Remarks by John Pecman, Commissioner of Competition
The Indian Institute of Management
November 20, 2013
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Thank you for your kind introduction, and the opportunity to join in this discussion on "The Game Changing Potential of Competition Regulation and Competition".
Canada and India continue their negotiations on the Free Trade Agreement and, in the meantime, we have much to share and much to learn from each other.
I am especially pleased to have had the opportunity to meet my colleagues in the Competition Commission of India — the CCI.
They are doing incredibly important work in advancing competition in India to the benefit of both Indian consumers and businesses.
It was a real pleasure to speak and share some of Canada’s best practices with my colleagues yesterday, and to have had the opportunity to learn from the CCI’s approach as well.
Today I would like to begin with a little background on competition regulation in Canada before turning to why competition is important, why compliance is important, and how we work with our partners in the international community.
Why competition matters
Canada has a proud history where competition law is concerned: we carry the honour of being the first country to pass competition legislation.
Canada’s legislation was enacted in 1889, one year before the United States’ Sherman Act, and was considered the first competition statute of modern times.
At the time, Canada’s legislation included criminal provisions making it an offence to unlawfully conspire, combine, agree or arrange to prevent or lessen competition unduly or enhance prices unreasonably.
However, much has changed in the past 120 years. And since the introduction of the original legislation in 1889, successive governments have modernized our legislative framework, most recently in 2009.
The Act now includes civil and criminal provisions that apply to a wide range of conduct, as well as a variety of remedies, including imprisonment, fines, administrative monetary penalties and restitution.
At the same time, Canada’s economy is much less regulated today than it was a generation ago, and all Canadians have benefited.
In Canada, successive governments have understood the importance of building a strong competition framework and you don’t have to have a PhD in economics to understand why: healthy competition benefits consumers, businesses and the economy as a whole.
In 2006, the government of Canada struck the Competition Policy Review Panel, a panel of experts in the field of business, chaired by a man by the name of Red Wilson.
I reference this because what the Panel had to say about competition in its final report to the Minister of Industry contains some very relevant comments on competition.
In underscoring the vitally important role of competition and competition policy, the Panel said that strong competition does three things:
- It provides workers the opportunity to work for more productive, innovative companies, earn higher wages and pursue rewarding careers;
- It offers Canadian consumers better products, lower prices, more choice and better services; and
- For our economy, it is the strongest spur to innovation and value creation — leading to a higher standard of living for all.
I share the Panel’s view that the path to a more innovative and productive economy comes through increased competition.
And further, I believe that increased competition comes through strong competition law enforcement, which means providing enforcement bodies with the legal tools and resources they need, and promoting competition within the business community.
Because we are largely a business crowd today, I want to focus on why competition is good for business. As the Panel pointed out, healthy competition on a level playing field is crucial to productivity, job creation and economic growth, all of which benefit the business community.
But when we drill down to the micro-level, how does competition benefit business?
Well, for starters, earning a reputation for solid competition practices gives a company a competitive advantage. It helps a business establish itself as a trusted and respected operation.
This trust and respect helps reduce transaction costs, risk and uncertainty, and provides recognition that helps attract high quality employees.
And in a more obvious way, there are deep reputational and financial costs associated with the failure to comply with competition law.
When we look at all these benefits, it becomes clear that competition has the potential to drive a company’s success.
With competition, companies operate more efficiently, employ higher caliber workers and produce better and more innovative products and services.
In fact, businesses have much to gain through compliance with competition laws.
In Canada, the Competition Bureau emphasizes that compliance is a responsibility shared among the Bureau, the legal community and the business community.
It is my firm belief that there are numerous benefits to approaching compliance as a shared responsibility.
For example, shared compliance helps ensure "fair play" in the marketplace by increasing accountability in the business community, which in turn levels the playing field.
Through shared compliance, we can achieve immeasurably more than any one of us ever could alone — to the benefit of consumers, business and the economy.
In Canada, the Bureau promotes compliance through publications, advocacy, suasion and enforcement. We strive to be as transparent as possible to provide a level of certainty and predictability in our enforcement approaches for businesses and the legal community.
We articulate our priorities, and we work with stakeholders in developing policies, procedures and programs.
Members of the Canadian legal community promote compliance by making their clients aware of their obligations under the Competition Act.
The business community promotes compliance by helping ensure that competition laws are respected. They do this by putting in place and following credible and effective compliance programs. It is fair to say that most companies want to "do the right thing" and to be seen doing the right thing.
More companies are looking for ways to promote their corporate social responsibility and ethical business practices, and compliance with competition laws is part of this.
