Coordination, Not Conflict: Competition and Industrial Policy in a Protectionist Era

From: John Pecman 
To: Competition policy watchers 
Date: September 29, 2026 
Re: Coordination, Not Conflict: Competition and Industrial Policy in a Protectionist Era 

The Nortera-Green Giant merger challenge by the Competition Bureau raises an important issue that will define Canadian economic policy for years. 

In an era of rising protectionism, should competition or industrial policy take precedence? The bureau’s effort to block Nortera Foods’ acquisition of the Green Giant and Le Sieur brands on traditional competition grounds collides with Nortera’s assertion that the deal supports “Canada’s food security and food sovereignty.” 

This is not an isolated skirmish. The recent call by industry leaders for a coordinated AI slowdown based on public safety concerns immediately comes to mind. The Nortera proposed merger is a test case for how Canada will navigate the intersection of competition, industrial policy, and national economic security. 

Conventional wisdom treats these policy domains as inherently conflicting.  Professor Diane Coyle, a British economist with the University of Cambridge, challenges this dichotomy. In her recent paper, Coyle analyzes competition and industrial policy choices in an era of structural change, noting that “there is no clear assignment of policy tools to different bodies, but rather a need for co-ordination of policies across domains.” She proposes that “competition policy should be seen as a key component of modern industrial strategy, especially for economies seeking to build strategic capabilities”. 

Coyle’s insight is that the structural transformations under way, in digital technologies, artificial intelligence, and the energy transition make market-shaping inevitable. Competition decisions will determine market structure in ways that have profound industrial policy implications. The appropriate question is not which policy is paramount, but how they can be coordinated. 

Germany offers us a model. Under section 42 of the Act against Restraints of Competition, the Federal Minister for Economic Affairs can override a merger prohibition when “the restraint of competition is outweighed by advantages to the economy as a whole or by an overriding public interest.” Since 1973, this power has been used only about 10 times, on grounds including energy security, international competitiveness, and the retention of critical technical expertise. 

Canada already has analogous mechanisms. Section 94 of the Competition Act exempts banking and transportation mergers from tribunal jurisdiction when the Minister of Finance or Transport certifies them as in the public interest. The Minister of Industry exercises a de facto veto over wireless mergers through spectrum licence approvals, most notably of late in the Rogers-Shaw merger, where binding conditions were imposed. The Minister of Transport approved the WestJet-Sunwing merger in 2023 despite Competition Bureau concerns. These are not historical anomalies; they are living features of Canadian merger review. 

Most dramatically, in 1999 before the sectoral exemption for transportation mergers was introduced under section 94, the government suspended the Competition Act itself to facilitate the Air Canada-Canadian Airlines merger. Canadian Airlines was on the brink of collapse. The Cabinet invoked section 47 of the Canada Transportation Act to suspend key competition provisions for 90 days, citing the risk of community isolation and the potential loss of 16,000 jobs. The Public Interest Advocacy Centre called it “government intervention to suspend the operation of as fundamental a set of principles as the Competition Act.” That extraordinary measure established a precedent: When public interest stakes are high enough, competition law can yield. 

But should it? The evidence overwhelmingly supports competition as the default. Matthew Chiasson and Dr. Paul A. Johnson in their paper demonstrate that competition spurs innovation and efficiency of “enormous magnitude.” Declining competitive intensity contributes to weaker business investment and innovation. A recent Competition Bureau commissioned study found that removing regulatory barriers to competition in Canada could grow the economy by up to 10 percent over the long term. It is well established that pro-competition policies drive productivity and long-term economic growth by fostering a dynamic market where businesses must innovate, lower consumer prices, and invest in research and development. 

The apparent conflict between competition and industrial policy is often not a real conflict. Patents, R&D subsidies, technical standards, and advance market commitments all restrain competition in some respects while promoting innovation and economic welfare. They are different mechanisms for achieving shared goals. 

But real conflicts do exist, when industrial policy protects incumbents, entrenches market power, or pursues objectives genuinely at odds with consumer welfare. The task for policymakers is to distinguish between apparent conflicts (which can be resolved through better coordination and policy design) and real conflicts (which require explicit trade-offs and normative judgments). 

Coyle’s framework points toward a principled resolution. She argues that competition policy and industrial policy have “largely overlapping ultimate aims,” both are intended to deliver efficient resource allocation and enhanced innovation. The challenge is coordination, not subordination. In sectors vital to national security or economic resilience, narrow departures from competition may be justified. But such departures require structured, transparent, and accountable mechanisms, not ad hoc interventions. 

One such mechanism could be the Investment Canada Act (ICA), statute governing the review of foreign investments to ensure they provide a net economic benefit to Canada and do not injure national security. 

I propose a sectoral ministerial authorization model limited to mergers involving firms in sectors identified as sensitive under the ICA: critical minerals, cultural industries, advanced and sensitive technologies, critical infrastructure, sensitive personal data, and defence. Under the ICA, “sensitive sectors” are treated as vital to Canada’s national and economic security and therefore trigger enhanced net-benefit and national-security scrutiny. 

Further, the Minister of Industry, who also governs the ICA, should be able to override the application of the Competition Act to an anti-competitive merger in sensitive sectors based on public interest. Given the importance of competitive markets to Canada’s innovations, productivity and prosperity, this override power should only be implemented in exceptional circumstances. The minister would be required to explain an override decision in a written public statement. This approach is coherent, proportionate, transparent and leverages existing institutional competence. It also reflects Coyle’s call for greater institutional coordination between competition authorities and industrial policymakers. 

The Air Canada-Canadian Airlines episode should serve as a warning, not a precedent. It was extraordinary, one-time, and justified by the imminent corporate collapse in a key sector of the economy. It should not become the model for routine intervention. Instead, Canada needs a structured mechanism that allows industrial policy considerations to be weighed in sensitive sectors without undermining competition across the economy. 

Coyle identifies two fundamental institutional challenges: “How to combine expert analysis with political legitimacy; and how to co-ordinate policies across bodies whose responsibilities or remits sometimes conflict.” 

A sectoral ministerial authorization model addresses both. Competition analysis remains with the Competition Bureau and Tribunal; public interest determinations, limited to ICA sensitive sectors, rest with the Minister of Industry accountable to Parliament. 

The Nortera case can serve as a catalyst for legislative reform. If “food sovereignty” is understood as the maintenance and enhancement of domestic capacity to produce, process, and supply food, such that Canada is not excessively dependent on foreign sources for essential food products, and such that domestic producers and processors can compete fairly in domestic and international markets, then the question becomes whether this sector rises to the level of economic security. If it does, the appropriate response is to add food processing to the ICA’s sensitive sectors through public debate and parliamentary scrutiny. 

Competition policy should remain paramount for the vast majority of the economy, with industrial policy serving as a carefully circumscribed exception, invoked only where genuine conflicts between competition and other vital national interests cannot be resolved through better policy design. 

John Pecman is the former Commissioner of Competition, a Senior Fellow at the CD Howe Institute and a Senior Business Advisor at Fasken. 

To send a comment or leave feedback, email us at  blog@cdhowe.org. 

The views expressed here are those of the author. The C.D. Howe Institute does not take corporate positions on policy matters.