Thank you, Madam Chair, and the committee. It's a pleasure to be here with you today.
My name is Robin Shaban. I am the principal economist and co-founder of Vivic Research, an economic consulting firm. I am also a Ph.D. candidate at Carleton University studying Canadian competition law.
The focus of my research is the notion of economic efficiency that has come to be the core philosophy underpinning Canada's competition law. On March 16, I published an op-ed in The Globe and Mail outlining what I saw as a potential outcome of the Competition Bureau's review of this transaction. As you heard from other witnesses, Canada's competition law, the Competition Act, contains a provision that may make it impossible for the bureau to block this merger, no matter its impact on Canadians.
The provision in question is section 96 of the act, commonly known as the “efficiencies defence”. This defence allows businesses to merge even if it harms competition and consumers, because it creates cost savings for the business. Under the efficiencies defence, cost savings, often including layoffs, are weighed against the economic inefficiency that comes with higher prices after the merger. For instance, Superior Propane's acquisition of ICG Propane in the 1990s was permitted because of the efficiencies defence, despite it being predicted to increase the price of retail propane by about 8%. As a result, the merger created monopolies in 16 communities across Canada.
Unlike legislation in other jurisdictions, Canada's merger laws are not intended to protect consumers. Again, the Superior Propane case is illustrative. It was calculated that consumers would collectively pay about $40 million more per year due to higher prices, but this number was largely irrelevant because, according to economic theory, it does not represent an inefficiency.
Rogers and Shaw claimed in their press release that the transaction will create $1 billion in synergies or efficiencies per year. If their claim is truthful, then the bureau may be unable to take any action to protect competition in telecommunications markets. At this point, the only people who can assess the veracity of efficiency claims made by the parties are officers at the Competition Bureau and the members of the Competition Tribunal.
My intention here today is to provide information and insight into Canada's merger control laws, grounded in my academic research. My hope is that committee members walk away with a deeper understanding of competition laws relevant to this transaction, as well as inspiration to reform our competition laws to better serve Canadians.
Thank you. I look forward to your questions.