The Corner Newsletter: February 16 , 2024
Welcome to The Corner. In this issue, we explore new antitrust reforms in Canada, which brings the country in line with recent antimonopoly initiatives in the U.S. and Europe.
Canada’s Bold New Reforms Bolster the Antimonopoly Movement
Austin Ahlman
In recent years, antimonopoly enforcers and activists in the United States and Europe have often jostled for leadership of the movement. But with a flurry of new antitrust reforms, Canada is suddenly in competition for this title. And legislators and enforcers have several more bold initiatives waiting in the wings.
The biggest move thus far was last fall’s Bill C-56. Although the bill nominally focused on grocery and housing prices, embedded within its provisions were fundamental rethinkings of Canada’s antitrust regime. Since the 1980s, Canada has based its antitrust laws on the increasingly discredited “Chicago School” philosophy first embraced by the Reagan Administration.
The bill repeals the enshrinement of the efficiency defense in Canadian antitrust law. This leaves the Canadian Competition Bureau free to choose whether to consider efficiency arguments when considering a proposed merger, or to focus instead on other factors.
The Parliament appears set to follow that success in the next few months with C-59, an omnibus bill that includes a suite of other antitrust reforms. One particularly consequential provision would expand the Competition Bureau’s ability to collect information from businesses. Another would create new private rights of action for companies to sue each other over anti-competitive practices.
The push demonstrates that Canadian lawmakers remain undeterred following a tense battle with platform monopolies Google and Facebook during much of 2023 over the C-18 Online News Act. That bill provided a compensation system for Canadian news publishers who have struggled to survive as those two corporations divert nearly all advertising revenue into their own pockets. That legislation spurred Facebook to withhold content from Canadian news publishers from its entire platform. While the government continues to tussle with both tech giants over terms, Google has agreed to an initial compensation level of C$100 million, which will provide a lifeline for many Canadian publishers.
Canada’s moves put a country that has long lacked basic antitrust tools in a position to pursue far more aggressive actions in the years ahead.
As Keldon Bester, executive director of the Canadian Anti-monopoly Project (CAMP), put it in an interview with Open Markets, prior to these reforms Canada’s competition law and enforcement was almost entirely captured by corporate interests. “The changes today are important and material, but they are really a way of catching up [with the United States and European Union],” he explained. “We owe a huge debt to these countries, and the changes made are very much working in that direction.”
Before co-founding CAMP in 2022 with fellow policy reformer Robin Shaban, Bester worked in Canada’s Competition Bureau, assisted the economist Jason Furman with an official UK report on digital competition, and worked as a fellow for the Open Markets Institute. Bester’s team, alongside other Canadian fair markets advocates, have much to be proud of so far. In addition to the reforms outlined above, Bill C-56 also weakened the ability of grocers and landlords to join in restrictive covenants that limited where new grocery stores could be opened. And the current draft of Bill C-59 also includes new merger and acquisition rules, similar to the United States’ new merger guidelines, that enhance scrutiny of large deals as a matter of course.
Among the reforms, Bester described the right of private action as a “sleeper hit” that could be the single most powerful change in the long run, as it decentralizes enforcement away from the relatively small Competition Bureau and empowers private actors to pursue their rights to fair competition in the courts. While the legislature has given the Canadian bureaucracy expansive new tools, he warned that it may take a while for enforcers to fully embrace the new approach.
“A big thing to look for is whether the government brings forward new abusive dominance cases under these new laws soon,” Bester explained. He also says antitrust advocates should be watching closely for the Competition Bureau’s “response to the next high-profile merger, which as we always know, is just around the corner.”
Center for Journalism & Liberty to Host Webinar, “The Value of News,” on February 26
The Center for Journalism and Liberty at the Open Markets Institute will host a webinar, “The Value of News,” at noon on Monday, February 26. This event will explore how to (re)define the value of credible journalism to the business models of Facebook, Google and other platforms. Participants will also discuss the value of news used in the training of AI applications like ChatGPT. Panelists will include Dr. Anya Schiffrin, director of the Technology, Media, and Communications Specialization at Columbia University; Cristina Caffarra, antitrust expert and professor at University College London; Ermela Hoxha, associate director of strategic & platform partnerships at The Guardian; Alexis Johann, executive behavioral designer & managing partner at Fehr Advice; and Dr. Courtney Radsch, director of the Center for Journalism & Liberty. RSVP for the event here.
Open Markets Releases Paper on Writing Effective Laws for Antitrust Enforcement
In his paper Writing Law: Minimum Requirements for Enacting Robust Antitrust Legislation, Open Markets Institute’s senior legal analyst Daniel Hanley outlines 25 characteristics of effective antitrust legislation that will enable Congress to pursue vigorous antitrust enforcement policy. Among other recommendations, the paper asserts that proposed legislation should incorporate bright-line rules, provide narrow legal defenses, and clearly delegate agency authority to enact rules for improving the law. Ultimately, this paper offers guidance to legislators, policy advocates, and the public on how to assess whether proposed legislation will improve the antitrust laws and promote a fairer marketplace. Read the full paper here.
