Competition Bureau Final Report - December 11, 2007 (Full Report) [PDF]

Over the past number of years the Federal Trade Commission in the United States, the OECD and the Irish and UK Competition Bureaus have looked into the practices of professional regulatory bodies to determine the extent to which any of those practices may unnecessarily interfere with competition. Each found practices that inhibit competition and by result in consumers paying more than they should have to for the services they receive. Each has also recommended specific measures to enhance competition through the reduction of unnecessary regulation.

In Canada's case, the OECD reported earlier this year that productivity within the regulated professions is approximately half that of the regulated profession sector in the United States and falls significantly behind labour productivity in other Canadian industries. The OECD specifically recommended that Canada promote competition in professional services by reducing regulation.

Accordingly, about 18 months ago the (federal) Competition Bureau initiated a study of five regulated professions in Canada: Accountants, Lawyers, Optometrists, Pharmacists and Real Estate Agents. The final report "Regulation of the Professions in Canada" was released yesterday. Professional regulation falls primarily within provincial jurisdiction. By undertaking this study, the Bureau is clearly sending a message that henceforth it intends to play a role in professional regulation, specifically using its powers and authorities under the Competition Act when it comes to professions and professional regulation.

The Bureau has also made it clear that it completely understands that protecting the public interest is paramount in professional regulation and sometimes the public interest will trump concerns about competition. It has concluded, however, that in some instances professional regulation has imposed rules and regulations that are anticompetitive and go beyond protecting the public interest and into the protection of professional self-interest.

There are obviously differences among the specific findings and recommendations for each of the five professions studied. Nevertheless, the Bureau identified several thematic or systemic concerns:

The Bureau found substantial interprovincial variations in the minimum entry to practice qualifications. Unless there is clear evidence that the minimum entry to practice qualifications do not adequately protect the public interest, the regulatory bodies should gravitate towards the minimum entry to practice qualifications and should eschew attempts to increase those qualifications (i.e. credential creep) unless there is a compelling public interest reason for doing so.

In this regard, the Bureau found that the professions are moving in the right direction, perhaps prompted by the (federal) Agreement on Internal Trade. The Bureau notes, however, that signing Mutual Recognition Agreements is only a first step and the real test will be effective implementation. The Bureau also noted the need to ease the entry of foreign trained professionals into the practice of their professions in Canada and for greater consistency among the provincial professional regulatory bodies in recognizing one international bridging program for foreign trained professionals.

In the quest for lower prices, increased choice and enhanced access to professional services, the Bureau encourages the expansion of professional scopes of practice, including expansion of scopes that overlap or duplicate the scopes of other professions.

The Bureau saves its harshest criticism for the advertising restrictions imposed by professional regulatory bodies claiming that they often appear to go beyond what is necessary to protect consumers from false or misleading advertising and, as a result, limit consumers' access to legitimate information that would enhance competition. The Bureau believes that the regulators' restrictions should go no further than addressing false or misleading advertising. The Bureau notes, in this regard, that the Competition Act provides sanctions against false or misleading advertising. The Bureau is particularly concerned about restrictions or prohibitions against comparative advertising among members of the same profession or among different professions. In the Bureau's view, such restrictions or prohibitions obstruct competition and make it difficult for new entrants to advertise any unique or distinctive services they provide.

The Bureau is predictably concerned about fee schedules, whether they be voluntary or prescriptive. In the Bureau's view fee schedules amount to tacit or overt collusion. Recommending minimum fees inevitably leads to those minimum fees becoming the de facto minima; specifying maximum fees inevitably means that fees gravitate to the maximum.

In her speech yesterday in Toronto announcing the release of the report, the Commissioner of the Competition Bureau took the position that Bureau hopes that the regulatory bodies will implement the Bureau's recommendations voluntarily. However, the clear inference was that of the professional regulatory bodies don't do so, the Bureau will not hesitate to get involved to the extent authorized by the Competition Act.