Commissioner of Competition Matthew Boswell speaks at Canada's Competition Summit hosted by the Competition Bureau Canada in Ottawa on Oct. 5, 2023.Sean Kilpatrick/The Canadian Press
Matthew Boswell is Commissioner of Competition with Competition Bureau Canada.
The alarm bells are ringing.
Our economy is becoming less productive. That means Canadians are missing out on higher wages and an overall better standard of living.
The situation is urgent. The Bank of Canada has said as much, with senior deputy governor Carolyn Rogers recently saying, “It’s an emergency – it’s time to break the glass.”
How do we turn the tide? One word: competition.
Canada needs a national economic policy focused on promoting competition.
The evidence is clear: Competition is the key to unlocking our productivity and growing our economy. This is borne out in study after study showing the impact increased competition can have on economic performance.
Without meaningful competition, companies grow complacent. For consumers, that complacency means higher prices and poorer service. For our economy, it means less investment, less innovation and less opportunity for new ideas and business models to flourish. Over time, this weighs on our overall economic performance.
Last year, the bureau published a study that tracked the steady decline in competitive intensity in Canada’s economy between 2000 and 2020. The results are unequivocal – Canada has a competition problem.
Thankfully, Canadians are speaking out and demanding more competition. And Parliament has taken notice.
In the past two years, we have seen sweeping, positive changes to strengthen the Competition Act. These changes will enable stronger law enforcement against anti-competitive mergers, abuses of market power, price-fixing cartels and companies that mislead consumers.
But stronger enforcement is only one side of the competition coin; the other is a regulatory environment that discourages complacency.
Too often in Canada, laws, policies and regulations create barriers – which are outdated and no longer serve the public interest – to competition, including from neighbouring provinces. They usually serve the interests of established businesses that benefit from – and lobby heavily for – such barriers.
The uncomfortable truth is that Canada imposes far more public restraints on competition than most other countries. In fact, Canada ranks near the bottom in the Organization for Economic Co-operation and Development’s PMR Index, a globally recognized indicator that measures regulatory barriers to competition.
Unless governments – at all levels – truly prioritize competition in our economy, we will not achieve our economic potential as a country.
This isn’t a question of tinkering around the edges. It’s past time for governments to make bold, unwavering and long-term economic policy decisions rooted in competition.
So what would this look like? As Commissioner of Competition, I have three ideas of where to start.
First, let’s take inspiration from approaches that have worked in other countries.
We could begin by reviewing our existing regulations through a competition lens. Australia did this in the 1990s and it led to the most significant and successful economic reforms in its history, amounting to a permanent increase of at least 2.5 per cent in Australia’s GDP, or around 5,000 Australian dollars a household per year.
The Australian experience can also serve as a model for getting provincial buy-in on difficult reforms. The Australian government agreed to make payments to the states and territories conditional on their implementation of competition reforms. The transfers paid for themselves by growing the economy and allowed states and territories to share in the gains.
Second, we need to set clear, measurable and ambitious targets for change. What gets measured gets done.
Imagine if every minister in Canada had a commitment to competition in their mandate. The White House Competition Council is doing this, and it’s working. Imagine if we set an ambitious goal to make our regulatory regime one of the most competition-friendly in the OECD instead of one of the least. Imagine if no major sectors of our economy were off limits when it came to improving competition.
Third, we need to invest in our institutions and research.
Publicly funded research on competition is sorely lacking in Canada. Why not create Canada Research Chairs in competition? And why not open up more of our data to researchers, as Statistics Canada did with its Canadian Internal Trade Data and Information Hub? What if we provided competition impact assessment training that would empower our regulators to push back against those who lobby for policies that restrict competition?
These ideas are just the tip of the iceberg. There are many ways of promoting competition. But this is a discussion we need to be having in order to turn the tide on Canada’s productivity crisis.
If we heed the alarm bells and move to tear down barriers to competition today, we can generate unprecedented returns now and for future generations.