Canadian COMPETITION LAW

February 28, 2014

On my daily media sweep I read what I thought was a very good critique by Don Cayo (Vancouver Sun) of Canada’s current dairy industry, and in particular raising questions (yet again) as to whether supply management makes sense in Canada (see: Canada’s dairy monopoly costs families $276 a year).

This quite timely and persuasive comment discusses new Conference Board of Canada work and an upcoming report on the topic (see: here) and questions a number of the claimed justifications for maintaining Canada’s supply-managed dairy industry, including: food safety, price stability for consumers, protection from subsidized production abroad, protection of jobs and efficiency.

Some of the specific topics discussed in the Conference Board’s new research include higher prices for consumers (according to the Conference Board, about $276 per family for dairy products than consumers in other countries), impediments for farmer expansion and export (based on the slow-growing and regulation-constrained Canadian market) and negative impacts on dairy industry employment.

Overall, as a result of the Conference Board’s new work (its full report is to be published on March 6^th), it recommends that a “win-win reform package needs to be accompanied by a new vision for industry growth” (particularly growth into export markets).

As with a number of other current regulated market related debates – including in the Canadian wireless, liquor retailing and taxi industries – it remains very difficult for me to understand what differentiates markets that need government protection (I suspect today very few) from those that benefit from no such protection, why Canadian governments should remain in industries competing with the private sector or why regulated industries should not be subject to market forces as are other industries.

In this regard, two justifications for industry protection that are commonly raised, including in the dairy industry and recent liquor retailing and taxi competition debates, that always seem to me to be particularly fallacious are public safety and price stability.

With respect to public safety, a great many industries in Canada are regulated from a public safety perspective without imposing quotas – notably the various professions (i.e., it is perfectly possible to regulate safety without protecting the number of market participants – merely impose and enforce minimum safety standards for consumers that must be met by all participants).

And with respect to price stability, I as a consumer don’t want stability I want market volatility and competition.  That’s what leads to better prices and innovation.  So I guess what I’m saying is I want cheap cheese, who doesn’t?

In any event, I thought this recent comment on Canada’s dairy industry well worth a read as well as the preliminary findings of the Conference Board on competition in Canada’s dairy industry (see: here and here).

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