Join us as we interview Denise Hearn and Vass Bednar about their new book, “The Big Fix”, an investigation into the key issues – and potential fixes – for competition policy in Canada.
In this episode of the Counterfactual podcast, we are joined by Denise Hearn, author, applied researcher, advisor, and resident senior fellow at the Columbia Center on Sustainable Investment, and Vass Bednar, the Executive Director, Master of Public Policy Program at McMaster University and host of the Globe and Mail podcast Lately to discuss corporate concentration, “kayfabe competition”, the financialization of the economy, and more challenges for competition policy to address in Canada.Denise’s and Vass’s new book “The Big Fix” was released on October 15; more information can be found here: https://sutherlandhousebooks.com/product/the-big-fix/ .
This is the final episode in the fall half of our Counterfactual season. Make sure you subscribe to Counterfactual wherever you get your podcasts to ensure you don’t miss our upcoming episodes.
Hi everyone, Kate McNeece here. Thanks for joining us for this 2024-2025 season of Counterfactual.
We hope you’ve enjoyed our programming on topics from greenwashing to AI to getting to know the people behind the Competition Bureau.
The episode you’re about to listen to is the last regular episode in the fall half of our season. We’re going to take a little break and be back with a great new block of episodes in spring 2025. Make sure you subscribe to Counterfactual on your platform of choice so you don’t miss an episode. If you have any questions, comments or suggestions, you can also reach us at our email, podcast committee@cba.org. We look forward to hearing from you.
Now, on to the episode.
00:39
Counterfactual Podcast
Welcome to Counterfactual, the podcast brought to you by the Competition Law and Foreign Investment Review Section of the Canadian Bar Association. Counterfactual takes a fresh look at issues relevant to business competition and related areas of regulation and explores the real and hypothetical worlds to gain practical insights and debate policy. Hope you enjoy the show!
01:06
Kate McNeece
Hi everyone, and welcome to Counterfactual. I'm Kate McNeece, I'm one of your Counterfactual hosts. I'm very pleased today to be joined by Denise Hearn and Vass Bednar, who are the authors of the new book, The Big Fix.
As we're recording this, it is upcoming, but when you are listening to this, it will be out and there will be a link in the show notes if you're interested in this conversation to learn a little bit more.
Denise is an author, applied researcher, advisor, and resident senior fellow at the Columbia Center on Sustainable Investment. Vass is the Executive Director, Master of Public Policy Program at McMaster University and host of the Globe and Mail podcast Lately where she is a contributing columnist. So Denise, Vass, thank you so much for joining us today.
Vass Bednar
Thanks for having us.
Denise Hearn
Thanks for having us, Kate, excited to be here.
01:53
Kate McNeece
So just to kick off, could you each tell us a little bit about your background, you know, I'm ah a competition practitioner, so that's where my interest in competition law and policy comes from. But you ah neither of you, I think, has that background. So can you tell us a little bit about how you got into competition policy and where your interest is stemming from?
02:11
Vass Bednar
Oh yeah. You want Denise wants me to go first. Okay. You know, for me, it was a little bit accidental, a happy accident. My background is in public policy and in 2020, I got a call from McGill actually. “Hey, we think competition's important. Do you think you could do kind of a primer for us on the state of competition policy in Canada?” and while I was on the call with them with my wired headphones, which I believe everyone should always own only wired, I Googled, what is competition policy? And they're like, Vass, do you know about this? I was like, I know a little bit and I really want to learn more. So it's the perfect opportunity.
And as I was doing some more research and meeting and getting to chat with more people, there were like these little quirks and quirks where I'd be like, yeah, I just want to make sure like, is this the way the law actually works? Like I must be getting something wrong and people were like, “Oh no, definitely that's how you interpret it.”
And it started kind of a fascination, uh, where I was both learning about something, but also offering commentary kind of out loud and in the open. And I was also having a lot of fun. I was learning a lot and I was having a lot of fun. It's actually how I got to meet Denise, uh, at the start.
03:19
Denise Hearn
Yeah, and for me, I'll go back a little bit further before my path converged with Vass, but I was working in London for a macroeconomic research firm that sold to institutional investors and hedge funds and family offices and sort of tried to predict where markets would go, and the founder of that firm had written a few books before and was interested in exploring with me the macroeconomic drivers of inequality. And as we started doing our research, particularly in the U.S., we found that industry concentration at the time we were researching - sort of 2016, 2017, - was discussed a lot in academia and obviously in competition policy circles, but wasn't necessarily part of the public discourse in the same way that it is now.
And so, um yeah, so we wrote a book called The Myth of Capitalism that came out in 2018. It was a Financial Times best book that year. And I really you know knew nothing about antitrust or competition policy. I was interested in it from the sort of angle of you know, how can we make markets more equitable and fair?
And then that set me on this sort of seven, eight year journey of discovery and um constant learning. And ah since then, I've done a lot of you know research and advisory work in this area. I've got to meet Vass because we did a project with the province of Ontario when they were reviewing their Consumer Protection Act and wanted to think about how to introduce competition policy as part of that thinking.
04:44
Vass Bednar
So you know we're fun at parties, like really fun.
