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Compete to Win

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Competition Policy Review Panel Releases Report

OTTAWA, June 26, 2008 – The Competition Policy Review Panel, chaired by L.R. Wilson, today provided its report to the Government of Canada, titled Compete to Win. The report puts forward a series of policy recommendations aimed at making Canada a more attractive destination for talent, investment and innovation, as well as a sweeping national Competitiveness Agenda based on the proposition that Canada’s standard of living and economic performance will be raised through more competition in Canada and from abroad. Greater competitive intensity in Canada will yield better products at lower prices, more jobs and higher earnings, stronger companies, and a stronger economy.

Joining Mr. Wilson on the Panel were N. Murray Edwards, Isabelle Hudon, P. Thomas Jenkins and Brian Levitt.

“The Panel believes that Canada needs to be more open to competition, as competition spurs the productivity enhancements that underpin our economic performance and ultimately our quality of life,” said Mr. Wilson. “With our Competitiveness Agenda we hope to seize the attention of Canadians from all walks of life, to develop a more competitive mindset in Canada, and to create the conditions in Canada for global economic success.”

Compete to Win is the result of a year of research and consultation, and is based on the objective of raising Canadians’ standard of living by improving the country’s economic performance. The report makes a number of specific policy recommendations to the federal government, and also calls for action by other levels of government, the business community, post-secondary educational institutions and individual Canadians to make Canada more competitive in the context of economic globalization.

Specific policy recommendations to the federal government include:

  • Amending the Investment Canada Act to reduce barriers to foreign investment by increasing review thresholds; reversing the onus to require the government to demonstrate that an investment would be contrary to the national interest before disallowing a transaction; increasing transparency and predictability; and preserving a distinct approach for the cultural sector while also initiating a broad review of Canada’s cultural policies;
  • Liberalizing investment restrictions in the Canadian air transport, uranium mining, and telecommunications and broadcasting sectors, and removing the de facto ban on mergers in the financial services sector;
  • Updating and modernizing the Competition Act in line with best practices internationally;
  • Creating a Canadian Competitiveness Council to give voice to and advocate for competition in Canada, and ensure sustained attention by governments on national competitiveness.

As part of the Panel’s national competitiveness agenda, Compete to Win also identifies a number of broad public policy priorities bearing on Canada’s competitiveness, and makes recommendations for action in these areas with the goal of making Canada a location of choice for global talent, capital and innovation.

These specific public policy priorities for action are:

  • Taxation;
  • Attracting and developing talent;
  • Head offices and cities;
  • Fostering growth businesses;
  • Strengthening the role of directors in mergers and acquisitions;
  • The Canadian economic union;
  • Canada-US economic ties;
  • International trade and investment;
  • Regulation; and,
  • Innovation and intellectual property.

“One of our key findings is that Canada needs to get its act together as a nation,” said Mr. Wilson. “As governments, as businesses and as individuals we need to work better together and collaborate more effectively in the service of our national competitiveness. Competition is global, and the pace of economic activity will continue to accelerate. We must ensure that our policies and our mindset reflect global realities, and our national interest.”

Compete to Win was submitted today to the Minister of Industry, on behalf of the Government of Canada. The Competition Policy Review Panel was formed in July 2007 with a mandate to review Canada's competition and foreign investment policies, and make recommendations to the federal government for making Canada more globally competitive. The Panel conducted consultations, heard from Canadians and international experts, and commissioned research to inform its recommendations.

A backgrounder on the Panel’s report is attached. The complete version of Compete to Win, an Executive Summary, and additional information on the Panel, are available at: www.competitionreview.ca.

For more information, please contact:

Christiane Fox
Competition Policy Review Panel, Secretariat
(613) 889-8365

Backgrounder

Competition Policy Review Panel Releases Report: Compete to Win

  • The Competition Policy Review Panel spent a year reviewing Canada’s competition and investment policies.
  • The Panel’s report, Compete to Win, draws one principal conclusion: in order to prosper in the global era, Canada must adopt a more globally competitive mindset.
  • Vigorous competition spurs continuous improvement and an ambition to be the best, boosts efficiency and adaptability, and raises productivity.
  • Intensifying competition will build a stronger economy: better products at lower prices, more jobs and higher earnings, stronger firms, and greater prosperity.

Mandate

  • In July 2007, the Competition Policy Review Panel was mandated to review Canada's competition and foreign investment policies, and recommend ways to improve Canada’s productivity and competitiveness.
  • Following the Industry Minister’s statement in October 2007, issues related to state-owned enterprises and implications for national security were not subject to review by the Panel.
  • In particular, the Panel was mandated to review:
    • The Investment Canada Act;
    • Ownership restrictions in specific sectors; and
    • The Competition Act.
  • The Panel consulted widely, receiving 155 written submissions, commissioning over 20 research projects, and speaking to over 150 participants at 13 regional and thematic consultations.

