Competition policy is OK, with a few exceptions, Magazines Canada tells the feds

Magazines Canada has told a federal competition review that all it wants for the magazine industry is a fair and level playing field and it thinks that's pretty much what it has -- with a few exceptions.

In a submission released today, the association told the Competition Review Policy Panel that it wanted the federal governments variety of policy instruments to continue and to be improved to ensure a "competitive, open and dynamic sector". It recommended no changes be made to the current investment review law, which dates back to 1999 and the Canada-U.S. Agreement on Magazines.

However there are inequities in the current regime, the submission said, and these competitive disadvantages need to be addressed. Among them:

• Direct to consumer pharmaceutical advertising, a huge category, is forbidden to Canadian magazine publishers under the Canada Health Act but are regularly carried by the large number of U.S. originating titles.

"Since 59% of Canadian magazine sales are of foreign titles, the objectives of the Canada Health Act are being seriously undermined with a very significant number of Canadian readers regularly viewing these ads. Additionally, U.S. publishers use these advertising revenues to enhance their editorial products in direct competition with Canadian magazines."

• While Canadian publishers have to pay for 50% of the costs of recycling their magazines, U.S.-originating magazines evade the levy.

"So, while over half of the recycling from the magazine sector is due to magazines imported by foreign publishers, the full amount of the cost of recycling these magazines is borne exclusively by Canadian publishers."

• The provincial liquor commissions who publish magazines and use their monopoly position to essentially suck up all the beverage alcohol advertising.

"Publishers are concerned that these provincial liquor agencies utilize their monopoly status, and the revenues from liquor sales, to enhance their position in the marketplace and effectively eliminate competition through aggressive market practices that private sector competitors cannot possibly replicate."

Mags asked what -- if any -- changes they'd like in competition and investment policy

Should we be commenting and what should we be saying? That's the question that Magazines Canada is putting to its members; to advise it about the potentially far-ranging review that the federal government is conducting about foreign investment and competition policies.

A bulletin has gone out to Magazines Canada's 350 consumer magazine member titles asking for comment by November 30 on some of the following questions:

• Should the foreign investment regime change or stay as is?
• If it should change, what amendments should Magazines Canada recommend and how would they further Canada’s cultural policy goals?
• Should Magazines Canada make a submission to the panel on behalf of the sector?

A federal panel has released a discussion paper called Sharpening Canada’s Competitive Edge and will be receiving written submissions until January 11 as well as meeting with interested groups.

Under the current federal policy and the Investment Canada Act, foreign acquisition of Canadian-owned and Canadian-controlled periodical publishing businesses is not permitted and government policy is designed to ensure the production of majority Canadian editorial content if a business intents to produce or sell periodicals here or sell advertising in periodicals.

Although it doesn't refer specifically to the Canadian magazine industry, the panel has posed some questions that, depending on how they are answered, might have a major impact:

1. What changes, if any, are required to Canada’s sectoral investment regimes to minimize or eliminate negative impacts on Canada’s competitiveness?
2. What have been the impacts of these investment regimes on productivity and competitiveness in the specific sectors?
3. Are there alternative mechanisms that would achive the non-economic policy objectives of the sector while also ensuring maximum competitiveness of firms operating in the sector?

Magazines Canada has referred its members to two background documents:

• Overview of Cultural Sector Investment Review Policy from Department of Canadian Heritage
• The Investment Canada Act

Though MC members are being asked to e-mail their responses to President Mark Jamison (mjamison@magazinescanada.ca),there's probably no restriction on non-members giving him their views. There are certainly no restrictions on sending comments directly to the federal panel.

Recommendations the panel may make could substantially change the competitive landscape for Canadian magazines. For instance, the purchase of major Canadian publishing groups by larger U.S. firms. Or the removal of restrictions on competition in the advertising services field.