To unlock growth and innovation, Canada must treat competition policy as a whole-of-government economic strategy.
by Vasiliki (Vass) Bednar, Denise Hearn. Originally published on Policy Options
June 16, 2025
(Version française disponible ici)
Trade policy has dominated headlines since U.S. President Donald Trump’s pressure campaign against Canada started last winter. But the re-elected Carney government in Ottawa, along with its provincial counterparts, has a unique opportunity to use the full breadth of industrial policy to position Canada to succeed – and even thrive – in uncertain global conditions.
While traditional industrial policy tools such as subsidies, procurement, tax incentives and federal financing facilities remain essential, competition policy is a powerful and underutilized market-shaping force that can unlock innovation, growth and productivity. It’s time to recognize the potential of competition policies as an industrial policy instrument, not just a mechanism for enforcement.
A modernized competition policy would shift Canada from reactive enforcement toward the necessary proactive approach, both within our borders and abroad. Competition policy can unlock productivity gains by addressing concentration bottlenecks, support dynamic domestic industries over passive incumbency, as well as capture and promote fair access to critical infrastructure, data and emerging digital platforms.
It can even build and safeguard Canadian sovereignty in essential sectors amid global corporate consolidation.
Competition policy as a national strategy
But to harness its potential to unlock growth and innovation, Canada needs to adopt an integrated, whole-of-government approach. We often think of competition policy as being the sole domain of bureaucrats in Ottawa. But Canada can’t democratize its economy from Parliament Hill alone or through one bureau.
Building a freer, fairer market economy will require multiple federal departments aligned around common goals, along with provincial governments shaping the rules within their jurisdiction.
Tackling interprovincial trade barriers is a good, albeit overdue, start. But it’s not enough.
Internal trade frictions remain a frustrating quirk of Canadian federalism. From mismatched licensing regimes to restrictions on the sale of alcohol across borders, we’ve normalized barriers between provinces that would be unthinkable in other advanced economies.
By removing these, we reduce duplication, open opportunities for businesses and workers, and create larger, more dynamic markets. There are significant benefits from the promised “one Canadian economy” because internal trade represents about 20 per cent of GDP, so even small improvements can drive meaningful gains.
However, internal trade reform isn’t just about economic efficiency. It’s also a gateway to a broader project – one that reimagines competition policy as a proactive, pre-distributive agenda to build fairer markets.
To do that, the provinces and federal government must work in lockstep. In this rapid response to Trump’s tariffs, Prime Minister Mark Carney has established a productive foundation for a whole-of-government approach to investing in the country’s competitiveness.
Provincial tools to open markets
Similarly, public procurement represents about 15 per cent of GDP and can be harnessed to achieve Canadian goals. Federal and provincial governments should use their purchasing power to favour open, competitive ecosystems over dominant incumbents; require open standards or interoperability in tech contracts; and invest in “public options” such as open data platforms and public AI models to prevent monopolization.
Provincial governments have tools to combat market dominance that federal regulators lack. They can open markets and protect smaller players by rejecting the use of exclusivity clauses, slotting fees and wholesale practices in retail grocery that disadvantage smaller suppliers and independent grocers, as well as other independent businesses.
They can support regional food distribution alternatives such as the Ontario Food Terminal and restrict anti-competitive real estate practices, such as restrictive covenants as Manitoba just did. Doing so doesn’t just protect consumers. It keeps markets open and contestable, especially in sectors where dominant national entities have suppressed competitors.
Likewise, consumer protection is largely a provincial file. Provinces should be adopting common standards that enable consumers to compare prices and make informed choices. In the face of bait-and-switch pricing, they can collaborate on identifying junk fees; enhancing labelling laws; and ensuring consumers can easily unsubscribe from sticky recurring services. These steps would reduce deceptive practices and help rebuild trust in the marketplace.
Why is per-unit pricing mandated only in Quebec, which also has new rules on pricing and tipping that are meant to better protect consumers against abusive commercial practices? Why aren’t more provinces replicating Ontario’s Ticket Sales Act, which protects consumers from scalper bots and hidden fees? Why isn’t planned obsolescence prohibited across the board? Ditto subscription traps?
A shared mission for fairer markets
Workers should also have the freedom to earn a living without being boxed in by coercive contracts or gig apps that prevent them from working for multiple platforms. Non-compete clauses impede the mobility of millions of workers. Studies show that banning or restricting their use would likely boost wages and productivity. Provinces can lead here too, as Ontario did by banning them in 2021.
Why has no other province copied this example and why do they persist federally? These clauses are restrictive and unnecessary. A few months ago, Australia announced it is instituting a federal ban on non-competes for workers earning less than $175,000 annually. The 2024 federal fall economic statement promised action on this subject, though it is unclear whether this is still on the agenda.
Health care is also ripe for provincial leadership on competition. Quebec has already explicitly separated pharmacy ownership from insurance companies. More provinces could do the same or mandate transparency from pharmacy benefit managers, whose opaque pricing schemes inflate drug costs. Provinces could also support generics and biosimilars, and ensure competitive pharmaceutical markets that reduce costs for patients and governments alike.
They can join federal efforts to modernize copyright law, promote right-to-repair legislation and push for mandated interoperability in farming equipment and electronic devices. These issues may seem technical, but they’re central to whether Canadians (especially small businesses) can compete in digital and hardware ecosystems increasingly defined by the largest players.
Canada needs a new playbook – one that sees competition policy not as a niche domain for technocrats, but as a shared tool for building better markets. That means treating industrial policy not as a top-down mechanism to pick winners, but as a collaborative mission to open opportunity.
Provinces don’t need to wait for Ottawa. They can lead right now by harmonizing consumer protection rules, backing independent businesses, empowering workers and reforming markets distorted by legacy monopolies.
Former U.S. president Joe Biden’s competition council showed what’s possible when governments co-ordinate their efforts to reduce costs and give workers more freedom. We can do the same here if we treat competition not as a siloed strategy, but as a nation-building one.
As Carney put it in his 2021 book Values: “Eternal vigilance in the name of competition is essential.” We have a chance to make that vigilance a whole-of-government habit. We should seize it.
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This article first appeared on Policy Options and is republished here under a Creative Commons license.