When competition authorities expand their legal toolkits, the most consequential policy choices often do not appear in the statute. They emerge later—in enforcement guidelines, presumptions, and priorities that determine how aggressively agencies will deploy new powers. Canada now finds itself squarely in that phase.
Recent amendments to the Competition Act illustrate the shift. Reforms enacted in 2023 and 2024 added “excessive and unfair selling prices” as a form of abuse of dominance, extended civil review to agreements between non-competitors, expanded private access to the Competition Tribunal, and sharply increased penalties. Corporations now face fines of up to C$25 million, rising to C$35 million for repeat violations, or three times the benefit gained.
These statutory changes have pushed interpretive authority downstream. The Competition Bureau must now give operational meaning to open-ended concepts and decide how forcefully to pursue them. Comments submitted by several scholars, including a recent set from the International Center for Law & Economics (ICLE), underscore how much turns on those implementation choices, rather than on statutory text alone.
Canada’s approach combines three elements that many jurisdictions continue to debate: expanded substantive theories of harm; broader private rights of action paired with monetary remedies; and dramatically higher penalties. Together, they create a real-world test of what happens when lawmakers broaden enforcement authority without strengthening the doctrinal guardrails meant to limit error costs and over-deterrence.
That experiment deserves close attention in Washington, Brussels, and other capitals. The underlying risks—legal uncertainty, inflated error costs, and pressure to turn competition law into de facto price regulation—are not uniquely Canadian. They reflect structural tensions in modern competition policy, especially when enforcement discretion expands faster than doctrinal discipline.
Where Vague Standards Meet Real Penalties
ICLE’s comments stress that the Competition Bureau retains broad discretion when interpreting open-ended statutory terms such as “excessive,” “unfair,” and “significant purpose.” How the bureau exercises that discretion will do far more to shape outcomes than the words of the statute alone.
Competition enforcement always operates under uncertainty. Agencies rarely know firms’ true costs, demand elasticities, or innovation trajectories. That uncertainty generates two familiar forms of error: Type I errors, or false positives, in which authorities condemn conduct that benefits consumers; and Type II errors, or false negatives, in which they fail to stop genuinely anticompetitive behavior.
Judge Frank Easterbrook’s error-cost framework—later extended to modern antitrust by Geoffrey Manne and Joshua Wright—shows that these errors are asymmetric. False positives impose durable, economy-wide costs by chilling pricing, contracting, and innovation. Once a court or agency declares a practice unlawful, firms abandon it across markets, and courts rarely revisit the issue. False negatives, by contrast, are more likely to correct over time through entry and expansion, particularly outside markets with unusually strong barriers or network effects.
That asymmetry grows more consequential as penalties rise and private enforcement expands. Canada’s reforms lower the threshold for private parties to seek review before the Competition Tribunal and, beginning in 2025, authorize monetary awards to private applicants. Unlike U.S. antitrust law, Canadian law lacks an “antitrust injury” requirement to screen out claims alleging harm to competitors, rather than harm to competition.
In that setting, vague standards magnify uncertainty and invite strategic litigation. Terminated distributors, unsuccessful rivals, and other commercial counterparties can wield competition law as leverage in ordinary business disputes, rather than as a tool to protect consumers. Firms facing that risk will predictably steer clear of pricing strategies, vertical agreements, and product integrations that often enhance consumer welfare.
Any jurisdiction that combines broad statutory language, expanded private enforcement, and high penalties confronts the same question: How do you avoid deterring the very competitive conduct you claim to promote?
The Perils of Policing Prices
The most consequential change to Canada’s Competition Act appears in Section 78(1)(k), which treats “excessive and unfair selling prices” as an anti-competitive act. The statute defines neither term. While the Competition Bureau would be wise to adopt a narrow interpretation, the underlying concerns extend far beyond Canada.
High prices often signal successful innovation, risk-taking, or temporary market power, not exclusionary conduct. In competitive markets, high prices attract entry. In dynamic markets, they finance the investments that generate long-run consumer benefits. As the U.S. Supreme Court observed in Trinko, the opportunity to charge monopoly prices—at least temporarily—drives firms to take risks and innovate in the first place.
Cost-based benchmarks for “excessive” pricing prove especially fragile in multi-product firms, digital platforms, and high fixed-cost industries with low marginal costs. Consider a pharmaceutical company: how should regulators allocate costs across 10 failed drug trials and one successful medication? Or take a software platform with massive server infrastructure and near-zero marginal costs per transaction. No accounting method offers a stable or objective measure of “cost,” and different approaches yield wildly divergent results.
European competition law underscores the point. Article 102 of the Treaty on the Functioning of the European Union recognizes excessive pricing in principle, yet the European Commission pursues such cases only rarely. The reason is practical, not doctrinal. Competition authorities cannot perform these calculations with reliable precision. Allocating common costs, valuing intangible capital, and adjusting for risk strain even well-functioning markets, let alone regulators operating with incomplete information.
Layering a free-floating notion of “fairness” onto that analysis worsens the problem. Absent a clear connection to competitive harm, fairness standards invite rent-seeking by rivals and push competition authorities toward de facto price regulation, without either the information or the mandate to do the job.
A more disciplined approach would state clearly that high prices, standing alone, do not establish abuse. Enforcement should scrutinize pricing only when it links to exclusionary conduct—such as margin squeezes, foreclosure, or tying arrangements that extend monopoly power. “Unfairness” should matter only when anchored in demonstrable harm to the competitive process, not as an independent, subjective standard.