Denise Hearn
Yeah, yeah, yeah, exactly.And so here we are. And and then, yeah, the this book is has been an awesome next sort of iteration of our of our collaboration.
04:56
Kate McNeece
Well, I can tell you that being a competition practitioner also makes you really fun at parties. Because whatever merger i I'm working on, I've now been so immersed in it that that's all I can talk about.
So The Big Fix, how did the genesis of this book come around? What made you decide to write this book at this moment in time? And like what should we be taking from the title, The Big Fix?
05:23
Denise Hearn
Yeah, I'll take a first go at that. um So, we got approached by McGill's Max Bell Public Policy School who received an endowment to pick an author once a year to write about something substantive related to Canadian economic policy. They wanted a competition policy book and so they approached Vass and I to co-author it.
You know, in one sense, like competition policy chose me and chose us, I think, versus the other way around. but I do think it was very timely in the sense that obviously we've had these three major legislative updates to our competition law, which are quite historic. But what we want to do with the book is really to say, OK, we've had some amazing wins from our perspective in this area. And now we want to build on that foundation and go even further and sort of think about not just legislative changes, but how we can engage, you know, all of government and really thinking about competition strategically in a way that can rebalance power across the economy for multiple stakeholder groups.
And maybe Vass can tell you about our title and how we landed on that.
06:28
Vass Bednar
I mean, yeah, but now I want to go back to the titles we had to drop, The Big Fix to us is actually very playful. It's kind of a triple entendre. One, it is a gesture at the kind of zombie ideas, the big fixes that kind of keep coming up that we haven't let go of, that we point to as potential silver bullets for Canada's economy, right? Unleashing the power of poultry by ending supply management, having more foreign competition, we wanted to point to those and say, you know, these need to kind of move away. Two, we wanted to gesture at how it can feel like certain markets or industries are kind of fixed, that there's not enough robust competition. We wanted to point to those kind of structural realities that are there and bring the reader along with ‘aha!’ moments that we've had too.
And then third is around our solution set that, that it's comprehensive, that it's integrated and integrative and kind of it is big. It's just as big as kind of the challenges that we face. So that's what we hope people will take away. And that's the kind of fun we're having with, that title.
07:33
Kate McNeece
Yeah, that's great. I think your point about ah the sort of ideas that recur or the or the problems that have recurred in in competition policy history was a really interesting theme through this book. I was i was just speaking with Denise before we started recording and I wanted to say one of my favorite anecdotes in the book when I read it was an anecdote about when they were first passing or debating the Combines Investigation Act or the Combines Act, even in sort of the late 1890s, it was in the context of a debate about high grocery prices.
And of course, in some of our amendments in the last year were, one of the bills was actually called the the and grocery price reduction act or something. It was something to do with with grocery prices. So it was a very much sort of everything changes, but everything stays the same point to make in the book.
Denise Hearn
Absolutely.
Kate McNeece
So I think one of the themes that was really interesting um that you start off with to kind of situate the discussion is that you argue in the book that competition has moved from taking place within industries to taking place kind of across multiple industries through the rise of quote, “everything companies” is what you call them. Can you explain what you mean by the term “everything company” and how have these types of companies in your view impacted competition in Canada and competition enforcement?
08:45
Vass Bednar
What we wanted to show, I mean, of course, Amazon is kind of the quintessential everything company, everything store, right? So we're also gesturing at that kind of big techness. As we were having conversations over the years about particular telecommunications firms or grocery stores, because they tend to be in the news, it struck us that these aren't typically these aren't only telecommunications companies or they aren't only grocery stores. And the way we were talking about them was obscuring how sophisticated they were.
And then in turn, what that means to actually try to compete with a company like that head on. And the more we kind of dug around, we were also kind of seeing some connections to private label companies in terms of this illusion of rivalry that can be kind of maintained or presented to us. And then we're kind of in in the dark.
And another reason we got not excited about them, but sort of fascinated was because they become very difficult to define by the kind of standards that we're used to. And it seems like so many companies have just kind of outgrown classification systems that we have, that it makes it very difficult, if not impossible to really get real about what their kind of competitive market really is.
Should we talk about some of the companies themselves that we're that we're putting forward or is that just table setting?
10:13
Kate McNeece
No, sure. Let's talk about some examples from the book maybe about things that you've identified or areas that maybe surprised you as you were researching this or some examples of some of these sophisticated companies. And I'm interested in this. You brought up the point of ah sort of illusion of competition. And you describe it in the book as “kayfabe” competition, which is not a term I was familiar with. So maybe you can get into that a little bit.
10:39
Vass Bednar
I'll tag Denise into the ring on that one, but I will say that one of the things I was surprised about as we were digging around on everything company stuff was that Canadian Tire is also registered as a bank under the Bank Act. And I just, I found that really interesting in terms of these bigger competition conversations. But Denise, the bell rings, you're in.
11:01
Denise Hearn
So kayfabe, we came across this term. It's a term that's used in professional wrestling. And we’re in that world, yeah, you know, Vass has all the figurines in her basement.
Vass Bednar
Which we watch a lot of.
