28 Pages Posted: 1 Aug 2013
Date Written: May 22, 2013
In Canada, various sectors of the economy are subject to government regulations, many of which are designed to correct market failures. However, such regulations are generally inconsistent with federal competition law, which aims to promote economic efficiency by maintaining the integrity of competitive markets.
The courts have resolved this tension by developing the Regulated Conduct Defence (RCD) – an interpretive judicial doctrine that immunizes various regulatory regimes from the application of competition law. In this Commentary we challenge the wisdom of the RCD from an economic and legal standpoint. In particular, we criticize the view, established by the courts, that regulations conflicting with competition law should be deemed to operate in the public interest.
We argue that certain regulatory regimes advance private interests at an unreasonable cost to consumers. Our analysis includes three examples of regulatory regimes that interfere with competitive forces but nevertheless benefit from immunity to competition law: agricultural supply management, private alcohol retail, and legal services.
We propose: (i) clarifying the Competition Act’s application to regulated conduct; (ii) where practicable, limiting the scope of immunity for regulated sectors such that if regulation is deemed necessary, it is narrowly tailored to be minimally impairing to competition; and (iii) requiring the federal government to assess the competitive effects of all legislation prior to enactment.
Keywords: Economic Growth, Innovation, Supply Management, Competition
JEL Classification: L40, L43, L50
Suggested Citation: Suggested Citation
Mysicka, Robert and McKendry, Marty, Beer, Butter, and Barristers: How Canadian Governments Put Cartels Before Consumers (May 22, 2013). C.D. Howe Institute Commentary 382. Available at SSRN: https://ssrn.com/abstract=2303832 or http://dx.doi.org/10.2139/ssrn.2303832