Fostering inclusive growth through competition

From: Competition Bureau Canada

CBA Competition Law Spring Online Symposium

April 29, 2021

(As prepared for delivery)

Greetings

Good afternoon everyone.

Thank you to the Canadian Bar Association for organizing this online symposium, and special thanks to Kaeleigh Kuzma as the Symposium Chair and to Navin Joneja as the Section Chair. I appreciate the opportunity to speak with you.

Introduction

Much has changed in the last year. Events have only served to bring the importance of competition into ever sharper focus, especially as we consider the state of competition in important sectors like telecommunications and digital services. Put simply, competition now matters more than ever and it matters for all Canadians.

So today I will talk about how competition can contribute to Canada’s economic recovery, and do so in a way that creates opportunities and reduces barriers for all Canadians – how it can support inclusive growth. I will provide an overview of how inclusivity is, and will continue to be, an important consideration in our work.

Growth, measured traditionally

Traditionally, we have measured the benefits of competition in lower prices, and more choice, innovation, productivity and growth. But right now, productivity and growth are particularly top of mind, given current economic realities. Many leading economists have pointed to how important it is that Canada’s economic growth rate exceed interest rates to help us reduce our debt burden in the years ahead. While productivity fuels economic growth, much ink has been spilled on the fact that, for many decades, Canada’s productivity has been lower than that of other top countries such as the United States, Germany, and the United Kingdom.

Competition is essential to increasing productivity. Competitive intensity pushes individuals, firms and markets to make the best use of their resources, and innovate by developing new ways of doing business and winning customers. Competition not only drives productivity, it also improves our global competitiveness and our standard of living.

Fueled by the rise of the digital economy and the accelerated pace of economic concentration in digital markets, there has been increased focus on competition policy and enforcement around the world. And, if we go beyond digital markets, the post-pandemic recovery has further highlighted the importance of competition for our economic well-being. A recent International Monetary Fund article titled Rising Market Power – A Threat to the Recovery?, cites research showing that corporate market power in advanced economies has risen in recent decades and may present a risk to economic recovery. It highlights five priorities to address this trend, all of which put the work of competition agencies at the heart of the solution.

This is why this year’s federal budget is so important for competition in Canada, as it acknowledges the importance of fair and competitive markets for economic recovery and sustained growth. More specifically, the Budget includes a funding proposal for the Bureau of $96 million over five years and an ongoing $27.5 million.

Should we be successful in securing these funds, this is a significant step for the Bureau and we are committed to working very hard to seize this opportunity to strengthen competition in Canada on behalf of all Canadians.

While it is the Bureau’s responsibility to protect and promote competition, we must work in concert with Canada’s policy-makers. And, now more than ever, productivity growth has to be our collective priority to ensure the future well-being of our economy. To this end, I’m pleased that the Bureau will be hosting The Competition and Growth Summit from June 1st to 3rd. During the Summit, we will bring together experts to discuss the role that competitive markets can play in driving economic growth in the wake of the pandemic. This will include leading thinkers from government, academia and business, as well as the heads of the competition agencies from the United States, United Kingdom, Australia and New Zealand.

Inclusive growth

As we consider Canada’s post-pandemic economic growth, we must also think about productivity and growth in a new way. We must think about the impact of our work on all Canadians. The Canadian Inclusive Economy Initiative says that, “when we talk about inclusion in the context of economic policy or economic growth, we focus on who shapes, participates in, and benefits from growth.”

The last year has brought the need for more inclusive growth into sharp relief. The COVID-19 pandemic disproportionately impacted certain groups, exacerbated income disparity, and laid bare systemic racial- and gender-based discrimination.

Some may ask whether competition policy has a role in driving inclusive growth. My answer is unequivocally, yes. Competition is a powerful tool to achieve this.