Denise Hearn
So you know, in professional wrestling, it's well known by fans that, all the characters are invented, they have these fabricated sort of feuds and storylines. And it's all scripted these fights and so it's very rare for a wrestler to break character, it's sort of like breaking the fourth wall in acting. And when they do, it's called breaking kayfabe. And we thought this was such a great analogy for sort of how so many markets operate today, where there's the ah the illusion of rivalry between firms, but there's actually might be tacit collusion, or there might be just to the consumer,
You know the when you walk into the grocery store and you see all these different brands you think oh you know they're all competing for my dollars but then you come to find out oh you know a majority of these are actually owned by the grocery store similarly you walk into a Sunglasses Hut and you see Gucci and Prada and Ray-Ban and Oakley and you think these are distinct brands competing for you, for your dollar and that you have a choice in the matter of which company you're supporting over the other. And actually the reality is that all of those um sunglasses brands are owned by EssilorLuxxotica, which also owns the retail outlets, you know, also owns the Sunglass Hut and they've vertically integrated the whole manufacturing to distribution supply chain. And so it's sort of this way playful way of saying that every day as we go about our day-to-day lives as Canadians and you know and as Americans that um we're sort of living in this illusion of competition within markets, which is sort of like we call kayfabe capitalism, the illusion of rivalry.
13:02
Vass Bednar
I tried to convince Denise that we could say it more fancy, kay-fa-bay, but that's not the, that's not the appropriate way to pronounce it. But in my mind, sometimes I make it that fancy.
13:16
Kate McNeece
That great. I'll admit I Googled it. I'm not myself a professional wrestling fan like you Vass, so I had to look that up as well.
So as a competition practitioner, to take a sort of technical view, one thing I find very interesting about this concept of the everything company is that it's a bit in opposition to how we often think of antitrust analysis in particular in the mergers context.
So in the mergers context, there's a ah lot of focus on market definition. So what is the relevant antitrust product market? And what is the, you know, relevant antitrust geographic market?
Where are they competing to sell these products that are in the product market? And I think the concept of an everything company seems to suggest that, you know, we're not going to be defining the like, maybe those product market based analyses aren't useful in capturing the true competitive effects that a company can have and in a market. And I find this very interesting. You're quite critical of market definition, arguing that a plaintiff or an enforcer will try to artificially restrict a relevant market so that if you have a very small kind of pond, maybe the entity that you think is engaging in an impugned activity or is causing concentration through a merger will have a bigger piece of that pie, whereas defense counsel, who I guess I am – I was saying I've never felt as big and bad as when I read this book, because I don't really necessarily think of myself as a “defense counsel” – or a market participant will try to artificially maybe expand the market so they have a very small piece of a bigger pond.
And so you've sort of pushed back on this idea as easily manipulated. But in our recent amendments to the Competition Act in the mergers context, there's kind of a doubling down on market definition and on market share calculations. We've imported this structural presumption concept, which is based on defining a relevant market, assessing the shares of all the participants, and using that to create a concentration index. And it also has sort of a combined market share test.
Can you speak a little bit about that tension? If we're now kind of legislatively identifying potentially problematic mergers or potentially problematic companies sold like with a real emphasis on this market definition and market share, how can merger enforcers or companies assessing sort of what the potential impact will be on the market or what their potential risk is, square this circle. And are there other alternative sort of indicia we should be using to identify potentially anti-competitive transactions or companies that potentially may have outsized impacts on competition in Canada?
15:57
Denise Hearn
Yeah, I think it's a really astute question, Kate, and um I don't think that there are that anyone really has a good answer to this question yet. But I'll take an attempt, which is I think that both structural presumptions and new approaches to understanding ecosystem companies or everything companies are necessary, and they don't necessarily have to be contradictory. Because you know there are many industries that are more easily definable and where a merger might fit into a kind of you know yeah more easily definable sort of market definition, whether by geography or by product market or even by labor market in some cases. And in those instances, I think having structural presumptions can help give the Bureau you know the upper hand in reviewing potentially anti-competitive deals. And I do like in our legislative updates that they've reversed the burden of proof because I think that was that was something that was very difficult for the Bureau to constantly have to mount a case.
However, you know, as we do note in the book, now many companies are operating as ecosystems of reinforcing assets um across industries. And so what we say in the book, like, you know, in the past, um companies used to compete within industries. Now they want to collect assets across industries that kind of reinforce that flywheel to use Bezos language again.
And you see that, you know, most obviously with the tech companies, Amazon we've mentioned, but if you look at Alphabet, I mean, it's cloud computing, it's logistics and transport. um It has its own venture capital companies that invest in new and emerging technologies, advertising, consumer electronics, you know, it goes on and on and on. So how do you, when you're looking at those market definition questions, you can bring narrow cases, as is the case with the DOJ, and the search case right now, but I think it's more, the impacts are really more on sort of nascent and emerging markets. And so even there we do have some precedent like in the U.S. you know there's been a few cases related to nascent markets whether that's um obviously the Microsoft case and that and Netscape is sort of like the most historic example. But even in 2020 the U.S. like the DOJ filed against Visa acquiring Plaid arguing that it sought to eliminate a nascent competitive threat and that merger was ultimately abandoned.
