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Proposed changes to Canada’s Competition Act could kneecap our already faltering economy

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9 minute read

From the Macdonald Laurier Institute

Aaron Wudrick, for Inside Policy

No party wants to be seen as soft on “big business” but that is a bad reason to pass potentially harmful, counterproductive competition policy legislation.

The recent federal budget was widely panned – in particular by the entrepreneurial class – for its proposal to raise the capital gains inclusion rate. As it turns out, “soak the rich” might sound like clever politics (it’s not) but it’s definitely a poor narrative if your goal is to incentivize and encourage risk-taking and investment.

But while this damaging measure in the federal budget has at least drawn plenty of public ire, other harmful legislative changes are afoot that are getting virtually no attention at all. They’re contained in Bill C-59 – the omnibus bill still wending its way through Parliament to enact measures contained in last fall’s economic statement – and consist of major proposed amendments to Canada’s Competition Act. The lack of coverage and debate on these changes is all the more concerning given that, if enacted, they could have a long-term negative impact on our economy comparable to the capital gains inclusion rate hike.

Worst of all, the most potentially damaging changes weren’t even in the original bill, but were brought forward by the NDP at the House of Commons Standing Committee on Finance, and are lifted directly from a previous submission made to the committee by the Commissioner of Competition himself. In effect, they would change competition law to put a new onus on businesses to prove a negative: that having a large market share isn’t harmful to consumers.

MPs on the committee have acknowledged they don’t really understand the changes – they involve a “concentration index” described as “the sum of the squares of the market shares of the suppliers or customers” – but the government itself previously cast doubt on the need for this additional change. It’s obvious that a lot of politics are at play here: no party wants to be seen as soft on “big business.” But this is about much more than “big business.” It’s about whether we want to enshrine in law unfounded, and potentially very harmful, assumptions about how competition operates in the real world.

The changes in question are what are known in legal circles as “structural presumptions” – which, as the name implies, involve creating presumptions in law based on market “structure” – in this case, regarding the concentration level of a given market. Presumptions in law matter, because they determine which side in a competition dispute – the regulatory authority, or the impugned would-be merging parties – bears the burden of proof.

So why is this a bad idea? There are at least three reasons.

First of all, the very premise is faulty: most economists consider concentration measures alone (as opposed to market power) to be a poor proxy for the level of competition that prevails in a given market. In fact, competition for customers often increases concentration.

This may strike most people as counterintuitive. But because robust competition often leads to one company in particular offering lower prices, higher quality, or more innovative products, those who break from the pack tend to attract more customers and increase their market share. In this respect, higher concentration can actually signal more, rather than less, competition.

Second, structural presumptions for mergers are not codified in the US or any other developed country other than Germany (and even then, at a 40 percent combined share rather than 30 percent). In other words, at a time when Canada’s economy is suffering from the significant dual risks of stalled productivity growth and net foreign investment flight, the amendments proposed by the NDP would introduce one of the most onerous competition laws in the world.

There is a crucial distinction between parliamentarians putting such wording into legislation – which bind the courts – and regulatory agencies putting them in enforcement guidelines, which leave courts with a degree of discretion.

Incorporating structural presumptions into legislation surpasses what most advanced economies do and could lead to false negatives (blocking mergers that would, if permitted, actually benefit consumers), chill innovation (as companies seeking to up their game in the hopes of selling or merging are deterred from even bothering), and result in more orphaned Canadian businesses (as companies elect not to acquire Canadian operations on global transactions).

Finally, the impact on merger review will not be a simplification but will likely just fetter the discretion and judgment of the expert and impartial Competition Tribunal in determining which mergers are truly harmful for consumers and give more power to the Competition Bureau, the head of which is appointed by the federal Cabinet. Although the Competition Bureau is considered an independent law enforcement agency, it must still make its case before a court (the Tribunal, in this case).The battleground at the Tribunal will shift from focusing on the likely effect of the merger on consumers to instead entertaining arguments between the Bureau’s and companies’ opposing arguments about defining the relevant market and shares.

Even if, after further study, the government decided that rebuttable structural presumptions are desirable, C-59 already repeals subsection 92(2) of the Competition Act, which allows the Tribunal to develop the relevance of market shares through case law – a far better process than a blanket rule in legislation. Nothing prevents the Bureau from incorporating structural presumptions as an enforcement screen for mergers in its guidelines, which is what the United States has done for decades, rather than putting strict (and therefore inflexible) metrics into statute and regulations.

