Bringing competition into focus
Competition Bureau encourages online competition in the eyewear industry
The Competition Bureau (Bureau) has a long history of advocating for increased competition and innovation in the health care sector. For years, the Bureau has provided advice to governments, regulators and other decision-makers (collectively, decision-makers) on ways to enhance competition, while at the same time achieving legitimate public policy goals. Competitive markets are responsible for delivering many of the products and services upon which our health care system relies, and healthy competition can lead to innovation in product and service delivery, increased consumer choice and lower prices.
Over the last few years, the Canadian eyewear industry has been in a state of steady growth, fuelled in large part by an increasing number of Canadians requiring corrective lenses.Footnote 1 There have been numerous advancements in visual health technologies, and competition in the industry has sparked innovation in products such as eyeglasses and contact lenses. Competition has also led to changes in how eyewear has traditionally been advertised and sold to consumers, most notably via the Internet. However, purchasing prescription eyewear over the Internet may not be so easy in the future given different regulationsFootnote 2 in place across the country and ongoing litigation that could impact how online eyewear retailers operate.Footnote 3
In this edition of the Competition Advocate, the Bureau examines certain regulations governing the dispensing of prescription eyewear, and explores the implications that they may pose for online eyewear retailers. To enable consumers to benefit from online competition in retail eyewear sales, the Bureau calls upon decision-makers to take competition into consideration when implementing and reviewing regulations that govern the industry.
The eyewear industry at a glance
Expenditures on vision care services have been on the rise in Canada since 2012.Footnote 4 With an ageing population in need of corrective lenses and eyewear making a comeback on the fashion scene,Footnote 5 sales in the industry have flourished. In 2017, retail eyewear sales in Canada were estimated to be nearly $2.1 billion, with prescription eyewear sales accounting for over 80% of the total (or roughly $1.7 billion).Footnote 6
Brick-and-mortar retailers continue to be the primary avenue for contact lens and eyeglass sales. As Canadian consumers demand greater choice, lower prices and improved convenience in purchasing eyewear, Internet retailing has become more popular. In 2016, online retailing saw rapid growth in Canada, particularly for contact lenses. For eyeglasses, many consumers prefer to try frames on prior to making a purchase, and rely more heavily on the services provided by eye care professionals, including eyeglass fitting and adjustment.Footnote 7 However, there have been recent advancements in online retailing that may make it easier for consumers to purchase eyeglasses over the Internet.Footnote 8
With the recent surge in online eyewear sales, warnings have come from some industry associations. In a 2014 position statement, the Canadian Association of Optometrists (CAO) cautions that the unregulated sale of eyewear over the Internet can compromise patient care. Similar warnings have been issued by provincial regulatory bodies, including, among others, the Nova Scotia Society of Dispensing Opticians, the College of Opticians of Ontario, the Saskatchewan Association of Optometrists and the Opticians Association of Canada, British Columbia Chapter.
Consumers can benefit from purchasing eyewear online
Online competition in the eyewear industry has provided consumers with access to lower-cost products and greater convenience. In 2012, CBC's Marketplace broadcast a segment on the high price of prescription eyeglasses sold in Canada. The CBC reported on price differentials between eyeglasses sold in-store and those sold online. Their findings suggest that eyeglasses sold at traditional brick-and-mortar retail outlets could be at least 50% more expensive than those purchased online.
Further support for lower online vs. offline prices is offered in a study published by the United States Federal Trade Commission (FTC). In their report, the FTC found that contact lenses sold online were on average $15 USD cheaper than those sold offline, though wholesale clubs offered the lowest average prices overall. An FTC Bureau of Economics Working Paper also examined the online and offline prices of contact lenses and found that, when controlling for differentiated retail services, offline prices were approximately 11% higher than online prices.
In addition to cost savings that can be realized by making purchases over the Internet, nearly half of all Canadians find online shopping to be more convenient than visiting a brick-and-mortar retail outlet. In the online world, customer reach can also extend to regions across Canada, including remote locations that may not be well served by traditional retailers. For example, Internet retailing of eyewear appears to have improved access to eyeglasses and contact lenses for a number of consumers living in rural or otherwise underserviced Ontario communities.Footnote 9
Regulatory framework varies across the country
Optometry, the practice of examining the eye and vision systems, and opticianry, the practice of fitting and adjusting eyewear, are regulated professions in Canada. However, the precise regulatory requirements for each profession vary between the provinces and territories. In many cases, a provincial or territorial statute broadly governs certain health professions, including optometrists and opticians. This is typically accompanied by specific regulations for each profession, which the professional order – often a college – is responsible for administering. Under most regulations, eye care professionals, including optometrists and opticians, have the ability to dispense corrective eyewear.
