Canadian Competition Law Objectives and Foundational Economic Concepts

• Author: John S. Tyhurst
• Pages: 73-139

73

C H A P T E R 3

CANADIAN

COMPETITION LAW

OBJECTIVES AND

FOUNDATIONAL

ECONOMIC CONCEPTS

The purpose of thi s Act is to maintain and encour age competition

in Canada i n order to promote the eciency and adaptabilit y of the

Canadia n economy, in order to expand opport unities for Canadia n

participation i n world markets while at the same time re cognizing the

role of foreign competition in Canad a, in order to ensure that sma ll

and medium-size d enterprises have a n equitable opportunity to par-

ticipate in the Can adian economy and in order to provide consumers

with competitive pr ices and product choices.

— Section 1.1 of the Competition Act

A. INTRODUCTION

This chapter exami nes the objectives of Canadian competition law, their

origins, their content and their implications. It begins by considering

the legislative “pole star,” the purpose clause, above. The discussion

turns to a brief survey of the main historical objectives. The modern

objectives are then reviewed, begi nning with economic eciency, a cen-

tral focus in the cu rrent legislation. That review provides an opportunit y

to examine the concept of eciency, as well as to provide an overview

of some of the key economic models and concepts which are applied or

referred to in later chapters. The chapter then clos es by looking into two

clusters of objectives, distribution of wealth and concern for economic

CANA DIAN COM PETITION LAW AND POLIC Y74

power/business equity, which have played a diminishing role with the

evolution of Canadian competition law over time, but which are still

part of its fabric, content, and context.

B. THE PURPOSE CLAUSE

1) Interpretative Role of a Purpose Clause and Objectives

The Supreme Court of Canada has stated that in construing a statutory

provision, one must read its words “in their entire context and in their

grammatica l and ordinary sense h armoniously with the scheme of the

Act, the object of the Act, and the intention of Parliament.”1 A purpose

clause provides interpretative guidance which carrie s “the authority

and weight of duly enacted law,” and context for the entire Act.2 In Can-

ada (Commissioner of Competition) v Superior Propane Inc, the Federal

Court of Appeal exami ned section 1.1 and observed th at such clauses

“are integral to the statute and c an carry as much weight as its other

sections.”3 The Court noted, however, that “the wording of a particu-

lar provision in a statute may be so clear and precise that it must be

regarded as overriding an ambiguous purpose clause.”

A purpose clause, li ke that found in the Competition Act, may con-

tain a number of disparate objectives. In Superior Propane, Evans JA of

the Federal Court of Appeal obser ved, “[a]s is not uncommon in such

clauses, not all of the stated pur poses or objectives can be served at the

same time, nor are all neces sarily consistent.” The objectives must thus

be weighed and balanced in applyi ng the legislation to particular ca ses.4

Even if we cannot identify a single, uni fying objective for a particu-

lar provision, we may be able to ref‌ine our understand ing of how a given

interpretation has an impact on the realization of dierent goals and

objectives, to develop greater clarity in a ssessing the outcomes available,

and the nature or content of the trade-os between objectives t hat may

sometimes be necessa ry. As Robert Bork noted in his inf‌luential treati se

on antitr ust:

1 R v Sharpe, [2001] 1 SCR 45 at para 33; Canadian Foundati on for Children, Youth

and the Law v Cana da (Attorney General), [2004] 1 SCR 76 at para 20. See also

Re Rizzo and Rizzo Shoes Lt d, [1998] 1 SCR 27 at para 21.

2 Ruth Sullivan, Sullivan o n the Construction of Statutes, 6t h ed (Toronto: Lexis-

Nexis, 2014) at §§14.39, 14.41.

3 Canada (Commissioner of Comp etition) v Superior Propane Inc, 2001 FCA 104 at

paras 106–7 [Pro pane FCA1], leave to appeal t o SCC refused [2001] SCCA 252.

4 Propa ne FCA1, above note 3 at para 105.

Canadi an Competition Law Object ives and Foundational E conomic Concepts 75

Only when the iss ue of goals has b een settled is it possible to frame a

coherent body of substantive r ules.5

Examining the objectives of legislation can also provide parameters

which may help guide the design or application of a legisl ative provision

or rule. In the case of competition law, economics is the disc ipline that

has increasi ngly provided a framework for determini ng how the guiding

principles and rules should be desig ned and applied.

2) Content of the Purpose Clause

a) The Meaning of “Competition”

A glance at section 1.1 of the Competition Act above reveals that the

legislation’s overall purpose is “to mai ntain and encourage competition

in Canada” — something th at comes as no surprise in an Act wit h this

title. But what does “competition” mean? The Supreme Court of Canada

in the 1997 decision Canada (Director of Investigation and Research)v

Southam Inc, considered the purpose clause of the Act in the context

of an appeal from the Competition Tribunal’s assessment of a merger

of Vancouver newspapers and concluded that “[t]he aims of this Act

are more ‘economic’ than they are strictly ‘legal.’”6 Even taking into

account this economic context, the word “competition” can still have

a range of meanings. While others are possible, three meanings of the

term which appear most relevant in t his context are: (1) competition

as a form of behaviour or process, (2) competition as a market structure

or economic outcome, and (3) competition viewed through the lens of

economic freedom.

First, “competition” can refer to “rivalry”7 or “a striving for the cus-

tom and business of people in the marketplace,”8 i.e., a form of behaviour.

Rivalry involves the jockey ing for competitive position, carried out by

independent players in an attempt to gain a competitive advantage over

others. American Justice Learned Hand wrote in United States v Alum-

inum Co of America that “immunity from competition is a narcotic, and

5 Robert H Bork, The Antitr ust Paradox: A Policy at War with Itself (New York:

Basic Books, 1978) at 50 [Bork].

6 Canada (Director of Investigation and Resea rch) v Southam Inc, [1997] 1 SCR 748

at para 48 [Southam].

7 The Shorter Oxford English Dictio nary (Oxford: Oxford University Pre ss, 1973) at

382.

8 Richard Whish & David B ailey, Competition Law, 9th ed (Oxford: Oxford Uni-

versity Pre ss, 2018) at 4. See also Harr y S Gerla, “Restoring Ri valry as a Central

Concept in Antitr ust Law” (1996) 75:2 Nebraska Law Review 20 9.