How Governments Maintain Monopolies – And What to Do About It

Toronto, – Governments in Canada maintain monopolies in certain sectors of the economy through regulations that advance private interests at an unreasonable cost to consumers, according to a report from the C.D. Howe Institute. In “Beer, Butter, and Barristers: How Canadian Governments Put Cartels before Consumers,” authors Robert Mysicka and Marty McKendry criticize the view, established by the courts, that regulations conflicting with competition law should be deemed to operate in the public interest.

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“While many of these regulations are designed to correct market failures, they are inconsistent with federal competition law, which aims to promote economic efficiency by maintaining the integrity of competitive markets,” said Mysicka, a lawyer with Stikeman Elliott. The courts have resolved this tension, the authors note, by developing the Regulated Conduct Defence (RCD) – an interpretive judicial doctrine that immunizes various regulatory regimes from the application of competition law. The authors point to three examples of regulatory regimes that interfere with competitive forces but are immune from competition law: agricultural supply management, which imposes monopoly-like prices on consumers for milk and eggs; the near-monopoly on beer sales in Ontario, which can inconvenience consumers; and legal services, where high fees pose a problem for access to justice. The authors propose: (i) clarifying the Competition Act’s application to regulated conduct; (ii) limiting the scope of immunity only to regulation that is minimally impairing to competition; and (iii) requiring the federal government to assess the competitive effects of all legislation prior to enactment. These reforms will limit the extent of private monopolies perpetuated by government regulations and lead to lower costs for consumers. For the report go here:

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