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Competition commissioner Matthew Boswell has his hands full reining in the digital economy


Competition commissioner Matthew Boswell has his hands full reining in the digital economy

The Financial Post takes a look at 11 people and companies we’ll be watching closely in the new year.Ten months after taking the top job at Canada’s chief competition enforcement agency, Matthew Boswell spoke to the Financial Post about his plans to rein in anti-competitive practices and behaviours in order to create trust in the…

Competition commissioner Matthew Boswell has his hands full reining in the digital economy

The Financial Post takes a look at 11 people and companies we’ll be watching closely in the new year.

Ten months after taking the top job at Canada’s chief competition enforcement agency, Matthew Boswell spoke to the Financial Post about his plans to rein in anti-competitive practices and behaviours in order to create trust in the digital economy, which he views as a key plank to advance the country’s productivity and global prospects. The former Crown attorney, who was also a senior litigator in the enforcement division of the Ontario Securities Commission before joining the Competition Bureau in 2011, reveals where he sees red flags and how he’ll push to promote a “culture of competition.”

FP: What are your priorities as Commissioner of Competition?

MB: We see a vision to be a world-leading competition agency at the forefront of the digital economy in terms of all things we do. The second aspect of our work is to promote competition in Canada and champion a culture of competition, which I think, quite sadly, we don’t have — at least not one as vibrant as I would like to see it. The benefits of such a culture of competition for Canadian consumers and the benefit to the Canadian economy would be tremendous.

FP: What do you mean by culture of competition?

MB: Competition is quite simply the force that is driving us to do better. It encourages companies to be more productive, to innovate, to improve quality, to decrease prices, all of which is of benefit to Canadian consumers, so they have choices and markets work for them and what they need.

FP: Why is this a priority for you?

MB: It’s key to increasing Canadian productivity and prosperity. Canada does not place sufficient importance on competition and we need to change that for the benefit of Canadians and our economy, to make it more productive. Something lots of people have been talking about of late is declining productivity in Canada, and so the bureau is out there making the point quite loudly that competition is a driver of this increasing productivity. We are also making the point that, unfortunately, we have significant regulatory barriers to increasing competition in Canada, and this is something that we believe the entire country would benefit from taking a long, hard look at.

FP: How? Do you have a recommendation?

MB: The OECD (Organisation for Economic Co-operation and Development) has recommended that countries undertake something called competition impact assessments, which is where you look at your regulation at all levels of government and see if those regulations are unnecessarily impeding competition in the country: Are they being too heavy administrative burdens on startups, creating barriers to entry for small and medium-sized enterprises?

FP: How does Canada stack up against other countries?

MB: The sort of sad bit in this regard is that the OECD created something called the PMR, the product market regulation indicator, which measures regulatory restriction on competition, and in 2018, the PMR indicated that Canada was 33rd out of 34 countries. We’re now just ahead of one country, Turkey, I believe. This has evolved over time where a culture of competition would significantly help (improve) this, we believe. In 1998, we were 10th out of 28. In 2008, we were 18th out of 34.

FP: What are you doing, or plan to do, that’s specific to businesses that operate in the digital economy?

MB: In terms of the digital economy and enforcement, we’re already doing a fair bit to advance the vision. We hired a chief digital enforcement officer last summer, someone who’s joined the bureau through a secondment from IBM, to take a look at quite literally all aspects of how we do our work in the digital economy, how we can improve, what sorts of tools and technology we need, what sort of training our current employees need, what kind of employees we need for the future so that we are well-placed to enforce in a rapidly changing data-driven digital economy. We have to stay constantly ahead of the curve on this stuff.

FP: How are you being proactive in terms of the business community?

MB: Consistent with the emphasis on enforcement in the digital economy, we put a call out to businesses in Canada to communicate with us about potential issues they might be seeing, so that we’re aware of challenges they may be facing, or anti-competitive practices that they may be suffering under that may be preventing them from competing on a level playing field.

FP: Who was the target here?

MB: This is specifically targeted at certain aspects of the digital economy, and certain large players, to make sure we’re hearing from smaller players, small and medium-sized enterprises that might be experiencing anti-competitive conduct.

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FP: What industries? Banking? Telecom?

MB: In our enforcement call-out, we highlighted areas like online search, social media, display advertising and online marketplaces, and different types of practices that might be going on there that are anti-competitive. There are no specific companies named, obviously.

