Tag Archives: Canadian Business

Beware Of Overreach In Canada Competition Law Reforms

May, 2024 – Many of the federal government’s recent reforms in competition law sensibly strengthen the enforcement powers of the Competition Bureau and private actors seeking redress for allegedly anti-competitive behavior. However, amendments to the Competition Act that simply make it easier to meet legal tests for orders against allegedly anti-competitive conduct are over-reach, says a new report by our friends at the C.D. Howe Institute.

In “Uncertainty and the Burden of Proof in Canadian Competition Law,” author Edward M. Iacobucci, a professor in corporate and competition law at the University of Toronto and Competition Policy Scholar at the C.D. Howe Institute, says that while strengthening the enforcement powers of the Competition Bureau is welcome, other amendments to the Competition Act imply more profound changes to the fundamental posture of competition law.

Specifically, there is a family of amendments and proposals to move away from the bedrock principle that the burden rests with the Bureau to prove, on a balance of responsibilities, that a merger or practice by a dominant firm is likely to be or is anti-competitive. 

For example, the author argues that lowering the burden of proof in mergers cases to “appreciable risk” of anti-competitive effects or something analogous would be a mistake.

“The overwhelming problem with this standard is that it is too easy to meet and fails to distinguish anti-competitive from benign conduct,” he states.  He also disagrees with proposals to rely on market shares rather than competitive assessments in mergers cases.  He objects in addition to abolishing the requirement to analyze anti-competitive effects in abuse of dominant position cases – recent amendments imply that pro-competitive conduct could be treated as an abuse of dominance.

Aside from competition law reform, the author notes that there are other policy reforms that could promote competition. 

 “Assuming competition has worsened in Canada, there are several remedial policies that I suspect would be far more important than competition law reform,” he says. “The OECD ranks Canada near the worst internationally in establishing regulatory barriers to competition.” 

 Regulation, internal trade barriers, restrictions on international competition and ownership, and other policies are all important contributors to reducing competition in Canada and, certainly in their collective impact, are more important than competition law, he argues.

Nevertheless, there are good reasons to take stock of Canadian competition law.

“The vulnerability of digital markets to market power stemming from network externalities and scale economies encourages reflection on whether the Competition Act continues to be suitable for present times.”

“I am skeptical of the narrative that the law requires sweeping reform to address the digital economy or to reverse a strong, secular decline in competition caused by competition law,” Iacobucci added. “But I am not skeptical that there is room for improvement. I encourage the government to focus on strengthening enforcement and to resist and even reverse recent reforms to the burden of proof.”

For The Silo, Edward M. Iacobucci, TSE Chair in Capital Markets, Faculty of Law, University of Toronto and C.D. Howe Competition Policy Scholar.

Read the full report here.

Study in Brief:

• There are good reasons to take stock of Canadian competition law. The vulnerability of digital markets to market power stemming from network externalities and scale economies encourages reflection on whether the Competition Act continues to be suitable for present times.

• Recently, a number of statutory amendments have been proposed to amend the Act, some have been tabled in Parliament and still others already adopted. The federal government recently passed consequential amendments that grant the Minister of Innovation, Science and Economic Development (ISED) the power to initiate market studies, to include scrutiny of vertical agreements as possibly anti-competitive collaborations, to repeal the efficiencies defence to mergers, and to lower the burden of proof in abuse of dominance cases.

• Many of the government’s actions to date sensibly strengthen the enforcement powers of the Competition Bureau and make it easier for private actors seeking redress for allegedly anti-competitive behaviour.

• There are, however, other actual and proposed amendments that imply profound changes to the fundamental posture of Canadian competition law. In particular there are actual and proposed amendments that move away from the bedrock principle that the burden rests with the Bureau to prove, on a balance of probabilities, that a merger or practice by a dominant firm is likely to be or is anti-competitive.

• While enhancing enforcement is welcome, legislative amendments that lower the burden of proof are a mistake.

Benefits of Working On The Front-line in Canada: Lessons From My First Job

As a double immigrant who worked his way through high school and university, I am a big believer in the lifelong benefits of working on the front line, early in life. My first job was an eye opener to say the least.

As a double immigrant who worked his way through high school and university, I am a big believer in the lifelong benefits of working on the front line. My first job was in frontline customer service at age 16 for Canada’s largest sports store chain, Collegiate Sports (now Sport Chek), in a flagship mall in Toronto. I started as a salesclerk selling shoes, retail apparel, ski equipment, and stringing tennis racquets.

As a student athlete, I was fortunate to work in a large sports department store situated in a multicultural city and to serve all kinds of people across various ages and income groups.

Our customers ranged from consummate “old stock Canadian” athletes, who were fanatical about every detail when ordering custom equipment, to wide-eyed gullible immigrants whose children were seeking to learn a new sport like ice hockey or snowboarding. It was a fast paced atmosphere with dense traffic in the evenings and buzzing with energy on the weekends like a casino hotel on the Las Vegas strip.

It was also a very demanding job because it required being on your feet for 8 hours per shift and being constantly “switched on” to anticipate customer needs. Employees engaged in their first front line customer service role developed emotional intelligence through hundreds of daily interactions with customers. Over time, I learned how to read customers’ non-verbal facial expressions and body language, which varied widely by their ethnicities, stage of life, and other factors.

The job required meticulous knowledge of every major sporting activity, current and incoming inventory, and prices for disparate product lines and brands while also including labor intensive tasks such as tagging the products, stocking the shelves, and cleaning the store after hours. Determining the best allocation of shelf space was a key decision. There were no “smart technologies” such as sensors, cameras, big data, and analytics used by retailers today to manage inventories and shelf-space. Hence arranging the optimal product assortment on the floor to generate traffic was an essential part of the job that required teamwork and an entrepreneurial mindset of experimentation through trial and error.

