Question

The objective of Canadian competition policy is:________

A. to encourage firms to make price-facing agreements if they can increase profits by doing so.
B. to improve profits of Canadian firms by encouraging mergers.
C. to subsidize Canadian firms so they can compete in world markets.
D. to prevent unnecessary mergers and collusive practices.
E. to give consumers more information about the differences between similar products.

Answer 1

Canadian competition policy aims to benefit society by preventing unnecessary mergers and collusive practices which can harm consumer interests and the broader economy.

Step-by-step explanation:

The objective of Canadian competition policy is to ensure the market operates in a way that is beneficial to consumers and the broader society. Among the options provided, the most accurate answer is D. to prevent unnecessary mergers and collusive practices. This aligns with the public policy mission to encourage behavior that benefits society as a whole rather than just increasing the profits of a select few large companies. Government regulators understand that while many mergers can be beneficial, allowing firms to operate more efficiently, some mergers can lead to less competition, higher prices, and reduced innovation. Therefore, the fine balance that antitrust and competition policy must maintain is to allow productive mergers while preventing those that could be detrimental to competition.