Unfair Competition from Government-Subsidized Labs

Background

  • A number of government-subsidized labs across the country are offering commercial testing services that compete directly with members of CCIL. The subsidized labs include those operated by government-supported research institutes, universities, and municipalities.
  • Because they are subsidized, these labs can offer services at unrealistically low rates.
  • In essence, they are using taxpayer funds to undercut the private sector. CCIL views this as unfair competition.
  • Subsidies include not only operating funding, but also capital grants which allow them to make significant investments in new plant and equipment.
  • As well, these subsidized labs often enjoy captive government business.

CCIL Position

  • CCIL believes that government subsidies for laboratory research and education are serving worthy and legitimate goals.
  • But we feel that it is an entirely inappropriate use of taxpayers' money to help publicly-funded institutions expand into a market that is already well served by the private sector.
  • This is especially true in today's tough economy when governments must ensure maximum value for every taxpayer dollar.
  • Publicly-subsidized labs distort market pricing and have a negative impact on investment, growth and job creation by private businesses.
  • These subsidized labs, supported by municipal, provincial and/or federal funding, thwart the efficient allocation of capital and the functioning of a free market economy.
  • They also act as an obstacle to the development of globally competitive laboratory companies in Canada.

Status

  • CCIL is raising the issue of unfair competition with the government officials responsible for overseeing the public sector labs.
  • Many of these labs had an initial mandate of research and development, or education in the case of university labs, or public health in the case of municipal labs.
  • But those that have since branched out to include commercial testing as part of their services have lost sight of their original purpose.
  • Our point is that these organizations should get back to doing what they were intended to do – and stop wasting tax dollars by competing with the private sector.

Recommendations

  • CCIL is urging governments to stop providing financial support to institutions which use this funding to compete with private-sector businesses.
  • We are also recommending that all grant recipients be required, as a condition of their grant, to declare that they will not use their subsidized advantage to compete with the private sector in the future.