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

From the Macdonald Laurier Institute

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.

Related Topics:#AaronWudrick #BillC-59 #CompetitionAct #InsidePolicy #MacdonaldLaurierInstitute

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Trump eyes end of capital gains tax in 2025

Published on April 7, 2025

Todayville

MxM News

Quick Hit:

In a historic announcement that rattled markets and reignited debate over tax policy, President Donald Trump revealed plans to eliminate the capital gains tax starting in 2025. The unprecedented move would allow Americans to retain all profits from asset sales—whether in stocks, real estate, or other investments. Supporters tout it as a bold pro-growth measure, while critics warn it may cause budget strain and market instability.

Key Details:

President Trump announced the elimination of capital gains tax effective 2025, describing it as a move to reward success and promote wealth-building.
Currently, capital gains are taxed at rates up to 20%, with additional surcharges for high earners.
The announcement caused a major rally across financial markets, though critics claim the change favors the wealthy and could disrupt the economy.

Diving Deeper:

At a press conference on Monday, President Trump laid out a sweeping proposal to eliminate the capital gains tax in its entirety, calling it a “long-overdue correction” to what he described as a punitive tax on prosperity. “Why should you be punished for building wealth?” he asked. “This is America—we reward success.” If enacted, the change would allow investors to retain 100% of profits from the sale of assets such as stocks, homes, and businesses, with zero tax liability.

This proposal marks a sharp departure from decades of entrenched U.S. tax policy. Currently, long-term capital gains are taxed at rates ranging from 0% to 20%, with potential surcharges including the 3.8% Net Investment Income Tax for high earners. Trump’s plan would zero out those liabilities entirely starting in the 2025 tax year.

Conservative economists and market analysts have lauded the move as potentially the most transformative supply-side reform since the Reagan era. They argue that removing the tax will unshackle trillions of dollars currently locked in unrealized gains, spurring investment, entrepreneurship, and broader economic dynamism. “This is a game-changer,” said one pro-growth advocate. “It sends a clear message that America is back to being the most investment-friendly nation on Earth.”

Predictably, left-wing critics erupted. One Democratic senator labeled the measure a “grenade” that would detonate the federal budget and widen the wealth gap. Others warned of asset bubbles and increased volatility as investors rush to dump assets ahead of the reform’s implementation. These concerns, however, do not seem to have spooked the markets—at least not yet.

The Dow Jones Industrial Average jumped nearly 600 points following the announcement, while cryptocurrencies surged on expectations of tax-free gains. Real estate portals and trading platforms like Robinhood and E*TRADE saw surges in activity as users began strategizing around the policy’s timing. Online, the announcement triggered a wave of memes and commentary. The hashtag #NoCapGains began trending on X (formerly Twitter), with some calling it a “wealth liberation act” and others denouncing it as “Robin Hood in reverse.”

Legislation to formalize the proposal is expected to hit Congress within weeks. While Republicans have largely expressed support, Democrats are preparing for a fierce battle. It’s unclear whether some establishment Republicans—many of whom have been resistant to bold reform under Trump—will help move the bill forward or slow-walk it in favor of more moderate compromises.

Until the law is officially passed, financial advisors are urging caution. “The promise of zero capital gains tax is tempting,” one planner said, “but don’t bet the farm until it’s signed, sealed, and delivered.”

Still, with the 2025 tax season approaching fast, the stakes are enormous. If passed, Trump’s plan would not only mark one of the most dramatic tax overhauls in modern history—it would redefine the very incentives that drive American investment and wealth accumulation.

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Trump threatens additional 50% tariffs on China, urges ‘patience’

Published on April 7, 2025

Todayville

From The Center Square

By Casey Harper

President Donald Trump threatened to ratchet up tariffs against China after China upped its own tariffs against the U.S. in response to the president’s tariffs policy announcement earlier this month.

The Chinese Communist Party raised its tariffs on U.S. goods to 34%, ignoring Trump’s warning not to retaliate, which does not include Chinese tariffs on specific U.S. goods like natural gas.

That 34% figure matches the additional tariffs the president put on China in his announcement of the new tariff policy on April 2, an announcement that brought overall tariffs against China to 54%.

Trump argues that tariffs are not the only way China takes advantage of the U.S.

“Yesterday, China issued Retaliatory Tariffs of 34%, on top of their already record setting Tariffs, Non-Monetary Tariffs, Illegal Subsidization of companies, and massive long term Currency Manipulation, despite my warning that any country that Retaliates against the U.S. by issuing additional Tariffs, above and beyond their already existing long term Tariff abuse of our Nation, will be immediately met with new and substantially higher Tariffs, over and above those initially set,” Trump said in a statement online.

“Therefore, if China does not withdraw its 34% increase above their already long term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th,” he continued.

“Additionally, all talks with China concerning their requested meetings with us will be terminated!” the president said. “Negotiations with other countries, which have also requested meetings, will begin taking place immediately.”

Trump also urged Americans to be patient with his tariff policy as stocks continued to decline.

The president unveiled a sweeping set of reciprocal tariffs during a press conference earlier this month, and since that announcement the markets have seen sharp declines.

“The United States has a chance to do something that should have been done DECADES AGO,” Trump said on TruthSocial, his social media platform. “Don’t be Weak! Don’t be Stupid! Don’t be a PANICAN (A new party based on Weak and Stupid people!). Be Strong, Courageous, and Patient, and GREATNESS will be the result!”

Democratic and some Republican critics have blasted the president’s tariffs, a policy previously foreign to the Republican Party in modern politics.

Trump has admitted there will be some pain but argued that the tariffs will reinvigorate domestic manufacturing in the U.S. and raise revenue for the federal government. He also says the tariffs will help the U.S. negotiate better trade deals with other countries, many of which currently charge steep tariffs against the U.S.

Critics argue the tariffs will increase prices for Americans and hurt the economy and U.S. trading relationships.

Trump and his allies have argued the U.S. has been manipulated and taken advantage of in the previous tariff system, all while manufacturing jobs were shipped overseas. Now, they argue, much of our manufacturing is done by one of our greatest adversaries: China.

“Countries from all over the World are talking to us,” Trump said. “Tough but fair parameters are being set. Spoke to the Japanese Prime Minister this morning. He is sending a top team to negotiate! They have treated the U.S. very poorly on Trade. They don’t take our cars, but we take MILLIONS of theirs. Likewise Agriculture, and many other ‘things.’ It all has to change, but especially with CHINA!!!”

Sen. Rand Paul, R-Ky., has helped lead the charge of Republicans who oppose the president’s new trade policy.

“Politicians should pay attention to the millions of investors who are worried that widespread tariffs will lead to a recession,” Paul wrote on X Friday.

Trump’s comments suggest that he is doubling down, not backing off, of his new tariff policy, likely part of the reason markets continued to slide Monday. Trump pointed to other signs of economic health, and his Treasury Secretary Scott Bessent has pointed out that the stock market is only one marker of the economy and one in which half of Americans have no stake.

“Oil prices are down, interest rates are down (the slow moving Fed should cut rates!), food prices are down, there is NO INFLATION, and the long time abused USA is bringing in Billions of Dollars a week from the abusing countries on Tariffs that are already in place,” Trump said. “This is despite the fact that the biggest abuser of them all, China, whose markets are crashing, just raised its Tariffs by 34%, on top of its long term ridiculously high Tariffs (Plus!), not acknowledging my warning for abusing countries not to retaliate. They’ve made enough, for decades, taking advantage of the Good OL’ USA!”