Yves Faguy speaks with economist Robin Shaban, founder of Vivic Research, about competition law and why reforms should aim to make it more growth inclusive.
Yves Faguy speaks with economist Robin Shaban, founder of Vivic Research about competition law and why reforms should aim to make it more growth inclusive.
Robin Shaban is the co-founder and associate at Vivic research, an economic consultancy for organizations working towards positive social change. They are the co-founder of the Canadian Anti-Monopoly Project, a think tank dedicated to addressing issues of monopoly in Canada.
They are also the co-author, with Colleen Kaiser, of an upcoming report, Leveraging Competition Law and Policy to Promote Inclusive Growth in Canada.
To contact us (please include in the subject line ''Podcast''): national@cba.org
Episode 16 _ Competition Law and Inclusive Growth
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Yves Faguy: Hi, my name is Yves Faguy. In this episode of Modern Law, we discuss whether competition law should be reformed to fight inequality.
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Male: You're listening to Modern Law, presented by the Canadian Bar Association’s National Magazine.
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Yves Faguy: Why should we care about competition and competition law? It’s a good question. Is it because it improves productivity, or that when businesses compete amongst themselves for customers, it leads to lower prices, higher quality goods and services and more innovation, all for the benefit of the consumer?
Or should competition law be connected in some way to our broader societal needs? To improving our living standards, for one. That’s the topic of today’s conversation with my guest, Robin Shaban, a self-described data, competition law and social justice nerd. Robin Shaban is the co-founder and associate at Vivic Research. Vivic is an economic consultancy for organisations working towards positive social change.
Robin is also the co-founder of the Canadian Anti-Monopoly Project, a think tank dedicated to addressing issues of monopoly in Canada. They are also the co-author with Colleen Kaiser of an upcoming report on leveraging competition law and policy to promote inclusive growth in Canada.
Now, I first met Robin at the CBA competition law conference in October, and frankly, was really struck by their refreshing presence in the debate surrounding the future of competition law in this country, this at a time when it is very much top-of-mind for policy makers.
Robin, welcome to the show. Thanks for coming.
Robin Shaban: Yes, thanks so much for having me.
Yves Faguy: Listen, we're going to talk about competition law, which is often considered a staid and sort of arid form of law, but there really is a lot of interesting debate going on in this field. Perhaps to kick things off first, just, how did you develop an interest in this field? Tell us a little bit about how you got here.
Robin Shaban: Yes, all right. Well, my first job out of grad school, from my master’s in economics, was at the Competition Bureau. I was an officer in the mergers branch, reviewing mergers and acquisitions. And from that experience, it inspired some academic work of mine in the area. I decided to do my PhD in public policy, where I wanted to unpack the idea of economic efficiency that often shows up in competition law and apply a critical lens to it, both asking, does competition law create the efficiencies that we believe it does, and what is the relevance of these efficiencies anyway?
Yves Faguy: And?
Robin Shaban: well, it’s a work in progress, but I think that my key insight so far in my work is that there’s a lot of different ideas of what efficiency means. And ultimately, efficiency comes down to what it is you're trying to achieve. Efficiency doesn’t make sense without some sort of value proposition, right.
Efficiency in a very basic sense, is the ability to produce more with a given amount of input, right. But why are we producing this certain output, right, and what is the value of that? And so, efficiency really comes down to a question of goals, what it is we’re trying to achieve, and what is the value of the output that we’re trying to create, whether that’s through a policy intervention or through businesses – businesses offering goods and services.
Yves Faguy: Right, because it strikes me that, you know, competition law in this country has been very focused historically on – well, at least recent historically on strictly economics; consumer welfare, efficiencies, obviously. And not so long ago, the prevailing view was that government should stay out of the way as much as possible for that to happen, lest they do more harm than good.
So there seems to be – and you seem to be part of this movement – a growing sense that maybe we’ve been overlooking a whole slew of competitive harms, and not least of which is rising inequalities. Am I right? Or help me connect these ideas together.
Robin Shaban: Sure, yes. I think that something that Colleen and I are aiming to raise in this upcoming paper on competition law and inclusive growth, is that competition law needs to be understood within the broader objectives of government and society. And because our economy is made up of markets primarily, competition law actually touches on a lot of different aspects of the economy and society more broadly.
And when we’re thinking about the role of competition law and what it ought to achieve, we need to be cognisant of the wide-reaching impact of competition law.
And so, that’s where these historically social considerations of inequality come into play. At the end of the day, competition law does touch on this problem. So the question becomes, how do we want competition law to engage with this issue and what role should it be playing?
