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DM@X- Competition Policy

Updated: May 3, 2023

By Sophia Katzell, Content Development Research Assistant

On the first day of this year's DM@X conference, a panel was held on competition policy and cultural policy, moderated by VP and General Counsel of The Globe and Mail Jesse Langdon. Speakers Vass Bednar of McMaster University and Mark Opashinov of McMillan LLP gave their opinions on the Competition Act and its impacts on the streaming and social media marketplace.

The Competition Act is aimed at encouraging and maintaining competition in Canada to create equitable opportunities to participate in Canada’s economy and operate in global markets. It is a chiefly economic regime with the goal to maintain the efficiency and adaptability of the Canadian economy. To do so, it touches on various market activities, such as merger controls, advertising, and criminal activities such as price fixing.

Digital markets present a unique challenge when compared to the physical; low barriers to entry, a broader geographic scope, and increased price transparency all present a different landscape for the Competition Act to navigate. Furthermore, as a result of network effects, actors in digital markets see nonlinear growth patterns. This significantly benefits first movers once they become incumbents in their markets.

An example of the changes seen in digital markets is addressed by Bednar in exploring concentration in the Canadian movie industry, and how Cineplex has become a chokepoint for films in Canada. Making up 70% of the Canadian market, Cineplex seemingly has the last word on all of Canada’s distribution decisions. By controlling when minor movie theatres are able to show films, Cineplex has effectively gained the ability to throttle film distribution as they see fit. This level of control was compared to the cautionary tale of a recent TicketMaster scandal in which the site was unable to accommodate their demand levels for Taylor Swift tickets and crashed mid-sale. These sorts of events have consumers questioning why single companies are able to reach such large sizes that they no longer need to compete, having entered a class of their own. Opashinov explained how this came about: the competition act has no prohibition on bigness, (except in the case of mergers), just on dominant parties abusing their position. Cineplex simply got very big, and is seeing the benefits of that bigness.

As for reforms, Bednar and Opashinov formed two different schools of thought. Bednar feels that a change in Canada’s competition laws is long overdue, and advocates a more predictable review cadence to prevent further lag. Similarly to how drip pricing was widely outlawed, there are deceptive practices unique to digital platforms that Bednar feels should be restricted. However, standalone laws targeting specific firms should be avoided, as they create unnecessary incoherence when not universally applied. The solution she proposed was to set out standard actions that would allow companies to be designated as gatekeepers regardless of size, thereby restricting companies from over-leveraging their nonlinear growth. In contrast, Opashinov suggests that where possible we should be making better use of extant laws rather than making new ones. His justification for this is that so many business processes are built on the frameworks of laws such as the Competition act- frequent changes would hinder businesses abilities to maintain consistent internal practices.

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