FP: I know you can’t name specific companies that may be under investigation, but some of the big players in Canada are not Canadian-based companies.

MB: That doesn’t prevent us from doing our work if they’re conducting business in Canada. If it’s through the internet and they have a substantial connection to Canada in terms of their business, then their conduct, if it’s anti-competitive, falls within the bureau’s mandate. In the past, we’ve pursued enforcement cases against large, digital companies that don’t have a significant physical presence in Canada. We brought a deceptive marketing case against Amazon, for example. We had an investigation into Google that in 2016 resolved by way of some undertakings from Google to cease certain types of conduct. We’re not limited by the fact that the companies might not actually be Canadian companies.

FP: What about within Canada’s borders? Some have argued that there are industries where incumbent dominance has frustrated competition from new players. I’m thinking about telecom again and discussions about creating a fourth national wireless player.

MB: We’re very active in that space as well in terms of competition in Canada. We just provided our submission to the CRTC (Canadian Radio-television and Telecommunications Commission) in their wholesale wireless hearings into whether or not to have mobile virtual network operators. And we’re often advocating to the CRTC on competition issues, domestic competition issues in terms of the digital economy. Our submission is quite extensive and it’s supported by an independent expert report. We make specific recommendations on how they might consider going forward with a wholesale wireless regime in Canada. And our recommendations are aimed at enhancing the already existing fourth players in different parts of the country — the regional competitors. We believe the submission we made will facilitate them becoming stronger competitors in the long run. We’ve already seen from those regional competitors cheaper cellphone prices in the areas where they have a significant presence. There will be a CRTC hearing in February where the bureau, including myself, will testify.

FP: What sorts of other probes can we expect? Is there anything you’re doing now that will indicate what’s ahead?

MB: We’ve done a lot of enforcement work and will continue to do so through our deceptive marketing practices branch here at the bureau. In digital economy matters, we recently obtained a temporary consent agreement — an injunction — against FlightHub, preventing them, while we continue to investigate, from making false or misleading representations on and, with respect to hidden fees on their website, false or misleading representations about seat selection, all digitally made through their websites. This was significant from our perspective, so we took the step of obtaining this injunction from the Competition Tribunal while we continue the investigation to prevent harm in the marketplace. Also in the deceptive marketing area, we’ve done significant work in terms of drip pricing online.

FP: What’s drip pricing?

MB: It is where you’ll see an advertisement or representation on your cellphone or on your home computer that you can get a product or a service for X dollars and you then start going through the purchasing process and as you click your way through, additional mandatory fees are added in so that at the end when you’re checking out, the price that was originally represented to you is not in fact available. It’s often a significantly higher price. This is a deceptive marketing practice. We’ve brought multiple cases against multiple large Canadian and global companies for this practice … including this summer’s settling with Ticketmaster for drip pricing practices and they paid a $4-million penalty for that conduct. Prior to that, we pursued all the large car rental companies for the same drip pricing practices. Collectively, that was about $6 million in penalties. And these were all primarily online representations that are deceptive to Canadians.

FP: Will we be seeing more from the Competition Bureau in this area?

MB: We’ll continue to do that work. We’re also doing work to prevent a practice known as astro-turfing. It’s when companies make positive reviews or five-star ratings for their products and it’s done by their own employees or people connected to the company, without disclosing those connections. We had an enforcement action against Bell for this a few years back, and we’re monitoring for that sort of activity going on in the digital marketplace.

FP: Do you think foreign ownership limits should be changed in industries where there are barriers, such as telecommunications?

MB: That’s not something we’ve ever addressed in a report. At a very high level, it’s important for the discussion in Canada to be about how we can have a greater culture of competition for the benefits of the economy. There are estimates that reducing the regulatory barriers to competition could increase GDP per capita in Canada by two to five per cent, which is a significant change. That’s an area where part of our vision during my time as commissioner is really to champion this culture of competition in Canada. The other point that needs to be made is that as we compete in a global marketplace, it’s more and more important that we have a strong competitive market at home so that our companies who want to go out and compete globally are prepared to do so, having thrived under competitive conditions in Canada. It’s really helpful to refer to a person named Michael Porter, who’s a very well-known Harvard economist, who has stated that — and this brings the point home — unless a firm is forced to compete at home, it will usually lose its competitiveness abroad. It’s really important for Canada to take this into account when we’re considering all aspects of competition within the country.

Financial Post

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