Competition Policy Review Panel Research Paper Summary printable pdf download

This document is a summary of research commissioned for use by the Competition Policy Review

Panel. The reports remain the responsibility of the individual researcher(s). The views expressed

do not necessarily reflect those of the Panel or the Secretariat.

Competition Policy Review Panel

Research Paper Summary

Author: Marc VanAudenrode, Jimmy Royer, Lisa Pinheiro, Anne Catherine

Faye

Title: Adapting Competition Policy to Global Economic Environment

Subjects Addressed:

• Service Sector

• FDI in Canada

• Merger Review

o International Policy Harmonization

o The Treatment of Efficiencies

o The Balancing Weight Standard

The Services Sector:

The research report notes that the services sector has been rapidly expanding in

Canada and that this is consistent with the experience of other OECD

jurisdictions. It is further observed that the services sector is taking on a greater

prominence in Canada because its growth in both employment and output is

surpassing that of goods production. An increasing percentage of the service

production in Canada is tradable – and in 2006 services accounted for $65.1

Billion in Canadian exports and $82.2 Billion in imports (a record-level). The

researchers find that like many jurisdictions Canada has experienced difficulty

measuring the services sector and the amount of concentration in it. Growth

rates in the services sector between 2002 and 2006 range from a low of 8.5% in

public services, to a high of 23.8% in wholesale trade. Trade in services is

notoriously difficult to measure and the literature has identified four needed

pieces of information to accurately track the services trade: value of the services,

transaction prices, modes of supply, and foreign-affiliated activities. As well the

literature has identified three policy priorities for the services sector in Canada:

addressing data and measurement needs, identifying Canada’s comparative

advantage in the services sector, and the main export markets for Canadian

services (as well as competitors in those markets).

Foreign Investment:

The research report indicates that in 2006, foreign investment both CDIA and FDI

in Canada reached their highest level in six years, i.e. since the technology boom

in 2000. The United States remains the most significant source of inward FDI,

accounting for 61% of the stock in 2006, while European investors are of growing

importance. The share of inward FDI attracted by manufacturing industries has

declined from 59 in 2000 to 55% in 2006, while commodities production

(particularly oil and gas) have seen their share increase. CDIA is dominated by

financial services. The researchers note that, relatively to other OECD countries,

Canada maintains significant restrictions towards foreign ownership in sectors

Competition Policy Review Panel Research Paper Summary