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  • Ted Woodhead

Winning by losing and other observations

Photo credit Alexander Schimmeck on Unsplash

I am a keen observer of competition matters before the Competition Bureau, the Competition Tribunal and the Courts. I also follow proceedings in other jurisdictions. So I thought I would share some thoughts on the first few years of the term of the Chair of the Federal Trade Commission, Lina Kahn.

Ms. Kahn came to some notoriety in 2017 when as a student at Yale Law School she authored a paper in the Yale Law Journal, the premise of which is that Amazon has enjoyed staggering growth and operates in massive volumes while undercutting prices which leads to predatory pricing and is anti-competitive. This is a fine argument to make for a law student, except that it argues that the consumer welfare standard, a lynchpin of antitrust, does not capture the myriad of evils that the technology platforms allegedly perpetrate. As I said, this is a fine argument for a law student to make but it is increasingly obvious that the Courts do not agree.

Assuming the Chair of the FTC in 2021, she has aggressively prosecuted large technology platforms and has been branded a progressive activist pursuing the "novel concepts and theories" outlined in her Yale Law Journal paper. The quotations around "novel concepts and theories" represent the kindest criticisms of her aggressive prosecutions proffered by the reviewing Courts. Reviewing the reasons of some of these cases, including the recent Microsoft/Activision case, discloses that she is long on novel concepts and short on facts, law and economics. As one might expect, those have been fatal deficiencies in her quixotic battles with big tech.

Chairman Kahn calls these losses "partial victories". Putting aside whether spending finite Agency and Court resources on lost causes, or distracting her key staff from their primary mission was a wise strategy to begin with, she nonetheless declares the losses a victory because she claims they have disclosed the inability of the current statutory framework under which she operates, and the current jurisprudence and economics of antitrust, to grapple with the internet age. In other words, "has no one at all read my brilliant paper?".

Parsing all of that, it would seem her victory from losses will be if Congress gives her new powers and statutes that will give life to her "novel concepts and theories". I am interested in following this, if for no other reason, to find out how it all turns out. I predict very badly, but we shall see.

I am reminded of something the late and great educator and basketball player and Coach John Wooden said which was "don't mistake activity for achievement". On that note, I am reminded of the similar competition crusade undertaken by Canada's Chairman of the Competition Bureau. He too has aggressively prosecuted cases and embarrassingly lost a number of them. He has lobbied heavily to secure expanded powers as a result. The Bureau has been ordered to pay one of the biggest cost claims in history because of the loss sustained in an effort to block, delay and frustrate the acquisition of Shaw Communications by Rogers Communications. His bewildering and quixotic quest ended in January of 2024. He vowed however that "We will never compromise in our efforts to protect and promote competition for the benefit of Canadians". A lot of activity, a lot of losing, but hey, a "partial victory" I guess because he got some new powers to conduct his overreach. Stay tuned in the coming months and years to see how all of this plays out.

So, enough about that. Let's flip to a couple of recent decisions of the Canadian Radio-television and Telecommunications Commission (CRTC). First, we have an amended roadmap posted to the CRTC's web site but never announced which definitely would lead one to believe there has been lots of activity, albeit no achievement given the whole series of consultations and "engagements" will now be delayed by at least a year and not lead to a conclusion until 2026 at the earliest. So much for transparency and achievement in updating its woefully unsuitable frameworks.

Meanwhile as we wait for them to grapple with the internet age (said with some hope, but little faith) the CRTC granted relief to two broadcasters - CFCM-DT a television station in Québec City owned by Québecor Média Inc. and Corus Entertainment Inc, the largest independent provider of programming in Canada. Quebecor's application was filed almost a year ago and Corus' was eight months ago. These two broadcasters were granted relief but others were not. The CRTC seems to have granted relief to these two because of threats made by Quebecor about the ongoing viability of the station as is and the evident dire financial situation at Corus which is not good. In the face of an acknowledged failure of the framework to grapple with the internet age, which should but won't, call into question the usefulness of the framework at all, the CRTC has once again failed to address a systemic failure and instead engaged in some very late activity, but precious little achievement.

At least one of the reasons for delaying relief to others appears to be the CRTC's belief that there are near mythical advantages to ownership groups that are vertically integrated. There aren't really but the CRTC gives it a whirly anyway. Where it all falls apart however, is that Québecor Média is vertically integrated too. So, if the benefits of being vertically integrated are so salutary then why give Québecor relief but not BCE and Rogers? You may have to wait awhile for the answer to that puzzler says the CRTC.

So the commonality in all of this is that apparently the new age strategy is to engage in a lot of activity but not a lot of achievement and to proclaim partial victories and pretend we're winning while losing.


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