The FTC went after Facebook's acquisition of Within on a sort of nascent market argument, which ultimately was not successful. But I think the arguments were sort of given some credence by the courts. And so I think there is you know there's some precedent here for trying to think about when a company is acquiring something that is may in and of itself the deal may not seem anti-competitive but it ultimately serves to kind of bolster the entrenched position of the of the firm.
But I do think that that's something that competition policy will have to wrestle with going forward and ultimately what wrestle yeah and ultimately what we're trying to say is ah that um this is how companies themselves like describe themselves.
If you go look at McKinsey they talk about ecosystem companies they talk about how to leverage these types of synergies, if you if you will, to use this sort of “McKinsey-ified” language. um we should look at companies the way that they look at themselves is really the point that we're trying to make.
19:49
Kate McNeece
I think it is interesting because, you know, I think there's a lot of discussion in the competition policy context about market a definition as sort of a defined thing when you know in truth, if you think about anything, like if it's a discussion of what you're going to substitute with a given product. So if you think about it in your life when you're choosing between one thing or another, You know, there's always a little bit of wiggle room. Like there's no real thing. If you have ah a frying pan, you know, is that substitutable with, you know, a bigger frying pan or a smaller frying pan? Is that substitutable with a pot? You know, in the right context, maybe yes. In another context, maybe not. Is that substitutable with like some other kind of cookware? You know, you sort of step out and I think what we often do with our clients is try to find the outer bound and sort of what makes sense.
And you look, of course, you know, there are primary sources, you look at internal documents, you think about how these companies – again, you sort of do go back to how these companies define themselves, but often it's more of a “no, well, of course, we don't compete with them. We don't view them as a competitor, even though a consumer might.” Right?
So, you know, it's something I think it's something that we always struggle with, even if it is sort of going through a very traditional analysis. And I think you're right that as we these companies grow and they may have tentacles kind of throughout the economy.
Even if you're not sort of suggesting an overhaul of competition law, it is something we need to address. It is something we will need to think about because competition policy is going to necessarily have to reflect the way companies compete. I guess just sort of goes without saying.
21:16
Denise Hearn
Well, it's kind of that like elephant, you know, that the blind man and the elephant thing where everybody's touching a different part, you know, I mean, like some of these companies are so big now that you touch the trunk, and that's like a completely different, you know, side to the business.
And what we're really trying to say is that even if you're successful in sort of doing that narrow definition on a product-specific basis, that doesn't give you the full picture of the of the company overall. And so how can we, you know both as regulators or as competition lawyers, um sort of get better with thinking about how to actually turn the lights on so we can see that see the whole elephant, as it were?
21:54
Kate McNeece
Yeah, absolutely. So I think one of those, I guess, feeling out the elephant pieces that we often talk about is AI and data issues, those are really big topics in the competition bar right now. And they have been for some time. And you touch on this in the book. So in your view, can you discuss how you think the advent of AI and the advent of kind of, quote, big data, unquote, um has created new or exacerbated existing market power issues in Canada? And any thoughts on how that sort of fits in with this competition policy a definition discussion?
22:27
Vass Bednar
I'm glad you linked to big data because I think we've kind of come off this ah in the way we had like a lot of techno-optimism. We had this big excitement, right? 2014, 2015, it was huge. We were all kind of fascinated with what happens when we crunch these large data sets. What can we learn about ourselves, each other, the economy?
And we weren't really paying attention to what it might mean in a competitive context. We wanted to point to AI because it's as transversal as competition policy. We're very kind of, I think people tend to be focused on the privacy elements, of course, with the way we're attempting to to deal with AI legislatively in Canada.
We're also doing trying to do two things at once, which is kind of interesting, which is regulate the um acquisition of something and its application in kind of one set of legislation, and yet potentially ignoring some of the effects to marketplace, both through the application of AI, but also the creation of it, where and how these algorithmic systems are produced and kind of what the rails are, right? What the kind of infrastructure is that underpins other companies that are trying to kind of make a play there.
Denise, do you want to jump in as I ramble through AI things? I think there's so much to say about it. There's also this element, ah if I may, since I pretended, Denise, I was tagging you in. There's also this like kind of fun element where like We always talk about more competition, right? There's this like very captivating, but vague drum beat. We need more competition, but with the application of synthetically synthetic media, right? Fake audio, fake music, fake video, et cetera. We're getting to a place where we, we definitely have quote unquote more competition, but it's not necessarily better or the kind of competition that we would want. And we thought that was something that we really wanted to gesture at and put forward.
24:34
Denise Hearn
Yeah, I think I'll just add on the AI point, and I know this has been quite a topic of conversation within competition circles. And it's clear that AI will have sort of disruptive impacts that none of us can really predict or understand at this time.
But I think what we wanted to point to it in the book was um really looking at the kind of structural puzzle pieces in a way of actually generating AI and what are those component parts. And so those are data. Those are access to talent and software, um the hardware and the computing capabilities and the access to energy to actually do it. And you know it really only positions a few mega, mega firms and a few ah sovereign entities that have the actual spending ability to spend billions, if not trillions of dollars on CapEx to actually generate um this type of AI output.
