The Tyee | Bryan Carney | Jan 6, 2020
Canadians like to believe they live in one of the most sophisticated free-market economies in the world. Don’t tell that to John Pecman. Until May of last year, Pecman was commissioner of the Competition Bureau, the agency responsible for enforcing laws against anti-competitive practices in the Canadian marketplace.
After he stepped down in September 2018, he published an article in the Canadian Competition Law Review that called for reforms to give the bureau more power to check corporate concentration, including added independence by separating it from the Ministry of Innovation, Science and Economic Development.In a phone interview with The Tyee last week, Pecman elaborated, saying that federal laws governing corporate competition reflect Canada’s outdated view of itself as primarily a resource exporter and otherwise unable to compete with the big U.S. economy next door.This led to laws favouring corporate consolidation in the name of “efficiency” over promoting competition or the interests of consumers.The Competition Bureau he ran lacks the independence that would make it truly effective, he said — a vulnerability to political meddling that brings to mind other headline grabbing moments in Ottawa of late.
“Scarce enforcement resources” further erode the bureau’s ability to take initiative, he noted. The Trudeau government trimmed the bureau’s already strained budget to help cover a $950-million industry initiative called “superclusters ,” says Pecman. When it comes to not just studying market concentration but moving to break it up, says Pecman, Canada is “so far behind other western economies on this front. The fact that the country does not treat competition policy seriously is just a great disappointment to someone who has spent his entire life working in this area.”
Here is more of what Pecman, who spent 34 years at the bureau and now is senior business advisor at the nation-wide law firm Fasken, had to say...
On why it’s time to get the Competition Bureau out of the Ministry of Innovation, Science and Economic Development: “If you look at any international body’s recommendations on institutional framework and design for competition authorities, the number one no-no is to be housed in the industry department that’s there supporting business, particularly [corporate] ‘national champions.’ Of course the industry department is probably the most lobbied department, so there’s the perception of political interference.”
On years of competition law foot-dragging in Canada: “Competition law has been sort of shunned to the side, other than there were some serious amendments in 2010. I think particularly when you’re reading the papers today and [headlines reflecting] the angst about monopolies and IT giants, and corporate concentration and income inequality, we haven’t heard much from the government on any plans to study these issues.
“There have been calls outside of my requests from time to time to look at the law. For example, Carolyn Wilkins, the senior deputy governor at the Bank of Canada. During her speech this past year at the G7, she raised a concern about the growth of the IT giants and its impact on labour.”
On ‘scarce resources’ and ignored cases: “Notably, on the abuse of [corporate market] dominance or consumer protection and deceptive marketing practices, particularly on the latter part, we receive more complaints than we have resources. We have to be careful, the bureau does, where to invest our scarce enforcement resources.”
On the big 2008 recommendation never enacted: “If you are familiar at all with the competition review policy report done by L.R. (Red) Wilson [for the Canadian Council of Chief Executives] back in 2008... the largest recommendation that they made was to create an independent Canadian competitiveness council that would report to parliament that would do the advocacy and the policy work for competition. And that was not adopted by the previous government or this government.”
On how Canada lags behind other nations, hurting innovation: “There is a huge gap. Most countries around the world have their competition authorities spending significant budgets to work in terms of promoting competition. In Canada, that’s just not the case. It depends on the discretion of the commissioner. There is no expressed authority to do it. “To me, there needs to be some clarification of the importance of competition policy and advocacy in Canada with expressed authority to do that kind of work — whether it’s referred back to an independent competitiveness council to do the work or give the authority to the competition bureau. Someone has to do it.
“It’s hurting the competitiveness of the country not focusing on that, including the innovation agenda. The number one driver of innovation is competition.” On why the Competition Bureau is ‘spinning its wheels’ because it can’t make regulations: “We are so far behind other western economies on this front. It’s just disappointing. The fact that the country does not treat competition policy seriously is just a great disappointment to someone who has spent his entire life working in this area, knowing how powerful it is. “Let’s take a good example — FinTech (Financial Technology). We engaged in a serious market study on the whole question of financial services technology. We put together a significant consultation and put out a report with 30 recommendations, including moving to an open banking system whereby consumers can move their banking data easily to competitors, whether it’s FinTechs or other banks, to facilitate competition, lower prices, better services. “The government, in its last speech in the throne, identified this as important and in finances started to look at the issue. “But in England, their competition authority did a robust market study because [unlike Canada] they can compel information from companies. Then it issued regulations. So England is about a year ahead of us. They’ve actually implemented open banking. And the FinTech companies and services and banking service fees have gone down significantly in the U.K. And FinTech is twice the size in Europe as it is in Canada. “So there’s an example of the importance of competition advocacy in changes by government to facilitate competition and the benefits to the marketplace, where consumers have greater choice, lower prices, better services, better quality. “And so, we’re spinning our wheels on open banking. The finance department is going to study this for years and who knows where it is going to end up? “It just speaks to the lower priority competition policy has in Canada, in my view, compared to Europe, Australia, the U.S.” You may also like:
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John Pecman on why it’s time to beef up the Competition Bureau he led.
John Pecman on why it’s time to beef up the Competition Bureau he led.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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