The Objectives of Canadian Competition Policy 1888-1983

K.J. Charles was Professor of Economics, Lakehead University, Thunder Bay.

The present Combines Investigation Act was originally enacted in 1910. It has been amended several times since then, and in 1983 the government announced its intention to amend the Act again to modernize its provisions and to ensure a “free market place.” Despite the longevity of a competitive policy, evidently so far no comprehensive study of its objectives has been undertaken. The authors attempt to fill this void, under the auspices of the Institute for Research on Public Policy, which has already published three other volumes on competition policy and corporate concentration.

The authors identify three major objectives of Canadian competition-policy legislation — preventing abuses of economic power, maintaining free competition, and achieving economic efficiency. Each of these objectives is discussed in a separate chapter, followed by another chapter on the lesser objectives of Canadian competitive policy.

The framers of the early legislation were not hostile to big business in general; they believed that Canada stood to benefit from “large aggregations of capital.” What they and the Canadian courts attempted to curb, the authors point out, was “oppressive and unreasonable restrictions on competition.” The Canadian courts convicted virtually in every case where accused accounted for 50 per cent or more of the market and had tried to fix prices or allocate markets. Between 1924 and 1975, the Crown won 90 per cent of such cases. Between 1975/76 and 1979/80, however, it won only 58 per cent of conspiracy cases, and in the next three years this proportion further declined to 42 per cent.

The economic efficiency goal is a recent one, and evidently the courts now strike only at those activities that would give competitors an “advantage not attributable to superior economic performance.” It is widely felt that competitive policy as it now operates in Canada interferes little with the business community’s freedom of action to impose a wide variety of restrictions on the competitive forces in the economy.

A concluding chapter summarizes the major findings of the study. Businessmen are generally opposed to anti-combines laws. The authors express the hope that businessmen (and others) who “read this volume will both better understand the objectives and perhaps acquire a greater sympathy for them” (p.163).