And so we wanted to point to that in the book to say, when you break it down, you know there's really these big core infrastructure, sort of vertically integrated pieces around hardware, software, and data that um only a few firms, the largest tech firms, really you know have access to. And then startups you know already are and will continue to sort of um glom onto the rails of the existing ah firms. and um And so what does that mean? What does that mean for competition? What does that mean for AI development? I mean you know Just this week, we had um Eric Schmidt saying that everyone should give up on their climate commitments and just leave it to AI. And you know who's best positioned to benefit from unregulated AI?
Well, it's Google because it has a lead in generative AI patents. it has one of the three biggest cloud providers, you know so on and so forth. So I think we have to take these kinds of things um understanding you know understanding the kind of implications that that that these requests, what’s behind these types of statements, right, and who stands to benefit.
26:35
Kate McNeece
I think there's an interesting kind of intersection of that with innovation and productivity, which is another topic that that you cover. So, you know, there's been – you just have to open a newspaper in Canada today to hear to see an op ed or hear concern about the quote “productivity crisis” and we have a productivity gap compared to other and, you know, developed countries.
So and you talk in the book about the financialization of the economy contributing to this lagging productivity issue. So I want to unpack that a little bit because I think this discussion about AI and particularly about the startup economy and how it relates to the sort of bigger tech companies fits in in a really interesting way, because, you know, we've talked about the kind of killer acquisition topic, which I know is a big concern: these bigger companies are maybe buying up or acquiring other companies who could become competitors because that's the way that they acquire their tech or they acquire their people or they acquire you know their IP, which would be you know helpful to integrate.
But at the same time, it strikes me that maybe one driver of someone feeling as though they can go and enter the market and start a startup is the possibility of kind of getting at a financial windfall that makes all that risk useful by being acquired by private equity or being acquired by a Google. So can you talk a little bit about how this sort of but acquisition pipeline and financialization um of the market kind of, I'm talking about mergers specifically, but you talk about a couple of other aspects of the markets, the financial markets that may be relevant as well.
How has that contributed to lagging productivity? And in your view, why hasn't antitrust been fit for purpose to address these issues?
28:22
Denise Hearn
Yeah, I can take a first go. um So I think, there's well, there's so many components to your question there, um which are all though, which are also great.
So first of all, it's ah important to understand, at least in the U.S., most people don't get venture capital funding. Most businesses and startups go to the bank, and they get a loan.And it's very it's sort of, I don't know, let's call it 2% or something that actually acts you know goes to access sort of the capital markets privately. Of those that do, they want to generate sort of high-growth businesses.
And I think, of course, it stands to reason that um it has a lot of cachet if you sell your business to Google um and you go on to found something else, it has a lot of cachet if you're able to pay your VC investors back with a high multiple and so on. um And so I think the incentives there are easily understandable.
What really shocked me was when I went and looked at the IPOs in Canada and I found that 84% of IPOs last year were exchange-traded funds, ETFs, which to me blew my mind, honestly. It shocked me because it really showed me that um we have a scale-up problem in Canada and companies that are going public are not actually operational companies, they're financial products.
And to me, that is not how you generate a productive economy with high job growth and so on and so forth. And we know that small businesses or you know um new businesses generate more job growth than old businesses.
And Canada's firm exit and entry rates have been falling for decades, the same as in the U.S. So I think um there's many reasons for that. I M&A and the growth of M&A and the growth of killer acquisitions is certainly a part of that, It's a major part of that. And the kind of inability for companies to, you know, not only access capital, but access markets. I'll just say one last thing, which is, in the US, I started something called Access to Markets, which talked to a number of different startups and entrepreneurs of all kinds, farmers, pharmacists, independent business owners, you know high tech Silicon Valley entrepreneurs. And what was so interesting to hear from them was like, yes, everybody acknowledges that accessing capital as a business owner is very difficult.
But once you do get capital, nobody really thinks about like, what are the terms of competition for you? And how do you actually access customers? Increasingly, businesses have to they have to go through some gatekeeper in their industry. You know, if you're a farmer, you're starting a direct to consumer meat business.
We talked to one guy, he couldn't reach customers because he couldn't get any slaughter capacity because um you know because the meat packers are so concentrated and they won't they only do business with large players.
So he had to build a whole new supply chain for himself just to be able to run his business. And I think it's, you know once you start talking to people who are actually trying to build businesses in their industry, you realize how difficult it actually is with such concentrated markets for um companies to actually start up and do something innovative.
And so that's part of what we want to bring forward in the book is it's like, It's not just about M&A. It's also how do you create the conditions in which new entrepreneurs can actually bring something to market and reach customers without having to pay a huge toll to Amazon for advertising or Google for advertising? Because now that's like a huge portion of spend for small businesses. And then when the government supports startups, actually, inadvertently, it's just going to pay, the infrastructure of the large firms. So are there different ways of doing this? Can we support more productive kind of innovation in Canada through different means? That was a long answer.
32:11
Vass Bednar
I feel like it was a great answer.
And I mean, look, we think the book packs a punch and that we're able to pack a lot in in those 100 pages, which I sometimes accidentally say is 100 words.
