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Proposed recommendations would improve Canada's competitiveness

|Written By Robert Todd

Aspects of a report proposing changes to competition laws in Canada would improve the country’s international competitiveness - but politicians should think twice about a shift toward U.S.-style regulations, say lawyers.

“It’s a very ambitious and relatively thorough report. It does set out a broad framework for where Canada, in many regards, needs to go to improve its competitiveness and to remain the relevant, vibrant economy that it is well into the 21st century,” said Ogilvy Renault LLP lawyer Dany Assaf, who is co-chairman of the firm’s competition/antitrust team.

“I was struck by how many areas they at least commented on, and they put a marker down in almost every main area that we should at least give some attention to.”

The Competition Policy Review Panel report, titled “Compete to Win,” includes a set of recommendations to the government that the group says will make Canada “a more attractive destination for talent, investment, and innovation,” according to a release from the panel.

The report also includes a “sweeping national competitiveness agenda” that the panel says will lead to a higher standard of living through a stronger economy.

The recommendations are aimed not only at governments, but also the business community, colleges and universities, and individual Canadians. They include:

• The creation of a Canadian Competitiveness Council that would push for greater competition in the country;

• Remove the de facto ban on mergers in the financial services area;

• Amend the Investment Canada Act to get rid of barriers to foreign investment, including a reversal of onus that would see the government forced to show that an investment would be contrary to the national interest before such a transaction is quashed;

• Change the Competition Act to bring it up to speed with legislation across the globe.

“One of our key findings is that Canada needs to get its act together as a nation,” said panel chairman Lynton Wilson in the release.

“As governments, as businesses, and as individuals we need to work better together and collaborate more effectively in the service of our national competitiveness. Competition is global, and the pace of economic activity will continue to accelerate. We must ensure that our policies and our mindset reflect global realities.”

Assaf, who notes that the panel also recommends that the review threshold under the Investment Canada Act be increased to $1 billion, says the report shows a shift towards a more efficient foreign investment review process.

He adds that the recommendations also send a message that “in spite of some of the rhetoric you might have been hearing . . . about protectionism and some potential new issues with foreign investment, that Canada is going to remain engaged with the world.”

Assaf notes that Canada, with a population of 33 million, can’t put up economic barriers in a world of over 6 billion and expect to remain competitive.

“It’s just not possible to do that if you turn inward,” he says.

Blake Cassels & Graydon LLP competition lawyer Brian Facey says the report makes positive recommendations regarding getting rid of so-called “pricing” provisions, such as price discrimination.

But aspects of the report could hurt competition, he says. For example, the report suggests changes to rules regarding agreements between competitors, says Facey. Canada’s law in the area has been in place since 1889, he says, and it addresses agreements that lessen competition “unduly.”

The report recommends getting rid of the world “unduly” in the law, which Facey says will make it easier for the government to prosecute over such agreements. Facey adds that could be a good thing at times, but “the devil is in the details.”

“It’s almost impossible to draft a law that’s not going to capture good things, or that’s going to miss bad things,” he says.

Goodmans LLP competition law group leader Richard Annan served 22 years with the Canadian Competition Bureau. He disagrees with the panel’s recommendation of creating a U.S.-style competition review process.

“Our own system has more flexibility built into it. The timeframes for review are potentially shorter,” he says, noting however that changes must be made to the process by which information can be accessed from parties without a formal court process. The U.S. has a “second request” policy that allows the agency to issue a subpoena, while in Canada parties must go to court for such orders.

It’s now up to the federal government to bring the recommendations into practise, and Assaf says any concerns about dealing with this hot-button issue under the specter of a pending election shouldn’t weigh into politicians’ decision on the matter.

“Issues of the strength of the national economy, Canada’s competitiveness, and relevance in the world, I see that as a bipartisan issue,” he says. “I think any government that is ultimately in power in this country at whatever time is going to have to take many of these issues seriously, because it goes beyond partisanship to the national interest.”

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