Connect with us
[the_ad id="89560"]

Business

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

Published

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. 

Business

UN climate conference—it’s all about money

Published on

From the Fraser Institute

By Kenneth P. Green

This year’s COP wants to fast-track the world’s transition to “clean” energy, help vulnerable communities adapt to climate change, work on “mobilizing inclusivity” (whatever that means) and “delivering on climate finance,” which is shorthand for having wealthier developed countries such as Canada transfer massive amounts of wealth to developing countries.

Every year, the United Nations convenes a Conferences of Parties to set the world’s agenda to reduce greenhouse gas (GHG) emissions. It’s the biggest event of the year for the climate industry. This year’s conference (COP29), which ends on Sunday, drew an army of government officials, NGOs, celebrities and journalists (many flying on GHG-emitting jet aircraft) to Baku, Azerbaijan.

The COP follows a similar narrative every year. It opens with a set of ambitious goals for climate policies, followed by days of negotiating as countries jockey to carve out agreements that most favour their goals. In the last two days, they invariably reach a sticking point when it appears the countries might fail to reach agreement. But they burn some midnight oil, some charismatic actors intervene (in the past, this included people such as Al Gore), and with great drama, an agreement is struck in time for the most important event of the year, flying off to their protracted winter holidays.

This year’s COP wants to fast-track the world’s transition to “clean” energy, help vulnerable communities adapt to climate change, work on “mobilizing inclusivity” (whatever that means) and “delivering on climate finance,” which is shorthand for having wealthier developed countries such as Canada transfer massive amounts of wealth to developing countries.

Some of these agenda items are actually improvements over previous COPs. For example, they’re actually talking about “climate adaptation”—the unwanted stepchild of climate policies—more this year. But as usual, money remains a number one priority. As reported in the Associated Press, “negotiators are working on a new amount of cash for developing nations to transition to clean energy, adapt to climate change and deal with weather disasters. It’ll replace the current goal of $100 billion (USD) annually—a goal set in 2009.” Moreover, “experts” claim the world needs between $1 trillion and $1.3 trillion (yes, trillion) in “climate finance” annually. Not to be outdone, according to an article in the Euro News, other experts want $9 trillion per year by 2030. Clearly, the global edifice that is climate change activism is all about the money.

Reportedly, COP29 is in its final section of the meta-narrative, with much shouting over getting to a final agreement. One headline in Voice of America reads “Slow progress on climate finance fuels anger as COP29 winds down.” And Argus News says “climate finance talks to halt, parties fail to cut options.” We only await the flying in of this year’s crop of climate megafauna to seal the deal.

This year’s conference in Baku shows more clearly than ever before that the real goal of the global climate cognoscenti is a giant wealth transfer from developed to developing countries. Previous climate conferences, whatever their faults, focused more on setting emission reduction targets and timelines and less about how the UN can extract more money from developed countries. The final conflict of COP29 isn’t about advancing clean energy targets or helping vulnerable countries adapt to climate change technologically, it’s all about show me the money.

Continue Reading

Business

Canada’s department of government efficiency: A blueprint

Published on

From the Canadian Taxpayers Federation

By Franco Terrazzano 

Average compensation for a federal bureaucrat is $125,300. Cutting back the bureaucracy to population growth would save taxpayers $9 billion every year

Dumb government spending doesn’t stop at the 49th parallel.

U.S. President-elect Donald Trump announced the creation of a Department of Government Efficiency, with a mandate to “dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure federal agencies.”

Those marching orders sure would sound good in a prime minister’s mandate letter to a finance minister. And here’s the blueprint they should follow.

Begin with crazy research Canadian taxpayers are forced to subsidize.

The Social Sciences and Humanities Research Council spends $1 billion a year supporting “research and research training in the social sciences and humanities.”

Here’s a little taste of the reports it funds with your tax dollars:

  • Gender Politics in Peruvian Rock Music ($20,000)
  • Cart-ography: tracking the birth, life and death of an urban grocery cart, from work product to work tool ($105,000)
  • My Paw in Yours: Dead Pets and Transcendence of Species Divides in Experimental Art-Making Practice ($17,500)
  • Playing for Pleasure: The Affective Experience of Sexual and Erotic Video Games ($50,000)

And that’s just the tip of the iceberg.

Parks Canada put Mr. Magoo in charge of its hunting operations. It spent four years and $10,000 capturing a single bullfrog and dropped $800,000 hunting 84 deer on a B.C. Island. How can a simple hunt cost $10,000 per deer?

Well, hunting gets more expensive when instead of your grandpa’s old rifle, you use prohibited semi-automatic weapons, instead of a box of shells, you get a crate of ammo, and instead of your buddy’s old pickup, you rent a helicopter for $67,000.

Or how about the $8-million barn at Rideau Hall. Or $12,500 live senior citizen sex story shows. Or the $8,800 sex toy show in Germany. Or the millions wasted producing government podcasts no one listens to.

Then there’s government officials living high on the hog.

Governor General Mary Simon spent $71,000 on limo services in Iceland. Bureaucrats spend $76,000 a month renting art. Global Affairs Canada spends $51,000 on booze a month.

Now, the big stuff.

The size and cost of the government is out of control. Prime Minister Justin Trudeau hired 108,000 new bureaucrats. That’s a 42 per cent increase in less than a decade.

Had the bureaucracy only increased with population growth, there would be 72,491 fewer bureaucrats today.

Average compensation for a federal bureaucrat is $125,300. Cutting back the bureaucracy to population growth would save taxpayers $9 billion every year.

It’s time to stop rewarding failure with bonuses.

The feds dished out $1.5 billion in bonuses since 2015.

And the bonuses flow despite federal departments only managing to hit half of their performance targets once in the past five years.

Government executives overseeing ArriveSCAM took $340,000 in bonuses.

The Canada Mortgage and Housing Corporation rubberstamped $102 million in bonuses amid the worst housing crisis in Canadian history.

The Bank of Canada printed $20 million in bonus cheques in 2022, as inflation reached a 40-year high.

The CBC dished out $132 million in bonuses since 2015.

The next thing on the chopping block? Corporate welfare.

Trudeau put taxpayers on the hook for $30 billion in subsidies to multinational corporations like Honda,Volkswagen, Stellantis and Northvolt.

Federal corporate subsidies totalled $11.2 billion in 2022 alone.

Shutting down the federal government’s seven regional development agencies would save taxpayers an estimated $1.5 billion annually.

True efficiency would also mean eliminating failing government operations altogether. The feds should sell any Crown corporation that can, or should, be left to the private sector.

Here are a few examples.

The CBC, which takes more than $1 billion from taxpayers annually.

Canada Post, which lost $1.2 billion in the last two years and forecasts “larger, unsustainable losses in future years.”

VIA Rail, took $1.8 billion in taxpayer cash during the past five years just to cover operating losses.

The bad news for taxpayers is we pay too much tax because the government wastes too money. The list of wasteful spending in this article is far from exhaustive.

Other examples include the multi-billion dollar gun confiscation that police officers say won’t work, the $25-billion equalization scheme and taxpayer-funded media bailouts, among others.

The good news is a champion of taxpayers could make massive cuts and barely anyone outside the Ottawa bubble would notice.

This is the blueprint to slash Ottawa’s wasteful, bloated bureaucracy. All we need now is a prime minister with the guts to pick up the scissors.

Continue Reading

Trending

X