Yves Faguy: I don’t want to get too philosophical here, but are we disconnected from the values of competition law, or do we just need to redefine those values?
Robin Shaban: I think we need to re-evaluate the goals of competition law, given the economic and social realities of today. I think that the philosophical underpinning of competition law we have today is outdated, and that isn’t an attack on the architects of the legislation we have today, it’s just a reality of time.
A lot of that core thinking was developed in the sixties, seventies, into the eighties. We’re in a very different economic and social reality today, and we need to, very reasonably, I think, re-evaluate what the contribution of competition law should be in addressing some of our most pressing economic and social issues of today.
Yves Faguy: OK, so, in June – you know, just opening a parenthesis here – there were significant amendments to Canada's Competition Act which became law, that touched upon a range of issues – abusive dominance, cartel and collaborations, marketing and consumer protection, these kinds of things.
There are more significant changes to the act that are expected as the government continues its efforts to modernise the act and strengthen competition law in Canada. I'm not sure when that’s coming, but as we consider and as we think about efforts to modernise competition law, what are the challenges of rising economic inequality as you see them now, and how do they tie into that competition policy?
Robin Shaban: Mm-hmm. So traditionally, thinkers in the competition law space had separated out the issues of inequality and economic growth, and made the assertion that competition law’s primary goal should be to promote economic growth or grow the pie.
The question of how that pie should be divided should be delegated to the tax and transfer system because these tools of government are better positioned to redistribute the pieces of the pie.
However, I think that more modern thinking and research on this issue has highlighted that this distinction of social issues over here and economic issues over there doesn’t really – it’s not supported by the data. In fact, there is an important link between these two issues, and this is a point that we make in our paper, Colleen and I. We point out that one of the problems with inequality is that it is very closely tied to, and in fact, is arguably a cause of reduced intergenerational mobility.
So what that means is that when you live in a society where there’s low intergenerational mobility, your future is determined in large part by the success of your parents. So, if you are born into a wealthy family, you are more likely to be wealthy in the future. If you're born into a lower income family with fewer economic resources, you are less likely to be able to achieve greater wealth and income into the future. Your future is, in large part, predetermined.
What we want are societies with high intergenerational mobility, because what this means is that people are able to achieve their full potential through hard work, right, and this is the Canadian dream, the American dream, it’s the ideal for liberal democracies and societies.
The problem from an economic perspective is that when we have low intergenerational mobility, we’re actually not making the most use of the human capital that is available to us, and that’s a very big problem for productivity. If we aren’t making the most use out of the human potential that we have in our society, we’re undermining our ability as a society to enhance our economic wellbeing collectively.
So, there’s this important connection between the economic wellbeing of all people in society and our collective wellbeing. That is, like, our aggregate measures of GDP or productivity. And it may be convenient to separate out the two, but in fact, if we want to maximise both of them, we actually need to consider them together.
And this doesn’t mean that competition law should serve to – you know, seek to do all things for all people, but we do need to consider the intersectional nature of these two issues within competition law in order to maximise both of them.
Yves Faguy: So, I mean, so the one thing we always hear about competition policies, that the idea is to allocate the most efficiently way possible the capital resources. And you know, so what you're saying here is that, you know, the social capital is not being efficiently allocated.
Robin Shaban: Yes, that’s right, that’s right. So, inequality raises some problems when it comes to the efficient allocation of human capital –
Yves Faguy: Of human capital, yes, yes, is a better way of putting it.
Robin Shaban: Yes.
Yves Faguy: So, is that how you would define inclusive growth, or how does this fit into your definition – your broad definition of inclusive growth?
Robin Shaban: This is a dimension of inclusive growth. So, the definition of inclusive growth that we use for our paper comes from extensive work done by the OECD in developing an inclusive growth framework. And there’s three key dimensions of inclusive growth.
So, the first is that inclusive growth needs to be understood in a multidimensional way. So that means that GDP is not the only relevant measure of wellbeing. We need to understand wellbeing in a more holistic sense. So, what that means is that when we’re aiming to promote inclusive growth, we need to be looking at a dashboard of various measures of wellbeing, which include income of people, wealth of people, but also employment opportunities and health outcomes and one sense of safety or security in their community, and environmental conditions and climate conditions.
So, it is in itself a really complex idea to maximise all of these factors of wellbeing together. But that is the important challenge that the idea of inclusive growth poses to us. So that’s one aspect of inclusive growth.
