobs drives growing income and wealth inequality in Canada.

Unifor recommends that government:

• Abolish the efficiencies defence and focus the Competition Act on prevention and enforcement of abuses of dominance and anti-competitive conduct, while also building laws and regulations that build countervailing worker and consumer power.

4. Implement a legislative requirement to investigate impact of mergers on workers

Corporate concentration can have just as much of an effect on the labour market as it does in a product market: firms can take advantage of their power to reduce wages and depress working conditions in an industry. Furthermore, as the number of employers shrinks they may be more easily able to collude, both tacitly and actively. In his book, How Antitrust Failed Workers, Eric Posner estimates that "weak antitrust laws in the U.S. causes both employment and GDP to grow 13% slower than would otherwise be the case and leads labour to take a 22% smaller share of the smaller economic pie. " This is a scathing finding. It is reasonable to expect that the Competition Act in its current state leads to similar outcomes in Canada.

Unifor recommends that government:

• Introduce a legislative requirement that the Bureau investigate the impact of mergers on workers and the labour market, including investigating the number of jobs impacted and the effect of a merger on the quality of employment. This requirement combined with the erasure of the efficiencies defense will better capture the full effects of a merger on the broader economy and will allow the Bureau to make better decisions that support the purpose of fair and inclusive growth.

Unilateral Conduct

6. Further Strengthen Wage Fixing Provisions to Address Unilateral Behaviours

The draft enforcement guidance on wage-fixing and no poaching agreements reveals a fatal flaw in the Act that cannot be solved by changing the guidance: wage-fixing and no poaching can only be addressed when there is an agreement between two employers. A one-way agreement or a commitment from one employer with no such reciprocal commitment from another, cannot be addressed by the current law.

This oversight leaves many workers vulnerable to one-way agreements. These are particularly rampant in relationships between recruitment agencies and their clients. In most instances in a temporary staffing arrangement, the client organization which contracts with a temporary help agency will not be in danger of having staff poached by the temporary help agency. However, the agency has an interest in preventing employees from being poached by the client organization, which would likely offer greater security, promotional and other opportunities, and possibly superior pay and benefits.

Consequently, temporary staffing agencies may require their clients to commit to not hiring the contract workers who are employed by the temporary staffing agency. Just as gruesome, these agencies will frequently require their employees by contract not to accept a position at the client organization where they are providing temporary services, although the terms and conditions of employment may be much stronger. Arrangements such as these must be prohibited in the law as well.

Unifor recommends that government:

• Design and implement a rule to address one-way agreements to fix-wages, one-way no poaching agreements, and one-way non-compete agreements.

Competitor Collaborations

5. Design and implement a Civil Equivalent to Section 45 (1.1)

Wage fixing and non-compete agreements exploit the inherent power imbalance between employees and employers. The amendment of the Act to include criminal offences for wage-fixing and no poaching agreements in 2022 was a significant step towards protecting workers from anti-competitive conduct. However, the burden of proof for these offences is so high that meaningful criminal prosecutions for wage-fixing seem almost out of reach. In addition to the new criminal provisions, government must go further to protect workers and the Canadian economy from wage-fixing and no poaching agreements by amending the Act to establish civil liability for the conduct captured by section 45(1.1), including wage-fixing and no poaching agreements. Additionally, to ensure meaningful accountability for wage-fixing and no poaching agreements, unions and private individuals must be given standing to bring private right of action claims for these prohibitions.

Unifor recommends that government:

• Enact a civil prohibition on wage-fixing and no poach agreements as described in section 45 (1.1). This would allow the Bureau to investigate and fine entities that engage in undesirable activity.
• Introduce a new private right of action authorizing unions to bring claims for wage-fixing and no poaching agreements.

Deceptive Marketing

10. Target anti-competitive conduct in the digital advertising market

As online advertising growth continues to outpace all other segments, "traditional media sectors (i.e. broadcast TV, radio, newspapers, and magazines) have been fighting over a shrinking pool of advertising revenue." In fact, Google, Facebook and Amazon now account for 90% of Internet advertising spending in Canada. This is clearly not the only dynamic driving the rapid transformation and restructuring of Canada's media landscape, but advertising revenue has always been a fundamental building block in the news business.

Governments around the world have sued for a variety of alleged anti-trust and anti-competitive practices in this sub-sector of the economy. For example, Google's control of the online advertising business is one obvious area of concern, but so is its increasing dominance in internet search, online business services and hardware. Large corporations continue to amalgamate an outsized presence in every aspect of digital technology and communications, wielding a concerning level of control over the very infrastructure of the internet.

Unifor recommends that government:

• Enhance cooperation with regulators in other jurisdictions, specifically the United States and the European Union, and adopt best practices.
• Act to prevent and prohibit companies from acting anti-competitively as both buyers and sellers in digital advertising markets.
• Put an end to anti-competitive self-preferencing practices and discriminating against competing products and services on online platforms.
• Look to the principles and approaches of regulators that have already been developed to protect the competitiveness of other electronic trading markets, such as stock exchanges and other gatekeeper examples.

Administration and Enforcement

1. Update the Purpose Statement

The Purpose Statement in the Competition Act is narrowly defined and excludes reference to broader goals of inclusive economic growth, fairness, opportunity and prosperity. As a result, these important objectives are not considered by the Bureau or the Tribunal. Canadian civil society cannot rely on corporations to act in the public interest without strict rules and strong government enforcement.

Unifor recommends that government:

• Adapt the legislative Purpose Statement to explicitly include the goals of building countervailing power of civil society, including unions and consumer groups, promoting fairness and opportunity and advancing inclusion and shared prosperity.

