“Well Made Here” urges patriotism in Canadian competition policy
Our organization, “Well Made Here”, has decided to participate in consultations on the future of competition policy in Canada. While the initiative focuses on improvements to the Competition Bureau’s application system, our involvement is aimed at raising awareness of the fact that the singular anti-trust dimension that dominates the spirit and language of the current Competition Act – and no doubt that of its forthcoming iteration – deserves to be modernized, not only in light of the digitalization of the economy, but also of the globalization of markets affecting the well-being of our companies, the impact of free trade treaties on these businesses, and above all, the little importance given to the “locally made” products.
It is certainly not simple to consider the protection, even the promotion, of Canadian manufacturing when addressing competition. At first glance, it seems antithetical. At least for proponents of Adam Smith whose infamous invisible hand regulates all things.
At “Well Made Here/Bien fait ici”, we do not share this vision of primitive capitalism. We are in fact convinced that only a rigorous legislative framework can allow fair transactions between parties.
We appreciate the purpose of the current law and believe that it needs to be embodied better in competition practices in the field. Said purpose reads as follows: “to preserve and promote competition in Canada, to enhance the opportunities for Canadian participation in world markets, while at the same time taking into account the role of foreign competition in Canada, to ensure that small and medium-sized businesses have an honest opportunity to participate in the Canadian economy, and to provide consumers with competitive prices and product choice.”
We believe that the concept of healthy competition today should not only cover the parties involved in online commerce, but also coexist with very Canadian values such as local buying and compliance with CSA and other standards; product sustainability and eco-design; the traceability of raw materials and their impact on the fight against greenhouse gas emissions; the behaviour of companies and those to whom they outsource their work with respect to the working conditions of their employees, etc.
This would avoid aberrations such as the following: in a call for tenders, the Government of Quebec required that the Maison des aînés in Chicoutimi be clad in aluminium because the region is the birthplace of this mineral. However, it was aluminium from China that came in at the lowest bid. Note that the quality of the product was also lower, as were the working conditions there, but Adam Smith has spoken. Which is not to say that Justice, let alone Equity, prevailed.
To avoid such political embarrassment, officials had to resort to sleight of hand, whereas a rule discriminating in favour of local procurement based on a mix of price and quality criteria would have decided the matter more conclusively.
Another injustice: Retailers and their credit card transaction fees
The basis of sound capitalism is the notion that businesses should be able to freely choose how to earn and spend money, subject to the laws in effect. Hardware stores and retailers across Canada and in every other industry do not have this freedom of choice when it comes to credit card transaction fees.
Operating as a de facto duopoly, Visa and MasterCard are free to charge whatever interchange rates they want and to modulate these rates as they see fit; worse, based on the types of credit cards used by consumers while shopping.
In the absence of legislation imposing a universal rate on Visa and MasterCard – regardless of the type of card – and capped to prevent abuse, the Commissioner of the Competition Bureau should invoke the sections of the Competition Act dealing with lack of transparency, acceptance of arbitrary billing, and abuse of market dominance to intervene on behalf of all merchants
Action deterring local trade
The Competition Bureau has intervened in recent years when several retailers have attempted to agree on the same opening hours. The intention was not to fix prices or set territories, but only to protect their survival by supporting each other. These hardware retailers were threatened with 14 years of imprisonment and a 25 million fine if they repeated the offence.
We know that under the neo-liberal influence that is sweeping North America, businesses must open for extended hours and more days. This is detrimental to their profitability because while operating expenses increase with longer hours, the same cannot be said for their revenues: a consumer who has $150 to buy a round saw is not going to increase his spending to $200 because the hardware store opens for extended hours.
Under these circumstances, in the same geographic market, we argue that hardware stores, in particular, should have the right to agree to the same days and hours of operation. In doing so, they avoid cannibalizing their customer base and pool of employees.
We, therefore, believe that the Competition Bureau is erring in intervening in such situations. And in doing so, it is harming competition by driving local businesses out of existence.
Government laxity in dealing with stolen goods
In the spirit of section 52 of the current Competition Act, which deals with false information or information that may mislead the public, we believe that the Commissioner should be able to intercede with Facebook regarding its Marketplace and similar platforms where merchandise is resold in order to require “sellers” to conform to certain behaviours.
Statistics show that more than 50% of shoplifting is committed for the purpose of resale. The arrival of virtual marketplaces has been a tipping point for retailers, given their effectiveness in selling new stock anonymously.
First, the Bureau could work with provincial consumer protection agencies to force resale merchandise websites to warn citizens that they can face criminal prosecution if they buy stolen merchandise.
Indeed, anyone who buys a stolen item is a de facto accomplice, and the courts have shown in several cases that it can be difficult for a consumer to plead ignorance. A cautionary banner at the start of a browsing session, like trailers before a movie, could make many citizens question the integrity of an online seller.
Even more direct and compelling might be the requirement to publish a photo of each seller’s claimed proof of purchase with their ad. Such a measure would make it more difficult to steal goods, which, according to our retailers, is the main motivation for stealing from hardware stores, much more so than the desire to own a round saw. The authorities even claim that stealing has become a professional occupation, a way of making a living, for an increasing number of people.
For an equitable contribution from the web giants to infrastructure
By extension, we have taken the opportunity to expose the online sales giants for another injustice compared to brick-and-mortar companies, namely the inadequacy of their contribution to the use, maintenance, and construction of the land transport routes that their multiple delivery vehicles bog down.
We argue that the process of modernizing the Competition Act must take into account the lack of consistency in the remedies available to address certain forms of anti-competitive behaviour arising from the online environment and the new challenges posed by the way data-driven and digital markets operate.
This complacency on the part of our governments in the face of web giants and market globalization has exacerbated disruptions in our domestic markets and supply chains, increasing the cost of basic necessities and raising concerns about fair trade.
Well Made Here’s leadership believes that a sound competition framework can include minimum obligations to be met, even giving benefits to companies that exceed them if these criteria not only force innovation, but also contribute to struggles such as those for workers’ rights, sustainable products and eco-design, and the protection of the planet.
A healthy competition framework should therefore, in our view, be willing to positively discriminate in favour of companies and their products and services where it can be demonstrated that the public interest is better served by choosing products that are produced closer to home and have quality components and rigorous after-sales policies.
Indeed, the proponents of the consultation assert that Canada must ensure “that its rules support a vibrant and competitive economy at home, that they also allow Canada to remain a capable partner in the global struggle for equity, inclusion, and prosperity in the new global marketplace.”
In other words, the government must seek to identify the best ways to modernize Canada’s competition law framework and address the above challenges to the maximum benefit of the greatest number of Canadians (consumers, businesses, or workers).