The second aspect of inclusive growth is that, as we’re contemplating enhancing wellbeing across all of society, we need to understand that there are distributional aspects to this problem. That is, some people enjoy greater incomes than others; some people have a greater sense of safety in where they live than others. Some people have a more suitable environment than others, so we need to be considering the distributional aspect of these different dimensions of welfare.
The third aspect is understanding the intersecting role of different government interventions. And this is where competition law has a lot to contribute. Back to what I was saying previously, the reason why competition law is so important is because it touches on so many aspects of our lives. And that’s just a reality – we need to consider that.
And furthermore, competition policy and competition law also touch on various different interventions that governments are already implementing to enhance the welfare of people. So, we need to understand the role of different policies aiming to enhance inclusive growth in totality. And we need to be mapping out how different interventions are planning to enhance inclusive growth and our collective wellbeing, and how we plan these different interventions to work together.
And I think that’s a really important challenge that we’ll need to face as we contemplate changes to the act. What role does it ultimately play in enhancing our wellbeing and how does it complement and support other initiatives that are already underway to enhance our wellbeing?
Yves Faguy: OK, so if I may just push back against a couple of these ideas. So, I get that there’s an alignment between the pursuit of less inequality, more productivity and efficiency. But I think there are critics out there of your stance on some of these issues, that would say that addressing economic inequality is really a redistributive tax issue. What are your thoughts about that? What would you respond to them when they bring that up? A
And that, fundamentally, competition law is – ought to be simple and, you know, kind of, I suppose, stick to its knitting and not get too involved in redistributive planning, that we should be letting the markets work their magic.
Robin Shaban: All right, I'm going to break that down. So, to your first point that this is fundamentally about redistribution and we need to leave the issue of inequality to the tax and transfer system. My pushback to that is, I mean, sure, all fine and good in principle; where are you going to come up with the billions of dollars to actually make that happen?
The problem with redistributive policies is that they are incredibly expensive. A point I’ve made in the past is, look at the Canada Child Benefit; it was implemented in the last decade, it’s one of the most ambitious redistributive policies that we have, and has actually gone a long way in addressing child poverty in Canada.
It costs twenty-six billion dollars per year, about. That’s about the same value as the Rogers-Shaw merger, which is one of the largest in Canadian history. So, when people say, “Ah, just leave this to the tax and transfer system,” I don’t know if people really appreciate what that actually means for governments.
If we can find more cost-effective ways of creating a better economy where people don’t have to rely on redistributive programs to get by, I see that as a win-win for everyone. It means less financial stress on governments who are left with the responsibility of redistributing wealth to people who don’t have enough to get by. It means that we’re addressing the problem at its root; we’re not cleaning up the mess of markets.
I think it makes more sense to have markets that work well and meet people’s needs. I think within the social policy sphere, there is an increasing awareness that, look, we’re kind of – we’re running out of runway when it comes to redistributive programs. And that’s not to say we shouldn’t have them, but they only take you so far.
One example is the recent BC expert panel on a basic income. So, in 2018 the BC government implemented an expert panel to investigate whether BC should implement a universal basic income. And I was involved in that project – I did a lot of simulations of different versions of basic income – and ultimately the expert panel concluded that BC should not implement a universal basic income.
That’s not to say – well, the reason is because the fundamental issue is inclusion. We need to be creating opportunities for people to enter the workforce and have good quality employment that meets their needs and is dignified. That is the solution to poverty that is sustainable. Simply giving money is not – it papers over the fundamental problem, which is that we have economic systems at play that don’t create fair outcomes that meet everyone’s needs.
And competition law could play a role. It is not the leading, you know, quarterback on this problem, but I mean, undeniably, because it deals in markets, it does have a role to play in creating this more equitable economic system.
Yves Faguy: Yes, it’s an interesting point. But what about the argument then that competition policy should be designed as something that is relatively simple and that, you know, it should just focus on free markets, intervening in those and complicating matters unnecessarily. Your report, I think, seems to argue in favour of moving away from the effects-based approach to evaluating anti-competitive conduct. So, help me out here.
Robin Shaban: Sure, yes. So, you're right; a lot of critique and criticism of this perspective I put forward is that, well, this is just going to make the law exceedingly difficult to enforce and far more complex. We actually need to be simplifying things.
And I agree and Colleen, my co-author, also agrees; we should be simplifying the law. And simplification can go hand-in-hand with creating a law that supports a more inclusive and supportive economy. I think that we can move away from the complexity that we have in our law today, to create more simplified approaches for evaluating anti-competitive conduct.