A Competitiveness Agenda for Canada

  • The Panel believes Canada must improve its productivity by increasing competitive intensity.
  • A precursor to international success is ensuring healthy domestic markets and reducing unnecessary barriers to entry. The freer flow of goods and services will import greater competition into domestic markets.
  • In order to achieve greater global success, Canadian firms will need to become more innovative and entrepreneurial.
  • Compete to Win puts forward a Competitiveness Agenda for Canada.

The Report

  • The Panel’s report, Compete to Win, makes a number of recommendations on how to strengthen Canada’s competitiveness, promote the growth of globally competitive companies, and become a destination for talent, capital and innovation.
  • The report focuses on three areas:
    • Liberalizing investment rules;
    • Updating Canada’s competition regime; and,
    • Creating an internationally competitive business environment.
  • Key recommendations are summarized below.

The Investment Canada Act

  • Change the Investment Canada Act in order to become more open to the world and reduce barriers to foreign investment by:
    • Increasing Canada’s threshold for investment review to $1 billion in enterprise value, and applying this threshold to all non-cultural sectors;
    • Shifting the onus to the Minister to say why a foreign investment is not in Canada’s “national interest”;
    • Increasing transparency, predictability and reporting; and
    • Initiating a comprehensive review of Canada’s cultural policies.

Regulated Sectors

  • Introduce greater liberalization of investment restrictions in regulated sectors in order to increase Canada’s competitiveness by:
    • Reviewing air transport, uranium mining, telecommunications and broadcasting, and financial services regimes every five years;
    • Allowing up to 49 percent foreign ownership of air carriers on a reciprocal basis;
    • Liberalizing foreign ownership restrictions in uranium mining, subject to a new national security regime, and obtaining greater rights to develop nuclear resources or process uranium;
    • Allowing foreign firms to establish or acquire Canadian telecom companies with less than a 10% market share, and, following a review of broadcasting and cultural policies, further liberalizing investment restrictions in the telecom and broadcasting sectors;
    • Retaining the financial services sector’s “widely held” rule, while removing the de facto prohibition on mergers of large financial institutions, subject to regulatory safeguards.

The Competition Act

  • Update the Competition Act andimprove economic efficiency by:
    • Reforming Canada’s merger review procedures to more closely mirror international and US practices;
    • Repealing outdated or ineffective pricing provisions;
    • Replacing conspiracy provisions with criminal procedures for hard core cartels and civil procedures for other types of anti-competitive agreements, and decriminalizing resale price maintenance; and
    • Providing general penalties for abuse of dominant position violations, and repealing industry-specific rules and penalties.

Public Policy Priorities for Action

  • Address key factors that underpin Canada’s competitiveness, including:
    • Taxation – lowering corporate income taxes, eliminating capital taxes, reducing personal income taxes for lower and middle income Canadians, and harmonizing provincial sales taxes with the GST;
    • Talent – supporting excellence in post-secondary education through greater specialization (i.e. in math, science and business), additional co-op programs, and more international students, and reforming Canada’s immigration processes to meet labour market needs, fast-track applicants, and address skills shortages;
    • Cities – showing federal leadership on critical urban issues under federal responsibility, having municipalities make greater use of alternative funding mechanisms, and having provincial governments assess the feasibility of allowing any municipality to levy a value-added tax within their jurisdiction, assessed on the harmonized GST tax base;
    • Growth Businesses – recalibrating government policies for small and medium-sized enterprises to focus on firms that demonstrate the desire and capacity to grow, and developing options to provide more private venture capital;
    • Corporate Directors – placing directors of Canadian public companies on a comparable footing with their Delaware counterparts when exercising their fiduciary duties in relation to acquisition proposals;
    • Canada’s Economic Union – eliminating all internal barriers to the free flow of goods, services and people within 3 years, and harmonizing federal and provincial environmental assessment policies and procedures;
    • Canada-US Economic Ties – addressing Canada-US border “thickening” as Canada’s number one trade priority;
    • International Trade and Investment – setting an ambitious timeline to conclude foreign trade and investment agreements with priority countries, incorporating comprehensive business input;
    • Regulation – assessing all regulations against competitiveness impacts, and harmonizing product and professional standards with the US, unless public policy considerations dictate otherwise;
    • Innovation and Intellectual Property – ensuring R&D and innovation policies support both domestic and global investment, and that new copyright legislation, patent laws, and counterfeit and piracy laws reward creators and further competition and innovation.

A Canadian Competitiveness Council

  • The Panel recommends creating a Canadian Competitiveness Council. The Council would:
    • Have a broad mandate as an advocate for competition in both the public and private sectors, and publish expert research on competitiveness issues;
    • Be an entity independent of government, with a small staff and a Board of Directors with a majority of members from outside government, and include representatives with federal, provincial and municipal perspectives. 
    • Keep a sustained focus on competitiveness in Canada.

Conclusion

  • The Panel believes that Canada must raise its productivity through greater openness to talent, capital and innovation, through vigorous competition, and through a more ambitious mindset.
  • Implementing the Competitiveness Agenda as outlined in the Panel’s report will create the conditions that will make Canada and Canadians more economically competitive and successful, both at home and abroad.