So you know we could have spent a bit more time there, but we also wanted to present those issues as inherently connected. Right? Why do Canadian firms historically under invest in research and development? Why are our firms so slow to adopt productivity enhancing technology? Why are we under investing in training for our workers? What element does a lack of competitive intensity do to those forces? So yeah, that's sort of my sniffly supplement to Denise.
32:55
Kate McNeece
No, I think that's great. And that actually, it's a wonderful summary of kind of the key themes and the issues you identify in the book, from your perspective of where we are in Canada today. And that provides a perfect segue for me to move to the second half of the book, which is, you know, solutions or your ideas for what Canada can do to address these issues moving forward. So, you know, both your book and you the Competition Bureau in a lot of its recent public statements have advocated for what we call ah a whole of government approach to competition reform to sort of address these issues, not simply through the enforcement of the Competition Act, which is our you know so sole purpose competition legislation, but sort of through a number of legislative and I think administrative law type approaches throughout the Canadian government. So could you take us through your recommendations for a couple, you raised ah a number of different potential avenues for this so we don't have to go through all of them in exhaustive detail, but can you sort of walk us through a little bit about what a whole of government approach means to you and how you would see that progressing going forward?
34:00
Vass Bednar
Maybe I'll tee us up. I mean, it's a bit of ah a full court press, but i don't I don't know a way to connect it to wrestling, right? So one of the things we missed in our intro actually is that Denise is a dual citizen. So she grew up ah largely in Canada, but is in the U.S. now.
So she's seen, and I think felt more closely the effects of President Biden's historic executive order from a few years ago that had about 72 kind of concrete, tangible commitments that occur outside of just core antitrust legislation, right? So we sort of felt that part of, almost part of the kayfabe in Canada is that our Competition Bureau is just, one division nested under the very same ministry tasked with growing companies and facilitating innovation. And we saw opportunities for other orders of government and also other ministries to be more deliberate about the interventions that they're able to take to make markets more competitive. So we wanted to kind of start to spell that out a little bit more and kind of the playfulness there is also it's kind of a democratization of power right of policy power because you're starting to diffuse and share that instead of just concentrating it and sort of responsibility in one place.
35:19
Denise Hearn
And I think what we're trying to say too is that, ah you know, competition policy is so fascinating because it implicates so many other areas, whether that's IP law or labor law or trade and foreign investment, and it's really complicated and hard ah to figure out how to do this well.
And so, you know, maybe to add another analogy, you know, when you're building a house, you need a solid foundation. And I think this is on my mind because I just finished I just moved into a newly built house. So you see how all of these different sets of expertise, whether it's you know plumbing or electrical or drywall, et cetera, et cetera, come together to scaffold this whole house, which is this kind of emergent, amazing phenomenon of all this expertise coming together.
And, you know, the economy similarly is infinitely complex with sets of relationships and markets, which need sort of many sets of expertise to ensure that they're functioning fairly and that they have a solid foundation.
And so when we're saying a whole of government approach, we're not saying, okay, more bureaucracy or more and unnecessary regulation, we’re talking about bringing different toolkits together so that you're not just using sort of like one hammer. And in our case, that means bringing multiple ministries, provinces, various types of expertise into the conversation about rebalancing power across the economy to ensure that all Canadians can flourish and that we are making um decisions about, you know, that don't just affect us today, but affect us into the future and our position, you know, and on the global stage, and then also right down to the local level, how can we sort of create more coherence about how we're structuring markets so that they can, so that they actually deliver the kinds of things that we want them to deliver.
So that's our that's our grand vision but for a whole of government approaches that um you know you would be able to bring sort of more people into the conversation. And as Vass mentioned, with the executive order, they created a competition council that had all the heads of various agent, you know, the agencies in the U.S. so that you start to create a sort of common language and framework as you're making decisions, as you're doing industrial policy, as you're thinking about um all the complexities, you know, that each ministry has to face. Is there a way to sort of, um yeah, create that sense of coherence about shared goals?
And that's really what we are trying to advocate for.
37:41
Vass Bednar
Let's be real, Canada is rarely a first mover on policy stuff. We love to take inspiration. We love a jurisdictional scan. Something else we wanted to do with the book was also recognize kind of what Canada does get right in in this scheme. There's a lot of scaffolding that kind of sets the stage for a whole-of-government approach. We would not be starting from scratch. It's not a tabula rasa situation. There are MOUs. There are certain things provinces are already doing and experimenting with. There's progress you know at the CRTC. I think you could also argue that Bill C-11, the Online Streaming Act, and Bill C-18, the Online News Act, are part of a vision for markets, the regulation of markets and the role of the state in those markets in Canada that actually just hasn't been framed or kind of articulated in ah in a concise way.