For example, in Ontario, optometry and opticianry are governed under the Regulated Health Professions Act (RHPA). The Health Professions Procedural Code (Schedule 2 of the RHPA) sets out practical rules for regulatory colleges, which are intended to oversee their professions in the public interest. The College of Optometrists of Ontario and the College of Opticians of Ontario (collectively, the Colleges) are responsible for registering and regulating members of their respective professions. The scope of practice for optometrists and opticians are provided for under the Optometry Act and the Opticianry Act, respectively.
In addition to broadly governing the self-regulated professions, the RHPA lists certain controlled acts which can be performed only by individuals authorized by a health profession act, or their delegated representatives.Footnote 10 Dispensing contact lenses and eyeglasses is listed as a controlled act, thereby placing certain limitations on who can carry out this function.
The act of dispensing is not explicitly defined in the RHPA, the Optometry Act or the Opticianry Act, but has been interpreted by the courts to include the preparation, adaptation and delivery of prescription eyewear.Footnote 11 Read alongside the RHPA, this interpretation suggests that only physicians, optometrists, opticians, or their delegated representatives (hereafter, licenced professionals)Footnote 12 may prepare, adapt and deliver prescription eyewear. Although internet dispensing is not prohibited in Ontario,Footnote 13 this interpretation of dispensing may have implications for online eyewear retailers. The potential implications are unclear, and are being examined in the context of ongoing legal proceedings that consider the interpretation of dispensing.Footnote 14
By way of contrast, in British Columbia, persons other than licenced professionals may dispense corrective eyewear, subject to certain conditions.Footnote 15 This is a result of changes to regulations that were made by the British Columbia Ministry of Health Services in 2010. These changes were made to modernize the way in which British Columbians can get their corrective eyewear, and to provide consumers with more choice.
Overly-restrictive regulations limit online competition
Health professions, including optometry and opticianry, are subject to various regulations across the country. While some regulations address important public health and safety issues, they may also have a direct impact on consumers, potentially affecting the prices they pay and the quality of goods and services they receive. As an advocate for competition, the Bureau believes that regulation should be used only where market forces will not achieve public policy objectives, and even then, only to the extent necessary.
At the federal, provincial and municipal levels, there are systems in place to ensure that the Canadian health care system functions efficiently and effectively, and that high quality health care products, including prescription eyewear, are accessible to Canadians. While many goods can be sold online with ease, certain regulatory requirements in Canada may limit how online eyewear retailers can carry out their operations.
Self‑regulating professional organizations, such as those overseeing the activities of optometrists and opticians, play an important role in ensuring that the public receives high quality health care services. It is without debate that licenced professionals have an important role to play in the eyewear industry, and that certain regulatory safeguards are needed to serve the public interest. However, decision-makers should consider whether it is strictly necessary for licenced professionals to be involved in all aspects of the eyewear dispensing process (i.e. preparation, adaptation and delivery), and to what degree. For example, can less restrictive measures be put in place to facilitate online sales, while at the same time, maintaining patient health and safety? In order to ensure the health and safety of those requiring corrective eyewear, while also providing consumers with high quality, innovative products at competitive prices, these are some of the issues that need to be carefully considered by decision-makers.
In order to minimize the potential for negative or unintended effects arising from regulation, decision-makers should take steps to ensure that regulations are evidence-based and strictly necessary to address legitimate public policy concerns. Doing so can promote greater reliance on competitive market forces, which can help to ensure that the Canadian economy benefits from innovative, high quality products and services at the lowest possible prices.
The Bureau urges decision-makers to keep competition considerations in mind when implementing and reviewing regulations that govern the dispensing of prescription eyewear in Canada. The Bureau acknowledges that there are important public health and safety issues that should be taken into consideration regarding the dispensing of prescription eyewear, and that certain regulatory safeguards are necessary to protect Canadian businesses and consumers alike. However, as the industry evolves, steps should be taken to ensure that regulations keep pace so as not to inhibit legitimate forms of competition that stand to benefit consumers and the overall economy.
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