2. Expand the Collective Bargaining Exclusion

Part I Section 4 of the Competition Act excludes collective bargaining between corporate entities and groups of employees from the purview of the Act. This preserves the Charter-protected right of unionized employees to collectively bargain with their employers without running afoul of anti-competition rules. However, gig workers and mis-classified dependent contractors are not considered employees and therefore not captured by this exclusion. Consequently, these workers, already more vulnerable due to the nature of their employment relationship, are left even more vulnerable in their employment relationships because the Competition Act may impede their access to collective bargaining.

Unifor recommends that government:

• Expand the collective bargaining exclusion in the Act to include all workers whether or not their relationship is structured as a traditional employment relationship so as to allow gig workers and misclassified independent contractors access to collective bargaining.

7. Increase Transparency and Accountability

The public should be able to access information about the activities of the Bureau, including its investigations, litigation brought before the Tribunal and any ongoing monitoring of market structures. Findings, penalties, and enforcement of penalties as well as conditions and enforcement of conditions imposed on mergers and acquisitions should be easily identified and followed by the public. Unfortunately, the Competition Bureau is not required to be transparent and there is often no way of knowing the number of active investigations, the nature of those investigations, whether findings have been made against a corporate entity or whether conditions and penalties that were ordered by the Bureau have been followed through on.

Unifor recommends that government:

• Codify basic transparency requirements into the legislation and ensure the Bureau has appropriate funding to hire personnel dedicated to meet these legal requirements. This could include regular reporting about issues that the Bureau is following such as industrial concentration.
• Require the Bureau to conduct regular information sessions with stakeholders affected by the Competition Act to provide supporting information on why decisions are made. More information would assist civil society in assessing the effectiveness of the law and whether further improvements are needed.

8. Expand the Private Right of Action

Budget 2022 opened the door for private individuals to bring abuse of dominance cases before the Tribunal. The private right of action for abuse of dominance needs to be expanded to give labour unions and consumer groups the right to bring claims for abuse of dominance, in addition to private individuals. In some cases, unions will be better placed than an individual to bring a claim before the Tribunal, and in other cases unions may be the only entities with sufficient resources to do so.

Unifor recommends that government:

• Expand standing for the private right of action for abuse of dominance to unions and consumer welfare groups.

9. Introduce an Advisory Role for Worker and Consumer representatives

Historically, Canada's competition law has neglected to consider the effects of abuse of dominance and other anti-competitive behaviours on workers. Budget 2022 changed that. Implementing the recommendations above will further broaden the Bureau's scope and allow it to capture a fuller range of anti-competitive conduct. In support of this broader focus, the Bureau will need to put in place systems that allow it to better understand and respond to harmful behaviour that hurts workers. These systems will also need to help the Bureau broaden the list of harms that result from anti-competitive behaviour – it's not just higher prices and lower wages.

Worker and consumer representatives could play an important role in assisting the Bureau and the Tribunal to expand its knowledge and understanding of the harmful effects of anti-competitive behaviour.

Unifor recommends that government:

• Introduce an advisory role for worker and consumer welfare representatives to support the Bureau to understand, investigate and address the full spectrum of harms resulting from anti-competitive behaviour and abuses of dominance.
• Expand the Tribunal lay members to include worker and consumer representatives.

Comments and Suggestions

About Unifor

Unifor is Canada's largest union in the private sector with 315,000 members from coast to coast to coast in nearly every sector of the economy. Unifor members have been directly affected by a number of recent Competition Bureau investigations and decisions including:

• Air Canada's approved (and abandoned) acquisition of Transat AT;
• The investigation into TorStar and Post Media newspaper closures;
• The accusations of wage-fixing at Canada's grocery giants;
• The investigations into the approved acquisitions of Shaw by Rogers and Sunwing by WestJet; and
• The on-going investigation into whether Google has engaged in certain practices that harm competition in the online display advertising industry in Canada.

In each case, it was clear to Unifor members that worker outcomes including job growth, wage growth and working conditions were of little consequence to the Competition Act and as such of little consequence to the Bureau even when experts at the Bureau identified negative effects on the labour market or individual employees. Unifor is pleased to provide input into the Competition Act consultation. Unifor is pleased that Canada is participating in this conversation and committed to updating the Competition Act to better reflect the modern economy.

This review must result in substantial changes that ensure investigating the effects of anti-competitive behaviour on workers becomes a primary and routine activity of the Competition Bureau.

The Problem with Canada's Competition Act

Weak competition legislation and enforcement has exacerbated the cost of living crisis, prevented the growth of good jobs with decent wages and working conditions and contributed to higher levels of wealth and income inequality.

Competition law has neglected to address the effects of anti-competitive behaviour on workers. Emerging research has revealed that the effects of a wide-range of anti-competitive behaviours suppress wages and working conditions and limit society's ability to achieve inclusive growth, including harmful mergers and acquisitions, no poaching and non-compete agreements, and suppressing unionization.

In its update to the Competition Act, government must ensure the Act and Bureau are capable of deterring and punishing harmful behaviour, while also bolstering the countervailing power of civil society, including workers, so that worker and consumer groups are able to successfully challenge harmful corporate concentration and abuses of dominance corporations engage in. Government must ensure strong and flexible abuse of dominance legislation, a well-resourced Competition Bureau and an expanded exemption for collective bargaining within the Act itself.

The following recommendations are critical to curtailing anti-competitive corporate conduct and protecting workers and the Canadian economy from the resulting harms.

Unifor's full submission can be found here: https://www.unifor.org/media/16231

Comments and Suggestions

Please see InfluenceMap's full comments at this link: https://influencemap.org/briefing/Submission-on-the-Canada-Competition-Act-April-2023-21983