Stakeholders call for a “whole-of-government” approach to competition reform

Stakeholders who submitted responses to the federal government’s consultation on the future of competition policy in Canada urged for greater consultation between various offices and to look at privacy and cybersecurity issues at the same time. “Digital technologies and data have blurred the lines between competition policy and other policy objectives like the protection of personal privacy and data governance, intellectual property, cybersecurity, international trade and so on. Now, competition cannot be easily divorced from these other policy areas and at the same time there is a need to consider the competition-related implications of other policies,” the Centre for International Governance Innovation (CIGI) wrote in its consultation document. The CIGI noted that the United State is placing greater emphasis on the accumulation of data, competition by “free” products, and the effect on user privacy when it comes to mergers and acquisitions. CIGI argued that targeted advertising, done through personal data collection, increases disinformation -- a problem which can be dealt with through competition reforms. “Take as an example the 'surveillance capitalism' model of social media platforms and the amplification of disinformation that is fed by the acquisition of personal data. There is a role for a competition authority to deal with the targeted advertising business model that drives amplification while other agencies deal with the harms that result,” CIGI wrote. In his submission, Privacy Commissioner Philippe Dufresne urged greater consultation between his office and the Competition Bureau. “The digital economy continues to bring several regulatory spheres together,” he wrote in his cover letter to Innovation, Science and Industry Minister François-Philippe Champagne. “This requires greater cooperation between the various privacy and competition agencies, as well as stronger laws to provide the protection that Canadians expect and deserve.” The commissioner made two recommendations in his eight-page intervention. The first is that his office and the Competition Bureau should be authorized through legislation to work together on investigations. Any new bill should also look at dark patterns which affect the marketplace, as is done in other jurisdictions. Dark patterns are defined as design practices which trick users into making selections that they would not have made otherwise. Dufresne cited the case of Facebook, now Meta Platforms Inc., which was investigated simultaneously by the Bureau and the Office of the Privacy Commissioner over how it handled users’ private data. An OPC look at dating site Ashley Madison raised both consumer protection and competition issues. The increasing number of occurrences of intersection between the bureau and the OPC lead to complementary actions and to tensions, the commissioner wrote. Data portability, for example, allows consumers to protect their information while at the same time allowing for churn in service providers. “It is also apparent that competition and privacy mandates will occasionally be at odds with one another,” he cautioned. “For example, in certain circumstances, privacy has been used as a shield to support anticompetitive practices.” Dufresne mentioned work done in the United Kingdom and in Australia where separate agencies worked collaboratively to protect privacy and foster competition. CIGI also highlighted the work being done in the U.K. and Australia. It pointed to the U.K.'s Digital Regulation Cooperation Forum which brings together the office responsible for privacy regulation, the telecoms and media regulator responsible for content and online harms regulation, the authority responsible for competition and consumer policy and the body responsible for regulation of financial services firms and financial markets. Australia’s similar forum will examine algorithms, digital transparency and increased collaboration between its respective offices. “These are worthwhile objectives and presently in Canada it is not clear how such cooperation on these important areas would occur. Meanwhile, the European Union is also contemplating the creation of a High Level Group of Digital Regulators under its Digital Markets Act to bring together relevant regulators,” CIGI argued. The Public Interest Advocacy Centre (PIAC) submitted a voluminous brief which also raised concerns about privacy and a suggestion that the competition framework be given explicit protections of user privacy and data. PIAC was critical of Bill C-27, the privacy reform legislation introduced by Champagne last June. “If Bill C-27 is passed in its current form, users’ consent and knowledge over data practices would be mostly based on what platforms deems users should ‘expect’,” the legal group asserted. “Firms can even forgo consent and knowledge if they deem there is a ‘legitimate interest’ outweighing potential adverse effects on individuals.” Customers will have less control over the use of their information by companies. Those firms could come up with sophisticated methods of enhancing the value of data for themselves or for third parties without consumers being aware of it, PIAC offered. PIAC made several other recommendations for strengthening the competition regime. Such a bolstering of the regulations is long overdue, the group maintains. “For example, there has never been an outright denial of any major telecommunications-telecommunications merger, despite repeated opposition by the Competition Bureau, including many merger approvals with conditions and divestitures,” PIAC wrote. It proceeded to list the major mergers that have occurred in the telecom sector over the past 23 years. “Need we go on?,” the group asked To further underscore the point, PIAC said the day it presented its submission was the same day that Champagne allowed the takeover of Shaw Communications Inc. by Rogers Communications Inc. “In this environment, PIAC submits that the Government of Canada must, with all due haste, radically rewrite the Competition Act, including changing regulatory structures, to have any claim that Canada is not simply run by corporations, but rather the Canadian public through their elected representatives,” the group stated in its 70-page submission. One of the centre’s recommendations is that economic efficiency should be placed on an equal basis with all other objectives with no special status. This is the current policy of the Telecommunications Act. The efficiencies defence was one of the factors in the Rogers-Shaw takeover. The Competition Bureau in its recommendations said it should be repealed because the defence is no longer supportable and leads to anti-competitive harm in the marketplace. The recommendation echoes previous recommendations the bureau has made on reform of the Competition Act. The Internet Society Canada Chapter (ISCC) noted that no other major international player has adopted the efficiencies defence in their Competition Act, in its submission. "Canada, despite its highly concentrated web of major economic players, has favoured a path leading to greater economic concentration. Canada must reduce the concentration of economic power and to breathe life into our markets,” ISCC wrote. ISCC argued that only business owners benefit from merger efficiencies. “Any merger that substantially lessens or prevents competition should be prohibited. Where a merger raises consumer prices or reduces consumer choices it should not be saved by prospective cost savings. It is illusory to believe that short-term cost savings will produce long-term benefits for the economy.” – Reporting by Paul Park at ppark@thewirereport.ca and Jenna Cocullo at jcocullo@thewirereport.ca.

Stakeholders call for a “whole-of-government” approach to competition reform

News | April 24, 2023

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Stakeholders call for a “whole-of-government” approach to competition reform

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