A CANADIAN COMPETITION POLICY FOR THE PLATFORM ECONOMY

The competition policy debate has been growing in Canada. Senator Wetston’s consultation in the fall of 2021 received roughly two dozen submissions, with participants largely falling into one of three policy positions. The first are in the ‘status quo’ camp, in which the belief rests that the Competition Act is fit-for-purpose for the digital age, and that targeted revisions are needed as opposed to more drastic changes. In the described ‘neo-Brandeisian’ camp, participants aligned, for the most part, on the belief that the “unchecked dominance” of Big Tech companies has stifled innovation, made barriers to entry to important markets, and subject small businesses to anti competitive behaviour. Participants in the third ‘European model’ articulated that competition is linked to social, political, and environmental problems, and that ex ante regulation that encourages pro-competitive processes instead of targeting outcomes is better than the current Canadian enforcement model. The debate about competition reform is both mechanical, such that it necessitates figuring out how different parts should work together, and philosophical, as it requires the discernment of what we know about the economy and how we would relate it to other social goals for the 2020s and beyond.

The panelists deliberated about the role of data in the economy and the unique nature of the platform economy. The platform economy is diverse, some platforms are oligopolies, such as app stores, whereas others have significant competition. While personal data has been collected and used through loyalty programs in banking and telecommunications for example—in the platform economy, personal data and privacy has become a new currency. Moreover, it has created new issues and exacerbated existing ones, such as transparency and consumer issues. For instance, companies’ control over data leads to self-reinforcing dominance. The prioritization of efficiency in the Competition Act should be seriously reconsidered in the upcoming review, as consumer harms are difficult to quantify in the platform economy, and economies of scale and network effects have greatly increased efficiencies.

The Competition Act is a productive conversational tool to decipher which areas of the platform economy are antitrust issues, therefore subject to competition law, and which areas are matters of privacy law. As a recent example, Tim Hortons’ location tracking of its app customers is a matter of privacy, because it did not use its data against a competitor. However, Amazon’s use of small business’ retail data to boost their own sales is a matter of competition. When it comes to hyper-personalized algorithmic pricing, through services like Uber, it is unclear whether the Competition Act is the best tool to deal with this characteristic of the platform economy. Both privacy and competition in Canada require reform, and they should have clearer intersections and integrations in law to minimize harm to the public.

While Canada is behind other jurisdictions in reforming competition law, this can be an advantage when seeing what has worked and not worked in similar countries, and applying these lessons to a Made-In-Canada solution. The EU is exploring new regulators, while the UK is reinvigorating existing regulators and using coordinating committees. The US has chosen a hybrid approach, which has ex ante regulation for large platforms. Their approaches inspire a Canadian reflection on whether new tools or a new regulator should be layered into the competition policy landscape, or asking if improving what already exists is necessary? In Canada, it is important to remember that there is no consumer protection at the federal level, that Canada is a secondary market, that the American-Canadian trade relationship is unique, and Canadian institutions are distinct from European and American counterparts.