Review of Industrial Organization
13: 243–264, 1998.
1998 Kluwer Academic Publishers. Printed in the Netherlands.
Rationalism Rebuffed? Lessons from Modern
Canadian and New Zealand Competition Policy
Department of Economics, The University of Auckland, Auckland, New Zealand
In 1989 Francis Fukuyama proclaimed “The End of History”. This event – which
did not passunnoticedin the Bureau of Competition Policy inOttawa
marked the ﬁnal conquering of other ideologies (monarchism, fascism, commu-
nism; even Keynesianism and social welfarism) by laissez-faire liberal capitalist
The 1986 revisions to the competition policy legislation of Canada and New
along with similar developments in the United States and Australia,
seem quite consistent with the end-of-history world view. They are very similar in
spirit and they are ﬁrmly based on the intellectual foundation of market capitalism,
modern ‘neoclassical’ economic theory, which is surely the only doctrine for the
end of history. It is truly universalist – ahistorical and acultural – in methodology,
and it provides a coherent elaboration of the efﬁciency of competitive market
The elaboration is not, however, unqualiﬁed, and this is the raison-d’
an activist competition policy. Mainstream neoclassicism admits the possibility of
“market failure” when structure or practice departs from pure competitive prin-
ciples. The effect of the 1986 amendments to the Canadian and New Zealand
legislations is to shepherd consideration of such failures within the neoclassical
compound of tradeoffs in efﬁciency measured unequivocally in dollars gained and
This represents a major change. The competition legislation that extends back
a century in Canada and the United States was based not on efﬁciency but on due
process;speciﬁcally, on safeguarding the rights of households and small businesses
to participate on fair and open terms in the market economy. We can see classical
antitrust as a late ﬂowering of the eighteenthand nineteenthcentury Enlightenment:
the program establishing the rights of the individual against the arbitrary exercise
See Khosla and Anderson (1989, p. 2 no. 6).
The Competition Act (1986) in Canada; the Commerce Act (1986) in New Zealand.