At the end of the day, here’s I break it down: In order to have a more inclusive economy and to promote inclusive growth, the Competition Act needs to do more to tackle market power. That’s the Competition Act’s role in all of this.
In order to do that, we need to simplify how we evaluate anti-competitive conduct, because in the complex system we have, we’re actually pretty likely missing a lot of anti-competitive behaviour that is, in turn, increasing market power.
So, by simplifying the legislation we are benefitting those that are working with the law every day, because they're no longer required to hop through these complex analytical hoops to demonstrate anti-competitive conduct or conversely, fight allegations of anti-competitive conduct.
And we’re also creating the dual benefit of a law that takes a stronger stance against market power, and in this way, we are creating the conditions for a more inclusive economy. And by having less market power pervasive across our economy, we are addressing inequality. We’re also creating better conditions for some of these additional aspects of wellbeing that are important to inclusive growth, like environmental outcomes, like a sense of safety in one’s community.
Because again, these aspects of wellbeing are tied to the proper functioning of markets, and when we have markets that are made dysfunctional because of market power, there are knock-on effects to that in other dimensions of wellbeing.
Yves Faguy: Yes, so I want to get to those other dimensions of wellbeing, but you mentioned, you know, some of the anti-competitive [accents 00:22:16] that we might be missing it. I noticed today – I mean, today on Policy Options, you published an article with Denise Hearn –
Robin Shaban: Yes, that's right.
Yves Faguy: – on the hidden trend reshaping and hurting the economy, which are serial acquisitions. So I think you're talking about this notion that, you know, we tend to pay attention to the big headline megamergers, but you're talking about something else here. Explain to me; are these some of the harms that you're describing here?
Robin Shaban: So, in that piece with Denise, what we’re talking about are transactions that are most certainly sneaking under notification thresholds of the Competition Bureau when it comes to merger prenotification. But at the same time, also creating pretty substantial impacts in certain sectors and markets.
So, large firms think of it in depth by a thousand cuts, right. One small –
Yves Faguy: Yes, you called them creeping acquisitions.
Robin Shaban: Yes, that’s right. It’s this creeping trend towards consolidation within markets. And this phenomenon is – phenomenon’s a bit strong [laughs] – this trend is really relevant for the review of the Competition Act,
Yves Faguy: because it highlights some potential deficiencies within our merger review system in particular, where we may be missing some harmful anti-competitive conduct that actually creates negative consequences for people.
I think the way this would fit into our work on inclusive growth is to say – well, I think it’s an example of that increase in market power, right: when we allow industry trends that create market power within certain markets, we are enabling a less equitable economy and undermining our progress towards inclusive growth.
So, that behaviour, depending on the market, can have various knock-on effects, stuff that – some articles from the Globe and Mail have reported on this trend as well; looking at creeping acquisitions, serial acquisitions within different healthcare sectors within Canada – pharmacies, dental offices.
Areas of private healthcare in Canada are seeing increased consolidation by this strategy, and undoubtedly, that will have an impact on our wellbeing. I mean, it drives one of the core dimensions of our wellbeing, which is our health.
Yves Faguy: So, what’s kind of interesting to me about also what you're saying though, is that you know, when you're talking – so, back to this notion of inclusive competition law or, you know, fostering inclusive [development 00:25:17], it requires somewhere that competition policies support certain welfare policies, I suppose, or certain social policies.
We could find ourselves in situations where these can conflict with one another, could we not? And how do we address that?
Robin Shaban: I think that’s a really important question, and this is where I come back to those three fundamental tenets of inclusive growth put forward by the OECD, the third one, in particular, of this mapping exercise. We need to understand first off, all the different policies in place today that are intended to promote inclusive growth. And we need to understand not only how they complement one another, but how they may also undermine one another.
I think, for example, in competition law circles, there is increasing interest in the intersection of competition and labour markets, and while there is the potential for a lot of good to come from addressing competition issues in labour markets, I don’t think it is a good idea for us to be striving for perfectly competitive labour markets.
Humans, as a good, right, in our labour, are fundamentally different from widgets, right. You know, people are not firms, people are not machines that can just enhance our productivity with some capital investment in order to spit out more output. That’s not how people work.
So, there, I think, there’s some important thinking that needs to happen on what the actual role of competition law should be, and competition in general. I think that there can be a role, but that needs to be understood within the broader context of labour policy, including labour laws that already exist to protect workers and their dignity.
And also understanding too what we expect from our labour markets, right; do we want labour markets where people have a lot of freedom in their work, where they could easily bounce from one firm to another and experience different types of employment or work, or do people value more the type of employment where you find yourself at a firm and you stay there for ten, twenty, thirty years, right? People themselves have different needs, and there’s a plurality there that we need to unpack if we’re going to foster labour markets that ultimately enhance our wellbeing.