The store manager was a flamboyant French-Canadian named Guy who was a die-hard Montreal Canadiens fan with a profound sense of humor.

Typical of 1980s Toronto, the staff was composed of up-and-comers, including many Asian, European, and Caribbean immigrants. Guy was great at motivating staff, casting people in the right departments, creating internal sales contests, and holding us accountable. He had a keen eye for talent and was adept at identifying and investing in adaptive learners who could conquer a multifaceted department such as ski equipment or hockey skates by efficiently conveying product knowledge to outsell others.

Guy’s greatest skill was building an informal talent marketplace to grow the business in one of the world’s most diverse cities. He understood that a high performing diverse team of employees who felt like the store was their own business would not just generate loyal customers but grow the sports retail business by engaging new communities. Under his leadership, the store became an incredibly diverse meritocracy of over 500 full time and part time employees: Caribbean kids rose from selling track shoes to managing winter sports and Asian women ascended from selling apparel to assistant manager roles overseeing budgets and purchasing. I remember training a Jamaican immigrant, who happened to be the best sprinter in Toronto, how to string tennis racquets at optimal tensions depending on the player’s style, and she taught me about the subtle differences in track and field spikes depending on specific events and surfaces.

Like any store environment, it was not always pleasant. When the store missed its numbers by a wide margin, Guy scolded us for not being sufficiently productive.

He would curse at us with Quebecois nouns, poke fun at our beloved Toronto Maple Leafs, and if revenues were under budget, walk us back to his office which doubled as “banc des pénalités” (“penalty box”). His diminutive office was adjacent to the boisterous warehouse receiving truck shipments, welding, and assembling equipment. Here Guy would shout out the disappointing financial results and present the dormant inventory and the blue-collar workers whose strenuous labor made it possible for us to sell these products on the floor. He reminded us that even the most talented players end up in the penalty box and cost their team when they fail to play together and trust their teammates.

Over the course of four years, this job taught me three things I would use in the rest of my career: First, the benefits of building a high-performing team of diverse colleagues who could teach each other through an apprenticeship model rather than formal training; second, how professional development is accelerated by highly demanding customers who make purchase decisions in a matter of seconds; and third, how the real world has a magical way of revealing where your greatest talents reside, even if it contradicts what your teachers and test scores suggest are your perceived strengths.

In my last year on the job, Guy got promoted to regional VP overseeing 100 stores in Eastern Canada.

Still, he sought me out once every few months. In our last few meetings, he expressed his gratitude that I helped recruit tens of what he called “gens talentueux” or highly talented and diverse employees – mostly high school athletes and musicians – that drew waves of new customers into his stores and grew the business. The last few times we met, Guy tried to persuade me to become a store manager and retail executive like he was. As an Asian immigrant with Ivy League dreams, I was not ready to take the store manager career path.

However, years later after graduate school and a stint in management consulting, I joined the hospitality industry where I was able to harness this cross-cultural competence to achieve breakthrough results. And when I became an operating executive and eventually a hospitality CEO, it made an even bigger difference. Thanks to years on the front line, I was able to swiftly unearth customer needs, connect deeply with front line employees and build collaborative cross-cultural teams. My front line experience was most helpful in relating to employees in emerging markets such as Shanghai where I had no prior work experience, did not speak the language, and had to motivate migrant workers, mostly mothers living apart from their children.

It was my years serving on the frontline in retail, sports, and healthcare that taught me to how to collaborate with colleagues, look customers in the eye and resolve their complaints, form teams to solve thorny problems, and meet the litmus test of becoming a leader by identifying and developing other people’s talents.

Service industries are not just the largest employers: they are engines of human development for communities, cities, countries, and entire civilizations. From the United States to China and Saudi Arabia, business, and government leaders “get it” and are investing billions to rebuild human capital in hospitality centric service industries after the pandemic. These diverse stakeholders recognize the critical role of service industries in rebuilding their countries, diversifying their economies, and facilitating meritocracy for domestic and foreign employees of all ages, races, ethnicities, and genders.

Surprisingly, their efforts are increasingly lost on the workforce. Instead, a talent disruption, powered by innovative technologies such as generative AI, changing attitudes towards work-life balance, and a growing mistrust of capitalism and governments is changing the equation. Millions of Gen Xers and Millennials are choosing the gig economy or hybrid jobs where they can effortlessly circumvent human interaction and avoid the discomfort of face-to-face conflicts. Groundbreaking technologies such as generative AI may accelerate this talent disruption, further distancing employees and contract workers and hence brands from their customers.

Consequently, brands that achieved differentiation through personalized service may suffer from commoditization. What is more troubling are the long-term career development implications for individuals, especially Gen Xers and Millennials who are set to become the next generation of service managers and grew up performing these gig economy jobs.

Driving around town and leaving bags at a front door with pictures, communicating via text confirmations, and receiving tips based on algorithms is not an equivalent experience to being on the frontline in a service operation.

It may provide contractors with flexibility and income, but it comes at the cost of a lack of learning and customer contact that will serve to stunt their professional growth. What is the solution here? Given this historic talent disruption, what is the path forward for business and government leaders in industries such as hospitality, retail, and healthcare that are experiencing long-term labor shortages and growing unionization? Should employers, including entrepreneurs such as franchisees, increase their investments in acquiring, developing, and compensating talents? Or should they invest in AI and other technologies to automate and reduce their investments in building human capital? What other alternatives, if any, exist?

My first job was in a sporting goods store.