As we continue to recognize the economic focus of competition policy, and the purpose and jurisprudence underpinning our law, it is essential to consider how we can support inclusive growth and opportunity for all Canadians. For consumers, opportunity may take the form of greater empowerment in the market place. For businesses, this may mean the opportunity to succeed or fail on the merits, free from anti-competitive conduct. For innovators, opportunity may mean being able to reap the rewards of invention and business acumen.

One of the purposes of the Competition Act is to ensure that small- and medium-sized enterprises, or SMEs, have an equitable opportunity to participate in the Canadian economy. The plight of SMEs during the pandemic matters deeply for competition in Canada, because they drive dynamism in our economy through their entry and expansion. While government support measures have played an important role to mitigate the effects of the pandemic on SMEs, it is clear that many small businesses are hurting.

Women have also unquestionably been disproportionately impacted by the pandemic. Women represented the majority of workers in industries most affected by pandemic-related restrictions — service, hospitality, and tourism.

The disproportionate impact of the pandemic on SMEs and women is compounded when we consider that pre-pandemic biases can block certain groups from answering the door when opportunity knocks. A recent report from the Women Entrepreneurship Knowledge Hub, found that stereotypes associated with entrepreneurship continue to create barriers for female entrepreneurs. This includes limiting opportunities for financing: “in Canada, men are four times as likely to receive venture capital and angel investments than women, while capital applications by women were dismissed 53% of the time, compared to 38% for men.” Barriers like these undermine fairness and economic efficiency and block economic participation for marginalized groups.

Delivering Results for All Canadians

Much like biases can act as barriers to entry, they can also impact the effectiveness of competition enforcement, advocacy and compliance. So, let me explain how the Bureau will strive to deliver the benefits of competition to all Canadians.

First, we are focusing on areas of the economy that have the greatest impact on Canadians’ daily lives. We are doing this by engaging with Canadians through initiatives such as public opinion research, open calls for feedback, and by taking a more proactive and intelligence-led approach to our work. The information gathered through these activities helps us allocate our resources to enforcement and promotion initiatives that best serve Canadian consumers and businesses.

Second, we are putting plans in action to increase the diversity of our workforce and governance committees. This will help us create a more productive Bureau and lead to better decision-making and better results for all Canadians.

Third, we are asking new questions. It is clear that we need to consider cases where the potential damage may be lower to Canadians as a whole, but skewed toward particular segments of the Canadian population. This involves a deeper understanding of who is impacted by anti-competitive activity. In this regard, I’m reminded of the words of acting Chair Rebecca Kelly Slaughter at the US Federal Trade Commission, for whom antiracism has been an important concern. In a 2020 interview, she said we must ask ourselves, “who’s harmed by this merger or this conduct? Who are the victims, and what is the harm? And what would our action change?”

Lastly, the Bureau continues to push the research agenda and challenge assumptions. As many are aware, the Bureau is working with the Organisation for Economic Co-operation and Development (OECD) to champion further research on the link between competition and gender, an area that remains largely unexplored. Following a call-out for research proposals, the OECD received dozens of submissions, and seven research projects are moving forward. These projects will help us understand how gender can factor into many aspects of our work, including market definition, cartel behaviour and case selection. This also means working with the Department of Innovation, Science and Economic Development to identify gaps in our law. This is a top priority as we need to ensure that our law is fit for the digital age and fosters competitive markets that work for all Canadian consumers, businesses and workers.

Conclusion

Incorporating inclusivity in our work is something that we must continuously strive to improve. We will have inclusive growth front of mind as a factor when we prioritize cases and advocacy work. We will continue to pursue our competition promotion initiatives to foster inclusive growth and build a more competitive marketplace. And, where appropriate, we will consider the potential harm to marginalized groups when choosing cases and focusing our advocacy. Together, through the efforts of our dedicated employees, the Bureau will continue to fight for all Canadians through our actions.

Thank you.

/Public Release. This material comes from the originating organization and may be of a point-in-time nature, edited for clarity, style and length. View in full here.