So, the short answer to that is, you're right; conflict is there, it will arise, and the inclusive growth framework challenges us to really sit down with these problems and confront them in a head-on way, rather than what we have historically done in the past, which is to say, OK, this problem is for another policy area; you go to that silo, we’ll stay in our silo over here, and hope it all works out. Because that approach, that is a recipe for inefficiency within government, and ineffective policy.
Yves Faguy: I guess the other area we need to be focusing on then would be – I mean, the other area where there could be potential, I guess, conflict or where – rather, thinking of it differently, where choices have to be made is when we target certain sectors of the economy. So, I guess the question is, should we be focusing certain sectors of the economy and ignoring others?
And you know, I'm thinking here a little bit about Canada's agricultural sector, which is its own beast, for example, and doesn’t really fit tidily in with the rest of the sectors of the economy in terms of, you know, our vision of what competition is. Is this a sector-specific analysis of thing?
Robin Shaban: Hmm – I think that – my response to that is that competition policy makers – and policy makers more generally – need to think very carefully about whether markets and competition are the right policy interventions for the outcomes that they aim to achieve. And in some instances, markets work very well, in other instances, markets may not be the right tool.
I think we, in competition policy land, often assume that competition is always good, but in fact, competition doesn’t always lead to good outcomes, and to oversimplify to say, well, the Competition Act is simply an aid to promote competition, or we should always be trying to promote more competition, is –
When you kind of carry that thought to its full conclusion, it takes you someplace really absurd, right. So, we want competition everywhere. I often think to myself, do we want to live in Sparta? Is that what we’re going for, where we’re just in this uber-competitive society where everyone’s competing for everything, and this is – it’s like social Darwinism at its peak. No, of course not. That is excessive, but you often hear people talking about how competition is just a good in itself, and it doesn’t make a whole lot of sense to me.
So, competition is an instrument for policy makers. To your point about does competition apply to certain sectors or should it apply to certain sectors, my response to that is, if we understand competition as one tool in the toolbox, I think it allows us to be far more creative, and I'd add to that too, that there's more in the toolbox than just free market versus nationalisation, right. I mean, we’re not in cold war era anymore, right. We can move past that now.
I think that there are a lot of really interesting models that lie outside of this private versus public dynamic; models of neutral aid or opensource, more, say for example, employee-owned businesses that may have a more socially driven mandate. I mean, social enterprise in itself. There are a lot of different institutions and interventions that we can be applying to economic issues that help us solve our problems.
Now, I think part of what you're alluding to in the agriculture comment is supply management in dairy?
Yves Faguy: Yes, obviously. [Laughs]
Robin Shaban: Yes, yes, we’ll call a spade a spade. And my take on that is that there are some political dimensions at play, and I don’t mean big key political, like, the parties. It’s a sticky situation because you have various stakeholders with diverging interests that are very afraid to talk to each other.
So, if we actually want to make progress on that, I think a good percept is just to turn down the temperature a little bit. Quite frankly, I think the competition policy people quit using supply management as a whipping boy for their competition ideals. They probably make more progress, right, because I think when people who benefit from supply management hear that, they see it as an attack, and who’s going to open up a conversation on reporting the system if they feel like the army is at the door, pounding at it, trying to get at them. You know, it’s not – I think just the whole approach to that needs to change.
Yves Faguy: We can ask ourselves, really, how much can competition law really be tweaked and changed and modernised to improve this country’s productivity when, you know, we still struggle with things like interprovincial free trade. Is it reasonable to expect that a new competition act would really overcome some of those barriers? Because I think there are a lot of critics of the current interprovincial free trade environment or lack thereof, that would say, you know, that in itself is the biggest barrier to competition in this country in the first place.
Robin Shaban: You're right, that there are a lot of dimensions outside of competition law that also impacts competition within markets and overall productivity in the economy. I approach the topic of interprovincial trade barriers cautiously –
Yves Faguy: [Laughs] As most people do.
Robin Shaban: Yes, I mean, in the same way that I also try and approach the supply management conversation in a nuanced way, which is that, I mean, it’s not like there wasn’t a reason for interprovincial trade barriers. And I'm not going to claim that I have some deep knowledge on the history of this, but it is a fundamental system within the Canadian Federation, and despite all the complaints about it, it still remains.
