OTTAWA, Oct. 4, 2016 /CNW/ - Restrictions on advertising in health care industries in Canada may be having unintended consequences, including higher prices, lower quality of service and reduced innovation.
In a report released today, the Bureau finds that most health care industry regulators tend to restrict advertising in some form, but there is insufficient evidence to assess whether these restrictions are achieving their policy objectives.
Regulators may restrict advertising to address legitimate concerns such as protecting consumer safety. However they may also restrict advertising for other reasons.
For example, when it comes to advertising low prices, regulators may be concerned that consumers associate low price with poor quality and this could damage the image of the profession. Regulators may respond by banning price advertising altogether, which makes it difficult for consumers to make informed purchasing decisions . This overly broad response could have the unintended consequence of driving prices up, reducing competition and stifling innovation.
The Bureau's report reviews economic literature related to the effects of advertising restrictions. The literature shows that when restrictions are lowered or removed, consumers do not experience significant quality reductions, and may even benefit from lower prices.
The report calls on governments and self-regulatory bodies to begin collecting and compiling data on the outcomes of their policies, such as changes in prices and consumer preferences, and to move toward evidence-based decision-making.
In support of this recommendation, the Bureau's latest issue of the Competition Advocate includes internationally-accepted best practices for regulators to follow when developing effective regulation.
- The four key principles for effective regulation that are outlined in the Competition Advocate are:
- Regulate only when really necessary,
- Use the best available evidence to inform decisions,
- Strike the right balance between policy objectives and minimal intrusion, and
- Review regulations regularly.
- Greater competition leads to innovation that can result in lower prices and increased choice for consumers.
"Competition is good for business and for consumers. The Bureau is calling on governments and other regulators to collect evidence on the impacts of their policies and to move toward more evidence-based regulation. Better regulation means more competition for the benefit of all Canadians."
- John Pecman, Commissioner of Competition
The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.
SOURCE Competition Bureau
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