Thank you, Chair, and thank you to the committee. I appreciate the invitation to be here today.
My name is Robin Shaban. I'm the senior economist at Vivic Research, which is an economic consulting firm. I'm also a researcher on competition policy in Canada.
The focus of my contribution today is to discuss current debates on the purpose of the Competition Act as it relates to SMEs. This debate is highly relevant, given the announced review of the Competition Act.
The purpose statement of the act, which is section 1.1, states that the aim of the law “is to maintain and encourage competition in Canada” in order to, first, “promote the efficiency and adaptability of the Canadian economy”; second, “to expand opportunities for Canadian participation in world markets while at the same time recognizing the role of foreign competition in Canada”; third, “to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy”; and fourth, “to provide consumers with competitive prices and product choices.”
The question of what the stated purpose of the act ought to be is critical for two main reasons. First, from a legal perspective, the purpose statement of the act shapes how the Competition Tribunal and courts adjudicate competition cases. The purpose statement of the act determines which competitive harms are considered under the law.
The second reason the purpose statement is so critical is that it articulates the guiding rationale for the Competition Act. The stated purpose of the legislation guides policy-makers on what should be included in the legislation. Some have argued that the purpose statement of the act should be changed so our competition law's only objective is to promote efficiency in the Canadian economy, and that it should not have any particular regard for SMEs, or other stakeholders, for that matter.
A notable example of this argument is put forward by Professor Edward Iacobucci in a paper commissioned by Senator Wetston as part of a broader consultation on competition law reform. Professor Iacobucci argues that having multiple objectives for competition law—like creating equitable opportunities for SMEs to compete while also promoting economic efficiency—creates complications in the application of the law, since objectives may conflict with each other. Professor Iacobucci's solution to this problem is to have the government make economic efficiency the only concern of competition law.
In the Canadian context, efficiency has often been used to justify the law's permissiveness of market power and dominance, which can be detrimental to SMEs that are striving to break into new markets. The argument goes that other benefits that competition law can provide, like ensuring equitable opportunities for SMEs to participate in markets, should be the responsibility of other policy areas.
While this approach may be an elegant technical solution from a legal perspective, it sidesteps the root of the issue, which is that competition policy is inherently political. Different stakeholders will inevitably have different preferences for the law. Ignoring this reality doesn't make it go away; rather, it creates a broader economic policy framework that works against itself. If the government followed Professor Iacobucci's advice, on the one hand we would have a competition law that promotes economic efficiency without regard for, and potentially to the detriment of, SMEs. On the other hand, we have ISED spending billions to support SMEs. How much further could those dollars go if we had a competition law that supports SMEs, rather than ignoring or working against them?
Even with the competition law we have today, there is scope to do more to support SMEs. I and some colleagues—Vass Bednar and Ana Qarri—recently prepared a report for ISED that outlines opportunities for reform of the Competition Act that would benefit SMEs. Extending the timeline the bureau has to review mergers after they have closed would enable it to rectify so-called “killer acquisitions”, whereby incumbents buy out new entrants that may become competitors in the future.
In the report, we also recommend making changes to how anti-competitive conduct is evaluated under the law and adopting a more rules-based approach that would be more predictable to implement and would potentially allow the bureau to block anti-competitive behaviours more successfully.
Competition law should aim to promote fair commerce in the Canadian economy by acknowledging and balancing the needs of all stakeholders, including SMEs, large businesses, consumers, workers, government and citizens in general. It's through the balancing of these needs that we derive the modern purpose of the Competition Act and also ensure the act works with, not against, the policies we currently have in place to foster fair and competitive markets in Canada.
Thank you again, and I'm looking forward to your questions.