I think that if we want to have conversations about liberalisation, we need to demonstrate that liberalisation is not only going to enhance our collective wealth. But back to the notion of inclusive growth, it’s going to translate into better welfare outcomes for many people, not just people who own businesses that are going to benefit from opening up provincial borders, for example.
So, there needs to be a more nuanced case to be made, and perhaps people are making that and I'm not part of those conversations. But from the conversations I am a part of, interprovincial trade barriers does; it’s a lightning broad issue that people like to point to, but I don’t see in the competition law sphere that argument for –
I mean, ultimately, what is this going to do for me, what is this going to do for the average Canadian who doesn’t own a business?
Yves Faguy: So, I mean, let’s talk about what this would mean concretely if we move on ahead with a modernised legal framework that embraces inclusive growth. What would that mean for our competition authorities, for example, because presumably they'd have to make certain qualitative assessments. What sort of expertise would an agency like the Competition Bureau need to add to its roster?
I assume there are a lot of – I always think of a lot of economists walking around there and some lawyers, but what other kind of expertise would they need to add?
Robin Shaban: Yes, I really like this question. So, first I’ll reiterate that a more inclusive approach to competition law doesn’t necessarily mean the law should be more complex. I mean, we can always make the law more complex [laughs], but it need not be, right, because again, the fundamental link between the inclusive outcomes we had in our research, Colleen and I, and competition law, is really market power, and competition law’s ability to curb and regulate market power.
However, some of the recommendations we put forward to suggest, for example, re-examining how we evaluate and establish markets when we’re doing an analysis on certain anti-competitive behaviour, right. What market are we looking at when we’re trying to evaluate and answer competitive behaviour under the act?
And there, I think, there is a lot of opportunity for an approach that leverages methods and understanding developed in social policy. For example, we talk about establishing relevant product and geographic markets for people who have limited mobility in a retail merger, for example. There are people who, they have a vehicle, who are able to get in their car and drive to another store if the store that is in their neighbourhood charges excessively high prices or that store closes.
But there are many people who don’t have this ability, and in fact, there has been extensive work done on this idea of food deserts, where neighbourhoods simply don’t have access to healthy, affordable and nutritious foods. And this work has been done both for Canadian cities, but also internationally, and this is clearly an area where competition law and policy has a role to play.
When we have markets that don’t meet our basic needs for accessing healthy and nutritious foods, that is a failure of the law, because part the function of competition law is to promote healthy markets that are competitive, where people have options for where they can shop. So, there are these important intersections in the sphere of social policy, or traditionally social policy issues, and these more “economic policy” areas like competition law, that need to be integrated if we want to make competition law and economic policy more generally, more effective.
Yves Faguy: So, what’s causing these food deserts, for example?
Robin Shaban: The core driver of food deserts is the simple lack of retail options in certain neighbourhoods. So, you have consolidation in grocery stores or you have grocer stores that are being built in areas that are car accessible, but not accessible by other means of transit, and as a result, you have entire communities that are without adequate access to food. And it’s been demonstrated through various research studies that this lack of access undermines the health of people that live in these communities, particularly people who are lower income, because they are less able to access the transit needed to get affordable, healthy foods.
And so, brining in expertise form various aspects of government that are dealing with perhaps social issues that have a competition dimension would be important for the Competition Bureau to do. And it’s important because the bureau does need to have these perspectives when investigating conduct. I don’t – frankly, I don’t see these perspectives being explored in the Competition Bureau’s analyses, and I think that’s in large part because of the siloed nature of government in general. But the particularly siloed approach that competition law in this country has taken over the last several decades.
Yves Faguy: Allow me to be a little skeptical about one thing. And I understand the value of bringing on new expertise into an entity like the competition bureau. I understand the value of having new expertise studying, you know, these issues that lie at the intersection of competition policy, but other social welfare policies.
Where I get a little skeptical is, you know, it seems to me that we would be relying a lot more heavily on competition policy as a way of supporting these social goals, and then I wonder then, what must we think about in terms of the kinds of errors as policy makers we’re prepared or we’re comfortable making? And it seems to me that we would be mandating our competition authorities with a pretty risky job, in a way. Certainly, one that, you know – for a government agency. Any thoughts on that?
Robin Shaban: Mm-hmm, can you expand a little bit more on errors?
Yves Faguy: Well, you know, I mean, government agencies tend to cautious and, you know, I'm making a huge generalisation here. But you know, presumably there’s a bit of a – I see – and maybe I'm wrong, but I see some experimentation here, which is, you know, you're bringing in competition law as one of the levers to address issues – to counter inequality, for example. And that requires, you know, maybe focusing on certain sectors as we discussed, focusing on certain elements of economy, maybe not on others. Making decisions – I could see critics coming in here and say, “well, here’s an example of government picking winners, where this should not be its job.”
