Competition Bureau’s budget boost doesn’t guarantee more clout
People upset about big, dominant companies breaking competition rules and pushing them out of business sometimes visit Michael Osborne, a partner at a downtown Toronto law firm. If he takes the case, he drafts a complaint about the abusive practices and submits it to the Competition Bureau.
“You think it’s a really good case, and the bureau says, ‘Yeah, well, but we don’t have the resources,’” said the specialist in competition law at Cassels Brock & Blackwell LLP. “This has happened to me. It’s happened to everybody in the business.”
Canada’s competition watchdog has for years been criticized for letting too much slide. The problem, critics say, is that the Competition Bureau is woefully underfunded for a national law enforcement body that is expected to pursue complex and sprawling investigations against deep-pocketed corporations.
If the bureau does pursue a case, the process can crawl along for years. For example, the famous bread price-fixing scandal that started in 2017 is still winding its way through the system today.
But the bureau is set to receive a major increase in federal government funding, which some observers believe could boost its power enough to seriously rein in anticompetitive practices. Others, however, fear that money alone won’t cure the longstanding cultural and political problems that have kept the bureau from operating as the sort of corporate police force that would make companies think twice.
The federal government in its budget announcement last month pledged to increase the bureau’s budget by $96 million over the next five years, plus annual $27.5-million budget increases after that, as a way of enhancing its capacity and making sure “it is equipped with the necessary digital tools” for the modern economy.
How the $96 million will be spent, and how the money will be spread across each of the five years, has not been disclosed. But assuming an even spread, that would amount to an annual increase of roughly $20 million, boosting the budget’s existing $53.7-million budget by more than a third.
“This is a big increase in funding, a very big increase in funding,” Osborne said, while John Pecman, the former head of the bureau, said the money is “long overdue.”
But for the boost to be truly effective, Pecman said the government also needs to modernize the Competition Act, which has become “probably
one of the weaker antitrust laws in the world.”
He said competition investigations have become far more sophisticated in recent years, requiring the bureau to conduct expensive forensic analysis of digital evidence.
“They haven’t been able to keep pace and, as a result, in my view, it’s slowed down a lot of the work they’ve had to do,” said Pecman, who completed his five-year term as competition commissioner in 2018 and now works as a senior business adviser at Toronto-based law firm Fasken Martineau Dumoulin LLP.
But he also said the bureau’s money troubles rarely force it to turn away antitrust cases that meet the “high standards” required by law.
“There might be a handful at most,” he said.
In a short statement, the bureau said it “does not hesitate to take action” when it learns of activities that contravene the Competition Act.
Still, the bureau only seems to litigate cases when it is certain to win, which makes sense considering its limited resources, but it also leaves the impression in the market that the rules won’t be consistently enforced, said Mark Warner, principal counsel at MAAW Law, who practices competition law in the U.S. and Canada.
Warner said clients come to him believing they have a case under a specific section of the Competition Act “and I say, ‘Yes, but that particular section of the act has literally never been enforced in the history of the country.’”
For example, the bureau didn’t pursue a case last year when the country’s three top grocers simultaneously cut $2-per-hour bonuses for front-line workers.
Competition commissioner Matthew Boswell has said he was concerned that some of the grocery executives admitted to being in contact with one another before cutting the wages, but the bureau ultimately concluded that proving the behaviour substantially lessened competition was a high threshold to meet. The comments prompted legislators to consider amending the Competition Act.