Competition Policy as a Lever for Organic Growth and Innovation in Canada

Executive Summary

Canadian competition law, and its merger law in particular, has focused on a narrow interpretation of efficiency to justify removing existing and potential competitors from the market, rather than protecting the competitive process itself. This paper argues that an overlooked function of competition and antitrust law is its ability to encourage organic growth and innovation: by removing mergers and acquisitions as a cheap shortcut to growth, competition policy pushes firms to invest in their own capacity to innovate and compete on the merits. This logic appeared in US enforcement — Commissioner Pamela Jones Harbour's lone dissent from the FTC's 2007 decision to close its investigation of Google's acquisition of DoubleClick, and the FTC's 2022 bid to block Meta's acquisition of the VR fitness company Within.

Canada's static conception of efficiency has clear consequences. The 2022 Rogers-Shaw telecommunications merger was blessed by the Competition Tribunal in the final hours of 2022 despite acknowledgment that at least hundreds of thousands of Canadians would see competition worsen and prices rise. While the profitability of Canadian firms has risen steadily, productivity growth continues to lag international peers, because firms insulated from competitive pressure feel no imperative to invest in innovation.

With the first formal consultation on the Competition Act in over a decade underway, the author argues Canada should enact stronger competition laws with three key characteristics: a merger enforcement framework that deters harmful mergers and incentivizes organic growth through investment; an approach to abuse of dominance that addresses the harms of monopoly in their incipiency; and a competition authority with the resources and powers to engage in continuous learning as the economy evolves.