And I guess my question is then, that should we be thinking about those risks, and are we prepared to – are we prepared to try and fail at our policies?
Robin Shaban: The way I would answer that is this: these risks exist, whether we acknowledge them or not. And they exist because of the far-reaching impact that competition law has. There are so many knock-on effects that, I mean, we couldn’t even conceive of, of enforcement decisions made or not made by the Competition Bureau.
I think it is more proactive for competition agencies like the bureau to proactively try and address these issues and acknowledge them, than it is to shy away from the challenge of experimentation. In other words, I hear your point of, all right, we have this new world where the Competition Bureau is getting out, they're trying things differently and it might get it wrong, right.
But the counterfactual that we live with today is that currently, the bureau isn’t looking at these issues, and as a result, we’re probably getting it wrong. [Laughs] So, that idea of error or bad decisions or bad outcomes, I think we need to compare the – yes, we need to be clear about what it is we’re comparing. And the fundamental challenge here is – or the fundamental world view I think we’re debating here is something you alluded to before, about this idea that government is best when it’s not interfering in stuff.
A lot of the progressive thinking done on competition law and policy to date, fundamentally disagrees with that perspective that this hands-off, markets-will-take-care-of-themselves, just let the boys play and, you know, fight it out. Maybe that works in some instances, but for a general philosophy or approach to competition law, or just economic policy in general, I don’t think it holds water.
We do need some sort of engagement from stakeholders like government, like the Competition Bureau, to guide market outcomes in a way that is gong to enhance our welfare.
So, intervention is needed, whether we want to do it or not. The question is, are we courageous enough to try, get out there, make mistakes and learn from those mistakes?
Oh, I’ll also say too that it’s relatively recent that we have the analytical capacity to evaluate the impact of enforcement decisions within competition law. Evaluation within competition law is a relatively new practice, and it’s only recently that we’re seeing a body of literature growing in this area.
And that is big, that empowers us to try different approaches and consider their impacts. I would contrast this with social policy. I was actually thinking about this earlier today; compare competition law to, say, EI, which is one of our biggest social policies. In EI, you can actually create very detailed and specific experiments. They do this; they will create pilots within EI, so certain regions of the country get a small tweak to the EI program. And then the government will do these very sophisticated econometric studies that have an experimental design, to demonstrate with very fine precision, the impact of this minute change to EI.
We don’t – I don’t see us there yet. For competition law the literature and our approaches to experimentation just aren’t that detailed, and that has a lot to do with the more nebulous nature of competition law. But I think that’s something that we can aspire to.
So, there’s lots of growth to undertake in that direction, and the way you start is to start. [Laughs] That’s how you get there, is taking the first few steps.
Yves Faguy: Where is – where do you locate Canada in terms of its challenge in addressing inequality, compared to other members of the OECD, for example?
Robin Shaban: Canada, relative to other countries, does fairly well when it comes to inequality. And just to clarify, that means that we are more equal in terms of income, for example, than other countries. The US generally does quite poorly compared to Canada, however, Canada – within the OECD data, the Nordic countries are miles ahead of everyone else.
So Canada is kind of close-ish to the Nordic countries, but there’s still a chasm there between Canada's performance and that of the Nordic countries. The Nordic countries are in a different class.
Yves Faguy: Right. Is there an optimal level of inequality that an economy should sort of try and situate itself to foster innovation and foster economic development, or should be we be aiming for sort of a flat line of inequality?
Robin Shaban: There’s two ways to answer that. So, if we’re assuming the type of economic system we have today, a market-driven capitalist system, then yes, research has indicated that when you measure inequality based off the Gini coefficient, which is an index that represents the degree of inequality within any variable, but in this case, we’re often looking at income, there is an optimum; so, you don’t want too much and you don’t want too little; there’s a sweet spot.
And Canada is generally in that sweet spot area, however, inequality in Canada has been growing over time. And what we want to do is curb that growth, and that’s the role that competition law can play in conjunction with other policy interventions.
However, that answer is really conditional on the type of economic system we have today, and I do think that many changes that we need to make to our economy and society to ensure our long-term viability, need to challenge the current economic organisation that we have today. And that may include moving away from more market-based ways of organising our economy, to alternatives, some of which may be public ownership.
But, like I mentioned before, there are a lot of ways that humans can come together to meet our material needs that lie outside of this cold war era, public versus private dichotomy. And it’s about finding those creative solutions that are going to work the best.