38:33
Kate McNeece
Yeah, I found the idea of a Competition Council very interesting because, again, as a practitioner, I have a particular mindset on this. And part of what I think when I think of a whole of government approach is sort of what is what is the role of the Competition Bureau in that whole of government approach? I as counselor advising clients on how best to comply with the Competition Act or how to assess risk of a given, say, transaction, for example, under a Competition Act. You know, if I'm looking at you know this is subject to Competition Act approval, and this is how, in my experience, as someone who's been doing this for a while, the Competition Bureau typically approaches things like this, that allows us to sort of give a company a general sense of what to expect and advise them in sort of a ah meaningful way. When I think of a whole-of-government approach, especially again in the transactional space, so if you've got kind of multiple cooks in the kitchen and multiple agencies maybe having a hand in this with potentially multiple regimes for review of a transaction. That seems to me to be a much more difficult scenario to advise on.
So what's your vision? In this scenario, would we have kind of a whole bunch of different pieces that all have to be complied with or would it be more of a consistent approach maybe led by the Bureau or advised by the Bureau or coordinated by the Bureau? What is your sort of vision for that? Or if there is a more complex regulatory environment and that chills some potential mergers like in in your view, is that a feature rather than a bug?
40:03
Denise Hearn
Yeah, I mean, I think in terms of like merger transactions, I don't think we're putting forward that, you know, that we want to expand that beyond um the sort of existing statutory authority of the Bureau and then, you know, the Ministry of Finance and certain um circumstances and so on, and transport, which is the same in the U.S., by the way. So, you know, DOT has the — basically the authorities had sort of been dormant for a long time. And what the Biden administration has done is actually say, hey, you can't just not enforce the law because you don't feel like it, like you should, actually enforce the authority that you have and use the sort of full breadth of your tools. And so that's part of it.
But then I think um what we're really trying to say is that there's a lot of room for other types of competition related um ah you know regulation or not just regulation, but initiatives. you know Like as an example, in the U.S., the USDA they have the Packers and Stockyards Act, but they've created a whole portal now and they've done a lot of sort of community engagement to hear directly from farmers. What issues are you facing? How can we better respond to you? So it's not just about introducing more regulation. It's really about how can each ministry with its own set of expertise and industry expertise better respond to constituencies and sort of the direct problems that they're facing. Do they have existing laws? Are there gaps where we need to introduce new legislation? You know It's sort of kind of a taking a comprehensive picture to really look at it. And so I don't think that firms should be worried that now all of a sudden there's too much of a patchwork.
I mean in certain instances I'm sure that is the case, but um we're not necessarily advocating ah at the transaction level that they would have to sort of go through multiple different ministries to get a merger approved.
41:55
Kate McNeece
Yeah, that that all makes good sense. So there is one additional concept that I wanted to bring out that I found really interesting in your book, which is and a greater role to play for individuals, consumers, and other market participants in competition policy rather than just the sort of government ah ministerial approach.
And so you know there are a couple of aspects currently of merger policy. you know The Competition Bureau does consultations, and when they're doing investigations, often they may put up sort of a website that says, hey, give us your views on this issue. And by email, there's you know in merger reviews, you have to provide your market contacts, your top customers and suppliers.
So they do do some market testing and some discussion with market participants. And then there is my personal favorite and Section 9 of the Competition Act, which allows any six residents of Canada to make what we call a six resident complaint to ask the Bureau to investigate something. So there are some aspects of that already built into our current competition practice. But can you expand on how you think we can i strengthen consumer participation or what that might add to the competition policy discussion at a more administrative level.
43:12
Vass Bednar
Yeah, I can't remember the last time I sent an email to a generic inbox and really felt heard, you know, as a citizen. A couple of things. One, you know, we were realizing that people are talking about competition policy and competition issues kind of all the time, but in all sorts of different ways. And they're not using the language of sections of the act or ah the phrase abuse of dominance. So we think for Canada, part of getting better at regulating markets is understanding those pain points and also kind of translating them back into the legislative infrastructure that we have. So again, taking some inspiration from the U.S. and elsewhere and kind of playing up that sharing of power, right, and sort of who competition policy is for and kind of what we're trying to accomplish, we're hopeful that there can be more kind of conversational opportunities.
And even traveling, you know, Canada is a big country and we know it's expensive to kind of go around, but sometimes outside of a merger or a discussion paper, we should be surfacing kind of near term opportunities ah in the competition space.
44:17
Denise Hearn
I mean, I think this is such a great question because it raises questions about you know democracy and deliberative democracy more widely, which ah you know there's a lot to say there. But I do think, I guess the wider point we want to make is that, um is that yeah, you know there are certain constituencies set up well to respond to the way that our current policy infrastructure works where you know They issue a call for comments and you know and ah those of us with too much time on our hands and you know who like to nerd out on this this kind of stuff can you know can send in all of our well articulated thoughts. But if you're a small business owner or you're a worker, I mean, you're just left out of this process completely, even though the um the implications you know for this policy making directly affect you the most.
And so I think what we're trying to say is that, um are there ways we can get more creative about bringing more voices into the conversation, particularly from communities that are most impacted? And what we've seen in the U.S., you know, the FTC and DOJ have been really intentional under Biden to go do listening tours, go, go speak at conferences like the inner, you know, the independent pharmacists here, you know, do roundtable closed door listening sessions where people aren't afraid to speak their mind because they're not you know they're not afraid of retaliation because that's real. I mean, that's very, very real.
