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Rethinking the Competition Bureau

Limited budgets and a diminished public profile are undermining the law enforcement agency’s independence.

Toronto downtown building

What is to be done with the Competition Bureau? No one in competition law circles seems happy with the way the bureau functions now — not the activists looking to take down online behemoths like Google, not the lawyers, not even the person who used to run the place.

"Over time, the bureau has become less relevant," says John Pecman, former Commissioner of Competition. Trained as an economist, Pecman joined the bureau in 1984 and became the first non-lawyer to lead it in 2013.

"Canada's competition policy needs a 21st-century re-think, one that puts the emphasis on innovation and productivity."

Pecman took part in a panel discussion at the CBA's Competition Law Fall Conference in Ottawa in October. Conference participants broadly agreed on the major challenge facing the bureau — a digital global economy growing more vast and complex with every passing year — and the bureau's major vulnerability: a lack of money.

That's where the consensus ends, mostly. People in competition law circles have different visions of what the bureau should be.

Pecman falls into the "maximalist" camp; he believes that solving the bureau's perennial funding shortfall won't be enough if it remains part of Innovation, Science and Economic Development Canada (previously Industry Canada).

His five-year term as the bureau's commissioner, preceded by eight months as interim commissioner, convinced Pecman that the bureau's position under Industry's deputy minister means the principles of competition policy—particularly the premium placed on open markets—take a back seat in cabinet government to Canada's traditional moat-and-drawbridge approach to industrial policy.

"Going back to the 1960s, there's been this theme in our industrial policy — a feeling that Canada has to promote its champions and protect them from outside competition," says Pecman.

When Industry absorbed Consumer and Corporate Affairs in 1993, he says, the ascendance of industrial policy over competition policy was complete.

"Competition policy has been consumed by industrial policy, which is why you never really hear about it," he says.

"But that structural change at the ministerial level marked the beginning of the slow decay of competition policy in this country. You started seeing fewer changes to consumer legislation after 1986, for example. In essence, the bureau no longer had a policy voice at the cabinet level."

In a paper published last year in the Canadian Competition Law Review, Pecman argues that "the bureau's independence is the single most important issue it faces going forward." He suggests making the commissioner an independent officer of Parliament, like the privacy or information commissioners—and giving the bureau control of its own policy, as the Bank of Canada controls benchmark interest rates. Failing that, he wants to see the bureau report to another department — a new federal department of competition, for example, or the Department of Justice.

Pecman isn't pitching a more powerful Competition Bureau because he wants it to take on ambitious crusades to break up powerful online monopolies like Google — the goal of the so-called "hipster anti-trust" movement. "Size in and of itself is not a competition law violation," he writes in his Canadian Competition Law Review paper, arguing that the bureau's goal ought to be to "protect consumers by protecting competition."

On that point, he has allies. "Competition law is complicated enough without bringing new factors into it," says James Musgrove of McMillan LLP, who has been practising competition law for 30 years.

But Pecman's call for more bureau autonomy seems to be getting a cool reception from a lot of people in the field — many of whom suggest that it might be unrealistic to expect the federal government to give the body more authority and more money at the same time.

"I'm not personally concerned by the bureau's lack of independence. The bureau's real problem is one of resources," says David Rosner, who practises competition law at Goodman's in Toronto. "Why would anyone imagine that making the bureau independent would help to deal with that problem?"

"I know there are people who think keeping the bureau under Industry is a potential point of conflict. I'm not one of them," says Musgrove. "The commissioner takes an oath, and I've never seen or heard anything to suggest that commissioners have not been following that oath."

Even if the bureau needs to be more independent, he says, its budget is a far more pressing problem because it undermines the authority the bureau has now.

Since fiscal 2000-01, the bureau's budget has hovered between roughly $40 million and $50 million. It topped out at $51.4 million in 2011-12, before falling back to $49.6 million in 2017-18. Musgrove suggests that a budget of $70 to $75 million would keep the bureau "on an even keel."

Mark Warner, a competition law practitioner with a firm based in Toronto and New York, says the bureau's modest budget puts it at a disadvantage when it comes to hiring the talent it needs to take on deep-pocketed multinationals.

"There are more real economists with real PhDs working at the American agencies than at the bureau," he says. "In the U.S., the Federal Trade Commission and the Department of Justice depend on a revolving door of expertise between the private and public sectors. That's less the case in Ottawa, where the bureau tends to depend more on the public service.

With more money, Rosner says the bureau could take on daunting investigations of newer market phenomena like the spread of algorithmic pricing — technology that sets prices based on the customer's perceived willingness to pay. It could hire more of the high-priced experts it needs, which could free it somewhat from the dead hand of bureaucracy as it presses for a root-and-branch reform of a Competition Act designed for an industrial economy.

As for policy, Musgrove says the bureau needs to be allowed to exploit the power of the bully pulpit. The privacy and ethics commissioners have outsized clout in Ottawa in part because they make public statements and push for reforms. In contrast, no one is speaking for the principle of free markets in the federal government.

"The government should permit the commissioner to make public presentations on policy. Governments have to have a role in competition policy. But the bureau should have more of an advocacy role," he says.

"And the single most important thing the bureau could be doing now is convincing the government and the Canadian public to allow market forces to prevail in places where they are non-existent now."