Perfect storm for Canadian jobless, Part III: the role of national champions

By Julius Melnitzer | May 19, 2021

This is the third of a three-part series. Read Part I and Part II.

Canada’s competition laws don’t play favorites. There’s no preferential treatment for “national champions” whose expansionist aims are anti-competitive but don’t create efficiencies that – as we’ve pointed out previously – frequently promote job losses.

“Competition law is fairly agnostic, as long as consumers benefit from lower prices,” says John Pecman, Canada’s Commissioner of Competition from 2013-18, who is now a senior advisor in Fasken Martineau Dumoulin LLP’s Ottawa office.

The upshot is that anti-competitive mergers that create national champions whose growth might actually promote employment likely won’t see the light of day. But in an increasingly protectionist world, one that COVID-19 has further skewed, does that still make sense?

Pecman says it does.

“It’s true that the entire world has been caught in the crossfire of the U.S.-China trade wars, and that the pandemic has made it worse by pointing out the need to protect national supply chains,” he says. “But if you do a cost-benefit analysis, the traditionally neutral competition law approach wins out because it advances globalization, free trade and domestic competition.”

What is certain is that the complexities of promoting national champions extends beyond our borders. A stark example is the proposed merger of Superior Plus Corporation and Canexus Corporation in 2016. The Bureau approved Superior Plus’ acquisition on the basis of the anticipated efficiencies created by the merger and despite its anti-competitive effects. But the deal fell through when the United States Federal Trade Commission, which reviewed the transaction as the Canadian companies had two U.S. plants, challenged it because of the anti-competitive effects on the North American sodium chlorate market.

Then there are trade considerations.

Neil Campbell, a competition partner in McMillan LLP’s Toronto office and a strong proponent of “nationally neutral, non-discriminatory” competition laws, maintains that changing our approach could get us into hot water on the trade front.

“Modern trade agreements, particularly CUSMA [Canada-United States-Mexico Agreement] and CPTPP [Comprehensive and Progressive Agreement for Trans-Pacific Partnership] often contain non-discrimination and most favoured nation clauses that are bedrock trade policies,” he says. “Some of these types of policies are starting to show up in competition chapters in trade agreements – and that’s a good thing.”

As Campbell sees it, competition policy isn’t the place to build protectionism into our policies.

“Competition law should focus on consumer welfare in terms of a competitive environment with low prices and good service,” he says. “It’s hard to integrate nationalism into maximizing wealth for consumers and for the Canadian economy”.

Interpolating national champions into our competition laws, Campbell adds, trades off general economic welfare by favouring particular Canadian businesses.

“And that’s negative because it creates an environment in which people are jockeying for outcomes that are not based on sound facts or economic analysis,” he says.

Using “adjacent structures and more targetted instruments”, Campbell believes, works much better than risking a “much less determinate and politicized competition law framework”.

Cal Goldman

Cal Goldman. also a former Competition Commissioner (1986-89) and now a Toronto-based competition practitioner at The Law Office of Calvin Goldman, Q.C., suggests we may already be doing that – but circuitously.

“It isn’t likely that competition policy will change to favour national champions,” he says. “But sustaining national champions could be a by-product of some of the overly-broad and relatively uncertain scope of our foreign investment review policy in areas outside of national security”.

What is true, however, is that times have changed.

“In the eyes of many, including leading competition policy thinkers across many countries, additional public interest considerations may require an updated rebalancing of the factors and weights that ought to be on the table in public authorities’ assessments of proposed mergers,” Goldman says. “As I’ve heard repeatedly in domestic and international discussions and policy projects over the last half year or so, the public interest in protecting people’s jobs, earnings, additional medical care that comes with employment and their sense of purpose in being able to go to work, all likely resonate much more with the public and with voters than economic concepts of prospective consumer welfare.”

Not surprisingly, then, interest in national champions, particularly in the health care (think PPE and syringes), pharmaceutical (think COVID-19 vaccines) and technology sectors, is emerging.

“The pandemic and the geopolitical environment may indicate a need for preferential treatment,” Goldman says. “These are, after all, exceptional times.”

The point being that our government, in consultation with the private sector, needs to confront these issues before it’s too late.

“If our senior government leaders are going to do their jobs as effectively as possible, they must understand that exceptional times give rise to exceptional issues that warrant a willingness to engage in exceptional thinking,” Goldman says.


Perfect storm for Canadian jobless, Part I: M&A uptick and unemployment growth

Perfect storm for Canadian jobless, Part II: making jobs count in M&A

“Vestige of the past”: Competition Bureau mulls scrapping “efficiencies” defence in merger laws

Competition Bureau’s approach to antitrust law needs to catch up with the times

Anti-competitive regulatory risk on the rise: COVID’s role

Julius Melnitzer is a Toronto-based. award-winning legal affairs writer, ghostwriter, writing coach and media trainer. Readers can reach him at [email protected] or

Best Investigative Series 2020

1 Comment

  1. Timely article and the Competition Act would need to be amended because no where in the Purpose clause of the Act is employment given as a factor to consider.

    Purpose of Act

    1.1 The purpose of this Act is to maintain and encourage competition in Canada in order to promote the efficiency and adaptability of the Canadian economy, in order to expand opportunities for Canadian participation in world markets while at the same time recognizing the role of foreign competition in Canada, in order to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy and in order to provide consumers with competitive prices and product choices.

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