📝 WHAT WE'VE BEEN UP TO:
Center for Journalism & Liberty director Dr. Courtney Radsch published an article in The Guardian on Facebook’s 20th anniversary highlighting the damage wrought by the social media giant over the last two decades. “It is time to demand accountability for the harms propagated by powerful tech companies such as Meta and break up the tech behemoth before it wreaks further havoc on individuals, society and the economy,” Radsch writes.
Writing in Mother Jones, OMI food systems program manager Claire Kelloway details the urgent issues that a new farm bill should address and recounts the farm bill’s fraught history. ”Congress couldn’t pass a new version in the fall, reflecting partisan dysfunction and also a contentious debate about what the bill ought to be — a debate that has become ensnared in the nation’s culture wars,” Kelloway writes. “Racial equity, food sovereignty, protections for workers, and meaningful action on climate change have broadened the bill’s traditional mandate of growing food and feeding hungry people.” The article was written as part of a partnership with the Food and Environment Reporting Network.
CJL submitted written testimony to the Senate Judiciary Committee Subcommittee on Privacy, Technology, and the Law in response to the subcommittee’s January 10 hearing, “Oversight of AI: the Future of Journalism.” In the testimony, CJL director Dr. Courtney Radsch wrote, “Large digital platforms are effectively diverting digital advertising revenues away from news publishers because they compete against news publishers for the same eyeballs to generate revenue.” Read the full testimony here.
OMI senior legal analyst Daniel Hanley published an article in Competition Policy International arguing that the rule of reason, a subjective legal standard used in antitrust cases, should be abandoned in favor of bright-line rules.
In an article on China’s overwhelming control over many key natural resources required for a clean energy transition, E-International Relations took note of Open Markets’ executive director Barry Lynn’s “rule of four,” which stipulated that “no country or company should hold more than a 25% market share in any crucial commodity such as critical minerals.”
The Minneapolis StarTribune quoted food systems program manager Claire Kelloway on new USDA rules for chicken tournament systems that leave out turkey farmers. Noting that both chicken and turkey farmers enter contracts without control over a number of inputs, she said, "It's hard to look at this and not see turkey farmers as being left behind," Kelloway said. Successful Farming reprinted the article.
🔊 ANTI-MONOPOLY RISING:
Tire makers across the U.S. were sued in federal court in Manhattan last week over allegations of pervasive price-fixing in the industry. The lawsuit follows raids of tiremakers in Europe in recent weeks over similar allegations. (Reuters)
Iowa lawmakers are urging the FTC to look into a proposed acquisition of one of the state’s major fertilizer plants by Koch Industries Inc. They claim the $3.7 billion deal undermines competition in the sector and puts the plant’s workers at substantial risk of being laid off. (Bloomberg Law)
The Colorado attorney general announced a new lawsuit seeking to block the $25 billion merger of grocery giants Kroger and Albertsons, joining the Washington attorney general, who filed a similar suit last month. (The Cincinnati Enquirer)
Pharmaceutical giant Pfizer settled an antitrust lawsuit brought by wholesale distributors who accused them of conspiring with Indian firms to hinder the production and distribution of cheaper generic competitors to one of their key cholesterol drugs. Pfizer agreed to pay $93 million in restitution as part of the terms of the settlement. (Reuters)
A group of United States senators led by Amy Klobuchar of Minnesota introduced a bill this month to crack down on algorithmic price-fixing, as part of an effort to modernize antitrust laws to account for the new high-tech methods of collusion that increasingly define the digital era. (Bloomberg Law)
📈 VITAL STAT:
$250-$470 per month
The wages paid to junior hockey players by the National Hockey League and its affiliated junior hockey leagues. The paltry salaries have spurred a class-action lawsuit by a union representing junior hockey players alleging cartel-like behavior that has allowed the league to illegally underpay junior players. (ESPN)
📚 WHAT WE'RE READING:
Who Owns This Sentence?: A History of Copyrights and Wrongs — Princeton University scholar David Bellows and lawyer Alexandre Montagu dig into the complex, ever-changing, and at times humorous history of copyright law. Going back to the advent of such laws in Britain during the 1700s through the modern day, Bellows and Montagu’s narrative traces the history of how ideas themselves came to be granted a legal ownership structure. The authors grapple with the tensions between the need for innovation, freedom of access, and fair compensation over time — a story that is particularly relevant in the era of generative AI and the decimation of the news publishing industry at the hands of platform monopolists.
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