Jurisdictions considering “excessive pricing” or “unfair advantage” provisions should proceed with caution. Vague statutory language coupled with expansive interpretation all but guarantees over-enforcement and invites politicized complaints, to the detriment of competition and consumers alike.
Vertical Integration in the Crosshairs
The amended Competition Act extends Section 90.1 to agreements between non-competitors under a “significant purpose” test for preventing or lessening competition. That shift brings vertical restraints and self-preferencing within easier reach of enforcement, even though both commonly reflect efficient vertical integration, rather than competitive harm.
A large empirical literature supports that conclusion. In their 2008 survey, “Exclusive Contracts and Vertical Restraints: Empirical Evidence and Public Policy,” in the Handbook of Antitrust Economics, Francine Lafontaine and Margaret Slade reviewed decades of evidence and found that vertical restraints typically address coordination and free-riding problems, and tend to enhance consumer welfare. Exclusive territories can prevent discounters from free-riding on full-service retailers’ investments in training and customer service. Resale price maintenance can mitigate double marginalization, in which both manufacturers and retailers add markups, pushing final prices above efficient levels.
Market-share screens fare no better. Treating a 30% share as “more likely” to imply market power is, at best, a crude proxy. Concentration often reflects competitive success, not exclusion. Static market shares say little about entry conditions, innovation rates, or competitive constraints from adjacent markets. A firm with 40% of a narrowly defined market today may still face intense pressure from close substitutes or rapid entry if prices rise.
The same logic applies to self-preferencing on digital platforms. Practices such as Amazon promoting its own brands, Google displaying its own shopping results, or Apple pre-installing its own apps fit comfortably within standard models of vertical integration. A restrained approach would intervene only when three conditions hold: the platform has durable market power; users face meaningful limits on switching or multi-homing; and rivals suffer foreclosure that harms consumers after accounting for efficiencies.
Recent empirical work reinforces that caution. Field experiments that demote platforms’ own products have sometimes reduced consumer surplus, precisely because those products were what users preferred. Absent clear evidence of foreclosure and consumer harm, blanket prohibitions on self-preferencing risk attacking integration that creates value.
For agencies contemplating stricter enforcement against self-preferencing or distribution agreements, the implication is straightforward. Lowering the intervention threshold while discounting the pro-competitive benefits of vertical integration will predictably chill integration, investment, and experimentation—the very conduct that competition policy should seek to preserve.
Algorithms, Labor, and Other Enforcement Temptations
Algorithmic pricing and labor-market enforcement are two other areas raised in the comments where regulatory enthusiasm has outpaced the evidence.
On algorithmic pricing, a basic legal principle should still govern: the requirement of an “agreement” does not evaporate because firms use software. Conscious parallelism remains lawful, whether a pricing manager reviews rivals’ public websites and adjusts prices, or an algorithm performs the same task. Former U.S. Federal Trade Commissioner Maureen Ohlhausen captured this intuition with the “Guy Named Bob” test. If a pricing manager (“Bob”) may lawfully observe competitors’ public prices and respond, an algorithm that does the same thing does not suddenly create liability.
Liability under Canada’s Competition Act should therefore continue to require a meeting of the minds, shown through traditional “plus factors,” such as exchanges of competitively sensitive information or shared pricing parameters. That framework offers a workable way to distinguish actual collusion from fast-moving, but lawful, oligopolistic interaction, and it could guide enforcers elsewhere facing similar questions.
Labor markets present a different challenge. Monopsony power can exist, but the empirical case for broad antitrust intervention remains mixed and methodologically contested. Many concerns about wages and working conditions fit more naturally within targeted labor regulation, including minimum-wage laws, collective-bargaining rights, limits on noncompete agreements, and occupational-licensing reform. Each policy tool has its comparative advantage, and competition law should not become a catchall for problems that other policy levers address more directly.
As enforcement ambitions expand, process should keep pace. Agencies should commit to clear documentation, meaningful access to evidence, realistic response timelines, and robust judicial oversight of interim measures. The European Commission’s reversals in Qualcomm and Intel show the risks when aggressive theories race ahead of sound procedure. Any authority contemplating more assertive enforcement would do well to internalize that lesson.
A Test Case for Modern Enforcement
The throughline here is not a call for less enforcement, but for better-targeted enforcement. Expanding authority without limiting principles breeds uncertainty and strategic behavior, and risks chilling the very competition that authorities seek to protect or enhance.
Excessive-pricing theories and fairness-based standards should tie directly to exclusionary conduct and demonstrable competitive harm. Untethered from those anchors, they drift toward de facto price regulation. Competition authorities lack both the information and the institutional design to regulate prices directly, and experience shows the costs of trying.
Vertical restraints, self-preferencing, and algorithmic pricing warrant effects-based analysis grounded in empirical evidence, not presumptions driven by political anxiety about digital markets. The economic literature on these practices has matured significantly over the past two decades. Ignoring that body of work in favor of intuition or anecdote makes for poor policy.
Close cases call for restraint. Under an error-cost framework, when legal uncertainty runs high and the costs of false positives increase because of expanded private enforcement and higher penalties, the approach most likely to protect long-run consumer welfare is disciplined intervention only where evidence of harm is clear.
Canada has substantially expanded its competition-law toolkit. How the Competition Bureau exercises its discretion will test whether broader authority can coexist with predictability, administrability, and an evidence-based focus on consumer harm. Regulators elsewhere should watch closely—and apply the same discipline to their own enforcement guidelines.