I'm not a free-market evangelist and I'm not die-hard nationalisation advocate either. I think it’s important for me to approach my work in this in an agnostic way, because ultimately, what I care about is promoting the welfare of people. I think it frustrates me that we still have poverty, and I don’t want that to be the case. So, what is the best way to deal with that? And there are a lot of solutions available to us that could be pursued.
Yves Faguy: So, what would you – keeping that in mind, what would you most like to see go into the policy design of a modernised competition law?
Robin Shaban: My top priority would be to have the notion of inclusivity and inclusive growth acknowledged within the Competition Act. And that really boils down to those three elements of inclusive growth that I talked about before:
That multidimensionality, so acknowledging that welfare and this growth that we’re pursuing, can't be limited to just income, but it needs to encompass various other dimensions of welfare. That distributional aspect, so recognising that some people have more than less, and when it comes to especially dimensions like our health and sense of safety, I think there’s a pretty simple case to be made there that our outcomes should be equal.
And that last element of thinking carefully about what role does competition law play in the broader orchestra of policy instruments that are working towards inclusive growth. So, it’s not like competition law is pulling all the weight, and it’s not like competition law should just abandon the whole project all together and leave it to someone else; it needs to play a part. What is that part? We need to get really clear on that.
Yves Faguy: And so, you're advocating for this and, you know, promoting these ideas. What’s the reaction that you see on the side of the policy makers? Are you getting a favourable audience on this?
Robin Shaban: I'm pleasantly surprised by the amount of engagement I get from people. And I think that’s relatively new. I don’t think these ideas would have received the same curiosity and interest ten years ago, even five years ago. I think there’s also a lot of confusion, and that’s why I'm excited about this paper, because it’s an opportunity for us to get these thoughts on paper so that other people can sit down and really read them and digest them.
But also striking the right balance of, you know, not getting too in the weeds on stuff, because when things are too detailed, sometimes it’s difficult for people to digest. I’ve been there – [laughs] I'm pretty detail-oriented, so yes, you don’t want to bombard people with the details. But I think overall, the response is a curiosity and an openness that I find very encouraging.
But also, confusion, which is fair, because it wasn’t until recently that we really had had opportunities to articulate these ideas and share them more broadly. So, it makes sense that people have questions and seem skeptical because of – yes, skeptical.
Yves Faguy: And what’s the greatest skepticism? Is it the notion that you’ll just be disempowering some big players, but in exchange you’d be empowering regulators? What's the biggest cause for skepticism that you see out there?
Robin Shaban: The biggest pushback comes down to the idea that the implication of all this inclusiveness stuff is that it’s going to make the law more complex. And don’t give that to us; we already have way too much complexity to deal with. When in fact, there’s actually – the idea of inclusiveness is not that radical. [Laughs]
When you really sit down and think through what inclusive competition law looks like and what people would like competition law to look like today, I mean, obviously there’s differences, but there’s a lot of similarity there too. So, it’s not like one party is saying is zig and the other one is saying zag; I think that there is more opportunity for a synergy between different perspectives than what people are typically thinking.
And I think a lot of that is also driven by the way we see dialogue on these issues transpiring in the States. I think that there’s a lot more fire and brimstone, and to be fair, I mean, there’s conversation like that here too in Canada, and rightly so. You know, I think that it’s fair for people to get upset about different competition issues in Canada – I think that’s fair.
But I also think that a lot of productive outcomes can come about when we’re able to sit down with these issues in an analytical way and conscientiously design competition law with the purpose of meeting people’s needs.
Yves Faguy: Well, I'm interested, I mean, in a way. I mean, I'm not necessarily a historian in this, but it seems to me that competition law at its origin, when it was designed in the US in large part, you know, it had an inclusive growth component to it, which was, you know, they were trying to limit anti-competitive conduct.
And so, you know, maybe it is a value and coming back to the values that were originally there, that got us going down this path in the first place.
Robin Shaban: It’s all about values. Back to the idea of efficiency that I'm examining in my dissertation, efficiency doesn’t make sense unless there are some objective function you're trying to optimise, or there’s some outcome you're trying to achieve. Efficiency needs to be hung on something, right. So, there’s always values. The question is, what do we want to value and what is competition law’s role in promoting outcomes that help us achieve those values or realise those values?
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Yves Faguy: Robin Shaban, thank you very much. That was a fascinating conversation. Thanks for taking the time to help us understand some of these issues.
Robin Shaban: You're very welcome. Thanks for the great conversation.
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