In Ernest Hemingway’s The Sun Also Rises, there is an incisive observation on the nature of change. One character, asked how he stumbled into bankruptcy, says: “Gradually and then suddenly.”
The often-arcane world of competition law was quiet for decades. A bigger-is-better ethos established in the 1980s held sway for years thereafter. But by the later 2010s, after the rise of titans of the internet economy, a renewed debate about competition emerged. The European Union, the United States and later Canada started to take policy actions.
That was the gradually. Last week came the suddenly, a seeming all-at-once blitz of competition action in Europe and the United States.
The European Commission, the EU’s executive arm, levied a hefty fine on Apple, €1.8-billion, “for abusing its dominant position.” Apple used its App Store to hinder competitors in streaming music, by preventing them from telling customers about cheaper outside alternatives. The decision came a few days before rules in Europe’s Digital Markets Act started to be enforced, which will change everything from how Google lists search results to ads directed at teenagers. “Self-regulation is over,” said Margrethe Vestager, the EC’s head of competition policy.
In the U.S., airlines JetBlue and Spirit scrapped their merger. JetBlue was looking to bulk up by buying Spirit, a discount brand. It’s the type of deal that a decade ago likely would have flown without much issue. But under President Joe Biden, who has made bolstering what Americans call antitrust enforcement a pillar of his administration, the Federal Trade Commission sought to block the deal in court and won in January. Attorney-General Merrick Garland last Monday said the merger could have “caused tens of millions of travellers to face higher fares and fewer choices.”
Canada has yet to see such dramatic news but the country is rapidly catching up with a modernized competition law. Last December, this space cheered unanimous support on Parliament Hill for changes to the Competition Act, ranging from revoking overly business-friendly measures to strengthening the Competition Bureau’s powers.
Further important changes are pending – and legislators should move to add some more punch as the bill is reviewed.
One big question revolves around structural presumptions for mergers, a threshold over which a deal becomes clearly problematic. The old Competition Act explicitly prevented such a consideration. A proposed amendment would allow “change in concentration or market share” to factor in a merger review but the Competition Bureau, in a submission this month to the Senate, said the idea should be improved with specific details, similar to United States.
There is momentum behind the advice. The principle to codify structural presumptions is already supported by the Conservatives and NDP in a separate private member’s bill. The Competition Bureau said the Rogers-Shaw merger would have played out differently if structural presumptions had been in place, with Rogers having to prove why the deal was a win for Canadians, rather than the bureau trying to prove it would lessen competition.
The bureau also called on legislators to support improved standards for merger remedies, which in the current law are weaker than in other countries.
Canada has made major progress improving its competition law, a process led by the federal Liberals. The latest changes being considered in the House of Commons and the Senate represent the final thrust in the modernizing of the rules of competition.
Legislators need to get it right and resist stepping back.
A month ago, the Business Council of Canada lobbied Ottawa to back down. The council suggested the process was too swift and could undermine competition, with the law changed “arbitrarily and capriciously.” The council wanted the latest proposed changes withdrawn.
The Competition Bureau, however, is right to say changes to date “represent a generational upgrade in our competition law framework” and further state – accurately – it is the result of “years of public and expert dialogue and parliamentary debates.”
Unanimous political support in December for competition reform is a testament to how resonant such changes are in these politically fractious times. Canada needs to keep up in the gradually suddenly shifting world of competition law.