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Beer, Butter, and Barristers: How Canadian Governments Put Cartels before Consumers

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Author Info

  • Robert Mysicka

    (Stikeman Elliott LLP)

  • Marty McKendry

    (Stikeman Elliott LLP)

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    Abstract

    In Canada, various sectors of the economy are subject to government regulations, many of which are designed to correct market failures. However, such regulations are generally inconsistent with federal competition law, which aims to promote economic efficiency by maintaining the integrity of competitive markets. The courts have resolved this tension by developing the Regulated Conduct Defence (RCD) – an interpretive judicial doctrine that immunizes various regulatory regimes from the application of competition law. In this Commentary we challenge the wisdom of the RCD from an economic and legal standpoint. In particular, we criticize the view, established by the courts, that regulations conflicting with competition law should be deemed to operate in the public interest. We argue that certain regulatory regimes advance private interests at an unreasonable cost to consumers. Our analysis includes three examples of regulatory regimes that interfere with competitive forces but nevertheless benefit from immunity to competition law: agricultural supply management, private alcohol retail, and legal services. We propose: (i) clarifying the Competition Act’s application to regulated conduct; (ii) where practicable, limiting the scope of immunity for regulated sectors such that if regulation is deemed necessary, it is narrowly tailored to be minimally impairing to competition; and (iii) requiring the federal government to assess the competitive effects of all legislation prior to enactment.

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    File URL: http://www.cdhowe.org/pdf/Commentary_382.pdf
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    Bibliographic Info

    Article provided by C.D. Howe Institute in its journal C.D. Howe Institute Commentary.

    Volume (Year): (2013)
    Issue (Month): 382 (May)
    Pages:

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    Handle: RePEc:cdh:commen:382

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    Related research

    Keywords: Economic Growth and Innovation; Competition Policy; Supply Management;

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    References

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    1. William B.P. Robson & Colin Busby, 2010. "Freeing up Food: The Ongoing Cost, and Potential Reform, of Supply Management," C.D. Howe Institute Backgrounder, C.D. Howe Institute, C.D. Howe Institute, issue 128, April.
    2. Kenneth E. Train, 1991. "Optimal Regulation: The Economic Theory of Natural Monopoly," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262200848, December.
    3. Easterbrook, Frank H, 1983. "Antitrust and the Economics of Federalism," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 26(1), pages 23-50, April.
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    Cited by:
    1. Paul R. Masson Author- Workplace-Name: University of Toronto & Anindya Sen Author- Workplace-Name: University of Waterloo, 2014. "Uncorking a Strange Brew: The Need for More Competition in Ontario’s Alcoholic Beverage Retailing System," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 414, August.

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