Adam Smith, often called the father of modern capitalism, said in his best known book, "The Wealth of Nations" that an individual seeking his or her own self interest is the most beneficial thing they can do for society;
In turn, society as a whole benefits through more jobs, more competition and better quality goods and services.
That is an oft repeated quote.
However, in his lesser known book, "Theory of Moral Sentiments", Smith maintains that an "ethical economy" is necessary to ensure the just treatment of all.
I think this quote expresses the sentiment that is captured by the term "corporate social responsibility."
Getting back to compliance — by now, companies should be well aware of the potential for loss of reputation and damage to carefully cultivated brands that can result from the failure to comply with competition laws.
In order to ensure compliance, companies must be aware of the competition legislation and regulations that apply to them and also of the approach that their competition authority undertakes to apply these laws.
It is incumbent on companies to keep abreast of what their competition authority is doing. As the saying goes, ignorance of the law is no excuse.
The most effective way for a company to protect its business and its brand is to be aware of its respective competition authority’s practices, procedures and policies.
I cannot underscore the importance of this enough, especially given the increasing cooperation between agencies and convergence in competition law and enforcement practices.
Cooperation & convergence: How they impact businesses
Since my appointment as Canada’s Commissioner of Competition, I have often referred to the notion of building a "Bureau without borders".
What this refers to, in part, is to strengthening our ability to work with partners beyond our national borders. There are currently about 120 countries around the world with competition laws, and that number grows each year.
Increasingly, we’re cooperating with one another through bilateral arrangements — both formal and informal — and through international forums, such as such as the OECD, the International Competition Network (ICN) and the International Consumer Protection Enforcement Network (ICPEN).
Canada’s Competition Bureau has strong relationships with most mature competition agencies, and it is growing its relationships with agencies in other countries, including India.
What this cooperation among countries means to the business community is that there is an increased likelihood that anti‑competitive behaviour will be prosecuted; and that those who want to engage in anti‑competitive behaviour have fewer places in the world to hide.
And our successes are piling up, including those we’ve achieved through international forums: perhaps the best known international actions have been our efforts with ICPEN and other international forums to target mass marketing and telemarketing fraud.
Through the international forums I just referenced, including the OECD, the ICN and ICPEN, and through regional competition networks, competition authorities work towards soft convergence of our competition regimes.
In fact, Canada’s substantive 2009 amendments were greatly inspired by the OECD peer reviews of Canada’s competition policy and law, leading to a greater alignment of our competition regime with those of our major trading partners.
Also, many of the Bureau’s enforcement guidelines are inspired by international "best" or "recommended" practices.
In addition to the convergence work in multilateral forums, cooperation between countries with competition laws is also taking place through formal and informal bilateral arrangements.
The Bureau works cooperatively with a number of international enforcement partners that are within and outside of government.
These relationships enhance the Bureau’s own expertise, the effectiveness of its enforcement activities, and the enforcement activities of its partner agencies abroad.
Canada currently has formal cooperation arrangements with 11 other jurisdictions and has informal relationships with competition authority officials in many other countries.
All of this collaboration and convergence means that we are both bolstering our collective ability to work together to catch those engaging in anti‑competitive behaviour and growing our respective agencies’ skill sets.
Again, the message for businesses is: if you decide to engage in anti‑competitive behaviour, make no mistake, you will be caught.
In working with international partners, we’re well aware of the differences our jurisdictions might have with respect to such matters as confidentiality and information disclosure.
We explore ways to reduce these barriers. We believe that there is a balance to be struck between enabling agencies to collaborate and advance investigations, while protecting the confidentiality and privacy rights of the parties.
We also encourage "self-reporting" of offences, including through immunity and leniency programs and a whistle-blowing initiative to target criminal cartels.
As with administering competition law within Canada, we find that the best method of working internationally involves a combination of formal arrangements and informal collaboration where our officials pick up the phone or send an email to international colleagues.
Through formal and informal means, we share ideas and information. We are always willing to provide informal advice and technical assistance to other government agencies and non-government organizations.
Going forward, the Bureau will continue to negotiate cooperation instruments with foreign governments and competition agencies and seek new opportunities to deepen its collaborative relationships with foreign competition enforcers.
As nations like India continue their rapid economic growth, the Bureau welcomes the opportunity to strengthen its ties and collaboration, in the hopes of advancing our respective competition policy and enforcement goals.
I want to thank you all for your time today. I hope that I have increased your appreciation of the important role that competition plays in a thriving economy, and how businesses benefit from that.
On a final note, I would like to underscore how important it is, in this time of increasing convergence and international cooperation, to understand the relevant legislative framework, how it affects your business, and how your competition authority approaches compliance and enforcement.
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