Competition Bureau taking more consumer-friendly stance

After years of being left to the figurative wolves, Canadian consumers may finally be seeing the dawning of a new golden age as far as regulatory protections go.

First, there's the federal government with its increasingly pro-consumer stance, then there's the Canadian Radio-television and Telecommunications Commission and its similarly emergent attitude.

Now, a third and somewhat surprising force - the Competition Bureau - looks to be joining the movement.

The formerly stodgy organization, perhaps best known to the average Canadian as the body that often rubber-stamps mergers, is all of a sudden raising eyebrows, even at long-beleaguered consumer advocacy groups.

"For the first time in a long time we see eye to eye on a lot of matters," says Bruce Cran, president of the Consumers Association of Canada. "They're asking us for our thoughts and they seem to be listening."

Consumer-friendly?

There's increasing evidence that the bureau is adopting a new consumer-friendly approach.

Two weeks ago, for example, the Bureau announced a settlement with four book publishers - Hachette Book Group, HarperCollins, Macmillan and Simon & Schuster - that it said would lead to lower e-book prices. Retailers will now be able to discount e-books while publishers will no longer be able to do "most-favoured nation" deals, where terms that are reached with one preferred seller are then applied to all other sellers.

"Businesses operating in the digital economy must realize that anti-competitive activity will not be tolerated, whether it occurs in the physical world or the digital one," said Commissioner John Pecman in a statement that consumer groups say is uncharacteristically tough-talking for the organization.

• E-book prices could drop under Competition Bureau pact
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The e-book decision came on the heels of a submission in January to the CRTC's ongoing hearing regarding wholesale wireless roaming, or the rates that cellphone providers charge one another to connect to each others' networks.

Smaller providers such as Wind have complained that bigger competitors charge them unfairly high rates compared to what they bill each other, which acts as an anti-competitive barrier to the smaller companies offering services across the country. The bigger carriers, for their part, say they charge each other less because they swap considerably larger amounts of traffic.

The Bureau, which has for years maintained that the wireless industry is sufficiently competitive, reversed course by suggesting that Bell, Rogers and Telus do in fact have undue influence. "The Bureau believes the incumbent services providers do have market power in the provision of retail mobile wireless services and the CRTC should take this fact into account when considering this matter," its filing said.

University of Ottawa internet law professor Michael Geist says the new position is a "bombshell" that will open the door to regulatory action against the wireless companies.

"It's an unmistakable signal that the Bureau is interested in the online digital environment more than it has been in the past," he says. "It's clearly adopting a more consumer-friendly lens."

Federal direction

Observers say the shift is the result of top-down direction from the government, which itself has dramatically changed course since first taking power in 2006. At the time, then-Industry Minister Maxime Bernier espoused a market-forces approach and instructed regulators to be largely hands-off. But public outcries and several successors changed all that.

First came Bill C-61, the copyright reform bill introduced by Bernier's successor Jim Prentice in 2008. The bill, which would have made it illegal to break digital locks on content, prompted tens of thousands of Canadians to join an online protest. The government scrapped its initial bill in response and conducted public consultations, with the eventual legislation ending up considerably more balanced toward consumer interests.

Then, in 2010, the usage-based internet billing furor - where Bell wanted to charge its wholesale independent internet providers for every bit downloaded by its customers - exploded into another online protest, this time attracting half a million petitioners. Then-Industry Minister Tony Clement reversed the CRTC ruling that would have allowed Bell's plan, thereby preserving indie ISPs' ability to continue offering customers large or unlimited usage packages.

Having seen the value in siding with consumers on such digital issues, the government has been steadily escalating its populist approach. A rejection last week of a sale of wireless spectrum from AT&T subsidiary NextWave to Inukshuk, a joint venture in northern Canada between Bell and Rogers, on the grounds that it would further strengthen those companies' power is the latest such move. 

In a 2012 "mandate letter," then-Heritage Minister James Moore urged new CRTC commissioner Jean-Pierre Blais to adopt similar principles.

"I would like to see the Commission comprehensively address consumer affordability and service complaints, ensure consumers are aware of and able to participate in broadcasting proceedings and regulate broadcasting undertakings only to the extent necessary," he wrote.

In line with its new mandate, the CRTC in December implemented the Wireless Code, which effectively outlawed several of the wireless companies' most-criticized business practices, such as three-year contracts and punishingly high roaming rates.

Pecman's influence

Commissioner Pecman, who has worked in virtually every department at the Competition Bureau in his 29 years there, took the reins of the organization last year. While there was no similar mandate letter sent, Moore - now Industry Minister - says he has encouraged the new Commissioner to proceed along the same lines as the CRTC.

"I don't think there's been lack of clarity either through the public comments I've made or that [current Heritage Minister] Shelly Glover has made or the Prime Minister has made," he said in an interview last week. "There's been a pretty consistent message ... about the needs of consumers and that ought to be reflected in everything the government does, not just the deliberate decisions we make in government policy or our investment and regulation, but also in terms of Crown agencies as they undertake their tasks."

The Competition Bureau declined to make Pecman available for an interview, but a spokeswoman did say that he has outlined four "C" priorities for the organization: compliance with the Competition Act that governs it; collaboration with other regulators such as the CRTC; communication with partners and the public; and a focus on Canadians, "which refers to the Bureau's role in ensuring that Canadian consumers and businesses continue to prosper in a competitive and innovative marketplace."

The attitude is manifesting in a different approach, where the Bureau is no longer looking at markets and services from just an economist's point of view, consumer groups say. The organization is increasingly trying to get an idea of how consumers are being affected on the grassroots level, which is something it never used to do.

"It was a long, slow process," says John Lawford, director of the Public Interest Advocacy Centre. "They're finally doing what I think they should be doing."

The question now is whether the new consumer golden age - at both the Bureau and the CRTC - will last, or whether it ends up as a passing fad. With the government driving the new consumer-friendly approach to issues, and governments prone to changing or being ousted from power, there is always the fear that things could go revert to the way they were, where consumers were powerless against big companies.

Consumer groups are optimistic that the authorities' new focus is here to stay, largely thanks to the internet, which has given individuals the ability to voice displeasure to those in power. And, while the Conservatives have so far made the most hay from this new reality, it's not their's alone to exploit.

"Consumers don't belong to the right or left," says Lawford. "There's a real power shift here."