Canadian COMPETITION LAW

September 12, 2013

Earlier this week, the Canadian Competition Bureau announced that it was launching a public consultation for suggestions as to where it should intervene (i.e., advocate) for more competition in key Canadian markets.

In this regard, on September 10^th the Bureau announced:

“The Competition Bureau announced today that it has launched a public consultation seeking the assistance of Canadians to identify sectors of the economy in which the Bureau could play a targeted role in advocating for increased competition.  Regulated sectors represent a significant portion of the Canadian economy. Creating a regulatory environment that promotes competition in these areas could have an immediate and meaningful impact on Canadians. As part of its mandate, the Bureau participates in a wide range of activities to promote and advocate the benefits of a competitive marketplace, both in Canada and abroad. Greater competition generally leads to lower prices for consumers, as well as increased choice and innovation.

This consultation is being undertaken as part of the Bureau’s ongoing efforts to promote the benefits of competition. In this role, the Bureau seeks to identify areas where it can advocate in favour of increased competition, and elicit a positive impact on our economy. As such, the Bureau will be incrementally increasing its level of strategic and targeted regulatory interventions in a manner that ensures the most effective use of its resources. As part of this work, the Bureau will consistently advocate that regulators and policy makers regulate only where necessary and that they rely on market forces as much as possible to achieve the benefits of competition. Where market forces are insufficient to achieve certain policy objectives, the Bureau will continue to provide advice to regulators to assist them in implementing policies that achieve their objectives in a minimally intrusive way.”

According to the Bureau, its principal criteria in deciding whether to intervene in regulated sectors include whether its efforts would have “clear, tangible benefits” for Canadians, whether it would be contributing in a useful way, whether an effective forum exists for the Bureau to present its findings, and whether there is a high level of public interest.

The Bureau’s intervention power arises from section 125 of the Competition Act, which gives the Bureau broad discretion to make representations to federal or provincial boards, commissions or tribunals at the request of a board/tribunal (or on its own initiative).

The Bureau’s new competition advocacy announcement comes at a very interesting time, given the Bureau’s recent setbacks in several recent cases in regulated sectors – its abuse of dominance challenge against The Toronto Real Estate Board and particularly the Tribunal’s recent dismissal of its price maintenance application in the Visa/MasterCard case.  In the Visa/MasterCard case the Tribunal, while praising the Bureau’s persistence in bringing difficult cases in uncertain areas of Canadian competition law, also clearly signaled that some cases are more suited to regulation than enforcement:

“However, this is an exceptional case and we are convinced that it makes more sense to begin with a regulatory approach rather than to back into it.  A section 76 Order would be a blunt instrument and there will be technical hitches, unforeseen consequences, a need for ongoing adjustment and stakeholder consultation.  The experience in other jurisdictions such as Australia and the United Kingdom shows that concerns will be raised by consumers regarding surcharging and possible gouging, and rather sooner than later, intervention will have to take place by way of regulation.”

Aside from some recent enforcement setbacks in the regulated sphere, Canada’s new Commissioner has been expressing a clear appetite to advocate for more competition in key regulated sectors (see e.g., here).  Past interventions by the Bureau have included efforts to unwind competitive restrictions in some regulated professions, including real estate, dentists and dental hygienists.  These have included, among others, successful efforts to uncouple the supervision of dental hygienists from dentists and the reversal of legislation banning rebates in connection with real estate services.

So it will be interesting to see into which industries (aside from its initial recent foray in mobile in connection with the CRTC’s wireless code consultations) the Bureau will choose to intervene.  More telecom?  Airlines?  Liquor retailing?  One or two key regulated professions?  Given that by the Bureau’s own account about a quarter of the Canadian economy is regulated, my guess is that the Bureau will have ample choice of regulated industries to choose from.

The Bureau’s public consultation period is to run until November 8, 2013.  For more information see: Competition Bureau Seeks Input from Canadians on Potential Advocacy Initiatives.

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