“Innovation is a Canadian value,” Innovation, Science and Economic Development Canada says in an online consultation on the federal government’s innovation agenda asking for input from stakeholders in six areas:
- Entrepreneurial and creative society
- Global science excellence
- World-leading clusters and partnerships
- Grow companies and accelerate clean growth
- Compete in a digital world
- Ease of doing business
The Competition Law Section replied to the last item on Sept. 9, with a clear caution that if the government wants to foster innovation, regulations are contraindicated – open market forces, should be trusted to promote increased competition and innovation, it says.
“Typically regulations are not designed to promote innovation and competition,” the Section says. “In contrast, laws of general application, like those embodied in the Competition Act, can be relied on to promote competitive intensity and efficiency, while protecting consumers and the public.”
In fact, it says, sector-specific regulations can create inefficiencies “by driving investment to certain sectors while potentially, incorrectly, discouraging investment in others.”
Not to mention that the system is too slow for regulatory efficiency – by the time regulations are implemented they can be out of date, and a regulatory approach also lacks the flexibility to react quickly to changing market conditions; it ends up stifling innovation instead of encouraging it.
In situations where the government decides that regulation is necessary, “the policy reasons for doing so must be clear and pressing,” they should be administered in a transparent and predictable way, and the government should explicitly acknowledge that it knows the regulations will stifle competition and innovation.
“To the extent new regulatory measures are contemplated, if possible, they should be designed in a manner that does not impede the ability of market participants to capitalize on innovation-enhancing opportunities,” the Section concludes.