There's a lot of fear. We could hardly get any small business owners to actually go on record because they're still so dependent on their you know on these large firms for their livelihood and they don't want to get singled out um or you know deplatformed or deprioritized in the search rankings.
I mean, this all happens, right? So how can the Bureau basically just hear more directly from the from people you know in their on their own turf, or in their own industries, um whether that's more kind of digital democracy experiments like Taiwan is doing, which I find really inspiring, or whether that's actually just getting on the road. and you know going to talk to people. I think I think that's a really important component of this. And some people will say, oh, you know you're taking it out of the realm of the experts. you know, hat are you doing? But it's sort of like, yeah, experts are super important and you know sometimes we need to sort of get out get off of our own high horse and really understand how the things that we work on day to day do affect people um in very profound ways. So that's I think that's where I'll end.
46:47
Kate McNeece
I mean, I think it's a really interesting idea because I think we often think of competition policy as something very esoteric, where we talk about it in very technical senses. So the idea of you know having these conversations and bringing it out of that kind of technocratic sphere, I suppose, is a really interesting one and one that really stood out to me in the book.
47:05
Denise Hearn
Right. I just wanted to add because maybe people listening to this will have the power to make this happen. But, you know, something Vass and I talk about, too, is that at least in the U.S., like there's quite a few reporters that actually have just a competition beat or antitrust beat. And in Canada, we don't have one dedicated reporter or one dedicated academic chair, you know, to these issues. And so I think it's like these are so important and we just need more. We need so much more knowledge translation. We need more journalists. We need more coverage, you know, because um It's not esoteric, even though it definitely can ah feel that way at times.
47:39
Kate McNeece
Well, I mean, I think it's a really interesting point because even, you know, Vass I also am a dual citizen. So I moved to Canada 10 years ago and started practicing in competition law here then.
And even from 2014 when I started practicing in Canada to now, I think there's just been a huge increase in the level of discussion, the level of kind of these issues bubbling up and suffusing into the popular consciousness.
Now, it's so much higher than it was when I started practicing even. Like I've been explaining my job to my friends for 10 years, and like now in the past year, people will come up to me and be like, oh, I read about you know X case. Like, friend came up to me the other day and said, “:I read about this you know Google litigation. And I turned to my wife, and I was like, that's what Kate does.” And I was like, “that is what I do! I am an antitrust lawyer,” Hooray, people understand what that is now.
So I think that that point in particular might just be a place where you know the sort of explosion and interest in this has just sort of outpaced our ability to follow it up. So I do wonder what it will look like in sort of five years as you know we have these new amendments, which I think we're expecting to see you know more on the enforcement side, both from the Bureau, which has been given a number of tools that allow it to, I think, more aggressively enforce the Competition Act, including a larger budget, and then there's also a lot of, we don't really have time to get into this whole thing, but there's also a lot of private um action provisions in the Competition Act that will be coming into course over in the next year.
So it may be the case that we have just sort of an explosion, like a continued explosion of competition policy and competition cases being front of mind that will lead to more dollars and more attention being paid through some of these academic and journalistic things, but it's a really interesting point.
And it is true that we're so we're starting to see that you know more on the front page, but we're not kind of at the point where we do have dedicated reporting about it other than the sort of, I guess you'd call it trade papers, like the Global Competition Review or things like that.
49:42
Vass Bednar
Well, look, we're a bit too reliant on everyday people, right?
On people organizing through Reddit, people speaking up about Gatorade asking them to put an extra scoop in, people reporting back on how grocery shopping feels like being in Alice in Wonderland and their cereal box getting smaller and smaller.
You know, we do gesture at the book too, at these trends, these business practices that are occurring outside, you know, forget market share. just they become ubiquitous and kind of commonplace and do they fall under that umbrella of false and misleading advertising, but how damaging are they for that broken trust, right?
Trust between citizen, consumer, and corporation, but also trust between citizen and state because Denise and I have hard work to do. We have to point to the government right or public policy as being somewhat deficient and then get you excited that public policy is also a huge part of the solution here. And that's not always easy, right? It's just not. um So yeah, that's why we're very focused on that and so delighted to get to speak with you um and thank you so much.
50:49
Kate McNeece
Yeah, of course, well, yeah, lots of big issues happening in Canada and, ah you know, The Big Fix, read about them, read about the fix ah in in the book.
So I'm trying to think of a professional wrestling sign off and I'm completely failing.
Vass Bednar
The KO?
Kate McNeece
So I'll just say, yeah, oh yeah, the the knockout blow.
Vass Bednar
I think maybe knockout.
Denise Hearn
We knocked it out.
Kate McNeece
I was gonna say, you know, the whole of government, maybe that's sort of like a Royal Rumble that you’re proposing.
Denise Hearn
Oh, wow.
This is good. This is good.
Kate McNeece
I'll give you that one for free. You can use it on the next podcast.
Vass Bednar
Thank you.
51:21
Kate McNeece
Anyway, thank you very much for joining us today. Denise Hearn and Vass Bednar. This has been a really fascinating conversation and we'd love to continue it um as you're going. The book is The Big Fix, We'll have, again, a link to the book in the show notes if you want to read more in depth. And thank you very much for joining us. This is Counterfactual.