Future Challenges
Three challenges to the future of competition policy are worth noting.
Two emanate from the ongoing process of globalization, and a third
comes from the rising importance of firms’ access to data, especially in the
technology sector. First, as the flow of goods and services across national
boundaries increases, it becomes more important to define markets on an
international rather than a national basis. For example, consider the
Canadian banking industry. With the continuing development of the
Internet, it becomes possible for foreign-based banks to sell some
financial services to Canadians without establishing a costly physical
presence in Canada—such as a network of branches. In this case, the
appropriate definition of the market (for the case of assessing the impact
of a merger) is larger than just the one defined by Canada’s borders.
The second challenge posed by globalization is the desirability of
standardizing competition policy across countries. Firms that are mobile
and have considerable market power may tend to locate their firms where
competition policy is the most lax, exporting into other countries. To
avoid such socially inefficient locational choices, countries have an
incentive to standardize their competition policy—in this case, firms
would choose their locations on the basis of economic rather than legal
forces.