No one disputes that Canada needs a healthy dose of competition in a wide range of sectors. But codifying dubious rules around mergers risks doing more harm than good. In asking for structural presumptions to be codified, the Competition Bureau is missing the mark. Most proposed mergers that will get caught by these changes should in fact be permitted on the basis that consumers would be better off – and the uncertainty of being an extreme outlier on the global stage in terms of competition policy will create yet another disincentive to start and grow businesses in Canada.

This is the opposite of what Canada needs right now. Rather than looking for ill-advised shortcuts that entangle more companies in litigation and punt disputes about market definition rather than effects to the Tribunal, the Bureau should be focusing on doing its existing job better: building evidence-backed cases against mergers that would actually harm Canadians.


Aaron Wudrick is the domestic policy director at the Macdonald-Laurier Institute. 

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2025 Federal Election

As PM Poilievre would cancel summer holidays for MP’s so Ottawa can finally get back to work

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From Conservative Party Communications

In the first 100 days, a new Conservative government will pass 3 laws:

1. Affordability For a Change Act—cutting spending, income tax, sales tax off homes

2. Safety For a Change Act to lock up criminals

3. Bring Home Jobs Act—that repeals C-69, sets up 6 month permit turnarounds for new projects

No summer holiday til they pass!

Conservative Leader Pierre Poilievre announced today that as Prime Minister he will cancel the summer holiday for Ottawa politicians and introduce three pieces of legislation to make life affordable, stop crime, and unleash our economy to bring back powerful paycheques. Because change can’t wait.

A new Conservative government will kickstart the plan to undo the damage of the Lost Liberal Decade and restore the promise of Canada with a comprehensive legislative agenda to reverse the worst Trudeau laws and cut the cost of living, crack down on crime, and unleash the Canadian economy with ‘100 Days of Change.’ Parliament will not rise until all three bills are law and Canadians get the change they voted for.

“After three Liberal terms, Canadians want change now,” said Poilievre. “My plan for ‘100 Days of Change’ will deliver that change. A new Conservative government will immediately get to work, and we will not stop until we have delivered lower costs, safer streets, and bigger paycheques.”

The ’100 Days of Change’ will include three pieces of legislation:

The Affordability–For a Change Act 

Will lower food prices, build more homes, and bring back affordability for Canadians by:

We will also:

  • Identify 15% of federal buildings and lands to sell for housing in Canadian cities.

The Safe Streets–For a Change Act 

Will end the Liberal violent crime wave by:

The Bring Home Jobs–For a Change Act 

This Act will be rocket fuel for our economy. We will unleash Canada’s vast resource wealth, bring back investment, and create powerful paycheques for workers so we can stand on our own feet and stand up to Trump from a position of strength, by:

Poilievre will also:

  • Call President Trump to end the damaging and unjustified tariffs and accelerate negotiations to replace CUSMA with a new deal on trade and security. We need certainty—not chaos, but Conservatives will never compromise on our sovereignty and security. 
  • Get Phase 2 of LNG Canada built to double the project’s natural gas production.
  • Accelerate at least nine other projects currently snarled in Liberal red tape to get workers working and Canada building again.

“After the Lost Liberal Decade of rising costs and crime and a falling economy under America’s thumb, we cannot afford a fourth Liberal term,” said Poilievre. “We need real change, and that is what Conservatives will bring in the first 100 days of a new government. A new Conservative government will get to work on Day 1 and we won’t stop until we have delivered the change we promised, the change Canadians deserve, the change Canadians voted for.”

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Automotive

Canadians’ Interest in Buying an EV Falls for Third Year in a Row

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From Energy Now

Electric vehicle prices fell 7.8 per cent in the last quarter of 2024 year-over-year, according to the AutoTader price index

Fewer Canadians are considering buying an electric vehicle, marking the third year in a row interest has dropped despite lower EV prices, a survey from AutoTrader shows.

Forty-two per cent of survey respondents say they’re considering an EV as their next vehicle, down from 46 per cent last year. In 2022, 68 per cent said they would consider buying an EV.

Meanwhile, 29 per cent of respondents say they would exclusively consider buying an EV — a significant drop from 40 per cent last year.

The report, which surveyed 1,801 people on the AutoTrader website, shows drivers are concerned about reduced government incentives, a lack of infrastructure and long-term costs despite falling prices.

Electric vehicle prices fell 7.8 per cent in the last quarter of 2024 year-over-year, according to the AutoTader price index.

The survey, conducted between Feb. 13 and March 12, shows 68 per cent of non-EV owners say government incentives could influence their decision, while a little over half say incentives increase their confidence in buying an EV.

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