Thank you to the committee for this invitation to appear before you to talk about something that I care a lot about, which is Canadian competition policy.

I am an economist and professor emeritus at the Sauder School of Business. I've been working, studying, researching and teaching in the area of competition policy for about 40 years. I spent a year as the T.D. MacDonald chair of industrial economics at the Competition Bureau and have worked with the bureau on and off over the years since.

This is a very exciting time to be involved in competition policy in Canada. I can't remember a time quite like this, except maybe the mid-1980s when we got the Competition Act. We were prepared to look at so many different changes. There's a lot that I like about what has happened and some that has given me pause.

In my remarks, I want to focus on a couple of things. I'm going to echo a lot of the comments made by my colleagues Professor Iacobucci and Professor Quaid, but perhaps coming from an economist, it will have a bit of a different spin to it.

I want to focus on two areas—and I'm going to use the same language Professor Iacobucci used—that I think might still be in play to some extent given that many things seem to be more or less settled. I want to start with the structural presumptions from clauses 8 and 9. I'll talk mostly about mergers; that's really where they bite.

I like the idea of providing structural guidance to merging parties that is based on market structure, but like Professor Iacobucci, I think they belong in guidelines. To put them in the law gives them weight and suggests a false precision that I think could be counterproductive. It risks turning, if you go to a litigated matter, a dispute that should be about effects on competition into a debate about what the market definition is.

Economists are even retreating a bit from the whole market definition exercise because we realize, for reasons Professor Iacobucci gave, that it's very messy and very imprecise, and we don't think people should rely on it too much. If you want to measure market shares or concentration, you have to start with a market definition: What's in? What's out? How do you measure shares? Professor Iacobucci did a good job referring to those challenges. I would like them in the guidelines.

I have two recommendations about this. The first would be to put them in the guidelines and not in the law. If they are in the guidelines, all the presumptions, in my view, should be rebuttable. Bill C-352, which takes away the rebuttable feature for mergers above 60%, is problematic in my view. There are going to be mergers where you invoke the greater than 60% share, and the tribunal would not even have discretion, as I read this clause.

There are many circumstances in which a merger with 60% could actually be pro-efficiency and benefit consumers. You could think about a situation where a large firm is buying a small firm that was otherwise about to go out of business—a failing firm, as we might say—or two firms might merge that have zero overlap in their businesses, which I think is an example Professor Iacobucci gave. You would expect no competitive impact from that. If I'm understanding it correctly, it could even block a large firm from divesting some of its assets and businesses because it would still cross 60%, even though it's actually reducing its size. That's subject to interpretation, I suppose, but for those reasons, I'd be very concerned about structural presumptions in the law.

The other area I wanted to mention, which Professor Quaid also pointed to, is efficiencies as a factor. Here, again, it's mergers that I'm going to focus on mostly, although it does come up in the competitor collaborations area.

I was always a fan of having efficiencies considered in a merger review. I'm a little disappointed that it got pulled out, but I recognize the challenges it has presented. I would really like to see some recognition of efficiencies left in the law, however. For that reason, I'm happy that Bill C-352 leaves them in as a factor. However, I'm also with Professor Quaid, and the commissioner to some extent, on the fact that the way they're left in as a section 93 factor with a lot of the old language—for example, the “greater than” and “offset” language—could be somewhat problematic. It could bring back some old challenges with the old defence, and they could plague us again.

My preference is to have efficiencies recognized in some way. I worry that if they're not in there somewhere, the tribunal will think that Parliament took out efficiencies as a consideration; it was suggested that they make it a factor, and they chose not to do it. They might wonder how much weight they as a tribunal should put on efficiencies. We recognize that efficiencies are a prime motivator of many mergers and a prime impact of many mergers. When they come through, they improve things for consumers and the firm. I applaud the fact that Bill C-352 still recognizes efficiencies, but we might want to think about the way they do that.

I'll leave my opening remarks there. I'm happy to engage in any other elements of the bill.

Thank you.

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